July 2009 Archives

July 31, 2009

How to Find and Hire Foreign Workers in San Diego - Despite the Current Recession and Immigration Controversy

U.S. immigration laws provide a number of different tools allowing local businesses to hire foreign workers on a temporary, seasonal or permanent basis. The laws are varied and complex, and the process (from determining a business' needs to matching those needs with the right prospective employee to complying with all federal immigration requirements) can seem insurmountable at first glance. A San Diego immigration attorney helps to navigate the maze, but hiring an attorney only adds to the complexity in the mind of the average business person. Yet, businesses of all sizes continue to hire foreign workers and at a growing rate. This is despite the current recession and immigration controversy.

Hiring Foreign Workers.jpg

The first step of course is to determine whether a business has a need for foreign workers. U.S. immigration laws directed at employment are designed to prevent employers from hiring foreign workers at the expense of U.S. workers. Thus, the fact that a business may be able to hire cheap labor from another country does not, from a U.S. immigration law perspective, satisfy the "need" component. Rather, a business' need for a foreign worker is based on that business' inability to find U.S. workers qualified and willing to take an employment position at the prevailing wage. Once a business determines the need for a foreign worker, it must of course go out and find him or her. Most businesses turn to one of the hundreds of international recruiting firms easily found on the web.

Satisfying the federal government that an employment position will not come at the expense of a U.S. worker depends on the type of position a business is trying to fill. The following is a summary of the different types of employment visas: H-1B Visas, the most common non-immigrant based visa, for specialty occupations such as architects, engineers, educators, accountants or legal professionals; H-2A Visas for temporary agricultural workers; H-2B Visas for seasonal non-agricultural workers; H-3 Visa for training in education of handicapped children; L-1 Visas for intra-company transferees; TN Visas for non-immigrant professionals from Canada and Mexico under NAFTA; and EB Visas, immigration visas, for permanent employment opportunities in the United States. There are five categories of EB Visas ranging from foreign nationals of extraordinary abilities to unskilled workers.

In a series of articles to follow on hiring foreign workers, we will explore in more detail the factors to consider in the initial decision to hire a foreign worker, complying with the legal requirements for each of the above listed visas and recruiting efforts. Whatever a business' needs might be, consulting an immigration lawyer is the best first step.

July 24, 2009

New and Growing San Diego Businesses - Hiring Employees Part Two

Part One of this article focused on making the decision to hire employees and the costs of doing so.  Part Two provides a brief overview of the numerous Federal and California State laws and regulations governing employers.  It is important that businesses become familiar with these laws as they contemplate hiring their first employees.  Minimum wage, Social Security and Medicare, tax forms and withholdings, workers' compensation, eligibility to work in the United States and other labor laws are all important considerations.
 
As businesses look to hiring employees, their first consideration is cost.  Wage is of course the largest component of employment costs, and in California the minimum wage is $8.00 per hour.  This is the minimum wage cost prospective employers face.  In addition to the employee's wage, the employer is responsible for paying an equal contribution to the employee's Federal Social Security and Medicare payments.  This is the same payment individual business owners pay as their self-employment tax.  Currently, the combined tax is 15.3% of the employee's wage (12.4% for Social Security and 2.9% for Medicare) of which the employer is responsible for half.
 
EmployeesPart2.jpgOnce a decision is made to hire, businesses are required to ensure that the employees they hire are legally eligible to work in the United States.  Each new employee is required complete a Form I-9, "Employment Eligibility Verification", and present their Social Security card.  It is recommended that employers take photo copies of the Social Security card for future reference and proof of documentation.  If for any reason, a prospective employee doesn't have a Social Security card, the employer should ask that they obtain one as soon as possible
 
Employers are also required to withhold taxes from the employee's pay.  The amount of tax withheld is determined by the employee's W-4 form which is provided to the employee by the employer.  The employee identifies his or her tax status and desired number of exemptions which the employer uses, along with state and federal tax withholding tables, to calculate withholdings.  At the end of each year, the employer reports the employee's income and total amount of withholdings to the IRS and the California State Franchise Tax Board via a W-2 form which is also provided to the employee for his personal tax return.

Continue reading "New and Growing San Diego Businesses - Hiring Employees Part Two" »

July 17, 2009

New and Growing San Diego Businesses - Hiring Employees Part One

Eventually the day comes when every new San Diego business owner asks the question "Is it time to hire my first employee?" The prospect is exciting and often serves as a catalyst for business growth. For some, the right time is when business operations begin to negatively affect personal life. Most business owners face a number of challenges requiring long hours and considerable energy eventually leaving little time for family and friends. For many business owners, living a healthy, active life style and spending quality time with family and friends is invaluable. For others, the sheer volume of day to day operations leaves them with no choice. Either bring one or more employees on board to assist with operations or suffer inefficiencies and loss of profit. Still others see the present high unemployment rate as a time for bargains. Whatever the reason, when the time comes to seriously entertain hiring employees, business owners must carefully consider numerous issues including compensation, employee benefits, hiring practices, compliance with state and federal law and development of a company employee policy.

EmployeesPart1.jpg

Before hiring that first employee, a business must have adequate revenue in order to maintain solvency and respectable profit margins. Cash flow, not fixed cash, is a key factor in determining whether a business can hire that first employee. To make this determination, the business owner must first decide what constitutes a fair wage. What constitutes a fair wage takes into account both what the employer can afford and what is commensurate with the job requirements and expectations. The employer must also consider whether to provide employee benefits. Medical coverage, retirement plans, paid holidays and vacation policies all come at a cost to the employer, but also serve as an additional incentive to prospective employees. The cost of advertising for the position is an additional short term consideration. If the business doesn't have the necessary "cash flow" to bring on a new employee, the business might consider other options like outsourcing important tasks. Accounting tasks for instance can be outsourced at a reasonable cost.

Finding the right candidates for the new position requires good strategy and a little common sense. Business owners must attract qualified employees. Salary, benefits, the business environment and other perks, the quality of the business itself and how the position is advertised for all have an impact on prospective employees. Newspaper advertisements, periodicals, websites like Monster.com and recruiting companies are all excellent tools. References from friends or industry colleagues are also effective ways to recruit employees. Before moving forward, the employer should put himself in the shoes of the prospective employee. A thoughtful consideration of what best enhances the business' appeal to prospective candidates assists the employer in anticipating employee preferences. The goal is to attract the best and brightest candidates and to ultimately choose the right fit for your business. The first few employees play a major role in the growth and developmental of any new business, and help define a business' relationship with clients and customers during its formative years.

Parts Two and Three of this article will explore compliance with Federal and California State government regulations and the development of a company employee policy. It is imperative that employers are knowledgeable of the numerous federal and state laws concerning hiring practices and other labor issues. Business owners may want to consider seeking legal advice from a San Diego business lawyer when developing employment policies. In the end, hiring new employees is rewarding. Business owners contribute to a lower unemployment rate as their businesses grow and long and rewarding associations are developed.

July 3, 2009

Business Entity Options and San Diego Start Ups

While the sole proprietorship might be the right business entity choice for many San Diego start ups, those thinking about forming a corporation or other business entity will want to examine the advantages and disadvantages of the various options, and discuss those options with an attorney or accountant. The ultimate decision will depend on the individual business and should be carefully considered. New and existing businesses have many options including incorporating, forming an LLC or forming a partnership. The following is a brief list of business entity features:

Business Entity.jpg

Corporations: A Corporation is treated as a unique business entity separate from those who own it. Because a Corporation is considered a unique business entity, the company does not dissolve when ownership changes. Under the corporate structure, shareholders are the owners of the corporation and elect a board of directors to oversee major policies, procedures, and decisions. Advantages of the corporate formation include ease of transferability of ownership (selling ones shares), limited liability for shareholders concerning debts or judgments against the corporation, deductions of the cost of benefits provided to officers and employees, and in certain circumstances advantageous tax rates. The Corporation must maintain corporate formalities.

Partnerships: In a General Partnership, two or more individuals share ownership in the business entity. The law does not distinguish between the business and its owners. The partners are liable for the debts and obligations of the partnership and are taxed on an individual level. The transfer of individual ownership usually requires the consent of all partners. The advantages of a general partnership include relative ease of formation and greater control over the management of the business. Limited Partnerships consist of at least one general partner (which may be a corporation) and at least one limited partner. The general partner manages the business' day to day operations and is liable for the debts and obligations of the partnership. The limited partner is a passive investor. A partnership agreement spelling out the rights and obligations of the partners is needed. The advantages of a Limited Partnership include greater control of the management of the business for the general partner and the ability to attract investors seeking limited liability.

Limited Liability Companies (LLC): An LLC is an unincorporated entity formed under state law whose owners are not personally liable for the debts, obligations or liabilities of the business. It is best described as a hybrid between a corporation and a partnership. The LLC's members manage the business like a partnership and are taxed on an individual level while being afforded liability protections similar to that of a corporation. The advantages of an LLC include the limited liability afforded its owners, individual tax treatment and less formalities to maintain than a corporation.

As business owners and new entrepreneurs navigate through the maze of information on the internet, they quickly discover a diverse range of views regarding the advantageous and disadvantageous of the various forms of business entities. The bottom line for any new or existing business considering incorporation or other business form is that the right decision is unique to your business. Learn as much as possible from all available resources before taking the next step. Contact a San Diego business lawyer to discuss your options.  The choices you make can have a profound impact on the future of your business.