Posted on March 28, 2018
Sola Salon Studios
It’s not every day you can get sage advice from an attorney without spending a dime! Fortunately for our Sola community, one of our 2018 Faces of Sola is not only a barber working in the salon 3-4 days a week, but he’s also an attorney, practicing law 3 days a week. When Christopher Matthew isn’t servicing clients at Dillinger’s Hair Company, he is helping businesses protect their brands. We asked him to give us five must-remember business tips. Here’s what he suggests:
When it comes to legal, you don’t have to do it all today.
“Lawyers are risk-averse,” Chris shares. “It’s their job. But entrepreneurship is rooted in risk. While you should be 100% sure of all of your legal matters, you don’t have to address them all before you start. Begin with the most necessary (think licenses, building codes, entity formation, etc.) and build from there.
Build an offensive brand.
“So often fear causes us to be vanilla in our branding and marketing,” Chris points out. “Don't be afraid to offend. In fact, you should aim to offend 50% of your market. In hair and beauty, our client is anyone who needs a haircut or color, and that is a vast customer pool. You want to weed through that pool and pick out the clients that you want. You do this by speaking to your people and offending everyone else.”
Choose a name wisely.
“First off, don't infringe. It is important that you choose a name that does not infringe on anyone else’s trademarks. Ideally, you would want a trademark specialist to run an in-depth search on any potential business/product/service names you want to use. This search will check trade databases, trademark registries, domain names, business entities, and scour the Internet to find uses similar to yours. The expense of running a comprehensive name search pales in comparison to a trademark infringement suit or having to rebrand all of your media, advertising, etc. after you have begun using it.”
“Secondly, choose distinctiveness over descriptiveness,” he adds. “The main requirement for something to be capable of trademark protection is that it is distinctive and thereby capable of identifying a particular good or service. So often we choose names that describe or identify our services, but these are not capable of trademark protection. Further, you will find that it is impossible to keep up with all the businesses with similar names. Just ask any barbershop called ‘Precise’ or ‘A Cut Above.’ There is nothing wrong with having a descriptive name, but if you plan to build a brand and register a trademark, you will want something distinct.”
Do you have employees or independent contractors?
While some members of our Sola community chose to be independent and operate under their own business name, we do have some who chose to hire assistants and expand into larger studios to operate with employees. Here, Chris touches on a very important lesson and something to keep in mind.
“As business owners, we have to pay close attention to the distinction between employee and independent contractor; our business may depend on it. If you are operating under the premise that your workers are all independent contractors and an inquiry such as an audit or lawsuit finds that they are employees, the costs could be ruinous. This is because you could be responsible for back taxes, wages, overtime and other fees or sanctions. And the risk extends to the workers as well. Anyone involved in the mischaracterization could be investigated and likely held responsible for unpaid taxes. While all parties must be concerned, the risk is clearly magnified for the owner who has multiple workers.”
“One of the major costs of a worker being categorized as an employee over an independent contractor are taxes,” he adds. “A company is taxed differently on employees, thereby raising the cost of doing business. While there is no bright-line rule as to who is an employee and who is an independent contractor, we do have some guidance from the IRS and Social Security Administration (SSA) to help us distinguish the two.
If a worker is an employee of the shop:
Basically, if the boss maintains a fair amount of control over the worker, he/she is likely an employee.
If the worker is an independent contractor (IC) at the shop:
Form a separate business entity.
“As a business owner, there is little reason to operate without a forming a separate entity,” he adds. “There are three main reasons to open a separate business entity such as a Corporation or LLC. The first is to protect your personal assets against liability. The second is to minimize some of your tax liability. And the third is to communicate credibility to third parties and the public. There are other benefits, but we are chiefly concerned with these three.”
Over the next few months, we will have Christopher go a bit more in-depth on some of the tips he has provided. For instance, we will take a closer look at how to build an offensive brand and get a better understanding as to why you should form a corporation or LLC to protect yourself. In the meantime, we hope his tips help get you sort through a few of the legal matters so that you can run your Sola worry-free.