When do we physically go back to work? The answer remains unclear. In a post COVID-19 world, individuals who have been working from home might return to an office that looks vastly different and follows entirely new safety guidelines.
And for some remote workers, there might not be a physical office to return to. Major corporations like Twitter are making headline news by rolling out permanent remote work options for staff, which is piquing interest with entrepreneurs and small business owners.
Is it possible that your startup may go fully remote, too?
Entrepreneurs may start and maintain successfully operated small businesses that do not have a physical storefront, and it is also possible for an existing organization to take its once-physical company and make it fully remote.
However, it’s equally as important to have an understanding of what remote work will mean for business, especially when it comes to the legal aspects. If you are considering taking your company fully remote, keep the following legal items in mind before fully implementing any policies.
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Remember: remote businesses are subject to the same requirements as physical businesses
A remote business still needs to incorporate or form an LLC as its entity formation. This business must also register trademarks, obtain a tax ID or employer identification number (EIN), appoint a registered agent, and complete annual filings to their state of incorporation. We’ll explore a little bit more about each item below.
Register any and all trademarks
Chances are fairly high that your company may have a unique name, phrase or tagline, design, or logo associated with it. This is your trademark. It’s a mark that distinguishes your business and its visibility to the world.
Trademarks, if not registered at the federal level, are vulnerable to being plagiarized by competitors. If a competing business starts to copy your original mark, you would be powerless to stop them. This is because you do not have proven exclusive rights to the trademark.
Is it complicated to register a trademark? Not at all. Trademark registration is a fairly straightforward process. Prior to filing an application, it is recommended that you conduct a name search. This may be done using the United States Patent and Trademark Office’s (USPTO) trademark database. Use the database to look up your trademark. See if there are any pending or currently registered marks. If there are, you may need to go back to brainstorming new ideas. However, if your mark is available, you may go ahead and begin filing an application to register the trademark.
Obtain a tax ID for the business
Tax IDs often go by a secondary name: employer identification number (EIN). This is a nine-digit number issued by the IRS.
Once a remote business has an EIN, it can conduct the following activities to help build and grow the company:
- Open a business bank account
- Hire employees
- Establish pension, profit sharing or retirement plans
- Build business credit
Appoint a registered agent
Whether you have a physical location or are fully remote, businesses must be able to designate a registered agent. This is an individual or third party who acts as the point of contact for the business. They receive paperwork on behalf of the business from county and state agencies, organize the documents, and pass them along to the owner.
Can you be your own registered agent? Entrepreneurs may act as an RA instead of appointing assistance from a third party. However, please remember that you will need to follow specific rules as a registered agent. You must be available between general business hours and have a physical street address in the state of the company’s formation. Don’t worry if your fully remote company doesn’t meet these requirements. You may always appoint a third party organization to step in and act as the point of contact on your behalf.
Remote workers must have a workers’ compensation policy
Outside of these legal requirements is another crucial policy: workers’ compensation. Working from the comfort of home, unfortunately, does not protect against potential injuries.
Nick Swenson is the founder of Swenson He, a digital product agency in Los Angeles and Dallas.
Prior to COVID-19, Swenson created a work from home policy that would allow his team to work remotely. The agency did a month-long trial period of remote work, starting with “Work From Home Wednesdays,” to iron out any issues. The company’s remote work policy was quickly finalized due to COVID-19, but not before Swenson clearly examined the company’s workers’ compensation policy.
“Companies should always double check their policy and confirm with their underwriter regarding the limits of coverage,” Swenson said.
Generally, a workers’ compensation policy will cover an employee if the injury occurs in conjunction with regular work duties. If the employee suffers an injury at home, he or she must notify the company immediately. It may be necessary for the employer to visit the home, as well.
What about remote workers who live with family members?
“It is important to specify that coverage does not include injury to family members, visitors or others that may become injured within or around the employee’s home,” Swenson said.
Part of Swenson’s remote work policy includes a safety checklist. Small businesses may consider implementing such a checklist for remote workers. Employees who work from home must submit a completed safety checklist that reviews the safety of their home. This includes keeping computer equipment out of direct sunlight and hot spaces, and avoiding the consumption of food and drink near data and equipment, etc.
File a foreign qualification
What is a foreign qualification?
Let’s say that your business initially incorporated in California. Your business wants to operate fully and remote in Nevada. In order to do business in Nevada, your company must be able to qualify, or register, the business as a foreign corporation in the new state outside of the initial formation state. This foreign qualification gives the business permission to do business in Nevada, as well as any remaining business they’d like to conduct in California.
How do I foreign qualify?
Once you’ve formed an LLC or corporation for your company, you will need to apply for a certificate of good standing. This is verification from the local Secretary of State that proves your small business is in compliance.
In this scenario, for example, you would receive a certificate of good standing from the California Secretary of State. This helps verify to Nevada that your business is in existence and up-to-date with its tax payments and filing deadlines.
After receiving your certificate of good standing, make sure that you have evidence of a designated registered agent. Then, you may file to register your business as a foreign corporation — and be well on your way to turning your company fully remote while remaining in compliance.