Business owners can write off many of their health care costs, but complying with IRS rules requires some planning.

Jonathan Cottor, Scottsdale, Ariz.

I have an LLC, and I’m seeking some advice about my family’s medical expenses. One accountant told me they can be run through the LLC as a business expense, and I’ve been paying the insurance premiums and any eligible co-pays and FSA-qualifying-type out-of-pocket costs through the business as an expense. I haven’t set up a separate HSA account, since the medical expenses run through the business and reduce my taxable income anyway when it pulls over to my personal return.

Another accountant has questioned this logic, and advised me that medical expenses need to reside solely on my personal return and are not business expenses. Who’s right?

By Lenora Chu, CNNMoney.com contributing writer

The second accountant is closer to the mark. For the most part, you'll need to treat medical costs as personal expenditures.

As a general rule, a business can only deduct expenses if they're “ordinary” and “necessary” for the operation of the business. Medical expenses for a member of an LLC are not considered “ordinary and necessary,” says Scottsdale, Az.-based tax accountant Phillip Wuollet of Johnson, Harris & Goff.

However, you still have options for cutting medical spending out of your tax bill.

You can deduct the premiums for your coverage using the "Self-Employed Health Insurance Deduction" on your personal return, according to Debbie Oster, director of tax compliance at Margolin, Winer & Evens, LLP in Garden City, N.Y. That will let you deduct 100% of the premiums paid for yourself, your spouse, and your dependents.

If the LLC pays for your coverage from its own coffers, it would need to classify that expenditure as a "guaranteed payment" to you. The business can deduct guaranteed payments as expenses, but then on your person return, those payments need to be included as income.

“If you pass it through as ‘guaranteed,’ you’re deducting it out of one pocket and adding it to another,” says Wuollet. “You’re just transferring money between accounts.”

If your insurance premium is passed through in that fashion, you can still deduct 100% of it off your personal return.

Co-pays and other incidental medical costs are considered your own expense — not the LLC's — and need to be included on your personal return. The IRS only lets you deduct medical bills, though, when they get extremely high: more than 7.5% of your AGI (adjusted gross income).

To get more tax protection, you could set up an HSA (health savings account), as you mentioned. Another relatively new option is a "section 105" health reimbursement plan. Under that arrangement, you contribute a fixed amount for each employee to an account that they can tap to pay for medical expenses.

Contributions to these accounts are tax-deductible for the company, and when the worker accesses the funds, those reimbursements are not considered taxable income, Wuollet says.

Give us your advice: Check out recent “Ask & Answer” questions.

Starting a biz: What you can write off

Will an HSA save you money?

Not sure if you’re underpaying or overpaying? Third-party salary surveys can help.

Thomas, San Francisco
I have a video production company with five full-time editors. I'm always stressed thinking I'm either overpaying them and I'm going to go broke, or underpaying them and am going to lose them and/or they're going to get resentful. Because of this, I realize I manage them nervously, which is not good management. How does one determine pay parity? I would like to pay them fairly so I can stop worrying and pay and manage them with confidence.

By Rose Fox, CNNMoney.com contributing writer
There are plenty of resources out there for both workers and employers who want to make sure that staffers are getting paid neither more nor less than they're worth.

To start with, look at free sites like Salary.com, PayScale.com, and CareerBuilder's CBSalary.com. You can also check the Bureau of Labor Statistics site at bls.gov. For more in-depth data, consider purchasing reports from survey companies that do research in your field. Salary surveys exist for almost every industry. Amy Kaminski, manager of marketing programs for Compdata Surveys, suggests sticking with surveys that get their data from employers: "This will help ensure the accuracy and reliability of the results."

Look for data that's applicable to the type of business you run as well as the type of employee you want. Ted Turnasella of WageLINK.net offers three helpful rules of thumb:

1) Make sure that the job being reported is a match for the job at your company. A good rule of thumb is for the job summary in the survey to represent at least 75% of the duties being performed by employees in the company.

2) Look at the effective date of the data and adjust it for the passage of time. For example, for data that is several months or years old, factor in an annual wage inflation rate of 3%.

3) If the data you are using is national data, it will need to be adjusted to your local market. Salaries in New York City are much higher than those in Brownsville, Texas.

Once you have all that information, consider how it applies to your company, factoring in regional and personal differences that may not be reflected in the numbers. "If a good editor is difficult to find, you may need to pay above market in order to keep these key employees," Kaminski says. "On the other hand, if you offer valued benefits such as flexible hours or above-average health insurance, you may be able to pay at or below market while still keeping your employees happy."

Jennifer Grasz, a CareerBuilder spokeswoman, agrees that soft benefits can matter as much as cash. "Companies are looking beyond salary and incorporating more flexibility into their packages to stay competitive in their recruitment efforts,” she says. “For example, we see more companies offering telecommuting opportunities, compressed workweeks and other alternative work arrangements."

Finally, if it becomes clear that a current employee's salary needs to be renegotiated, don't be shy about showing them the numbers that helped you to reach that decision. "Salary market data moves any pay discussion onto a less confrontational footing," says Dr. Al Lee, director of quantitative analysis for PayScale.com. "Yes, your employees may still look for work elsewhere, but it won't be higher pay that draws them away."

Give us your advice: Check out recent “Ask & Answer” questions.

How to keep laid-off workers honest

Fair pay for you and your partners

What to pay the boss's bosses

Experts reveal the best ways to keep company information in the building when the employees exit.

Tom Goll, Owner, U.S. Diversified Tech, Nashua, N.H.
We always hear about what employees should do to prepare for layoffs. But what should employers do to ensure that company data, contacts and customer lists don't walk out the door with terminated employees?

By Adriana Gardella, Fortune Small Business senior editor
You can take several steps to prevent or deter misappropriation and to bolster your legal position should you find yourself embroiled in litigation, says labor and employment lawyer Chris Arbery of Hunton & Williams in Atlanta. Arbery advises employers to implement a clear policy on confidential information, specifying that all business data, media, equipment and networks are company property. Let your employees know that any unauthorized use or disclosure of company information will be taken seriously. And be sure they sign confidentiality agreements to safeguard your trade secrets and other potentially sensitive data such as customer lists.

You may also wish to consider incorporating a noncompete agreement into your employees' severance packages, says Elizabeth Milito, a lawyer with the National Federation of Independent Business in Washington, D.C. Such an agreement, which must comply with state law and be reasonable in geography and scope, will prevent your former employees from working for your competitors or striking out on their own.

Because these measures may not dissuade the most determined sneak, Arbery also counsels, "Work with a network-systems specialist to secure electronic files to prevent – or at least trace – unauthorized downloads to flash drives and the like."

This column provides general information only and is not intended to replace the services or legal advice of an attorney. Always consult a lawyer regarding any specific legal concerns, as laws vary from state to state.

Give us your advice: Check out recent “Ask & Answer” questions.

Related links:

Fair pay for your and your partners

To fire or not to fire – the ethics of a layoff

'I signed a noncompete – but now I want a new job'

How much should you pay your company directors? First, take a hard look at what skills they'll need to guide your business.

Paul Dzera, MGBD, New York City
What would you recommend for determining board of directors' fee levels (annual retainer, board meeting fees, committee meeting fees, etc.), both in cash and stock options? I have a small public company with revenues of about $30 million. To date, I have reviewed the Director Compensation Report available through the National Association of Corporate Directors, but their "smaller" company information is for companies with revenues ranging from $50 million to $500 million.

By Emily Maltby, CNNMoney.com staff writer

Before you think about compensation, consider what skill sets you need represented in your board members.

"Twenty years ago, it was all the CEO's friends. So the qualifiers were, 'What's your golf handicap and how fast will you nod when I propose something?'" says Suzanne Hopgood, director of Board Advisory Services of the National Association of Corporate Directors (NACD). "This meltdown in particular has focused people on skill level. That will help define compensation. If you do rocket-science stuff, then you need highly educated, specialized people."

Also think about what you'll be expecting from your board. Startups that still require a lot of heavy lifting should pay their directors more than companies that are already chugging along at a steady pace.

One way to think about both skills and compensation is to imagine the board as a team of outside advisors, recommends Tom Juenemann, executive director of the Institute for Family Owned Business in Portland, Maine, which will be holding a conference in June on this topic.

"What would a good consultant cost you?" he says. "The answer will vary by industry and experience."

As you read this, board fees are in a state of flux. As the recession drags on, businesses are reducing the pay of senior executives and board members to keep costs down.

Taking this into account, Juenemann believes a good ballpark figure for a private business with about $30 million in revenues is $10,000 to $15,000 per board member, per year. Part of that should be paid as a base retainer, with the rest made up of attendance fees paid only when the board member turns up at board and committee meetings.

Another way to get sense of what you should be paying is to look at your competitors, suggests Hopgood. "Pick five public companies that are in your competitive range, go to public filings and see what they're paying," she says. "Then pick five that are in your revenue range, regardless of industry, and compare data points."

CEO salary is another commonly used benchmark. Juenemann says you can take your CEO's salary, divide it by the number of working days in the year, and come up with a reference point for a daily salary that you can pay your board chairman for each day that the board is working. Other board members typically command a salary about 80% of the chairman's.

Public companies like yours have other considerations: Do you want to pay part of your directors' compensation in stock or options? Fifty percent of public companies do so, Juenemann says; the rest pay only in cash.

As you figure all this into the equation, keep in mind that the economy right now has lots of supply and slow demand for seasoned business executives.

"Right now, people are looking to get board seats. Plus, there are more who are interested in smaller businesses than larger ones. The result is that you don't need to pay premium dollars," says Juenemann.

However, in this environment, it's imperative that you do extra vetting to ensure that your board members are skilled executives who are genuinely interested in helping your company succeed. You don't want a board member who is only in it for the salary.

If you need help finding candidates, try contacting NACD. They maintain a director registry that can help match qualified people with your needs.

Give us your advice: Check out recent “Ask & Answer” questions.

Free advice? Priceless

How to ditch bad business partners

'Should I hire a business coach?'

If your company is stalled, a coach could be the catalyst you need.

Darrin Lugash, Houston
I have a business in theory, but haven’t seen any action in it. I’m working full-time in my former trade while I wait for my business to take off. I'm not sure where to get help – when is it time to hire a business coach? What should I look for in a coach, and what should my expectations be of him or her?

By Lenora Chu, CNNMoney.com contributor
A business coach can be helpful when your company is in transition, you’re in financial trouble, or you’re facing a critical decision such as whether to add employees.

“When things are going steady you don’t typically need a coach,” says Vancouver, Wash.-based small business consultant Doug Williams.

Finding the right coach is important, especially since the marketplace is saturated with people advertising business coaching services. Start the hunt by creating a list of 10 or so prospects, suggests Rick Lugash, Southern California regional owner of the small business growth services company OneCoach. Some things to consider include how many current clients a coach has, any association membership or certifications, and verifiable success stories.

Make sure your prospects have proven track records in the specific area you need help with. For example, if you need help starting up a business, find a coach with a history of guiding successful startups.

Start by interviewing the top candidates on your list. Be sure to get the names of past clients, and contact them as references.

“You want to go through the same process to hire your business coach as you would use to hire the pediatrician to treat your children,” says Lugash.

And find someone who’s good at training and teaching. “You don’t want someone who will do the work for you,” Williams says.

Most coaches will charge from $150 to $500 an hour, says Williams, and a good one will grant you a complimentary initial consultation.

Don’t choose a coach based on price alone. Sometimes the inexpensive coaches are people who are “in between jobs,” says Williams. “They’re not going to help you.”

“Treat your coach as part of the startup investment,” Lugash recommends.

And although chemistry is important, don’t automatically eliminate a prospect because their style doesn’t match yours. Think had about why you're clashing.

“A good coach will take you out of your comfort zone into uncomfortable waters,” says Lugash. “That resistance might be the place you need to go.”

When you’re finally ready to sign on the dotted line, establish clear milestones by which to measure progress, such as “how many, and by when?” Lugash says. “Put them into the agreement.” Like a business owner, a coach has to deliver a clear payoff if they want their clients to keep coming back.

Give us your advice: Check out recent “Ask & Answer” questions.

Some sales aren't worth winning. If parts of your company are successful and others aren't, it's time to purge.

Sharron Stankiewicz, Ohio
I own three hearing aid businesses, all listed under the same corporate name but located in different areas. Two of them are going bust. Can I get out of my lease and still keep the one successful business running? What could the landlord do if I simply walked away from those leases where the businesses are failing?

By Kathleen Ryan O’Connor, CNNMoney.com contributor
Some times you have to cut off ailing branches to save the rest of the tree. The trick is to do it without killing everything.

If you simply cannot continue with a commercial lease, the first step is to dust off the paperwork you signed when taking the property, read the fine print, and hope you were farsighted enough to negotiate an “out” in case of business failure.

If you didn't, your next step is to talk to your landlord. In a down economy the landlord might be prefer to live with less rent instead of an empty storefront – and that might buy you time to reorganize and renegotiate with other creditors.

If cheaper rent won’t save the business, walking away has its own issues.

The landlord has the right to try to recoup the money outlined in the lease with one caveat: they do have to make an effort to mitigate the loss, such as trying to find a new tenant. But if they find one and the new tenant can’t pay your full rent, you could get stuck owing the difference.

Alternatives to walking away include asking to buy out the rest of the lease with one discounted lump sum, or simply declaring bankruptcy and forcing the landlord to stand in line with everyone else you owe money to.

Say the landlord goes after the money. Your personal assets might be safe, but that’s assuming there was no personal indemnification clause in the contract and that your company is “actually a legal corporation where protections have been maintained and remain unbreeched,” says Deena Burgess, a New York City lawyer specializing in small and online businesses.

That said, the assets of the business – and that includes your remaining, healthy location – are fair game for the landlord and other creditors.

“Failure to separate the companies means that they would be treated as a single entity, and that the creditor [or landlord] could chase the assets of any and all of the businesses that comprise that corporation,” Burgess says.

If you need to start triaging, what first?

Edward Stevenson, a corporate partner in the Newark office of the law firm Herrick Feinstein LLP, suggests the following:

— Minimize or restructure the debts of the two unhealthy stores by negotiating with creditors.

“The first thing is to contact and meet with each creditor of the different stores in an attempt to work out a payment plan or a reduction of the liabilities so the two unhealthy stores can operate at break-even, or possibly at a profit,” Stevenson says.

— If you are unable to negotiate a resolution with the creditors, file for Chapter 11 protection. You would have to include all three stores, even the healthy one, in such a filing, but it might allow you to re-emerge with a leaner, more profitable operation. “It doesn’t have to be the death knell for the business,” he says.

— Test the market to see if a sale of any or all of the stores is feasible.

If you do emerge in a stronger position, be sure not to make the same mistake twice. Have a lawyer review your corporate structure, Stevenson advises. Maintaining each store as a separate legal entity can save a lot of headaches down the road.

Keith Gerson, president and COO of Tamarac, Fla.-based PuroClean, has first-hand experience with moving a company with different operations into a more streamlined and profitable model.

PuroClean began as PureSystems Inc., a jack-of-all-trades company that dealt with property damage mitigation, restoration and reconstruction. The model was successful, but after the depressed construction industry of the early 1990s rebounded and the contractors PureSystems worked with “went back to their first loves,” Gerson says, the reconstruction part suffered.

Although the overall model was strong – the company added 82 franchises between 1991 and 2000 – its managers had to take a tough look at their business and admit that certain aspects weren't working.

One franchisee was doing nearly a million dollars worth of sales per year but was still losing money. Which led to PureSystems' big revelation: “Not all business won is worth keeping," Gerson says. "Sometimes you want to concede that to the competition. That work might just be tying up your bandwidth.”

From that epiphany came the tough choices. "We went ahead to move into a brand called PuroClean [and] tailored it to focus on the mitigation work,” Gerson says. “The margins were significantly improved.”

In 2001, the company franchised the first PuroClean. The change paid off: It's since expanded to 263 locations, three times the growth it had in the '90s.

“You need to obviously understand your business and your margins or get someone who will help you,” Gerson says. “The rest will take care of itself.”

Give us your advice: Check out recent “Ask & Answer” questions.

Related links:

My landlord wants rent on a broken lease!

When the lease outlives the business

If you need to cut costs, here's some tips on how to break the bad news to the staff.

Richard Ryan, Barberitos Southwestern Grille and Cantina, Charleston
I own a small restaurant that grosses around half a million a year. I am going into my third year and I currently employ six people. Most of them live off this job. I am holding a meeting today to explain why everybody will have their hours cut in half. Any advice on how to do this without losing the good performance and enthusiasm of the staff?

By Emily Maltby, CNNMoney.com writer

Many business owners today are finding themselves in the same position: The down economy forces them to make tough cost-cutting decisions, which may entail layoffs, pay cuts and reduced hours. These actions, while often essential to the bottom line, can make employees nervous, discouraged and sometimes depressed.

Because you don't want those negative feelings broadcast to your customers, you should prepare yourself well before diving into the meeting.

The first thing you need to evaluate is whether axing hours is actually the best course of action. Ask yourself whether eliminating jobs, for example, might be a better choice for your business and the employees, advises Bonnie Bernie, director of service operations at HR outsourcing firm Administaff.

"You have to look at all the options because you need to feel confident that you are making the right decision," she says. "Confidence is key when you are delivering negative news."

Keep in mind that employees probably see the writing on the wall. They know the economy is bad, and if they are seeing fewer customers, they can easily put two and two together. So make sure you give them credit for that by being open and honest.

"Acknowledge what they already know. You don't have to go deep into the company's financials, but you have to convey that you are in survival mode, that the downturn is impacting the business. Maybe that means stating that revenues are down a certain percent," Bernie says. "Convey that changes have to be made in order for the restaurant to remain open."

"You also have to send a message of hope," says Kevie Mikus, vice president of client services at The HR Group, another HR outsourcing firm. "Let them know that this was a difficult decision, and recognize that it will impact people's lives. But also stress that, because of these measures, you don't anticipate having to close the doors. If you believe this to be a temporary solution, then send them that message. If you can spell out the expected duration, then paint them a clear picture of what this will ultimately mean for the business when it's over."

Both Mikus and Bernie stress that leaders need to emphasize to the staff that everyone is in this together. Help them stay motivated by getting them involved in rebuilding the business.

"Ask for recommendations on cost containment and increasing sales," Bernie says. "Also consider cross-training them so that they can boost their skills."

Chances are that you know which employees are going to feel the impact of this decision the most – some may be struggling with bills, or with having other family members out of work. But don't make special concessions for them.

"You need to ask employees to step up their game, and if you are treating some people differently, others will hear about it," Bernie says. "That will take the focus off their own productivity."

One way to soften the bad news is to evaluate any other incentives that you may be able to offer to the employees. "Any little measure you can afford, like free meals, for example, could help to offset the blow," Mikus says.

As with any situation where you are dealing with people's livelihood, communication is essential. So make sure that following the meeting you are available and accessible.

Bernie recommends using this as an opportunity to hone your leadership skills. For example, keep the employees informed of the restaurant's progress so that they're not left making assumptions. Also, be sure to roll up your sleeves and show them that you, too, are stepping up your game.

If employees come to you with problems stemming from the new arrangement, do some research for them.

"Depending on where you are and on the employee's salary level, they may be eligible for benefits through a workforce commission. Give them some tools to work with if they need additional employment," Bernie says. "And when possible, be flexible if they have to take on another job."

Give us your advice: Check out recent “Ask & Answer” questions.

Related links:

Creating structure in a family business

Are layoffs my only cost-cutting option?

To fire or not to fire – the ethics of the layoff

Some clients aren't worth the headaches. Advance vetting and precautions can spare you the pain.

Chris Walker, Phoenix

I started a concierge service on a tight budget. I am not looking to conquer the world in a day. I would like to attract the "right" customer and grow the business within my means. What would be the best methods to find that "right" customer?

By Kathleen Ryan O'Connor, CNNMoney.com contributor

For an entrepreneur just starting out, it's tempting to taken on any client willing to promise cold, hard cash in exchange for your services. But the seasoned small business owners we spoke with all say the same thing: Do all the due diligence you feel is necessary for your particular business – credit checks, background checks, reference requests – but never forget the most important check of all, your instincts.

"Twice during the past year, I've signed clients about whom I felt uneasy," says Steve Winston, who runs a marketing and communications firm in South Florida. "And both times, I should have listened to my gut feeling."

One client was unable to communicate what he wanted from a marketing campaign and frequently left Winston waiting for an hour or more at appointments. "Yet, because of fears of about the economy, I took them on," Winston says. In the end, they parted ways.

The client never paid for the initial work completed. "I wrote it off as bad debt and lessons learned," Winston says.

If you want to formally vet potential clients, you have a few options. A Google search is an easy first step for finding out more about an individual or a business. If your potential client is a company, you can go to the Better Business Bureau's Web site and check to see if complaints have been filed against the company, and if so, how they've been resolved. A Dun & Bradstreet background check is commonly deployed for vetting. The most extensive report will give you a complete snapshot of the business: who owns it, how long they've been in operation, how often they pay late, details on any court judgments or liens, and even a recommendation about how much credit to extend.

You can also ask for references and check them by calling others with whom your potential client does business. What's been their experience? Did they get paid on time?

Consider joining a trade group to swap ideas and advice with fellow concierges working outside your geographic area – i.e., those who aren't direct competitors. The National Concierge Association is a good starting point for your industry.

And because the best defense is a good offense, it's critical to have a contract that spells out all the details. Unless you've comfortable drafting one yourself, it's worth paying an attorney to help you create a basic template contract you can use on all of your future engagements.

One excellent and often overlooked way to guard against deadbeat clients is to require that at least a portion of your fee be paid up-front.

"'Will they pay me, and will they pay me on time?'" are the key questions every business owner needs to ask about potential customers, says Dave Richards, who has run niche marketing firm Resort & Golf since 1990 in Bloomfield Hills, Mich.

"It sounds simple, but so important, especially now," he says. "I'd rather have one client that pays than three that don't."

Before accepting a new client, Richards calls his contacts within the business and checks with the potential client's suppliers. For a golf course, he'll go all the way to the company that sells them fertilizer or mows their grass to find out how timely the company is with its bill payments.

You're in a business where you'll have to spend a lot of time catering to a client's needs and wants, so it's essential to make sure you're personally comfortable with potential customers. All the legal vetting and paperwork in the world won't be as valuable as your initial impressions.

"Intuition is a real big part of this," says Ellen Delap, a Houston-based professional organizer.

Pay attention to the client's motivation, and whether it fits your business goals. Are they looking for the cheapest service, or are they looking for the best?

"We are always leery of working with a prospect whose sole motivation is saving money, because if they buy on price then they will leave you on price," says Lauren Brenner, president of the HR division of HCR Group, an HR and benefits consulting firm in Waltham, Mass. "We are looking to build an on-going relationship with our clients."

One final bit of advice: "Don't be desperate," says marketing specialist Winston. "You cannot be desperate, recession or not. Those kinds of clients pay you the least money and give you the most headaches."

Give us your advice: Check out recent “Ask & Answer” questions.

Related links:

Help! My client won't pay!

How to handle bounced checks

How to avoid deadbeat clients

How to get capital when you are your partner disagree on the risks.

C. Miranda, Urban Revitalizers, Boston

I am a partner in a small, certified minority business, and have been managing it for the past 10 years. My firm has just won a statewide contract to conduct assessments of real estate throughout the state. It is our first large contract, and it requires some start-up capital. I have applied for several business loans to carry us through until our first pay-down. The problem is that my business partner of 10 years is not willing to sign, saying that she wants to be able to continue to pay the bills if everything fails. I have used all of my credit cards to get us part of the way there, but still need more capital. My credit score is high. Can someone tell me how I can get over this hurdle?

By Emily Maltby, CNNMoney.com writer

You've got two things that many businesses are wishing they had right now: An ironclad government contract and loan options.

"In a way, that makes this a no-brainer," says small business coach Marian Banker of Prime Strategies. "I think you'd benefit from a discussion about your visions and goals for the company, because you and your partner may not be on the same page."

While business partners' personal goals for what they want to get out of the business can differ, your aims for the business itself should be the same. "If you can identify where the disconnects are in your mindsets about the business – which is probably where the problem lies – the rest of your issues will be solvable," Baker says.

When you sit down with your partner, talk about measurable goals. Your partner may think that the business can't afford certain risks , while you think that it can. Or you may have different ideas about what counts as a "calculated" risk, Banker says. Ask your partner what her growth plan is for the business, as an alternative to this contract. If she has a good idea, make sure you're open enough to entertain it.

But let's face it. Partnership issues aren't always that civil. You will each make put forward your best case, but sometimes disputes can't be resolved through negotiation.

There are some remaining options that might satisfy you both. The first is for you to ask your bank for a short-term loan without her signature.

"For the bank to consider that appeal, you would have to produce the signed contract, plus a separate business plan for just that project, which includes the projections of revenues and income after expenses that would be generated from the project," says Porus Sagar, an Orlando accountant and current SCORE counselor. "The underwriting standards of the bank will determine whether her signature is necessary, and you might be able to negotiate the extent of your liability with the bank."

There is a strong chance that the bank won't accept this option. If you both own exactly equal stakes in the company, the bank will usually want both of you to sign for the loan. One option is for your partner to give up a percentage of her ownership and give you the majority stake in the business. That will both compensate you for the additional risk you're assuming, and give the bank one managing partner to work with.

Sagar and Banker say that giving up ownership can be a sticky situation – emotions can hinder progress. Sagar has seen many partnerships dissolve in ownership disputes. He suggests asking an objective, independent attorney to help adjust the capital ratios.

"The lawyer will also help decide if the ownership arrangement is best as a permanent change or just for this project," says Sagar. "To create less friction, you could opt to take on additional liability for the moment; then when the job is complete, you could keep all the profits from it but rework the capital interest back to her. Take advantage of different levels of compromise that may be available."

Give us your advice: Check out recent “Ask & Answer” questions.

Related links:

How to ditch bad business partners

Divorcing your business partner

What's a fair split when partnering up?

When an entrepreneur dies, loved ones are forced to make tough decisions.

Ann Gaspar, Fairview Park, Ohio
I recently inherited a small computer servicing business due to my husband’s passing. I am looking for reading material on learning/managing an established business and can’t find any titles. Can you recommend anything that will help me step into this role and excel in it? I am a registered nurse, so the business world is new to me. There are six employees that have kept the business going fairly well in the year of my husband’s illness, so I’m not on my own entirely.

By Kathleen Ryan O'Connor, CNNMoney.com contributing writer

Even with the best of planning, it's devastating when the owner of a family business suddenly dies. The employees wonder if the shop will close, new managers have to be quickly trained, and the bills never stop coming. And, of course, there’s grieving.

Josephine Geraci barely got to enjoy being a newlywed before she was thrown into the chaos of a medical crisis. In 1996, she married Jerry Cantwell, her longtime boyfriend and the man with whom she had built a thriving, boutique Wall Street analysis firm. But less than a week after they returned from their Caribbean honeymoon, Jerry inexplicably forgot her nephew’s name. Then, a week after that, “the doctor is telling me he has two months to live.”

Cantwell died the next year of a brain tumor. He was 52.

Geraci found herself tossed headlong into two desperate and disparate worlds: grieving spouse and surviving business partner. She discovered is there is no guidebook for either.

Prior planning can help with many problems. Business owners should work out and discuss with other managers a Plan B for what happens if the main proprietor is unable to carry out their duties. Who will run the business? How will cash flow be managed? How will estate tax liabilities be minimized? Who in the family is prepared to take over – and if no one is, how will the transition to outside control be handled?

Brian Raftery, a lawyer with the New York firm Herrick, Feinstein LLP who specializes in succession planning, says it’s easy for small business owners to get so consumed with growing their business that they put off making plans for the long-term future. But without a plan, things can go south quickly – particularly if there isn’t a will. Without one, the state gets to decide who gets what chunks of the business.

In New York for example, the surviving spouse doesn’t automatically inherit the entire business. If there are children, half goes them – and if they're minors, they will need a court-appointed guardian.

But plenty of business don't have contingency plans, leaving the survivors to sort it out from scratch.

There is no reason why a spouse, even if they have never been that deeply involved in the business before, can’t make a go of it if they desire. Sometimes that fresh perspective can be a welcome change, says Charles Matthews, professor and executive director of the Center for Entrepreneurship Education & Research at the University of Cincinnati's College of Business.

You have two main sets of issues to resolve: ownership succession and management succession.

“She could easily take over as owner and not take over as operator,” Matthews says. That's the ideal role for someone who isn’t interested in day-to-day management but who still wants to keep the company in the family.

Other options include selling the business outright to a third-party, selling it over a period of time to one or more employees, or retaining ownership and formalizing a management structure.

While books on managing change can be helpful – Amazon.com has a lengthy list of business self-help bestsellers – gaining the advice of a seasoned business professional is probably going to be more useful in the long run. The Small Business Administration's SCORE centers offer free counseling. The closest one to you appears to be in Cleveland.

One option worth considering to help you get through the first few months: You could hire an interim CEO.

Mark Rittmantic, founder of the Northbrook, Ill.-based temporary CEO firm ForteCEO, says the most common reason owners seek out his business is that their company grows to the point where it requires leadership skills the current managers lack. But a sudden death is also high on the list: “Number two is 'there is no succession plan,'” he says.

In too many cases, the business begins to fall apart and is sold in a distress sale, giving the owner or his or her family a less-than-optimal price. Rittmantic recalled one charismatic woman who built a collections business up from scratch, eventually employing more than 100 workers. She was the driving force behind the business and was quite generous, supporting three generations when she died of ovarian cancer, he says. After her death, “that company went out of business in six months.”

So who is in the best position to step forward in the short term? Our experts agree it’s probably not the surviving spouse. A trusted lawyer, accountant or family friend – even someone with very little business experience – can be invaluable.

“Choose someone who knows what they don’t know,” Raftery says. “If they think they know all about investing and financing but lost their shirt over the past 10 years, they can be more dangerous than someone who recognizes they don’t know everything and will ask the expert.”

Looking back, Geraci, now 43 and living on Long Island, says trying to keep running the business was too much for one person to handle on their own, emotionally or professionally.

“I should have had someone watching over me,” she says. “You are not thinking straight. You don’t care about money.”

She ultimately decided to shut down Lionheart Research, one of the industry's first niche firms specializing in aerospace and defense equity research. “I kept the clients in the loop,” she says, so that when her husband’s health worsened they had an idea they were “at that point.”

Still, she says, “Everything hit all at once. I was forced to make many of the big decisions right away.”

Kelly Trieglaff of Fort Wayne, Ind. decided to forge ahead with her husband’s dream of running his own business after his death last year. She discovered along the way that even someone with very little experience running asmall business can succeed – albeit with a lot of help.

Kelly Trieglaff and her family

Kelly's husband Mike was in the restaurant business, but had always dreamed about doing something entrepreneurial built around their family’s passion for baseball. In 2006, they jumped at the chance to buy an Extra Innings training center franchise. The couple was just getting their new business off the ground when Mike received the dire diagnosis of stage-four bladder cancer.

Despite her grief, a new role as single mother to three boys and a full-time job she still holds at a biotech company, Trieglaff says she felt a huge responsibility to honor her husband’s dream.

“There was no question we were going to continue with the business,” she says. But the reality of running a new business still very much in the red was daunting, to say the least. “That’s when I started to think, I don’t know what I’m going to do.

“I contacted an attorney, worked with a CPA, and asked ‘What is the right thing to do?’ It’s a seasonal business, and summer and fall is tough,” she says. “I was going through the whole grieving process and couldn’t really focus on anything … the CPA and the lawyer, they were honestly advising me to close.”

She brought in a friend of the family as a partner. With the help of everyone from the landlord to the franchise company, Extra Innings is now supporting itself. Even with her degree in nursing, Trieglaff found she could draw enough from her experience in pharmaceutical sales to get her through.

“I’m very bossy,” she laughs, “so that was not a problem for me.”

Josephine Geraci remarried and became a mother of three, which prompted a return to the world of entrepreneurship. She founded My Mom Knows Best, a company that manufactures disposable hand covers for kids to use in germ-filled public places.

She doesn’t regret selling the Wall Street business. What helped her the most, she says, is funneling a lot of her grief in those early days into raising money for brain-tumor research.

“I just took that grief and that real deep sadness that I felt and said, ‘I just have to help one person.’ That’s how I got through my days,” she says. “I didn’t want my husband to die unnoticed.”

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Planning ahead is your best bet for a successful resolution if a business deal turns toxic.

Amy, Wheeling, W.V.
I formed an LLC with two other partners. They are a couple. One owns 33%, the other 34% and I own 33%. We do not have any legal documents drawn up. I want to take the business and get them out. One partner does nothing and still works a full-time job and the other is a control freak making poor choices. This is a new venture, and they funded it with credit cards. The debt is small and I can easily take it over financially, but they will not sell the business to me. The response has been fantastic, and I want to have the business before they ruin it. Do I have any options at all?

By Kathleen Ryan O'Connor, CNNMoney.com contributing writer

Starting a business with partners is a lot like embarking on a marriage. Attending to details like what happens if it all falls apart can seem silly and unromantic. After all, you’re in love. What could possibly go wrong?

But as any seasoned business owner can tell you, things go wrong all the time. The most successful entrepreneurs always plan for the worst from the very beginning.

The first mistake came when you started the business without a detailed and written-down operating framework.

“This was just not smart,” says Francie Dalton, founder of a Columbia, Md.-based consulting firm that specializes in communication, management and behavioral sciences. Dalton is also the author of Versatility: How to Optimize Interactions When 7 Workplace Behaviors Are at Their Worst.

The time to have hashed this all out was when the limited liability corporation was first formed, she says. An LLC operating agreement should spell out all the rights and responsibilities of the partnership, from profit distribution to exactly how a partner can exit.

Drafting such an agreement doesn’t have to cost a mint, Dalton says. Boilerplate legal language covers many of the details.

But since this didn’t happen in your case, you now have two choices: Stick it out and draw up a solid agreement with the help of a lawyer, or get out.

“If she wants to stay, she needs to get a little bit of humility,” Dalton says. If you want your partners to work with you on drafting bylaws for your company, you’ll need to offer them something they want in return.

“Start or stop doing something that to make [the other partners] happy," Dalton advises. "Once she has given those things, then she can request what she wants them to start and stop.”

If communication has become truly toxic, calling in a professional facilitator to manage the conversation might be money well spent.

Danielle Luffey, a marketing and public relations consultant in Minneapolis, founded DVA Brand Communications after a failed partnership – like you, she didn’t insist on having the key details worked out in writing before she jumped in.

Looking back, Luffey wishes she and her partner had consulted a facilitator. The two had been longtime friends, which added another layer of difficulty when tensions arose over responsibilities and expectations. They eventually went their separate ways, but not before they had to work out some fairly painful details, like how clients would be divided and who got to keep the domain name and logo.

“I really felt like we were going through a divorce,” Luffey says. And without a legal safety net set up in advance, there was little a lawyer could do at that point. "The attorneys said at the time, ‘Since you don’t have any paperwork, it’s sort of up to you.’"

It's also very easy in the first blush of a new business venture to forget some basic rules of human dynamics. The fact the other two partners are a couple should have been a red flag to consider, Dalton says: "They are motivated to be a unified front."

Say you decide to cut your losses and move on. Now what?

They may not be willing to sell the business to you, but will they agree to buy you out? As Dalton put: “’Hey guys, here’s my number and I’m out of your hair.’”

If not, it might be worth it to leave your chips on the table and walk away. There's at least one upside of having no operating paperwork: There is likely nothing in writing that says you can't turn around tomorrow and start your own rival business doing the exact same thing.

“This kind of thing can eat you up inside,” Dalton says. “You have to decide if it’s worth it.”

This column provides general information only and is not intended to replace the services or legal advice of an attorney. Always consult a lawyer regarding any specific legal concerns, as laws vary from state to state.

Give us your advice: Check out recent “Ask & Answer” questions.

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A father-son company seeks advice on formalizing roles and building a sustainable structure for growth.

James, Miami, Fl.
I am part of a small family-owned drywall contracting company, with previous experience in estimating potential projects. My father is the other half of the company, as he has experience in field work. We have experienced some success already, but I'm looking to create structure in our company and lack the experience to do so. What are the steps that I need to take to create clear-cut roles that I should follow? Do my dad and I need to assign responsibilities that we each stick to?

By Emily Maltby, CNNMoney.com staff writer
Defining roles is always difficult, and is even more challenging when the other party is a family member. Your general goal should be to establish clear spheres of responsibility – and then stay out of each other's area of expertise.

Gary Naumann, lecturer in entrepreneurship at the Carey School of Business Arizona State University, recommends sorting the critical tasks of the company into functional areas, such as operations, sales, office administration, finance and accounting. Then decide which of you is best suited to overseeing each area.

He suggests dividing and conquering so that you don't double-dip on every little issue. "In a small but growing business, there is no time for you to confer with each other about all the details of your respective areas of responsibility," he says. "My experience is that most of what each of you does in those areas should be done independently, thereby reserving the discussion time for those critical issues that require consultation."

This will become even more essential as you add employees – those who work for you will want to know what is going on and who to consult about various tasks. One tactic Naumann suggests is a "Who Does What" outline that you can hand out to your associates.

"This should not be limited to just the two of you," he says. "Rather, it should encompass all the key areas of your company so you are able to comfortably delegate certain tasks and everyone in the company knows who the 'go to' person is." This will also help you and your father concentrate on your key tasks.

Of course, with the division of responsibilities will come the challenge of remuneration. Formalizing pay arrangements is a key part of creating an official business structure.

"Compensation of family members is much less likely to be based on any objective criteria," says Allen Fishman, author of 9 Elements of Family Business Success. "The sooner the family business leader takes control of creating objective standards for dealing with compensation issues, the more likely it is the businesses will survive and flourish into succeeding generations of leadership."

Fishman recommends putting your policy into writing. "A clearly stated compensation policy often prevents conflict and is the best way to break through the emotional barriers that commonly come into play when discussing compensation," he says in his book. "It would be best if the family business developed its employee compensation policies to approximate the industry levels to some degree. It's not at all uncommon for family businesses to employ family members for more than the going rate."

If your company doesn't pay salaries and instead splits profits, compensation is generally based on ownership stakes. "From a tax standpoint, you can't start a business without a document that shows ownership," Fishman says. "If, for instance, one person runs a warehouse while another runs office operations, the payouts may be the same if they each own 50% of the company – even though their skill sets have different market value."

Fishman warns that in a very small business, such as a father-son operation, the issue of formalizing ownership stakes often isn't discussed unless there is a problem – when it's too late.

"Don't wait for a feeling of unfairness to arise before you sit down and talk," he recommends. "Documenting your visions for the company and how it should be run will help to ensure the company doesn't break apart in the future."

Health Savings Accounts are gaining popularity, but business owners need to take a close look to see if the low-cost, high-risk plans are right for their company.

Normand Savellano, Chino Hills, Calif.
I am president of my own company and my wife is vice-president. We pay ourselves a salary and get our health insurance through the corporation. Are we eligible for an HSA and for the corporation to contribute?

By Kathleen Ryan O’Connor, Fortune Small Business contributor
HSAs – or Health Savings Accounts – are a hot topic right now. Ever since President Bush launched a high-profile push to expand access to HSAs in 2006, an increasing number of consumers are choosing to spend their health care dollars on the IRA-like vehicle – to the tune of 6.1 million users, up 1.5 million from last year, according to the health insurance trade group America’s Health Insurance Plans.

But before jumping in headfirst, know that HSAs come with one very important eligibility criteria: You must first be enrolled in a high-deductible health plan, or HDHP, and not have coverage under any other health plan, including Medicare.

According to the Health Savings Account Resource Center a qualified HDHP is a health plan with a minimum annual deductible of $1,100 for an individual, $2,200 for a family. They recommend that an insurance carrier or licensed insurance professional verify that a plan qualifies for an HSA. You can get penalized for setting up HSAs without the appropriate insurance. The idea behind this combination is to strike that elusive balance between protecting against huge medical bills while still providing users with an incentive not to run to doctor with every sniffle or head cold.

But no two people are alike, so plenty of individual research is necessary before you decide to switch health plans. Some people balk at the fact that HDHPs feature higher annual deductibles than traditional health insurance. Small business owners also tend to like them because they can provide employees with health insurance at a lower cost.

The biggest lure with an HSA is that contributions to your HSA, within limits, are completely tax deductible, as are any withdrawals for qualified medical expenses. Plus, HSAs are fully portable, and the balance can roll over year-to-year up to a predetermined amount – a key difference between HSAs and FSAs (Flexible Spending Accounts). You won't face that year-end scramble to stock up on Tylenol to use up dollars that will otherwise disappear.

“You never lose it. It’s your account,” says Serena Yee, a St. Louis lawyer with Brian Cave LLP who specializes in employee benefit and retirement plans.

So what is the employer’s responsibility with HSAs? Very little, which is another thing that makes them attractive. Employers don’t have to contribute to their employees’ HSAs or even administer them. However, if you want to help your employees out, you're allowed to contribute up to the annual HSA funding limit. For 2008, that limit is $2,900 for individual coverage and $5,800 for a family. For 2009, it will be $3,000 for an individual, $5,950 for a family.

But there are some rules. Contributions among employees must be equitable – you can’t contribute $1,000 to one worker and a $1 to another – and if an employee leaves, your contribution walks out the door with them, even if they’ve only been there a short-time.

The National Health Policy Forum offers a great deal of information about HSAs. Other good information sources include Information Strategies, a media and marketing company that runs a Web site called HSA Finder, and the Small Business Guide to HSAs by JoAnn Mills Laing.

Consulting with a qualified tax professional is also a smart idea, since the tax implications for a corporation are going to be different than those for an individual or family.

Rob Wilson, president of Employco, a Chicago company that handles payroll and benefits for small businesses, says that while HSAs have been slow to catch on, companies continue to keep an eye on them. After all, an HSA is a radical departure from a more traditional health plan – and the full benefit isn’t necessarily felt right away, he says.

Typically, in the first year you are paying the higher deductible without accruing any significant balance on the account, so a consumer has to be committed for the long haul. With HSAs, the idea is, “The less I go [to the doctor], the less I spend,” Wilson says – which also might be a problem for some people.

“Part of it is education,” he says.

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Avery Wasoleck, Partner, Lane Office Furniture, New York City
When costs need to be cut, the first thought is often employee layoffs. Is there a more creative way for my business to achieve savings?

By Elise Reinemann, Fortune Small Business contributor
Layoffs, which can put a dent in company production and morale, are not as efficient as you may think. And the cost of severance packages and unemployment benefits can add up. So you're wise to pursue alternatives.

Steve Kane, managing director at Kane Partners in Hillsborough, Calif., suggests "spreading the pain." Instead of bidding your workers farewell, try cutting hours, the pay per hour, or compensation across the board. In fact, some employees may be okay with a reduced workweek that lets them temporarily trade money for time, says Pamela Brandes, associate professor of management at Syracuse University. They might welcome the chance to pursue other interests or care for children or elderly relatives. Brandes also advises rethinking your scheduling: Limit expensive overtime, ask employees to take extra, nonpaid vacation time, and don't fill vacant jobs.

Try to determine whether the dip is short or long term. Attracting a competent staff is expensive, Kane says. So if the problem is short term, it makes better sense to restructure temporarily rather than terminate employees permanently.

Layoffs can be especially trying for small businesses, notes Brandes, because they disrupt what are often close-knit networks of colleagues. Survivor employees tend to sympathize with departed co-workers and must struggle with increased workloads as they worry about their own job security. But if a layoff is inevitable, Brandes advises you to help your employees by putting the word out to business partners. A supplier or distributor might be looking for talented workers.
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Rising above higher commodity costs is challenging, but savvy owners can stay strong by adjusting to changing conditions.

Ahmad bin Saripan
I manage a food-processing business, and our sales are declining as costs and the price of raw materials escalate. How can I improve and grow the business?

By Herman Wong, Fortune Small Business contributor
Dear Ahmad: Making and selling a simple cookie isn’t as easy as it used to be. The rising costs of energy and ingredients challenge the recipe for success in the food industry – just as consumers cut back on their spending. Fighting against this inflationary tide takes smart cost-cutting.

“What you don’t want do is to start willy-nilly cutting costs. Be strategic about it,” says Bob Goldin, executive vice president of Technomic, a food industry consulting firm.

Fat to trim can come from the traditional places like headcount and company inefficiencies, but sourcing presents another good opportunity. Take a hard look at your production process. Can you replace any expensive ingredients with cheaper options that won’t affect the product? Outsource your manufacturing if possible and prudent, and do some research to see if you can find new suppliers with better prices. Also consider amending your contracts with suppliers: for example, offer to extend the contract length in exchange for lower prices.

But a business can’t cut its way to prosperity. It must also enhance revenue. Goldin suggests optimizing the price you charge (possibly by passing higher costs along to consumers) while also attempting to increase sales volume. Promotional activities can be a good investment: A sales slump can be a catalyst for more effective marketing.

Seek out new niches or channels to pump up sales. For a retailer, this could mean looking into specialty food stores or food services. Companies dealing in fresh foods could research expanding into the frozen arena. “You really have to explore the gamut,” Goldin says.

Looking deeper

Reacting to price increases may only be addressing surface symptoms, however, says Eric Flamholtz, professor of management at UCLA's Anderson School of Management.

“It’s not just the question of 'Costs are going up, how do I handle this? Do I negotiate a little better?' That’s only going to be a transactional perspective, as opposed to a management perspective,” Flamholtz says.

He suggests looking at the big picture – the current environment, your competition and industry trends – and then figuring out something unique about your business to build on. For example, Bell Carter Olive Company became a dominant player in the black olive industry by focusing on being a low-cost producer, which required a reassessment of both its business operations and its raw material purchases.

Once you've decided on a course, evaluate all aspects of your operations and determine how well they meet your company goals. That means taking a hard look at your market position, the services you offer, your operational and management systems, and even your company culture.

“What he really has to do is to step back from the immediate problem, take a more fundamental look at his business, and do a strategic assessment,” Flamholtz says.

Adjusting your business model

Judith Moore of Charleston Cookie Company has been battling cost increases all year. Her five-year old South Carolina company, which does around $1 million in annual sales, has seen the price of a 50-pound sack of brown sugar rise from $19.95 before Christmas 2007 to $26.95. Flour is up 25%, as is the European chocolate that gets folded into Moore’s double-fudge chip brownies and white-chocolate pistachio cookies. The falling dollar made importing from Europe a pricey proposition, so Moore is looking for a less expensive domestic chocolate producer that can provide the same level of quality.

She is also taking advantage of her growing wholesale business, which accounted for 40% of total sales in the past but will reach 50% by the end of 2008. Moore is leveraging her larger volume of purchases to negotiate better rates for ingredients.

But she’s not content to sit still. The company recently attended the recent Fancy Food Show in New York and came away with leads at four major wholesalers.

Moore is also sinking money into upgrading her company's Web site, an initiative aimed at increasing online sales. A new, monthly e-mail promotional campaign will cultivate existing customers.

Web sales currently make up 20% of revenue, but Moore plans to double that in 2009. She's hoping changing consumer habits will play into her online growth strategy: “It’s entirely possible given the price of gas that people may shop more online now than they are shopping in person," she says. "So that could be timely as well.”

Ask FSB's tips for keeping customers coming back year-round, even during the quiet seasons.

Lisa Jackson, Washington Terrace, Utah
I need a balance in my business. Some months I am swamped. Other months I have nothing. How can I market my services so that work comes in steadily, but slowly enough for me to handle each client with utmost care? Should I advertise a lot and put clients on a waiting list during busy times?

By Myrlande Davermann, Fortune Small Business contributor
Dear Lisa: First, figure out what drives your sudden business spikes. What generates the excess business when you're swamped? Is that when you're doing the most marketing? Once you know what prompts your business booms, you can create a marketing plan that will help optimize your schedule.

Putting your existing customers on a waiting list during busier periods may not be the way to go. Instead, you might want to hire some qualified contractors to help share the workload, suggests Kelly Davis, president of The Strategy Tree, an HR consulting firm.

“If you proactively build a team of talented individuals that are comfortable working on a contract basis, then you will have your team ready to deploy when you need their services,” she says.

If that isn’t a feasible option, Davis recommends looking into a date-specific direct mail campaign or advertisement. The goal is to encourage customers to use your services before a specific date, coinciding with a slower period for you.

Also, consider creating a customer referral program, she recommends. You can offer clients a bonus with each referral they make – but be sure to set out specific program parameters. Do you want to offer customers a cash bonus for referrals, or a discount on your services? Do referred customers need to remain a client of yours for a specific period of time before the bonus is paid?

“Many entrepreneurs make the mistake of forsaking their existing clientele in search of new customers. This mistake can cost you. So don’t do it,” says Thomas Freyvogel, an entrepreneur and business consultant.

Freyvogel agrees with Davis's suggestion to offer referral incentives to your existing clientele. He also suggests giving out "preferred client" coupons discounting your services (again, during your slower times), sending out birthday coupons for a discount or free service, and offering incentives based on how long a client has stuck by you. For instance, you could offer customers a 10% discount after their first year with you, and a 20% discount after two years. Let your clients know that they are number one.

“You can always find new clients, but in order for the customer base to grow, you must hold on to your loyal fans,” Freyvogel advises.

Jay, Vermilion, Ohio
I own a gas station in a suburban area, in a small town 5 minutes away from lake Erie. There are two others in the town, B.P. and Speedway. I have a tough time competing with them when it comes to gas prices. What can I do? How can I improve my inside sales and get people to buy the merchandise?

What do you recommend? Leave a comment below with your answer.

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John L., Lakeland, Fla.
My product/service business needs the customer base of another company. I fully expect to revenue share with this company. What percentage should I expect to share if I have an exclusive agreement with them? How much for a non-exclusive agreement?

What do you recommend? Leave a comment below with your answer.

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If one partner wants out, the other has a fiduciary duty to negotiate an exit strategy that won't damage the business.

Kath, Darwen, Utah
I am a partner in a restaurant and food-services business. I want to leave the business partnership, but my partner won’t buy me out. She says she’ll close the business and restart it, leaving me with nothing. I am only asking for the money I put in. Can she do this legally?

By Shara Rutberg, Fortune Small Business contributor
Dear Kath: Your partner’s conduct would probably be a breach of her fiduciary duty of loyalty to the partnership, according to David Sokolow, a professor of business organizations at the University of Texas School of Law.

“She cannot usurp the partnership's business for herself at the partnership's (and your) expense,” he says. “Courts are very unsympathetic to people who engage in oppressive conduct. She would be much better off simply buying you out for a fair price and then conducting the business as she sees fit.”

Your next step: Find a good lawyer.

“It’s very important for you to consult an attorney at this time,” says Suzanne Saxman, a partner in the Chicago office of Seyfarth Shaw and vice chair of the middle market and small business Committee of the business section of the American Bar Association. “You might want to start getting tough with this partner who’s making threats.”

Disclaimer: This column provides general information only and is not intended to replace the services or legal advice of an attorney or CPA. Always consult a lawyer or accountant regarding specific legal or financial issues.

Give us your advice: Check out recent “Ask & Answer” questions.

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A staffing agency turns to Ask FSB for growth resources.

Scott Zimmer, AAA Labor, Minneapolis, Minn.
I purchased a 52-year-old industrial staffing agency. Where can I find affordable assistance to help structure the company for growth? There is very little help available for staffing agencies.

By Paul Roberts, Fortune Small Business contributor
Dear Scott: The experts we spoke with said that your best bet for finding help is the American Staffing Association (ASA). The ASA was founded in 1966;  its members account for 15,000 offices nationwide and 85% of the total staffing revenues in the US, according to Richard Wahlquist, who is president and CEO of the ASA.

The ASA represents a broad range of staffing companies – from those offering day laborers to firms that place high paid executives. Industrial staffing is one of the largest segments within the ASA's membership.

Your comment about finding someone to help you “structure the company for growth” suggests that you are looking for the help of a management consultant. A good place to start looking is ASA's supplier index. It's a free, online resource that provides contact information and links to service providers catering to many aspects of the staffing industry. Joining a local chapter of the ASA gives you access to more data, including weekly publications, industry trends, and online educational tools, as well as the ASA's annual conference, which provides networking opportunities, Wahlquist said.

More locally, consider the Minnesota Recruiting and Staffing Association, which provides a wealth of information and training opportunities for its members on issues affecting the staffing industry, including contacts with local vendors and updates on legislative initiatives at the state and federal level. Joining one or more of these professional associations should enable you to find the help you need to start building your business.

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