Ask The Gift Basket Expert » Laws and Contracts

Hotels, Agreements, and Contracts

Shirley George Frazier — Sat, 29 Nov 2008 21:23:07 +0000

Angel asks:

I’m in the process of confirming a deal with a local hotel in providing baskets for their VIP guests.

Do you advise a contract because the number of baskets may change from time to time?

I would like to consider them my corporate client. Please share your suggestions and comments. Thank you very much.

It’s critical that all agreements, specifically for multiple baskets or components, are sealed with a contract whether your order is with a hotel, retail store, or private firm.

Because you’re working with a hotel, this status automatically puts them into the corporate client category.

I once worked with a woman who was in charge of the entire head start program in my city. The quantity of her orders, all made for friends and family members, also placed her into corporate status because of volume and not because of her profession.

Another designer asked about contracts. You’ll find my response here.

It’s wise to consult an attorney to make sure your contract favors you in all conditions. You’ll also find contract samples in books and online, but investing in an attorney’s counsel will let you sleep at night.

© 2008-2010 Shirley George Frazier. All rights reserved. Shirley George Frazier is recognized as the leading authority on the gift basket industry. She is author of How to Start a Home-Based Gift Basket Business, The Gift Basket Design Book, and Marketing Strategies for the Home-Based Business. Visit GiftBasketBusiness.com for videos, CDs, reports, tips, online newsletter, and much more to learn, grow, and profit with gift baskets.

Which Business Structure for Your Gift Basket Business?

Shirley George Frazier — Thu, 18 Sep 2008 14:44:48 +0000

Flora asks:

“Is it necessary to hire a lawyer with help setting up an LLC? I’ve heard that you can save money by setting it up yourself.”

An expert (I don’t remember the person’s expertise) who recently responded to a newspaper Q&A discouraged against incorporating a business without legal assistance.

I can understand that, but in my opinion, registering a company as an LLC (limited liability company) is not as complicated, so depending on your ability and willingness to review documents with meticulous care, I believe it’s possible to set up an LLC without legal assistance.

I do, however, suggest that you review the pros and cons of sole proprietorship, LLC, and incorporation to make sure you’ll be satisfied with your business structure choice. You’ll find a handy chart comparing each structure on the Nolo.com site.

Some states may not recognize LLC formation, and other states may make the process so complicated that hiring a lawyer to complete the job is preferred.

For example, New Jersey once did not recognize LLCs, but now they do. I was able to apply for and complete the paperwork online and pay a nominal, one-time fee, all without legal assistance.

California, as another example, provides business structure information on this page, making it easy for business owners to determine each step.

The book, How to Start a Home-Based Gift Basket Business, also introduces you to business structure options. Even if it’s not as detailed as updated state and country sites, it still provides a blueprint for one to consider before registration.

After you review the LLC formation details, you’ll know if it’s right to proceed without a lawyer or if one’s help is mandatory.

Are Gift Baskets a Business Tax Deduction?

Shirley George Frazier — Fri, 13 Jun 2008 04:01:58 +0000

Diane asks:

“I am trying to capture our local Real Estate market for closing baskets and would like to know if the Real Estate Agent can write the basket expense off on her income tax as a business deduction? I think that would be a good tool to use to try and snag the account.”

I’m aware of how some of my clients deduct the gift basket orders I fulfill for them; however, the question you ask is best answered by your accountant.

Business laws aren’t always the same in every city, county, state, and country. I’m not an accountant, and I’d be irresponsible to advise you on this matter. That’s true for anyone who’s not a CPA (certified public accountant).

I agree with you that knowing and sharing this information is a good tool during a presentation. If you’re not yet working with a CPA, small business owners with whom you network may be able to recommend one to you (that’s how I found my accountant).

A 30-minute or one-hour meeting with a CPA is worth the investment, as you can ask many questions during that time frame.

Once you learn the right answer from this knowledgeable source, you’ll move forward confidently with your real estate market presentations.

Do I Sell My Baskets on Consignment or at Wholesale Cost?

Shirley George Frazier — Fri, 23 May 2008 13:17:08 +0000

Marcelle asks,

“I would like to display some of my baskets with local businesses to see if they would sell. What would be the best approach to this, and if I were to sell some of my baskets, what method of payment from the consumer would be best since by business has not been formally established yet.”

When I entered this business in 1990, the most-popular way of selling gift baskets with local businesses was through consignment. This entailed:

1) showing the shop owner/manager gift baskets that would be sold in the shop,
2) crafting an agreement that protected the gift baskets while out of your care, and
3) collecting payment at month’s end (or whatever time frame was chosen) for the baskets that sold.

Today, many designers sell their gift baskets outright to shop owners. They do so by:

1) Creating about six different gift basket designs to offer to another retailer. Buying nested baskets are often good for this type of designing, which you’ll learn about on this page.

2) Determining a wholesale price for selling them to shop owners, which is a price that not only allows you to make a profit when selling them outright but also lets the shop mark them up again before placing them on the sales floor.

So, the method you choose to display your gift baskets with local businesses is up to you. If you can sell outright to a retailer and not have to come back to fix gift baskets that have been mangled by their customers, that’s usually the better deal.

I understand that this option is not always open, so if selling on consignment, create an agreement that gives you the largest profit percentage possible. Check on your baskets regularly, and in time you’ll learn which ones sell faster so that those designs are the only ones offered to their customers.

Do I Need a Contract?

Shirley George Frazier — Thu, 27 Mar 2008 22:00:03 +0000

Angel asks:

“I have the opportunity to create gift baskets for a local brownie company. They supply the brownies and I will create the basket for them to give to the customer.

Should there be a contract between the brownie company and my basket business?”

Congratulations on obtaining this account. Many designers do not pursue a contract when working as an outsource supplier because they believe the informal connection is beneficial.

However, many more understand the complexities of this collaboration and work out the details in writing before starting.

I learned long ago that you, the company hired to complete a project, are the one responsible for creating the contract. It’s in your best interest.

The contract will include:

the two parties’ names
the contract terms (what will be provided)
the contract length (how long you will work with them)
the payment and when it’s due (charging for the entire project versus an hourly rate works in your favor)
where the work will be completed (their facility or yours),
who’s responsible or held harmless in case of fire or theft, and any intricacies associated with the terms

I’m not an attorney, so consider what I’ve shared as advice only.

I encourage you to seek guidance from a small business attorney to create this contract. If you think he’ll be expensive (it’s more affordable than you imagine), think about how much this project will cost you if something goes wrong and there’s a dispute that lands you into court.

I interviewed small business attorney, Robin Gronsky, on Legal Tips to Keep your Company Out of Court, which covers this and other topics. It’s a worthwhile investment to understand legal basics.

[tags]gift baskets business, finding a small business attorney, gift basket laws[/tags]