Yeah there’s not much more to it

One of the things you could consider is combing the two companies into one company. Probably having the restoration company absorb the janitorial. They are so close in function that it makes a lot of sense.

As it turns out non-solicitation is also not valid in the state I live.

Or don’t express that. But if a client is calling you, it’s safe to assume that is exactly what happened. It doesn’t take much to put 2 & 2 together.

That is what happened in my case. Clients called me and said “why is this guy calling me are you ok?” My ex employee (the family member) told them that we were no longer in business and that he was taking over our clients. Once word got around that he was literally lying to them before he was even hired, his endeavor stalled.

Sometimes it’s ok to burn bridges

I have had this happen to me. In fact it was someone I was close to (family member). In fact (woman owned in a male dominated field) every man that I hired prior to bringing my husband on to run operations tried to start their own business and take clients from me. Non-competes are not valid where I live.

First, I would fire those two employees immediately and by surprise so that they no longer have access to the clients. What will happen is the clients will get a phone call from them in a few weeks to months stating that they have left and started their own business. It will take them this long to learn how to start a business and procure the equipment, material, and certifications that they need. For the clients, especially the loyal ones, this will throw up a red flag. Or it might not and that client will give them a try. They will most likely call you at which point you can express that they were caught on camera plotting to steal customers. To clients this is an automatic sign that they cannot be trusted.

The thing is, at least in our case, not only are we very very good at what we do, we are lower priced and we pay our employees very well. None of our competitors can keep up with us, and non of the former employees who have tried have been successful.

I am an s-corp too and yes, the s-corp designation means that instead of the company paying the income tax that income is treated as your income and you pay the income tax.

What I am going to do is pay myself the profits at the end of the year and pay the taxes. At the beginning of the year I will loan back to my company the overhead for 3 months. That will give them enough time to be self sufficient. At the end of the year, the company will pay back the loan + interest, distribute the profits for the year to me, and start the whole process over again. That way, anything I invest into the company (for equipment, etc.) also qualifies as a shareholder contribution.