disaster-loan

Don’t Spend That SBA $10,000 Disaster Loan Just Yet

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What is the SBA $10,000 DIsaster Loan?

The U.S. Small Business Administration (SBA) has responded to the Coronavirus (COVID-19) pandemic by offering small business owners in all U.S. states, Washington D.C., and U.S. territories and Economic Injury Disaster Loans. 

An important aspect of the loan has received an enormous amount of attention. That component is an advance on the loan of “up to $10,000.” The advance is supposed to be available following a successful application for the SBA loan.

The advance is intended to provide financial relief to businesses. Especially to those that are experiencing lost revenue during the Coronavirus pandemic.

No need to be a master of the English language to note the words “up to” in that statement. That escape hatch phrase goes a long way in allowing the SBA to do some pretty crafty things with the loan and the advance. As you’ll see later in this article, the SBA’s recent clarifications of the wording of the advance heavily leverage the phrase “up to.”

The reason this part of the Disaster Loan is important is that the SBA has suggested the advance will not have to be paid back.

Where’s my $10,000 Disaster Loan advance?

If you are asking this quesion, you are not alone. As far as we can tell, no one has received their advance or Disaster Loan yet. Loan applicants across the country are scratching their heads because the SBA initially suggested that the $10,000 grant wuld be available three days after the application.

You read that correctly, three days. A lofty goal by anyone’s standards. The SBA quickly, and with much public criticism, realized their gaff and removed the “three days” language from their website and application.

The website now reads: “The Economic Injury Disaster Loan advance funds will be made available within days of a successful application, and this loan advance will not have to be repaid.”

While no one really knows where your Disaster Loan advance is, we do know this, it’s probably not in your bank account. Yet.

It’s worthwhile to note that the $10,000 grant might be more of a wish list than a dream come true.

The SBA clarifies what “up to” means.

Earlier I noted that the SBA included the phrase “up to” in the description of the $10,000 advance. This week, in a statement from the SBA’s Massachusetts District Office, it was clarified that the SBA plans to limit the scope of the economic injury disaster loans. Even though these loans, advances, and grants are meant to provide businesses with immediate, emergency cash, that cash might be a lot less than many are expecting.

The Massachusetts Office of the SBA clarified that a business will receive $1000 for each employee, up to $10,000. The language of the statement suggested that this clarification affects businesses nation-wide.

So, if you are a business with, one employee, you can expect (at this time) a $1000 check. If your business has 4 employees, your check will be for $4000.

Remember, this is capped at $10,000, so if you have 15 employees, you will still only get a $10,000 advance or grant.

The relationship to other loan programs.

Adding complexity into the mix is how the SBA’s Disaster Loan relates to other programs, like the paycheck protection program (PPP).

Things seem to get more clear day by day and the current landscape suggests that the SBA Disaster Loan can be rolled into a PPP loan. The grant will be subtracted from the amount that gets forgiven. 

What should you do right now?

First of all, if you have not applied for the SBA Disaster Loan with up to $10,000 in grant/advance funds, you should do so. Click through to our COVID-19 portal of legal information to find the link.

Next, it’s time to be patient. We are in an ever-changing set of conditions and things change hour-by-hour. Once you’ve applied, all you can do is wait and see.

What will be interesting to many is how much of an advance will be given out. Will it really be only $1000 per employee? Patience and time will tell us.

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bankruptcy attorney Orlando

Bankruptcy Might Not Be as Difficult as You Think

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How Bankruptcies Work

By definition, bankruptcies are legal and financial arrangements designed to provide a person or business with temporary relief from their debt. The bankruptcy gives the individual or company (referred to as the debtor) time and flexibility to better organize their ability to pay their debt and other financial obligations. Part of the process typically includes the creation of a plan to fulfill certain financial obligations. There are also specific situations where debts are entirely eliminated. 

Clearly, bankruptcies should be considered as an option after other opportunities to relieve the debt have been explored. For example, it is usually advisable to attempt to negotiate with creditors before considering bankruptcy. 

While bankruptcies are incredibly complex, there are things that individuals and businesses can do to make the process less complicated. It’s critical that those considering bankruptcies go through a detailed planning process. Also, a recommended first step is enlisting the professional help of an attorney and a financial advisor.

What is bankruptcy protection?

In the US Legal System and in bankruptcy court there is an essential difference between bankruptcies and bankruptcy protection. Put simply; bankruptcy is the process a person or business follows when they can no longer satisfy their debts. Bankruptcy protection refers to the condition where. During and after the bankruptcy, a company or individual has financial protection from their creditors. 

What steps should I take before filing for bankruptcy?

When preparing to file, the more organized you are, the easier things can be for you and your attorney. Here are the efforts we recommend doing, and in some cases, not doing, as you prepare. 

Do: Determine the type of bankruptcy you should file. Bankruptcies come in several types, including Chapter 7, where most of your debts are forgiven and Chapter 13 which involves restructuring your debt into a manageable payment plan. Your lawyer is the best source of advice on determining which makes sense for your situation. Your lawyer may have you take a Bankruptcy Means Test to assess your ability to pay your debts. The results of this test could eliminate your qualification for filing Chapter 7 bankruptcy.

Do: Enroll in a credit counseling course. You may be required to take a credit counseling course either in person or online. Work with your attorney to determine which is best for your unique circumstances.

Do Not: Go on a spending spree. Many people inaccurately believe that all debt will be forgiven when you file for bankruptcy. The reality is that all of your debt will be examined and an appropriate course of action will be determined. When your debt is reviewed, the bankruptcy court will become aware of any significant spending you might have done before filing. A large amount of what could be seen as unnecessary spending might not work to your advantage. 

Do Not: Conceal the truth. Ultimately, the only way to get out of an impossible financial situation is to be truthful and honest about how you got there. When you work with an attorney, the more they know about your situation, the better they will be able to help you. 

Can bankruptcies be avoided?

It is entirely possible for many people to avoid bankruptcy and bankruptcy court. The most significant benefit to avoiding bankruptcy court is that you will preserve a higher credit rating. One of the ways you can avoid bankruptcies includes working directly with your creditors to organize a plan to satisfy your debt. Another strategy might be to sell non-essential items that you own and use the money to pay off debt. There are other tactics that should be explored, working with an attorney can help uncover all options that might exist for you.

Do I need a lawyer to file?

Facing overwhelming debt can be a frightening experience and could be a source of embarrassment for many people. You might not want to share details with family and friends, and that’s ok. But you don’t have to deal with the situation alone. Because bankruptcies can be quite complex, it can be to your benefit to hire an attorney early on. The attorney can help guide you through the process, work with you on deadlines and paperwork, negotiate with your creditors, and help make the process easier than going at it alone.

Ready to speak with an attorney about your options? You can contact us to schedule a consultation.

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Photo of Jennifer A. Englert - Attorney and Managing Partner of The Orlando Law Group

Corp & Business Owners, Prepare for the Tax Cuts and Jobs Act Changes

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OLG LEGAL COMMENTARY:
Jennifer Englert
OLG Founder & Managing Partner

Photo of Jennifer A. Englert - Attorney and Managing Partner of The Orlando Law GroupIt may be difficult to ascertain what exactly has changed under the new Tax Cuts and Jobs Act and how these changes may affect you and your business. This article will provide an overview of how the new tax law will affect business, whether you are part of a large corporation or own your own small business, by identifying the information you need to know about each major provision.

What’s changed for corporations under the new Tax Cuts and Jobs Act?

Under the previous law, corporations were taxed under a four-step graduated rate structure, with 35% as the top corporate tax rate. Effective on January 1st, 2018, the top corporate tax rate was permanently cut to 21%. The new tax rate is a single flat tax, meaning it applies to all C corporations. Under the new law, the corporate alternative minimum tax rate was also eliminated.

What’s changed if I own a small business?

Under the previous law, businesses organized as sole proprietorships, limited liability companies (LLCs), partnerships, and S corporations did not pay corporate tax rates. Business owners instead paid individual income taxes on their share of the business’s income, a process known as pass-through business taxes. Thus, those tax rates were the same as the regular personal income tax rates. Under the new law, individual tax rates were reduced from 39.6% to 37%.

Effective on January 1st, 2018, the Tax Cuts and Jobs Act allows pass-through business owners may now deduct up to 20% of their qualified business income. This deduction is subject to a number of limitations, one of which caps the 20% exemption at the greater of 50% of the wages paid to employees and reported on a W-2 form, or 25% of those wages paid plus 2.5% of the cost of depreciable property owned by the business or depreciable capital assets. One limitation on this deduction is married couples who own service-based businesses like law firms, doctor’s offices, and accounting firms can only claim the deduction if their annual income is below $315,000 ($157,500 if single). This provision of the new law will expire after 2025.

The new law will apply to all pass-through businesses, including sole proprietorships, LLCs, partnerships, and S corporations. The following example demonstrates how the 20% deduction would apply, not subject to any limitations. If you own a small business and it generates net business taxable income of $500,000, you may deduct $100,000 (20%) of it before the personal income tax rates are applied.

Business Loan Interest Deductions

Under the previous law, any interest a business paid on their business loans was generally deductible. Under the new Tax Cuts and Jobs Act law, a business may only deduct interest expenses equal to 30% of its adjusted taxable income. Furthermore, under the previous law, if a business carried a net operating loss (NOL), it had the option to use those losses to either reduce any taxes paid in the previous two years, or to reduce any future taxable income for the next twenty years. Under the new law, net operating losses are reduced and can only be carried forward to reduce any future taxable income and are limited to 80% of taxable income. Past taxes may no longer be reduced by a NOL deduction.

Other Deductions as they relate to the 2018 Tax Cuts and Jobs Act

  • Entertainment Expenses: Under the previous law, costs expended entertaining clients were 50% deductible. However, under the new law, entertaining clients is notdeductible at all. Holiday parties and other similar workplace events for employees are still 100% deductible.
  • Business Travel: The cost of meals and drinks purchased during business travel is still eligible for deduction. As for business vehicles, for both new and used passenger vehicles that are acquired and placed into service after December 31st, 2017, the new tax law increased depreciation allowances. The vehicle must also be used over 50% of the time for business purposes. An $18,000 deduction may be taken for a new car the first year you own it if you claim first year-bonus depreciation. The allowance then decreases per year to $16,000 for the second year, $9,600 for the third year, and $5,760 for the fourth year and after until the vehicle is fully depreciated. If you purchase an SUV or a truck, the vehicle is now 100% deductible.
  • First-Year Bonus Depreciation: Businesses making eligible equipment and property purchases can immediately deduct 100% of the purchase through 2022, which is an increase from 50% under the previous law. After 2022, bonus depreciation phases down 20% every year until it reaches 20% in 2026.

While this article provides an overview of the how the new Tax Cuts and Jobs Act law may affect how your business is taxed and what deductions you may make, it is important to consult with your attorney regarding all of the factors that may affect your business as the new tax law could have further implications on your business.

 

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senior couple meeting real estate attorney

Three Reasons to Hire an Attorney

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There are many factors you should consider before hiring a lawyer. The truth is that law is a complicated matter. Some legal matters such as fighting a speeding ticket do not necessarily require you to hire an attorney. However, if you are charged with driving under the influence (DUI) or other serious crimes, you should hire legal help as soon as possible. Legally binding contracts and agreements have a great deal of legal jargon that you might not understand. Hiring an attorney to assist you in these contracts can save you a lot of money and prevent future complications.

While legal situations vary from person to person, to follow are 3 reasons why you should seek legal representation:

  1. It can save you money. Fees vary from lawyer to lawyer, but most of the time attorneys will provide you with a free initial consultation. During the first meeting, you can evaluate the potential benefit of hiring a lawyer and further discuss what it will take to reach the goal of that particular challenge or project.
  2. A good attorney will negotiate your settlement. An experienced lawyer who truly comprehends the law and your situation can properly assess how the case might resolve at trial. However, sometimes attorneys can negotiate with the other party and come to a fair settlement and avoid it all together.
  3. Lawyers know the procedures. If you are not a lawyer, you will lack the knowledge necessary to properly fill out or file the court documents. Failing to do this or meet the required deadlines will put your case in jeopardy as it can either be delayed or completely dismissed.

While there are many “legal” tasks you can tackle on your own, it’s best to consult a professional in-order-to ensure you do not have to worry about unexpected issues later.

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Coffee Shop Meeting

How to Manage Without a Formal Office

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The new workplace isn’t really a place, it’s more a state of mind. You jump from meeting to meeting, talk over lunch, pitch over drinks, and create a “pop-up office” anywhere that has a place for your laptop or tablet, and of course Wi-Fi. For some who think smart logistically, you will manage to schedule full days to work solely at home, and other days where you move from meeting to meeting. Or, better yet, park yourself in a location, with coffee of course, and have your meetings come to you. We do suggest, however, that you purchase coffee or food, as those establishments have a business to run too.

If you want to succeed in this new frontier of business, being flexible in terms of time and space is vitally important. To follow are some key points that will help you steer in and around this territory:

Remain Charged
Is there an outlet you can plug into? Even if you’re at seventy percent – do it! The worst time to not have a fully-powered laptop is during a client meeting. And you can’t have your phone die when that unplanned conference call dial-in number gets texted to you. Whenever you have the chance to charge your devices, don’t miss it. You should also keep a portable charger in your bag for emergencies.

Do You Know the Hot Spots?
If you’ve already been practicing the impromptu office, you know the importance of free Wi-Fi and a calm place to work in-between meetings. Keep yourself organized by making a list of your favorite coffee shops, restaurants and hotel lobbies where you can tuck away in a corner and get 20-60 minutes of work done during downtime. This really helps when your local gathering place is too packed to be productive.

Create a Functional Work Bag
This is your office. You will want your laptop (or tablet), laptop plug, cell phone plug, headphones, toothpaste, toothbrush, lipstick (if it applies), cardigan (some places can be quite chilly), safety pin, hand cream, stain stick, Shout Wipes, breath mints, toothpicks, notebook, pen, pencil, mini deodorant — and that’s on a light day. Don’t go crazy, but just know that the day you don’t pack something is the day you will desperately need it.

Be Ready to Tackle AM and PM
There may be meeting-packed days that will go from scrambled eggs to cocktails, so you need to find outfits that can work all day long. If you’re a male, a solid suit. For women, this task is a bit more difficult. Great advice is that you can “always bet on black”. A little black dress lets you look professional during the day, and glamorous at night if you dress it up with sparkly jewelry.

Be Prepared to Pilot
Map out your day in advance. The worst feeling is to be crisscrossing town from one meeting to another, never knowing if you’ll make it on time. Having a solid plan of attack allows you to not get unnerved by those unexpected challenges and hurdles that tend to get thrown in your way. There are great apps to help with that. If you’re really organized, you will use the app as you actually plan the meetings so that it makes, even more, sense logistically.

These are just a few tips to help you be more prepared and less frazzled. As always, we’re here to help you navigate even the murkiest of waters so that you can focus on your business.

So, go forth business warriors! This is the way business moves. Find your best way to move along with it.

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Are Your Board Meetings Effective?

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How to make your board meeting more productive

Many board meetings are actually “bored” meetings. Leadership brings together their board members only to quickly present the material so they can get back to their “real” work. Without realizing it, you’re doing the company a disservice as the value of your board, if you have the right people, can be a tremendous source of insight and solid advice. The board’s job is to review the company’s financial performance and strategy and help provide counsel to the executive team. It’s up to you to manage them effectively.

Some boards are highly functional, many are not. Sometimes dysfunctional boards are a result of having investors who don’t really understand their role on the board or have the right skills or experiences to be helpful. Sometimes poorly run boards are a function of the executive team not knowing how to get the most out their boards.

To follow are some thoughts on how to make your interactions with your board more productive.

Communicate Frequently and Proactively

Do you wait until the actual meeting to correspond with the board? We advise that you send the board short, to the point, update emails at least monthly, especially if you meet quarterly or even less frequently. This keeps the board in-the-loop and does not give them the opportunity to come to their own conclusions about what is going on. Plus, you will be top-of-mind to people that matter and they will feel comfortable advocating on your behalf. Discussions Versus Presentations Many board meetings become really long slideshow presentations where management takes the board through pages and pages of financial results and plans. Send the presentation ahead of the meeting and instead use the time to have an open discussion on the key points.

Do you wait until the actual meeting to correspond with the board?

We advise that you send the board short, to the point, update emails at least monthly, especially if you meet quarterly or even less frequently. This keeps the board in-the-loop and does not give them the opportunity to come to their own conclusions about what is going on. Plus, you will be top-of-mind to people that matter and they will feel comfortable advocating on your behalf. Discussions Versus Presentations Many board meetings become really long slideshow presentations where management takes the board through pages and pages of financial results and plans. Send the presentation ahead of the meeting and instead use the time to have an open discussion on the key points. Your goal should be to have open dialogue with your board and take advantage of their expertise and experience.

Distribute Financial Information Prior to the Meeting

Financial information should be sent out 72 hours before a board meeting. If you send it out the night before, you’re practically guaranteed that it will not be read before that morning’s meeting. Remember, these are busy people too. Focus on Solving Strategic Issues Instead of wasting your time walking the board through financial information they should already be familiar with it. Spend your time walking through a few key decisions you’re trying to make and get their input on the topic. Set this expectation up front and your meeting will be more targeted towards results. Boards will only discuss the information you provide them and will mostly get off track if your agenda or your management style allows them to.

A Call Before the Meeting

If possible, have a quick call a day or two prior to the meeting with key members who will be reporting. This ensures you are up-to-date and onboard with what they will be presenting. This also helps you to create the agenda. Never be surprised at a board meeting. If you’re surprised at a board meeting it’s on you.

They Talk the Talk, Are They Walking the Walk?

Many things get decided at board meetings. If you took away actions — follow up. If a board member agreed to do something, hold them accountable. As with most meetings, much progress is squandered by lack of follow up. Lack of follow-up could put a real damper on progress and the board members who are living up to their promise on a particular task will become frustrated.

Meet in Person When Possible

There are times when you need to offer some board members the option to call-in to a meeting. That’s fine every now and then, but that usually results in people falling off the call, or becoming distracted. There is no way they’re as productive when it’s just voice. Also, having a well-functioning team with a high degree of trust in each other and confidence in each other’s opinions is critical to a successful board. And you simply can’t build relationships on the phone.

No Cell Phones Please

Help them be their best selves by banning electronic devices if you want a productive meeting. Schedule a 15-minute break in the middle of your meeting and inform people that there will be sufficient time to check in on their email during the break. Obviously, there are exceptions if they have something mission critical going on that might pull them away. But this should be the exception, not the rule.

Be Realistic With the Time Needed for a Meeting

If you’re trying to “get through your deck” and get back to work, then an hour is plenty. If you truly want input, discussions and relationships, schedule accordingly. Build Social Relationships Amongst Your Board Members We’re all so busy, but at least once or twice a year, schedule something that is purely social. We find it’s effective to hold a board meeting prior to the “social event” as they’re already together as a group.

Boards take work. But the best boards are super critical to your success and you get out of them what you put in.

If you have any questions about forming a board, or making the one you have even better, please feel free to schedule a consultation with one of the outstanding attorney’s at The Orlando Law Group PL.

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Medical insurance is a large expense for employers who provide that benefit. However, if you have older employees then employers can save money on their medical insurance, which seems counterintuitive.

Employers can save $5,000-$11,000 per employee (65 or older) on health insurance just by making a few simple changes.

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Employers Can Save Big on Insurance Costs for Older Employees

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For Example : If the employer is paying $1,200/month for employee insurance – $14,400 per year.

Medicare Part B is: $121

Medicare Part D is: $32

Medicare Supplement is: $185

TOTAL COST: $338/month – $4,056 per year                   

SAVINGS TO EMPLOYER-$10,344

This new plan is good with ALL doctors that accept Medicare in the United States. There are no copays, no deductibles, no referrals, and no medical payments for the employee. Coverage is 100%. Even with incidental costs for the employer, such as extra tax, bookkeeping, etc. the savings are still well over $8,000 per year. 

Therefore, employers should investigate this option with an insurance professional to help both themselves and their employees.

Mitchell Gordon has been a certified independent licensed insurance broker/agent for 17 years. He provides coverage for life policies to include Term, Whole, IUL, and Final Expense. He also provides coverage for various annuities and health policies such as Long Term Care, Dental, and Critical Illness. Mitchell specializes in Medicare/Medicaid education. He works with physicians and practice managers to help educate their patients about their health plans. Mitchell also gives seminars for churches, schools, and homeowner associations at no cost.

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Does Your Employee Handbook Negate Your At-Will Status?

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Florida is an “at-will” state, meaning an employer has the right to terminate an employee without having to establish just cause, and without warning. The only employees who this would not apply to are those protected by a legal employment contract. A contract might provide a period of time in which an employee can only be terminated for limited reasons, as outlined. This can be a powerful bargaining tool when trying to woo a strong prospect with an offer of job security.

The wording of your employee handbook is so important, as one or two sentences could turn the document from an informative onboarding tool into a legal contract that ties the hands of an employer. Creating a contract through implication can occur with something as simple as stating that employment will be terminated if there is “good cause,” or making promises of job security for employees who do “good work”. One or two words of careless copy could land you in a mountain of legal trouble.  

When a probationary period is outlined in an employee handbook, it could create an implied contract. A court might interpret the transition from probationary employee to permanent employee to imply job security, and thus the permanent employee cannot be terminated at will.

It is also important to note your disciplinary policies. If you state that employees can only be fired for certain instances of outlined misconduct, and will undergo a series of warnings, write-ups, and documented coachings, a court could require you to live up to that. If an employee is released for a reason not outlined in the official policy, or if a step in procedure was skipped, that employee could sue you for breach of contract.

A simple fluffy statement like “hardworking employees will always have a job here,” can be seen by a court as a promise of job security. This would necessitate the presence of “good cause” for termination, effectively neutering your “at-will” rights from a legal standpoint.

When drafting an employee handbook, you should avoid any and all language that could be perceived as a promise of job security. Outline your rights as an at-will employer in the handbook, clearly stating that nothing found within is meant to be taken as a contract for employment. Finally, ensure that you are fully protected by requiring employees to sign an acknowledgement form, which states that they understand their employment is at-will and can be terminated at any time for any reason.

The Orlando Law Group stands at the ready to aid businesses in creating and reviewing business policies. If you are establishing a business, or simply looking to review your current employment policies, call The Orlando Law Group at 407.512.4394 for a consultation.

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As a business owner, it is very easy to be caught up in the here and now. These papers must be filed NOW. These spreadsheets must be completed NOW. Deadlines rule all. But life’s greatest deadline comes at the end of the road, and if a business owner suddenly becomes incapacitated or dies, decades of hard work could be undermined. All the undue strife that can befall the associates and loved ones of an ill-prepared business owner can be prevented easily with the presence of a strong estate plan.

While many believe estate plans to be contributed to an individual’s personal wealth, they also apply to business holdings and assets. The creation of an estate plan which includes entrepreneurial interests can be composed of a great many documents, all of which require years of careful planning.
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Protect Business Assets in Your Estate Plan

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It is best practice for a business owner to outline their wishes in his or her Last Will and Testament. In this document, a business owner can divide their assets among beneficiaries, and name an executor to oversee the distribution of both personal and business assets. If your business happens to be a sole proprietorship, in which you are the only owner, the executor should also be given access to the business’s digital identity; namely email accounts, bank accounts, accounting information, and social media sites. As wills are a matter of public record, this information should not be included in the body of the document itself.

Power of Attorney should also be established in the estate plan, to ensure that should the owner ever become incapacitated for any reason, an individual is named who has the authority to handle the everyday affairs of the business. This ensures that all facets of a company continue to work in the absence of its owner, including asset management, paying bills, making payroll, and all other vital functions that will ensure the company’s survival in the interim.

A strong succession plan should also be included in any comprehensive estate plan for business owners. This plan should be written out formally and prepared years in advance. A succession plan lays out the transition of a business’s leadership following the exit of its owner, and a new owner is established to take the reins. This person can be a family member, long-time employee, or anyone the owner fully trusts with the continued future of their company. For more information on succession planning, check out our blog entry HERE.

If your business is a partnership, in which you and another person share ownership, it is vital to have a buy/sell agreement in place. This important document details how an owner’s stake in the company will be distributed upon his or her departure. Whether a business partner dies, retires, enters bankruptcy, or files for divorce, your business must be protected. For more information on Buy/Sell Agreements, check out our blog entry HERE.

A strong and complete estate plan is vital to ensure that your business will continue to grow and thrive without you, or that your loved ones will be taken care of following the disillusion of your business assets. The attorneys of The Orlando Law Group are at the ready to help you create a strong and comprehensive estate plan, to ensure that your wishes will be upheld. Call 407.512.4394 to schedule a consultation today! 

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When starting a business, whether online or at a physical location, it’s important to remember one simple truth. A business attorney is essential for the safety and success of your company.

 It’s typical for new business owners to focus primarily on things like marketing, staffing, and sales, but establishing a relationship with a trusted attorney early on helps to head off potential issues before they arise. Most new companies don’t approach a law firm until they’re already being sued, and by then it may be too late!

There are a plethora of vital tasks a firm such as The Orlando Law group tirelessly undertakes for business owners that range from important agreements, to mergers and acquisitions, to succession planning and more. 

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“Why Should I Hire An Attorney For My Business?”

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Here are just a few of the important services offered by a business law firm:

Entity Formation: The most important step in creating a new business is the actual legal creation of that business. Whether you’re starting a Limited Liability Company, a Corporation, or a non-profit organization, there are a number of legal hoops that could easily trip up a business owner who is not savvy in such matters. The presence of an attorney aids in this process by providing your business with an experienced guiding hand who will ensure that all paperwork is properly filled out, all steps are taken, and that all aspects of your entity are legally protected.

Business Strategy: Once you’re off the ground, an attorney can help with your company’s overall strategy, providing advice and support in regard to the creation and implementation of debt and/or equity financing strategies, organizational structure and risk management, joint ventures, licensing arrangements, tax planning and more! A lawyer is a close confidant who can approach the issues that affect your company with an outside perspective.

Contract Negotiation: In business, it is often said that “you don’t get what you deserve, you get what you negotiate.” An attorney can examine all contracts and agreements set before you, and represent your company during negotiations to ensure the best possible arrangement is agreed upon, with respect to your wishes. Having an experienced guiding legal hand at the wheel in the midst of a contract negotiation grants you an added advantage and a layer of protection as you work towards strengthening your business.

Succession Planning: An attorney is a vital asset during the creation of your company, and so too shall they be at the end of the road. When the time to retire finally arrives, a business law firm will ensure a smooth transitional period as you phase out of day-to-day operations and pass along those responsibilities to a worthy successor.

Listed here are just a few of the many important facets of business law which The Orlando Law Group specializes in. Other services include: entity advisory and guidance, mergers and acquisitions, buy/sell agreements, business sales, estate planning for business owners, and policy reviews.

If you are looking for a dedicated, knowledgeable, friendly legal team to guide and advise your business, call The Orlando Law Group today at 407.512.4394! 

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Everything that has a beginning also has an end. This old adage rings especially true in reference to business ventures.

The companies that we breathe life into through ingenuity and elbow grease can be a legacy we leave behind at the end of our careers. Will you be prepared for retirement? Who takes control of your company when you ride off into the sunset? These questions can be easily answered by a well laid out succession plan.

There is no end-all instruction manual for planning a smooth succession, however, the following steps are widely accepted best practices which should be implemented to ensure this transitional period has every advantage going in.

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Steps for Successful Business Succession Planning

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1.       Choose a worthy successor: Do you plan on leaving your company in the hands of a family member? Perhaps a long-time staff member? Either way, choosing the person to fill your own shoes can be a daunting task. It’s best for the business itself, to choose someone based on merit alone. If your oldest child has the perfect skill set, that’s wonderful. But for the sake of the business, it’s best to stay objective and ensure that the choice you make is the most qualified. It is generally accepted best practice to begin planning for succession up to fifteen years before you intend on retiring. This gives you ample time to test the waters, find your successor, and groom them to take over. 

2.       Implement a Training Plan: What are the critical functions of your company? It’s best to formally lay these out and familiarize your successor with the vital role they will be playing. Teach them to see the company through your eyes, to view it in a different light. Give them opportunities to take charge, and let them develop a managerial style which they can implement once it’s their turn at bat.

3.       Stick to a Time Table: It’s important to create a detailed timeline in order acclimate your successor to their new role, and begin to phase yourself out. The transfer of responsibility should be gradual, and allow for your successor to acclimate slowly.

4.       Develop a Retirement Plan: You need to think about your retirement, and ensure that your transition out of the workforce and into a well-deserved life of relaxation will go off without a hitch. To this end, plan out your life post-career. Where will you go? What will you do? Will you begin another business venture, or just enjoy a leisurely retirement? As your successor takes on more responsibilities, take the opportunity to ponder these important questions.

5.       Install Your Successor: Before you walk out of your office door one final time, you must ensure that your successor has been fully installed with the tools he or she needs to achieve success. Be that guiding hand, but also know when it’s time to let go, and allow your successor to succeed or fail on their own.

As stated above, succession planning is a complicated process, and can be often times confusing and frustrating. The Orlando Law Group specializes in aiding our clients in not only starting their businesses but laying out a well thought out plan of succession. Call The Orlando Law Group at 407.512.4394 and schedule a consultation today! 

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When starting a business, it is always best to prepare for every conceivable possibility. When a business has more than one owner, certain eventualities need to be addressed as early as possible; such as the question of what happens to the business if one partner leaves?

This situation and many others are easily spelled out in a buy/sell agreement. Much like a pre-nuptial agreement, which divides assets and sets conditions of a marital divorce, a buy/sell agreement spells out the conditions which transpire when a business partnership dissolves.

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What Is A Buy/Sell Agreement?

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Also known as a “business will” or even a “business pre-nup”, a buy/sell agreement defines what is and is not allowed to transpire should a business partner, through either voluntary or involuntary circumstances, give up their share of the company. Does a partner’s interest pass onto their spouse or heirs upon their death? In the event of a divorce, does a business owner’s former spouse have a claim on their share? To whom can a partner sell their ownership? These are some of the questions that a buy/sell agreement answers.

Eventualities covered under the umbrella of a buy/sell agreement can be tailored specifically to meet a business’s needs. Many agreements cover circumstances including death, disability, retirement, divorce, and voluntary or involuntary transfers including sales or bankruptcy. It addresses situations in which an owner might sell their interest by discussing how they can sell, when they can sell, who they can sell it to and how much can they sell it for? This protects the business against being sold to an unwanted entity.

Partners can also place in the agreement a clause in which a co-owner must offer to sell their interest back to their partner or partners before offering it to an outside party. The benefits of a buy/sell agreement are self-explanatory; ventures can fail, personal tragedies can occur, and partnerships can dissolve.

Buy/sell agreements should be an early staple of any new company that will be sharing ownership. It is strongly recommended to have an attorney draft the agreement close to the inception of a business. The Orlando Law group specializes in the creation and implementation of these vital agreements, and our team of dedicated experts will walk you through every step of the process to ensure that your business is protected.

For more information, call The Orlando Law Group at 407.512.4394. Be prepared. Think ahead. Defend your business against future threats before they materialize.

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Do you have a great new idea that you’d like to see turn a profit? Are you looking to turn your hobby into income? Are you a whiz online and think you can make a buck designing iPhone apps? Whether your idea is big or small, simple or complex, virtual or brick-and-mortar, taking the step to become an entrepreneur and start your own business is a big one.

Armed with your idea and your business plan, the next step is answering one important question: How should I legally structure my business? In most instances, you will probably have to choose between a limited liability company (LLC), a partnership, a corporation, or a sole proprietorship.
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“How Should I Legally Structure My Business?”

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The legal and financial ramifications of this decision are significant. Plus, you really can’t move forward and take important steps such as registering your name or getting your tax ID number until you’ve answered this critical question.

We must note that circumstances vary among individuals and individual businesses. Determining which of these structures is right for your business is dependent on the type of business you want to run, how many owners it has, and its financial situation. No one choice suits every business. Business owners must pick the structure that best meets their needs.

The most important factors for you to consider will include:

·        the potential risks and liabilities for your business;

·        the formalities and expenses involved in establishing and maintaining the various business structures;

·        your income tax situation; and

·        your investment needs.

Here is a brief explanation of the main options that are available:

·        Sole proprietorships are the simplest of the legal structures, but they also lack many of the legal and financial protections of other business forms. Sole proprietors have the advantage of being their own boss, but also shoulder the burden of being solely responsible for the business’s success or failure.
·        Partnerships are the simplest type of legal structure to form for businesses with two or more principals. The potential downside is that while partnerships have no formal paperwork requirements, they usually don’t protect partners from liability. Partnerships can be tricky if there is disagreement over work ethic, goals, or roles in business and leadership styles.
·        A limited liability company (LLC) is a business structure that has features similar to both corporations and partnerships. LLCs protect the owner(s) from certain liabilities, including business debts, while the legal structure allows for a flexible management arrangement.
·        Corporations are limited liability partnerships that are separate and distinct from their owners. In a corporate business structure, shareholders have the right to participate in profits, but are not held personally/financially liable for the company’s debts.

Still uncertain? No worries! Business structures can change over time. Often, businesses that start out as sole proprietorships or partnerships grow, shifting to LLCs and corporations. If your business needs and plans change, your business structure can most likely change with them. The Orlando Law Group has a team of knowledgeable dedicated attorneys on hand who can answer any questions regarding this important topic, and give you further in depth information. Call 407.512.4394 and let our team guide your process.  

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Online Businesses offer an outstanding opportunity in today’s market for entrepreneurs and leisure hobbyist and enthusiasts that want to take it one step further.  If you are considering a new online business, there may be federal, state, and local laws that must be met and standards and procedures to follow in order to comply. There is also a structure to follow if you need financial backing.  Here are some great tips to consider:
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Thinking of Starting an Online Business?

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Your Business Plan:  What is a Business Plan and Why Is It Important?

A business plan has two main purposes—to outline your business goals and to define the strategy for achieving them. Business plans are traditionally used when companies seek investors or commercial lenders. The business planning process will help your online business define a strategic blueprint for the operation and success of your company.  A solid business plan will create your own unique identity and it will give you the confidence and documentation needed to get out there and pitch your idea, product or services to anyone.  Basically if you have an idea for a product or service and hope to get potential investors, lenders, donors or business partners on board, a business plan is a requirement.

Declare the Controlling State Law

If you don’t declare the controlling state law, then anyone who sues you can determine the state law that applies.  It is important to include somewhere in your online contracts or your website the controlling state of your business.  If a plaintiff can show good reason for suing you from a particular state undeclared, that state’s laws will apply. This means that you could be ordered to court on the other side of the country. Chances are it could also mean that you will be more likely to lose based on the standards of the other state’s court.  You may need legal help to create Online Terms and Conditions to declare the governing state.

Best Practices Suggest You Set Up a Separate Business Checking Account

In most states, including Florida, all business transactions are required to be made through a separate business account.  This is extremely advisable and a benefit to your company if you want to receive the greatest number of business deduction possibilities, as well as maintain corporate protection. Remember, always keep your business finances and your personal finances separate. You don’t want to face expensive fees and penalties.

Privacy Policy and the Legal Disclaimers You May Need on Your Website

Many online businesses collect information in some way.  If your intent is to grow your business by collecting information from your site’s visitors, you will need to protect yourself legally by establishing a Privacy Policy. This special policy sets forth what you will or will not do with information that you collect.  Once you publish your exclusive Privacy Policy online, the requirement you will need to maintain is to “follow it”.  Also and just as important, if you change your privacy policy you will need to notify the users.  This protects you and will allow the users to accept the changes. Seeking legal advice is highly recommended in drafting your special Privacy Terms.  There are Rules and regulations for conducting e-commerce that apply mainly to online retailers and other businesses who perform consumer transactions by collecting customer data. Important to remember, even if you do not sell anything online, laws covering digital rights and online advertising may still apply to you. The Federal Trade Commission (FTC) is the federal agency regulating e-commerce activities, including use of commercial emails, online advertising and consumer privacy.

Other Protections You May Need

There are many other topics you may need to explore in securing a safe Online Business Experience. At The Orlando Law Group, our diverse team of attorneys have a wide breadth of experience with roots that run deep in the community where we live, work and play.  Our approach to serving clients is twofold.  We believe in preventative action and proactive engagement to provide exceptional legal representation.

  • Identity Theft – And as Business Owner Your Responsibilities
  • Privacy Rules for Financial Companies
  • Children’s Online Privacy
  • Computer and Information Security
  • Selling Internationally/Exporting
  • Using Consumer Credit Reports
  • Digital Rights and Copyright Laws
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ATTENTION EMPLOYERS: IS YOUR SOCIAL MEDIA SENDING THE WRONG MESSAGE AS TO YOUR WORKERS COMPENSATION COVERAGE?

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If an investigator finds that an employer is performing work that is outside the classification codes for which their policy covers, they can report it to the State. The Department of Financial Services has the power at that moment to issue a stop work order. In order to release the stop work order, the employer will have to pay at least $1000.00. At that point, the Department of Financial Services will require the employer to submit payroll records and they generally require records for the preceding two year period.

The Department of Financial Services calculates the premium that should have been paid based upon what they believe were the classifications that were not covered on the policy. The penalty can be two times the premium that should have been paid within the preceding two year period or $1000 whichever is greater.  Once the Department assesses their penalty, you have only 21 days within which to appeal it.

So, the Department could investigate an employer by looking at their website. If the website lists services that are not being covered under the policy, then they can send an investigator to confirm the employer’s activities.  Your website and Facebook page could also show pictures of events or activities performed by employees and may provide evidence of misrepresenting employee duties.  Often times, employers hire marketing companies to manage their website and Facebook page. These companies may use stock photos or captions that could incorrectly indicate the employer is engaged in services or activities that they are not.

If your business is issued a stop order, it is best to contact an attorney immediately. An attorney is able to gather all the required payroll records and make sure only those that truly represent payroll are submitted to the Department. The time deadlines are strict and failure to meet them can cause the business to pay penalties in excess of what they actually owe.  In addition, an attorney has the knowledge of the classifications codes and whether the codes being applied by the Department are accurate. 

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 In the wake of a workplace injury, many employees are in great need of compensation, as their newfound injury has brought incredible hardship to their finances. It is natural for a responsible employee to want to collect as much compensation as possible, so they can pay their medical bills, mortgage, or rent, and still have money for any accommodations that might need to be made to their homes (i.e. wheelchair modifications).
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Is It Possible to Collect Workers’ Comp and Unemployment Benefits at the Same Time?

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Unfortunately, most workers are not eligible to receive unemployment benefits while they are getting temporary disability benefits under workers’ compensation. Florida workers’ compensation law doesn’t allow injured workers to collect unemployment compensation while simultaneously collecting temporary disability or permanent total disability benefits.

The exception occurs when workers who have been injured and then released by their doctors to perform light duty work. These types of workers may also receive unemployment in addition to workers’ comp benefits. Although in this situation both types of compensation can be collected, the disability benefits will be subtracted from the amount due under workers’ compensation. As a result, it’s not much of a “win” because one’s benefits will be reduced for any period of time that unemployment is also being collected.

If a work injury has left an employee with a permanent injury or disability, that worker will need to file for Social Security Disability since he or she will not be able to work again. Workers who need time off work to rest and recoup from an injury may be able to collect unemployment and Temporary Partial Disability benefits.

In order to understand these benefits, it is important to define what these different types of benefits really are.. Workers’ Comp benefits are available to injured workers when their employer carries workers’ compensation coverage. Unemployment benefits provide workers with some money once they lose their job. Additionally, unemployment benefits can be collected if an injured worker tries to return to his job but his employer no longer has work available. In order to receive unemployment benefits in this situation, the worker needs to be physically able and available to work.

Because trying to collect both types of benefits can be complex and each of them has their own rules and guidelines, you might want to speak with an attorney to help you navigate the complexities of benefits’ laws.

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In April 28, 2016, the Florida Supreme Court rendered its decision in Castellanos v. Next Door Company. Shortly thereafter the Florida Supreme Court rendered its decision in Westphal v. City of St. Petersburg on June 9, 2016. The Castellanos case had been tried on July 3, 2012 and then oral argument took place on November 5, 2014. Westphal was tried on June 22, 2012 with oral argument occurring on June 5, 2014. 

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The Florida Supreme Court makes long awaited impactful decisions in Workers Compensation

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So, these cases sat pending for 540 days and 735 days respectively since oral argument.  These two decisions have now turned back the clock on major provisions of the workers compensation law. In Castellanos, the Supreme Court declared the attorney provision of the statute unconstitutional. The statute had been changed in in 2003 such that an attorney representing an injured employee was strictly restrained to a formula fee based upon the value of the benefits secured. Prior to 2003, the statute allowed for a reasonable fee which would further allow for an attorney to receive their fee based upon the reasonable hours to secure the benefits. In coming to this ruling, the Court explained that the attorney’s fees in Florida Workers’ Compensation serve a dual purpose. First, the fees enable the injured worker who has not received benefits to obtain competent legal assistance. Secondly, the fees serve as a penalty to employers that are wrongfully denying benefits. As a result of the Castellanos decision, the attorney for the injured worker has the ability to show that a statutory or formula fee will result in an unreasonable fee and thereby assert a fee based upon the hourly basis.

The Court in Westphal declared the provision of the statute, 440.15 (2), as unconstitutional. This section limited the injured worker to 104 weeks of temporary total disability. The Court stated that this limitation deprived the injured worker of disability benefits under these circumstances for an indefinite amount of time which created a system of redress that no longer functioned as a reasonable alternative to tort litigation. Workers Compensation Insurance provides the Employer with immunity against a civil action. As such, the injured worker gives up the right to sue them in tort for exchange of workers compensation benefits. The Court found that the limitation to 104 weeks was no longer a reasonable exchange for giving up the rights.

To provide some history, Westphal involved a firefighter who had exhausted his 104 weeks of temporary benefits and sought Permanent Total Disability benefits. However, he still required additional surgeries and did not meet the pre-requisite for Permanent Disability Benefits because he had not reached Maximum Medical Improvement.  Thus, he fell into a gap period between exhausting the temporary benefits and being able to pursue permanent benefits.  The Supreme Court found this gap period violated access to courts and cut off their benefits at a critical time with no redress. In declaring it unconstitutional, the Court revived the 260 week limit on temporary total benefits that existed in the pre-1994 version of the statute.  

WHAT EFFECT WILL THESE DECISIONS HAVE ON EMPLOYERS

As a result of the Castellanos decision, we have seen an immediate spike in attorney representation for injured worker’s claims and the filing of claims. Moreover, there were awards of attorney’s fee to claimant’s attorneys going back several years which had just been sitting out there. There was no way to push the fee issue and the claimant’s attorneys were waiting until this decision in order to pursue an hourly based fee. We are seeing the filing of Verified Petitions for Fees to resolve those old fee awards on an hourly basis. While the starting point still remains the formula fee, there is no doubt that we will see more litigation as claimant’s attorneys will have an incentive to take more depositions and engage in more litigation in order to provide evidence that the statutory fee would produce an unreasonable result. We will see their willingness to litigate smaller issues as there is an incentive to do so.  

With Westphal, there is still some ambiguity as to the extent the limitation of 104 weeks applies. The Court’s decision rendered the statute unconstitutional only “as applied to Westphal and others similarly situated”.  Thus, the ability to secure the additional weeks may be dependent upon how similar the injured worker is to Wesphal.  In the pre-1994 statute, it provided 260 weeks for temporary total benefits and a separate 260 weeks for temporary partial benefits. As such, this decision could mean the injured worker is entitled to up to 260 weeks of temporary total and that includes the 104 weeks of temporary partial. Alternatively, the decision could mean the injured worker is entitled to up to 520 weeks of combined temporary total and temporary partial. Nonetheless, we can expect that there will be a push for injured workers to remain on a no work status for as long as a period of time as possible.

Because of Castellanos and Westphal, the exposure for claims has increased which means an increase in attorney representation and filing of claims. NCCI originally filed for a rate increase of 17.1% for workers compensation policies. However, they just filed on July 1, 2016 an amended rate and proposed 19.6% with an effective date of October 1, 2016. So it will now cost the employer more for policies and they will be faced with increased claim exposure.

WHAT CAN BE DONE TO MINIMIZE THE IMPACT

It is critical for Employers and their Insurance Carriers to thoroughly and accurately evaluate their claims at every stage in order to provide the appropriate benefits and negate those areas for potential fee entitlement.  The medical experts selected to provide treatment will be critical to reigning in the claimant’s desire to remain out of work as long as possible. It will be necessary to make sure that the medical provider is applying objective criteria in determining work status and the placing of the worker at MMI. A knowledgeable attorney will be able to address issues and design an appropriate strategy to help Employers and their Insurance carriers through the process.

By Attorney Heather McLeod

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What is Workers’ Compensation?

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If you are hurt on the job, it’s important that you know what options are available to you to alleviate the anxiety of unpaid medical bills. While Workers’ Compensation won’t solve all of your problems, it should at least help with the financial burden the injury has created.

Workers’ Compensation in a Nutshell

Often called “Workers’ Comp,” Workers’ compensation insurance is a type of insurance purchased by employers for the coverage of employment-related injuries and illnesses. It is a state-mandated program consisting of payments that are made to an employee who is injured or disabled in connection with work. It is required and varies slightly by state, as every individual state has its own workers’ compensation insurance program. In Florida, the Division of Workers’ Compensation site attempts to ensure that anyone interested or involved in the Florida workers’ compensation system has the tools and resources they need to participate. The site assists injured workers, employers, health care providers, and insurers in following the Florida Workers’ Compensation Rules and Laws.

In most situations, injured employees receive workers’ compensation insurance, no matter who was at fault for the injury. Because these workers’ comp benefits act as a type of insurance, they keep the employee from suing his or her employer for the injuries covered. It is designed to cover injuries that result from employees or employers carelessness.

Situations That Are Covered

It should be noted that workers’ compensation benefits DO NOT cover pain and suffering. Rather they cover tangible expenses including: medical care from the injury or illness, replacement income, costs for retraining, compensation for any permanent injuries, and benefits to survivors of workers who are killed on the job.

The range of injuries and situations covered is broad, but there are limits. Not ALL problems that occur in the workplace are covered. Coverage may be denied in situations involving: injuries caused by intoxication or drugs, self-inflicted injuries, injuries from a fight started by the employee, injuries resulting from horseplay or violation of company policy, felony-related injuries, injuries an employee suffers off the job, or injuries claimed after an employee is terminated or laid off.

Who Receives Worker’s Comp

Most types of employees are covered by workers’ compensation insurance. However, there are some exceptions. States commonly exclude some workers from coverage, such as: independent contractors, business owners, volunteers, employees of private homes, farmers and farmhands, maritime employees, railroad employees, and casual workers.

Dollars and Cents

As a general rule, an employee who is temporarily unable to work will usually receive temporary disability payments of two-thirds of the employee’s average wage, up to a fixed amount set by law. An employee who becomes permanently unable to do the work he or she was doing prior to the injury, or unable to work at all, may be eligible for long-term or lump-sum benefits for permanent disability. The workers’ compensation system also pays death benefits to surviving dependents of workers who pass away from work-related injuries. The eligibility for wage replacement begins immediately after a few days of work are missed because of a particular injury or illness.

If it is the best fit for your situation, Workers’ Comp can be a huge help during a very difficult circumstance.  You might need help navigating the legal end of it if you don’t understand the insurance company’s approval of the workers’ compensation claim or if you disagree with the doctor’s perception of your injury – for example, if you feel more ill or injured than the doctor thinks you are.

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Know The Value of Your Intellectual Property

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Protecting your business name, key phrases, symbols and products at the State level is affordable and helps prevent other entrepreneurs from monopolizing on your groundbreaking business concepts. At the Federal level, trademarking your logo will protect the image associated with the products and registering the mark and/or domain name with United States Patent and Trademark Office (USPTO) is an extra layer of protection that will identify your mark as a source of the product. While Federal protection is more of an investment, the registration does not expire if all filing requirements are satisfied.

Intellectual Property theft is a growing threat, especially in areas of digital technologies, and is costing U.S. businesses billions of dollars each year. Protecting your ideas, creative expressions and preventing product infringement should be high on the small business owner’s list of priorities. Many small businesses are targeted specifically due to their inability to respond legally.

Trademarking the standard characters of your business entity is fairly simple and the return on the investment is invaluable. As a business owner, you should consider your options to protect, manage and enforce your intellectual property rights in order to get the best possible commercial results from its ownership.

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My Business was Sued! What Should I do?

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Before you are Sued

Often times, before being sued you will receive a demand letter. A demand letter is a formal notice demanding that the recipient performs an alleged legal obligation such as rectifying some identified problem, paying a sum of money or acting on a contractual commitment. Most demand letters will include a deadline for action. Demand letters are not actually lawsuits. At this stage, you should consult your lawyer in order to decide how to respond. At times, you may be able to show the writer that you did nothing wrong or you may be able to reach a settlement agreement. By taking these necessary measures, you could avoid being sued all together.

Once a Formal Complaint Has Been Filed

If the matter is not resolved through a demand letter or settlement, you will receive a formal complaint. A formal complaint can be delivered by a sheriff, mailed to your company or given to whomever your company indicated as the “agent for service of process.” Accompanied with the complaint is a “summons.” A summons indicates that you have been sued, states the claims being made, tells you how long you have to respond, and identifies the appropriate court.

The following is a list of steps you should consider in response to the summons:

  • Call your lawyer. Speak with your lawyer before you attempt to contact parties or witnesses, solicit advice from any non-lawyers, or respond to the legal action. Be honest with your lawyer and collect all relevant documents.
  • Refrain from discussing the issue with anyone other than your lawyer. Do not speak with the opposing party under any circumstances, and do not provide a recorded statement without your attorney’s consent.
  • Review the Papers Promptly and Act Quickly. In most courts, you are only allotted 20 – 30 days to respond to a complaint. A hearing can sometimes be set within of 3 – 10 days. A lawyer will need the time to learn the facts and prepare a response. Putting it off or ignoring the complaint can be costly. Failure to file an answer to the lawsuit within the time allotted can lead to a default judgment against your business. A default judgment can award the plaintiff full damages sought in the complaint, and force you to make payments to satisfy the judgment promptly.
  • Notify your insurance company. Because defending lawsuit can be very expensive, it is important to verify your business and homeowner’s insurance. Check your current and older policies. Confirm that you are covered by the insurance of a trade association, your landlord, or policies brought by suppliers, vendors or others that may consider your company insured. Converse with your lawyer and insurance agent to find out what kind of insurance you possess so that you can obtain help to resolve your claim.

In our culture, it’s just a reality that every business owner has a high likelihood of being sued at some point. Taking these actions can help ease the tension of being sued and help you obtain the best result.

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Should I hire an employee or an independent contractor?

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However, in our increasingly mobile world, hiring isn’t just a matter of finding the right employee. Whether virtual or on-site, sometimes an independent contractor is a better fit for the job at hand.

What’s the difference? According to Bankrate’s site, the difference is based primarily on the degree of control and independence over the work.

“An employee typically performs duties dictated or controlled by others. In many cases, an employee is provided training [and necessary tools] to do the job. And an employee works for only one boss.

“An independent contractor, on the other hand, generally has several clients. A contractor has his or her own tools (and in the modern workforce, this means digital devices, not just hammers and wrenches) and sets his or her own hours. And a contractor invoices for the completed work.”

Hiring an independent contractor can be a good fit if the job at hand requires a specialized skill that the company lacks or the business owner doesn’t plan to specialize in. It can also be a good idea for a short term project or a busy season. If a small business needs to save on labor costs, this option can also be a good way to go. An employer doesn’t need to pay benefits for contractors. Additionally, companies can save on taxes because it’s not necessary to pay the employer portion of Social Security, Medicare or state unemployment.

However, it’s important to understand and abide by the classification difference. It’s never a good idea to hire a contractor just to avoid the tax implications when you actually need/want an employee. If your company improperly hires a contractor when it should hire an employee, it is the business that will bear any compliance burdens and potential punishments. The IRS can come after your company when it discovers the misclassification and collect unpaid employment taxes. If you hire an independent contractor, you will need to file a 1099 if you pay him or her more than $600/year.

When is it time to hire an employee instead of a contractor? According to Raymond Grainger’s article on Entrepreneur, “The decision to hire full-time employees doesn’t have anything to do with the size of the organization as much as its profit margins. If the billable time of current full-time employees is at or above 85 percent and the profit margins are at least 50 percent, those are good indicators that the company is ready to add another full-time employee. A company makes less of a profit margin on contractors, so it’s important to factor in their workload.”

By Grainger’s reasoning, if these numbers aren’t being reached, the company is better off keeping its costs variable (by using contractors) until the firm can reach these margins.

Sourcing quality talent through independent contractors can be a good strategy for business owners. It’s just important to understand the ways they are different from employees and to use each classification well. Whether you’re hiring an employee who is going to be with you as a long-term investment or you’re working with a specialized contractor, there’s great value in knowing where the best talent is and how to manage it.

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Benefits of Using Accounting Software

Benefits of Using Accounting Software for Your Business

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In the accounting world, there are a lot of software choices that can make or break any business. Some software stands out from most choices, however. Good accounting software is highly beneficial to a business, and enables accountants to help the businesses they represent in a number of ways. There are a few programs offered by accounting solutions, each of which is affordable, easy to use, and allow for significant transparency in finances.

Adaptable

One of the most useful parts of some accounting programs is that each one is adaptable to the business using it. Often, accounting software is created with general usage in mind, so that they can be useful in some way to most kinds of business. However, this means that they will include many features that are entirely useless or unnecessary for the company they are bought for. More intuitive software, on the other hand, is built from different parts or modules. The result is an accounting program that is tailor-made for the company it is bought for and it is easily adaptable to changing marketplaces. This also means that companies only pay for what they will use, and they can end up paying less for it.

Efficient and Easy

Top accounting software is put together in a very simple way that is easy to learn and operate; It takes nearly no time to learn how to use this software. This saves businesses time that would otherwise have been spent by accountants needing to learn their new software, and money that would otherwise have been spent covering likely mistakes due to unfamiliarity. Accounting software also allows for very easy data storage, so day-to-day occurrences can be checked easily and quickly. Despite the simplicity of the programs, accountants are able to be highly efficient. The software is able to perform tasks such as predicting spending patterns based on invoices while remaining versatile, fast, and easy to use.

Versatility

Possibly the most important factor of the program is that accounting software helps businesses in more ways than simple accounting. Some accounting software, being as unique as it is, is able to perform tasks that most other software can’t. For example, it is able to examine spending trends, commitments, and project budgets so that it can warn and advise project managers when they are approaching budget limits. It can file business taxes and generate financial reporting and data. This means you can manage financial operations anywhere on the globe. In essence, the software is its own manager, not entirely unlike having an extra accountant who can monitor entire projects with a guaranteed efficiency (and high work ethic).

From www.sme-blog.com to The Small Business Blog

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Taxes Bankruptcy

So, You Still Haven’t Filed? Tax Do’s and Don’ts for You and Your Small Business.

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Tax time certainly isn’t the most exciting part of running your own small business. In fact, for most business owners, bookkeeping, in general, is a necessary evil. Keeping receipts, tracking expenses, and knowing tax law is probably NOT the thing that drives you.

But, it needs to be done. And it needs to be done well. If tax season is typically a stressor for you, a little planning and effort might help your tax return go smoothly – even this close to April 15th.  Here are a few tips for you to consider.


Don’t fail to file. Find out exactly what paperwork you need to file for your specific type of business. Keep your receipts, invoices, bank statements and other documents organized in case you ever get audited. If you need to backtrack to find your documents and get caught up, do it now. Don’t wait another second!
Do keep simple records of earnings and expenditures. Bookkeeping can be a very basic system: money in and money out. You can keep a spreadsheet or even just a ledger book. However, we strongly recommend an online accounting software package such as QuickBooks, FreshBooks, Wave or Zoho.  With little to no investment, such a program can save you hours in time, and make your accountant’s life easier at year end. (Online reviews like this one will help you choose a software that works best for you.) No matter what method you use, you will need to break down how you spent and earned in order to get the information the IRS needs.
Don’t forget to claim for the costs incurred as a result of setting up your business, such as company formation costs or any equipment you may have purchased.
Do make sure you claim all the allowances you and your business are entitled to. These include everything from capital expenditures to claiming help with your business rates. If you are running a business from home, check into claiming expenses for a proportion of your home-related costs.
Don’t blend business and personal. Keep business expenses, income and accounts separate from all personal finances to avoid confusion.

Do consider hiring a good accountant. This might be our best piece of tax advice! A good accountant might become your most important advisor, and could even save you money in the long run. At this late date, you might be in a little bit of a crunch but consider these qualities in an accountant (as taken from the FedEx Small Business Center site):

  • Choose someone who is responsive and timely. A good indication of their responsiveness? How quickly they return your call or email. You want to be on their priority list, not their back burner.
  • Ask around for a personal referral. If a friend or family member endorses an accounting professional, odds are you’ll be in good hands.
  • Look for someone with experience in your industry. Many accountants specialize in a particular field. If you own a business, choose an accounting professional who understands your work.
  • Find one who’s right for you, personally. Like in picking a doctor or dentist, subjective preferences play a role. You’ll be forming a long-term relationship with this person, so if your communication skills clash, keep looking.
If tax time was a bit of a scramble for you this year, we’d encourage you to plan ahead and develop some good recordkeeping habits now in anticipation of next year. Stay up-to-date by reconciling bank accounts, updating your accounting system and maintaining your books so they’re current and accurate when you need them. Just 30 minutes a week can make all the difference when tax times rolls around next year.

 

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Is a franchise right for me

Is a Franchise Right for Me?

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More and more people are looking to set up their own business, especially with the economic uncertainty and lack of jobs on a global scale. But setting up a business from scratch is not for the fainthearted. One in three new businesses fail within the first three years, often leaving a trail of financial devastation in their wake – which is why so many who want to reap the benefits of running their own business opt for the tried and tested franchise route. Well-known business models and familiar household names ensure that the franchise option for new business start-ups is a long-established and accepted path. Starting a business under a well-known and proven brand stands a greater chance of succeeding, than starting up from scratch.

The real estate market however is still buoyant – certainly in the estate arena at least. But owning an estate agent franchise is by no means a quick path to riches, and if you choose this franchise option, you will need to be energetic, motivated, a great communicator and possess real commercial tenacity to make it work for you – A successful business in real estate is as much about being good with people as it is about being good at sales – and you have to love both!

These days you don’t even need a high street base. Running your business online is becoming increasingly more viable, and the internet has taken its place in our lives as the oracle of all things real-estate. You can have a virtual shop, you can exchange virtual money, you can talk via email, Skype or text, pay by PayPal, you can take credit card payments with your mobile and conference call prospective tenants and landlords as long as you have a computer, broadband and a web-cam! Paperwork is paperless and the whole way we run and operate business has changed beyond all recognition.

Running a business without doubt requires the same, if not more commitment as you would apply to a job as a simple employee, but the difference is that you can, within reason, choose your own hours to fit around other commitments such as family or other jobs for example.

The private estate industry is growing exponentially, with fewer and fewer people able to buy their own properties turning to the rental market, so if you are willing to get your hands dirty and muck in wherever your business needs it, you’re keen to try new approaches, and to take on new challenges and have a great attention to detail your business will do well.

Source from www.sme-blog.com to The Small Business Blog

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Partner Divorce

How to “Divorce” Your Partner the Appropriate Way

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It is a well-known saying that a business partnership is a lot like a marriage. Unfortunately, just like marriages, partnerships can fail. In fact, some statistics say that 50% of both end in divorce.

When they do, it is best for everyone to make it as amicable as possible. Business partnerships end for a variety reasons: personality conflicts, different styles of doing business, financial difficulties, new goals or lifestyle changes for one of the partners. As long as you haven’t had a huge falling out, your exit strategy can ensure that your interests in the business are protected and that you leave with a favorable reputation.

As with any relationship, communication is the key at every step – including when you choose to end the partnership. Your business partner should not be surprised when you decide you want to move on. If they didn’t already know that your goals were shifting or that you were discontent, you start the proceedings at a disadvantage. Communicate along the way. And, when you do decide to tell them, don’t use email or a phone call to avoid the tough conversation. A sincere face-to-face interaction will be best.

As well, if you know you want to move on, don’t wait too long to start planning. Ending a business partnership is not an overnight process, so keep a time-line in mind as you determine what works best for you.

There are several options to consider for terminating the partnership. Start by having a brainstorm session with a few of your trusted advisers on all the options. Two things will help this brainstorm. First, review your owner’s agreement. Before you went into business, you should have prepared an agreement. Revisit the document in detail so you know if possible options are already outlined. Second, determine the value of your business and what the financial ramifications are of selling or leaving the business in general.

You could simply offer to sell your partner your half of the business. Or, you could offer to bring in a third party whom you could groom together and sell that third party your half of the venture. If your partner is not interested in moving on without you, then you may opt to close your business and support each other in your new pursuits. The process will go smoothest if you can come up with a win-win. Determine what would be a win for you, a win for your partner and a win for you both. As in any negotiation, you need the other side to have some wins. So when you are ready to present your ideas to your partner, go in with a plan that allows you to make some concessions

There are a few practical considerations that will help should things start to get sticky:

  • Obtain a personal attorney. You won’t be able to use the company attorney because it would be a conflict of interest. Find a new attorney who will work with you exclusively. Have them go through all the details with you and coach you on possible outcomes, and then keep the attorney in the loop at every step of the way so that she can continue to anticipate and coach.
  • Consider all paperwork that needs filing, as well as all accounts that need closed. Make sure that all debts are all paid off, settled, or transferred to the new owner. Follow-through on whatever you have agreed upon, taking care to meet every financial obligation and other milestones on time.
  • Finally, once everything is agreed upon, announce it to your staff. Help stem any gossip by setting the record straight by telling them that you and your partner have agreed to go separate ways and what the plan is going forward. If the business is going forward without you, the change in leadership can be scary for your staff, so this is a critical time to show your confidence.
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The Legal Aspects of Setting up a New Business

The Legal Aspects of Setting up a New Business

Beginning a new business can be an exciting process, but the legal aspects of it can be quite intimidating. Often, asking business solicitors for advice and aid can be a good way to get everything in order. If you are wondering what sort of questions you should ask when getting law advice for your new business, consider the starting points below.

Commercial Property

Any business, even one that focuses mostly on online activities, needs a physical location to get started. The decisions about whether you want to buy or lease an office space and what sort of zoning permits you need are among the first and most significant legal questions you will face. Business solicitors can help provide advice on mortgages, lease extensions, the repurposing of property, and contract negotiations regarding commercial buildings.

Employment Law

How do you plan to handle the hiring process for your business? Even a start-up company that includes yourself and a few friends will need to expand the staff if it is successful. Any sort of hiring process requires you to know about human resources laws and regulations in your area, redundancy procedures, and contract law. There is a need to make sure that the hiring process is fair at all times, but also to ensure that you are protected from people who try to unfairly take advantage of the system.

Partnerships

Most businesses start up as a small group of individuals, but they can grow quickly. When that happens, it’s important to determine a hierarchy of authority and to think about how you want to handle present and future partnerships. You should seek out advice on what personal investments should be required from each partner, how profits and losses need to be allocated among the different people involved, and how much flexibility you want in terms of altering the partnership. Remember also that successful business people starting a new business can be an exciting process, but the legal aspects of it can be quite intimidating. Often, asking business solicitors for advice and aid can be a good way to get everything in order. If you are wondering what sort of questions you should ask when getting law advice for your new business, consider the starting points below.

Commercial Property

Any business, even one that focuses mostly on online activities, needs a physical location to get started. The decisions about whether you want to buy or lease an office space and what sort of zoning permits you need are among the first and most significant legal questions you will face. Business solicitors can help provide advice on mortgages, lease extensions, the repurposing of property, and contract negotiations regarding commercial buildings.

Employment Law

How do you plan to handle the hiring process for your business? Even a start-up company that includes yourself and a few friends will need to expand the staff if it is successful. Any sort of hiring process requires you to know about human resources laws and regulations in your area, redundancy procedures, and contract law. There is a need to make sure that the hiring process is fair at all times, but also to ensure that you are protected from people who try to unfairly take advantage of the system.

Partnerships

Most businesses start up as a small group of individuals, but they can grow quickly. When that happens, it’s important to determine a hierarchy of authority and to think about how you want to handle present and future partnerships. You should seek out advice on what personal investments should be required from each partner, how profits and losses need to be allocated among the different people involved, and how much flexibility you want in terms of altering the partnership. Remember also that successful businesspeople tend to get many exciting opportunities once they’ve established themselves. In case it’s time for someone to move on, advice on dissolving partnerships is also useful.

Protection from Crime

Business crime can take many forms, including embezzlement, security breaches, or even physically dangerous situations such as robberies or arson. Business solicitors can help provide you with advice on where your potential vulnerabilities as an organisation are and how you should go about protecting yourself. For example, if your business requires you to have a lot of cash on site, you need to make sure you invest more in security and look into the proper levels of insurance to protect not only your interests but also the interests of your clients and customers.

Having somebody who knows about the ins and outs of business law is an important step that you can take to protect your fledgling company from the perils that await many new businesses. There are many legal aspects to consider, and no matter how excited you are about the possibilities of your new company, it always helps to have somebody else give their advice and opinions.e tend to get many exciting opportunities once they’ve established themselves. In case it’s time for someone to move on, advice on dissolving partnerships is also useful.

 

 

Source: www.sme-blog.com to The Small Business Blog

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Business Takeovers

Business Takeover Disasters!

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The process of taking over another company can be a very exciting time for you and your business, but it can very quickly turn into an unpleasant experience with serious lasting consequences. Here are some of the biggest mistakes made by companies during takeovers:

  • Inadequate due diligence – You need to have done extensive research into the finances, existing contracts and liabilities of the company you are buying in order to avoid lawsuits, extra expenditure or loss of sales.
  • Ignoring the culture of the target- If you underestimate the importance of culture then you are likely to experience some clashes, as no two companies will ever seamlessly fit together. To avoid misunderstandings and conflict from the beginning it is best if you set down a clear and consistent policy favoring the dominant culture.
  • Forgetting to keep customers informed – You will need to reassure customers that the takeover is in their best interests because your competitors will attempt to unsettle them during this period.
  • Failing to retain key employees – It is possible that competitors will also try to steal your best employees at this time by playing on insecurities they have about their own future within the company. You must reassure them and also be forthcoming about job cuts because an atmosphere of uncertainty will lead to false rumors spreading.
  • Overpaying for target – Do not get carried away and end up paying far above the market value of the target, especially in e-business where it can be easy to over-estimate the value of a company because of the amount of potential you believe to be there.
  • Bad leadership – Without a clear and powerful leader to drive the takeover forward it will stagnate. Make sure that if you are creating a combined managerial team from the two companies everybody is sure of their role.
  • Not understanding foreign markets – A cross-border merger can easily fail if you simply assume that things are the same in another country. Legislation or consumer attitudes towards products and advertising can be vastly different.
  • Poor IT integration – This process is never as simple as just swapping one IT system for another. In order for the transition to go smoothly it will require a lot of planning.
  • Failed brand consolidation – It will be important for you to have a clear idea of how you want to manage the new brands you acquire. Maintaining a brand can be expensive in marketing terms so you may wish to drop some entirely.
  • Mis-timing the takeover process – You will need to get the timescale just right in order to be successful. Rushing to completion could ultimately result in a poor merger with aspects overlooked, but going too slowly will only extend the period of upheaval further.

The best advice for completing a takeover successfully is to consider all the areas that could potentially go wrong and make sure you have a comprehensive action plan to guide the company through this period.

 

Source from www.sme-blog.com to The Small Business Blog

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Computer Monitoring Software in the Office

Computer Monitoring Software in the Office

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There are many ways to improve productivity around the office, but a problem that has been growing over the years is what employees get up to on their computers as soon as the bosses back is turned. It may be that single employee who you have an inkling is spending too much time on Youtube, or you may think you have an issue with your entire workforce. Whatever reason there is, a lot of companies have turned to computer monitoring software for help.

Computer monitoring software does exactly what it says on the tin: it monitors all activity that happens on the machine it is installed on. And if necessary it can also do this in secret. The first thing that comes to mind for most people when discussing monitoring software is legality and morals. Is it legal to install this type of software on employee’s computers? Yes, although every countries laws differ, in the vast majority you can install monitoring software on any computer you own. This of course means that if you have a boss to answer to you should get their consent first. The morality of installing this type of software depends on the individual and the severity of the situation. In some countries you must inform your employee(s) that they are being monitored, in others it’s up to you, so check your local laws before starting.

So what about the software itself -how does it work and what exactly does it do? There are a few different types of monitoring software, all can be downloaded and installed very easily. The more computers you want to install it on the longer it will take, but it should only take a few minutes for each machine in the office. The two types mentioned here are computer monitoring software and office monitoring software, and what you want to achieve will determine which you’ll need to go for.

Computer monitoring software is (usually) used to monitor a single computer. Once installed on the computer it will monitor everything, including websites visited, applications used, document and file activity (that’s anything opened, saved, moved or deleted), anything typed and anything printed (features vary from developer to developer but this is a standard set of features). You can set the software to run in hidden mode, so that no sign of it will be seen in places like the start menu, task manager or program files directory, or in visible mode so that an icon in the tray will let the user know they are being monitored. Either way you’ll need a password to access the interface. To view the results you can either log in on the actual machine, or set the software to send the reports to you via email every X seconds/hours.

Computer monitoring software should be used if you’d like to monitor either a single or a few computers. The other option is office monitoring software, which works in the same way as computer monitoring software but has a few extra features. Be warned, office monitoring software can get expensive depending on the amount of machines you’d like it installed on, but it does have its advantages.

As well as the above features, office monitoring software can be installed on each machine and controlled and viewed from a single computer (yours, for example). From there you can monitor each computer in real time; seeing a mini screen for each computer you own. You can also control each computer from your own, which is helpful if an employee has a problem that they need your help with. The main difference between the two types is that having office monitoring software being controlled from one single computer makes it easy to manage the entire office, rather than logging into each computer to view the logs, or waiting for an email. Office monitoring software is recommended for an office that has 10 or more computers that need monitoring.

As you can see, each type of monitoring software has its merits. If you’d like to monitor a handful of computers at home or at the office (up to say 10), you should be using computer monitoring software, but if you have a large office where you feel that all round productivity could be improved choose office monitoring solutions.

Source from www.sme-blog.com to The Small Business Blog

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Steps To Patent Your Idea

Steps To Patent Your Idea

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Coming up with a great invention idea is fantastic, however trying to figure out what next steps to take isn’t always easy! The United States Patent and Trademark Office doesn’t technically patent ideas, however it’s easy to get around this with the right application materials. Let’s look at how to patent your idea and get the invention process started!

Perform a Search

The first step any would-be inventor must take is ensuring their idea is original. While a Google search is helpful, your best proverbial bet is browsing the official U.S. Patent and Trademark Office website for ideas similar to yours. The office’s website provides plenty of information on this topic, including step-by-step instructions for performing a search. Information on how to determine if your invention is “patentable” is also available.

If you find an idea too similar to yours, don’t give up! Many inventors have this issue, and there’s nothing wrong with starting over–it just means your next big idea is on its way!

File a Provisional Patent

The best way to “patent an idea” is to file a provisional patent. Such a patent allows you to further develop your idea without worrying about another stealing it. A provisional patent also allows you to look for funding, and are less expensive than “regular” patents. You’ll have a year starting from the file date to work on your invention and can use the words “patent pending” to describe your idea.

File a Non-Provisional Patent

A U.S. non-provisional patent is a standard patent. The U.S. Patent Office recommends filing for this patent separately from your provisional patent rather than trying to “convert” one to the other. This provides you with more time and protection. Remember to mention your provisional patent in your application, which should include detailed explanations of your invention, how it functions, why it helps consumers, etc. Include drawings of your product–if you aren’t an artist, have a skilled (and trusted) friend or family member assist you. Fees and wait time vary according to year and how you choose to send your application. Electronic applications usually feature shorter wait times, and you’ll receive a digital certificate and customer number.

from www.sme-blog.com to The Small Business Blog

 

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How Should I Structure My Business

How Should I Legally Structure My Startup Business?

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Along with the countless other things a start-up has to deal with when setting up a company, there is the major decision of how the company should trade legally. Establishing it correctly at the outset is crucial and could eliminate many issues along the way. It could also have profound implications for the financial future of a start-up and the company.
Essentially there are four types of business structure:-
• Sole trader
• Partnership
• Limited company
• Limited liability partnership

A sole trader is someone who conducts a business or trade and has made no arrangements to be any of the other three types of business format. There is no mandatory central registry of sole traders so your affairs are entirely private. All the profits are counted as personal taxable income, the business assets will be personal property and the amount of tax payable is the same whether or not money is drawn out of the business. The owner is personally liable for any business debts or any other legal claims that may arise, such as product liability.

A partnership is where two or more people agree to trade as a unit and are essentially “sole traders” who share the profits and losses. There is no mandatory central registry of partnership businesses so again affairs are entirely private. It is imperative for the partners to draw up a partnership agreement that governs the conduct between them and deals with matters such as sharing profits, responsibilities and terminating the arrangement. Each partner may find they are personally liable for the actions of the other partner.

A limited company is a legal creation which is established in law and governed by the Companies Acts.
The registration process for a limited company is called Company Formation. It is advisable to use a company formation agent or an accountant to ensure the company is set up correctly.
Limited companies are registered at Companies House where a live database of all UK limited companies is kept and they are a distinct and separate entity from their owners and the people who run it. It has its own status for taxation, financial and general legal purposes.

An off the shelf company is a limited company that has been pre-registered with a name and company number and can be used to trade immediately.
The crucial difference between a limited company and a sole trade / partnership is the protection from personal liability for business debts. Unless a personal guarantee is signed or there is fraudulent trade, a limited company is “limited” in the sense that its owners are not liable for its debts. Some people see a limited company as an insurance policy, especially for a new or a high risk business. Many people have lost their savings and other assets because they started up not “being limited”.
On the flip side, unlike a sole trader who can draw money out of the business without incurring a tax charge, a company director would have to be paid under PAYE (including benefits such as a car or healthcare) and the shareholders are rewarded by means of a dividend, subject to the regulations.

Below is a summary of the pros and cons that are typically cited when considering forming a limited company.
Advantages
• Shares of the business can be given to others e.g. family or friends
• It may be easier to attract investors
• Obtaining bank loans may be easier
• There are no higher rate tax bands
• In the event of a partner leaving or dying it is easier to continue the business
• It is easier to sell the business
• There is a better public perception if a company is Limited
• It can assist in the protection of a name
• People have more confidence in the business if they can check your company on the public records at Companies House
• Subcontractors and agency workers may find it easier to obtain work using a limited company

Disadvantages
• The preparation of annual accounts will probably cost more than a sole trader
• The public can check up on certain aspects of a business

A limited liability partnership is hybrid of a partnership and a limited company. The LLP is registered at Companies House and is treated like a limited company in most respects but the profits are divided amongst the partners who pay tax on their own share at the rate appropriate to their circumstances. An LLP must have a minimum of two partners and one of the partners can be another limited company. It is a flexible creature but has not proved to be particular popular for small businesses.
As a general rule you should discuss your choice of business format with a qualified accountant prior to commencement – it will be money well spent. In most cases the limited company route is the safest option if one has any concerns whatsoever regarding a potential liability, but ultimately the consideration of risk is but one factor in a decision that may be based on many variables.
Whatever you choose we wish every success.

Source: from www.sme-blog.com to The Small Business Blog

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Goal Success

Planning for Small Business Success

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Embarking on a new business venture or project can often be a difficult and stressful period for a business owner. This can often be made even worse due to a lack of sufficient planning to guide them through the turbulence. In my many years in business I’ve learnt than nothing is more important than planning for success (and failure, see this post here).

Businesses of all sizes can benefit from careful planning. Don’t think that just because you own a small business that you shouldn’t set aside time to plan. There are times when planning becomes essential, especially if you need to prove to a lender that your business makes financial sense from an investment point of view.

This brings us to the first aspect of successful planning which is writing specifically for the audience it was intended. If you are producing an internal plan just for yourself than it is fine to create something loose and informal because you will understand the intention. However, if your plan contains specific instructions for employees to follow then you will have to write in greater detail to avoid misunderstandings.

Don’t make assumptions when writing a plan. Instead, you should try to research things in as much detail as possible. This will involve developing a complete understanding of the marketplace in which your business operates and an in-depth knowledge of the competition.

It is essential that all of your sums add up. because anything that is incorrectly costed has potential to throw the rest of the plan completely off-track. Bad financial estimation is one of the main causes of planning failure.

When it comes to actually implementing a plan, make sure that there are specific dates for the completion of each section. This is important because it helps you to evaluate the success of the project at various different stages along the way. Remember that you are not bound in any way to the plan and if necessary you can then make changes as you go along and circumstances change.

When I talk about business planning, though, I don’t mean reams of paper that takes you hours to write; instead use good business planning software, or tools, to allow you to briefly and concisely put the necessary points down somewhere always accessible.

 

 

Source: from www.sme-blog.com to The Small Business Blog

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Securing a Corporate Partnership for a Nonprofit

Securing a Corporate Partnership for a Nonprofit

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Corporate scrutiny over the past few decades has shown us the rising importance of non-profit partnerships.  However, many non-profits fail to secure valuable corporate partnerships because they don’t frame it the right way. Here are some things a non-profit need to do to form a successful corporate partnership:

  • You want to be clear on the reason you want to partner with them. What’s your charity’s goal and how could corporate partnerships help you achieve it?
  • Let the corporation you are trying to partnership know what’s in it for them. That’s not to say that all corporations are self-centered and don’t care about helping children or funding autism research.  You just need to put it in terms of the benefits to them, rather than overwhelming them with another problem there is in the world.  Let the corporation know how they can be the solution to a problem, how they can be the hero.
  • Identify areas of your charitable work that companies are likely to find interesting. A homeless charity may have a project that enables people to learn new skills so they can gain employment. This is very likely to appeal to companies because they understand the value of employment and it could offer some interesting volunteering opportunities for their employees.
  • Show the corporation how working together will increase their customer community engagement. Only then will the company commit the time, creativity and resources required to raise your profile and scale your social impact.
  • Offer to help co-create branded content using different media, you can position the partnership as a way to ease this burden while enhancing the company’s reputation.

As with any relationship, once the benefit to the other party is clear they will more readily share their time, expertise and resources. Without such an approach, the best of intentions and heart-felt commitment can fall on deaf ears, leaving both parties and the community at large at a loss.

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Buy Sell Agreements For Doctors

Buy-Sell Agreements for Doctors

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A Buy-Sell agreement is pertinent to many different types of businesses. Today we will just talk specifically about doctors. Medical practices are different from other businesses, because there is usually a lot of income made, and it’s not a family business that you can pass on to your heirs, unless of course they become doctors as well.

Definition of a Buy-Sell Agreement – A buy-sell agreement is nothing more than an executed contract where all the owners agree as to how the practice will be valued at the time of one of the partner’s death or disability, and how the stock ownership will be purchased. Without such an agreement in place, an accident could bring a thriving business into the middle of a complicated legal proceeding.

Benefits of a Buy-Sell Agreement – Some physicians who see themselves as healthy and not susceptible to accidents also stand to benefit from such arrangements. Think of a younger and older doctor joining forces, the terms of how to purchase the other party’s interest out in case of a mishap can be negotiated from the beginning in fairest terms for both sides.

Just as in any type of business, it is essential that the practice carry on, even in the event of one or more of the partnering physicians not being able to practice medicine anymore. Any industry must have a continuous, orderly manner of conducting its practice. The medical one carries a burden that reaches beyond financial gains or losses. A patient wants to have the comfort of knowing that their physician’s office can easily and without hassle continue a treatment that needs to be followed closely.

A physician’s asset lies in his knowledge and experience. A doctor’s set of skills is hardly something that can be passed on to heirs. Because the sweat equity will have generated some income stream, it is only fair that a financial pay-out be agreed upon for the family members that would be left behind.

In the event of an incapacity or premature death of one of the key physicians, their early exit can force a practice to associate itself with unwanted seed capital. Having seen this happen on more than one occasion, I can tell you this is not a position you want to find yourself in. A Buy-Sell agreement would prevent finding yourself in such predicament.

The necessary components to a Buy-Sell Agreement – There are many workings within a successful implementation of a Buy-Sell agreement. The first one is to make sure to have it funded. This translates to having a reputable insurance policy in place. The premiums you end up paying to have this contract in place will well be worth its weight in gold. Not all Buy-Sell agreements are created equal. Some key clauses you want to ensure your attorney includes in it are: The cost of buying out the partner’s share in case of incapacity / death, a provision to buy out the ownership interest over time in the event of insufficient capital, the care of the family members left behind, and early buy-out options. These are just some of the issues you will want to address.

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Income tax reduction trust

Income Tax Reduction Trust

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The Income Tax Reduction Trust is a type of trust specifically authorized by the Internal Revenue Code. These irrevocable trusts permit you to transfer ownership of assets to the trust in exchange for an income stream to the person or persons of your choice (typically you, your spouse or you and your spouse) for life or for a specified term of up to 20 years. With the most common type of Income Tax Reduction Trust, at the end of the term, the balance of the trust property (the “remainder interest”) is transferred to a specified charity or charities.

Income Tax Reduction Trust also reduce estate taxes because you are transferring ownership to the trust of assets that otherwise would be counted for estate tax purposes.

An Income Tax Reduction Trust can be set up as part of your revocable living trust planning, coming into existence at the time of your death, or as a stand-alone trust during your lifetime. At the time of creation of the this trust you or your estate will be entitled to a charitable deduction in the amount of the current value of the gift that will eventually go to charity. If the income recipient is someone other than you or your spouse there will be gift tax consequences to the transfer.

Income Tax Reduction Trusts are tax-exempt entities. In other words, when a Income Tax Reduction Trust sells an asset it pays no income tax on the gain in that asset. Therefore, after a sale the trust has more available to invest than if the asset were sold outside of the Income Tax Reduction Trust and subject to tax. Accordingly, Income Tax Reduction Trust are particularly suited for highly appreciated assets, such as real estate and stock in a closely held business, or assets subject to income tax such as qualified plans and IRAs.

While the Income Tax Reduction Trust does not pay tax on the sale of its assets, the tax is not avoided altogether. The payments to the income recipient will be subject to tax.

At the end of the term of an Income Tax Reduction Trust, the remainder interest passes to qualified charities as defined under the Internal Revenue Code. Generally, any charity that has received tax-exempt status through an IRS determination qualifies, but this is not always the case. It is also possible for you to name a private foundation established by you as the charitable beneficiary.

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Businesses That Benefit From the LLC Structure

Businesses That Benefit From the LLC Structure

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LLCs generally work best for:

  • Businesses with a limited number of owners, that are actively up and running. At about 35 owners of the business, at a maximum, the logistics of making collective business decisions are manageable.
  • New small businesses. Sometimes, new businesses want to pass early-year losses along to it’s owners to deduct against their other income, which may be a salary earned working for another company or income earned from investments.
  • People or business owners who have been considering forming an S corporation. S corporations provide limited liability protection to its owners and allow profits and losses to be taxed at individual shareholder rates, just like LLC’s. But these benefits come at a pretty high price: S corporations are significantly restrictive and a business can inadvertently lose its eligibility.
  • Existing partnerships. Only the LLC provides partnership-style pass-through tax treatment of business income while covering all of its owners, not just limited partners as in a limited partnership, from personal liability for business debts.
  • Businesses planning to hold property that will appreciate, as in real property. C corporations and their shareholders are subjected to a double taxation on appreciation when assets are sold or liquidate. Taxation occurs at both the corporate and individual level. S corporations that were originally organized as C corporations may also be subject to double tax on gains from appreciated assets. There can also be a penalty tax on passive income, which is money from rents, royalties, interest, or dividends, if it gets too high. Because the LLC is a true pass-through tax entity, it allows a business that holds appreciating assets to avoid double taxation.
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