Think Positive Even When World News is Negative

There is a lot of anxiety over current events including the state of our economy and the direction of our political leaders. This concern has impacted many businesses, great and small. However, many business owners need to realize that the stock market ups and downs, whether a foreign embassy is fully manned, or countless other issues newscasters display daily.  

It is true that many business owners will feel some type of impact from these larger scale news items, however the impact will probably not be as much as whether their individual business is selling its products and services to its customers. Regardless of the times, people still eat, sleep, get haircuts, go shopping for necessities and little perks, seek entertainment where they can, and millions of other things as they have been doing for years.

There are countless stories of businesses that have survived and thrived from these current down times and the ones that have hit our nation and world in the past. So rather than not do anything for fear of what may come, people should charge forward and continue to try to grow their business and succeed. Business owners everywhere should take a quick look at what they have, think about what they wish to accomplish, confer with their accountants and lawyers about what can be accomplished, and do it.

Protecting Your Biggest Asset - Your Property

When dealing with asset protection, a huge concern is property ownership.  At times, a trade-off is necessary between the control of the property, the tax benefits desired and protection wanted.

In a common scenario, a future husband and wife may own a property as joint tenants in common but wish to maximize their creditor protection and own it as tenants in the entirety.  This transfer may be useful in that they may choose to change ownership to tenants by entirety when they get married.  This change will offer the following benefits:

• give them the ability to have an undivided interest in the property,
• creditors will have limited ability to force distribution,
• the property will automatically transfer to the survivor upon death of one,
• a filing of bankruptcy by one may keep the property secure from creditors by the other.

However, the conveyance may cause a spouse the loss to individually transfer ownership, the property would lose its separate property status, and the entire property would become subject to the surviving spouse's creditors and the whims of the surviving spouse.

While this is just one issue and there are many ways to convey ownership of property, whether real or personal or utilizing corporate ownership or beneficiary interests in trust, there are many issues that should be reviewed and possibly addressed prior to making the transfer.  This runs true even for future business partners as well as marriage and other new ventures.

It is always highly recommended that one should consult with professionals who are experienced and skilled to establish a plan that addresses one's needs, desires and goals.

Business Formation - Choosing the Right One for Your Company

There are many options to choose from when establishing a new business.  Business entities range from simple sole proprietorships, partnerships, corporations, trusts, limited partnerships or limited liability companies to complex entities such as multiple tier stock corporations. The different types of entities each have different managerial control, liabilities, asset protection and tax consequences that should be reviewed and evaluated before proceeding.

Further the choice of the proper business entity must meet its proposed business particularities. The nature of the proposed business and the laws governing that venture may require certain structures to be used to proceed. Additionally one’s individual circumstances is important to the entity choice, since a personal bankruptcy can also risk the loss of your business and its assets too.

One should confer with a legal professional experienced in your field of business to determine what entity choice is appropriate for you.

Are Your Assets Protected?

Despite one’s efforts to limit their exposure to lawyers, there usually still exists the possibility that one may be sued for some reason.  It may happen because business is not as profitable as one may hope and their creditors are all requesting payment OR someone slipped and fell at their house OR someone was not paying attention while driving and got into an accident.  Whatever the reason, one should be prepared and make plans for these potential eventualities.

Asset protection is a plan using legal techniques and strategy to insulate assets from the claims of creditors. The techniques are designed to deter creditors from seeking judgment against a person and/or limit the ability of a creditor from seizing one’s property.  Asset protection is not about concealment or fraud.

An asset protection plan may be developed for a single event, such as starting a new business venture, or be more comprehensive to cover all aspects of one’s life. Additionally asset protection may be as simple as restructuring the use or ownership of a piece of property or be more complex and require the need of implementing creditor protection trusts, forming new business entities, creating defined benefit and qualified retirement plans to reduce future, potential creditor claims.

There are many techniques and strategies that people may use to protect their hard earned assets.  It is always highly recommended that one should consult with accountants, financial planners and attorneys who are experienced and skilled to establish a wealth preservation and management plan that fits one’s particular goals or needs.

Is a Generic "Fill in the Blank" Legal Form Right for Your Business?

Anyone can purchase a fill-in-the-blank form from the store or print one off the web, but are they appropriate for you and your business? 

One’s business may be as unique and creative as you are in running it. While a premade form may cover many of the issues that you need, it may not address all of your unique issues or circumstances. Manufacturers of these forms typically try to address many of the topics typically found with these forms, but you should realize that the form is being sold to the general market and not you individually.  There also exists the possibility that the form may address too much and be filled with information that you do not need (i.e. dealing with collections in pre-paid matters). If this is the case, then hopefully you bought a form that allows you to edit it so you can avoid unsightly cross-outs and possible confusion when the form is presented to a valued client.

Your business forms are only as good as the information in them. That is why a fill-in-the-blank form may not meet your legal business needs. It may behoove you to confer with an attorney to ensure your documents meet your particular legal needs and business requirements.

Independent Contractor OR Employee?

Control.  That is a key word for determining if a worker is an employee or an independent contractor. Many out there still have some confusion about how to classify their workers, and an improper classification may have severe tax and legal consequences.

To determine whether a person is an employee or an independent contractor, one must look closely at how the person is controlled by the employer.  The IRS provides some assistance in helping businesses determine the proper classification of a worker on their website, however the particular facts of the relationship is key to determining the person’s status.  A written contract or the filing of the proper papers with the IRS may help define the relationship, however they will not be definitive to the actual relationship that exists.

A few questions an employer must ask itself is:

1. Do I control or direct how the work is being done or just the end results?
2. Do I control when and where the work must be performed or just that the work be completed?
3. Do I control who the worker may use to complete the work being done or just the end results?
4. Do I control where supplies and services will come from or just that I be given the end product?
5. Do I require training about my procedures and methods or just the end results?
6. Do I reimburse expenses and costs or just pay a set fee?
7. Do I provide benefits such as insurance, pensions vacation pay or sick pay or just pay a set fee?
8. Is the work performed a key aspect of my business or something that just helps my business to run?
9. Is the work permanent or temporary?

While these questions are helpful, they are not everything that must be considered.

If a person is classified as an employee, then proper taxes will have to be withheld, unemployment taxes paid and Form W-2s issued in addition to other potential requirements.  If a person is classified as an independent contractor, then I may be required to only report the correct Form 1099 and allow the employee to pay his taxes himself. Failure to properly classify a worker may result in hefty fees and fines by the appropriate governing agencies.

It is advisable that the relationship of an employer’s workers be reviewed by experienced practitioners to ensure everything is in order and avoid legal problems later.

Business Succession Planning

Like estate planning, business succession planning is something that many put off and deal with only as a last resort.  But also like estate planning, if a business plan is not set up, the consequences to one’s loved ones could be extreme.

The livelihood of a business may change for many different reasons, including retirement, moving, death, divorce, or simply a change of heart.  Should something happen to an owner or there is a fight between the partners, the business itself may curl up and go away.  Those holding the bag will have to wonder what will happen to the employees, who work there, the clients who depend on the services and products offered, and the family and beneficiaries of the owner – all of whom depended on the success of the business.  Several famous businesses have collapsed when inexperienced family members inherited the shares of stock of the successful corporation and expected the bounty to flow to them.  Further, many business partners have jumped shipped when they realized they now had to deal with the spouse of a former partner and could not proceed with business as normal. A successful business succession plan can be set up to reduce these issues.

A successful business succession plan reviews the issues options available and determines the best route for success.  It deals with contingencies of death, disability and the like, finds the appropriate successors for the now vacant positions, and ensures proper payment is had to the correct people amongst other things.  It may also encompass different financial platforms including health care plans, life insurance, retirement plans and the like to create a package that not only deals with a possible death but also can be used for other purposes to help the business be financially stable and grow.

There are statistics that state the majority of us do not have our Wills, Powers of Attorney, Health Care Surrogates, Living Wills and other estate planning documents drafted.  There are many reasons people give; however businesses, like families, should not be harmed by such delays.  Unlike families, businesses are in the position to have the documents ready for such cases when the business is formed.  These documents can be simple bylaws, operating and partnership agreements that clearly define what happens when certain circumstances occur.  The documents can also include more complex shareholder and member agreements addressing other circumstances, issues and concerns that may or may not occur. A business is a child of the owner that needs oversight and supervision.  As many point out - without the correct person reviewing the books and doing the work, a business will not be a success.  Therefore the proper protection should be addressed in the governing documents.

Part of the fun of running a business is doing the work and seeing it succeed; however one must still have an exit strategy so the activities remain pleasurable and not a tiring event that must be endured.  A business succession plan can help reduce one’s anxiety for the future and keep a person coming back for more. No one wants to see the worst case scenario occur, but planning for the worst and hoping for the best is a practice that allows people to sleep at night during these times of uncertainty.