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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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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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What to Do If Your Business Is Sued: 7 Steps to Protect Yourself

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Getting sued is every business owner’s nightmare. One day, you’re managing clients and employees, and the next, you’re holding a formal complaint, wondering what steps to take.

Don’t panic. While facing a lawsuit can be overwhelming, how you respond can make all the difference in protecting your business, finances, and reputation.

Whether you’ve received a demand letter or a formal complaint, this guide walks you through the essential steps to take when your business is sued—and how to avoid common mistakes that could cost you big.

Step 1: Recognize the Early Warning Signs — The Demand Letter

Before you’re officially sued, you’ll often receive a demand letter.

A demand letter is a formal notice from an attorney or individual that outlines a grievance and demands corrective action—whether it’s paying a sum of money, fixing an alleged issue, or fulfilling a contractual obligation.

Key Characteristics of a Demand Letter:

  • It’s not a lawsuit but can signal legal action if ignored.
  • Includes a deadline for a response.
  • Often outlines the issue and the desired resolution.

💡 Why It Matters: Many lawsuits can be avoided by responding strategically to a demand letter. Consulting a lawyer early can help you negotiate a settlement or prove that the claim is invalid—before it escalates into court.

💼 What to Do When You Receive a Demand Letter:

  1. Don’t ignore it. Failing to respond could lead directly to a lawsuit.
  2. Contact your business attorney immediately. They can assess the legitimacy of the claim and advise on your options.
  3. Gather relevant documents (contracts, receipts, emails) that relate to the issue.
  4. Avoid direct communication with the sender until you’ve consulted your lawyer.

Step 2: If You’re Officially Sued — Respond to the Summons Promptly

If you couldn’t resolve the issue or didn’t respond to the demand letter, the next step is often a formal complaint.

You’ll receive two key documents:

  • The Complaint: Details the plaintiff’s allegations and what they’re seeking (e.g., monetary damages, contractual enforcement).
  • The Summons: A legal notice informing you that you’re being sued, which includes the court information and a deadline for response (usually 20–30 days).

How Will You Be Served?

  • In-person by a process server or sheriff.
  • By certified mail.
  • Through your registered agent for service of process (the official contact listed for legal documents).

💡 Ignoring the summons is the worst thing you can do. Failing to respond can result in a default judgment, where the court automatically sides with the plaintiff—leaving you responsible for all damages sought.

Step 3: Build Your Defense — With the Right Legal Help

Time is critical. The sooner you loop in a business litigation attorney, the better your chances of mounting a strong defense.

What Your Attorney Will Do:

  • Review the complaint and explain the legal claims against you.
  • Assess your options:
    • File a formal response (called an “answer”).
    • Negotiate a settlement if it’s in your best interest.
    • Prepare for trial if necessary.
  • Identify potential defenses, such as:
    • Breach of contract by the plaintiff.
    • Fraudulent claims.
    • Improper service of process.

💡 If you’re based in Florida, working with an experienced Orlando business litigation attorney ensures you’re represented by someone who understands the local court system and state laws.

Step 4: Avoid These Common Mistakes After Being Sued

When panic sets in, business owners often make critical errors. Here’s what NOT to do:

❌ Don’t contact the opposing party directly.
Even if you want to “work things out,” doing so could harm your case. Always go through your attorney.

❌ Don’t discuss the lawsuit publicly.
Avoid posting about the case on social media or discussing it with employees, vendors, or customers. Anything you say could be used against you.

❌ Don’t ignore deadlines.
Legal timelines are strict. Failing to respond on time can lead to an automatic loss.

❌ Don’t destroy or alter documents.
Even if certain records seem damaging, tampering with evidence can lead to serious legal consequences.

Step 5: Check Your Insurance Coverage — It Might Help

Many business owners don’t realize that their insurance might cover legal fees or settlements.

Insurance policies to review:

  • General Liability Insurance: Covers third-party bodily injury, property damage, and some legal costs.
  • Professional Liability Insurance (Errors & Omissions): Useful for service-based businesses sued for mistakes or negligence.
  • Employment Practices Liability Insurance: Covers employee-related claims (e.g., discrimination, wrongful termination).

💡 Tip: Some business owners may also have coverage through trade associations, landlords, or specific vendor agreements. Check all active and past policies and consult your lawyer and insurance agent.

Step 6: Consider Alternative Dispute Resolution (ADR)

Not all lawsuits go to court. Many can be resolved through less costly methods like:

  • Mediation: A neutral third party helps both sides negotiate a mutually acceptable resolution.
  • Arbitration: Similar to court but less formal. The arbitrator makes a binding decision after hearing both sides.

Advantages of ADR:

  • Faster than going to trial.
  • Often less expensive.
  • Keeps disputes private, avoiding public court records.

💡 When is ADR a good idea? If the opposing party is open to compromise or if the potential cost of litigation outweighs the benefits of fighting it in court.

Step 7: Protect Your Business Moving Forward

Once the lawsuit is resolved, take steps to reduce future legal risks:

  • Review contracts carefully before signing.
  • Keep thorough documentation of all business dealings.
  • Invest in appropriate insurance coverage.
  • Establish clear employee policies to avoid workplace disputes.
  • Work with a business attorney regularly to ensure ongoing compliance.

Final Thoughts: Don’t Navigate a Lawsuit Alone

Facing a lawsuit can be stressful, but you don’t have to handle it alone. The right legal team can guide you through the process, help you avoid costly mistakes, and work toward the best possible outcome for your business.

If your business has been sued or you’ve received a demand letter, contact our Orlando business litigation attorneys today. We’ll help you protect your company, minimize risks, and plan for a stronger future.

❓ FAQs About Business Lawsuits

Q1: What should I do immediately after being served a lawsuit?
Contact your business attorney right away. Avoid discussing the case with others and gather all relevant documents to help your lawyer build your defense.

Q2: What happens if I ignore a demand letter?
Ignoring a demand letter could lead to a formal lawsuit. While it’s not a legal requirement to respond, consulting an attorney can help you avoid escalation.

Q3: How long do I have to respond to a lawsuit?
You typically have 20–30 days from when you’re served to file a formal response. Ignoring this deadline can result in a default judgment against your business.

Q4: Can my business insurance cover legal costs?
In many cases, yes. Policies like general liability or professional liability insurance often cover legal fees and settlements, but it’s important to review your policy details with your attorney and insurance agent.

Q5: What’s the difference between mediation and arbitration?
Both are alternatives to court. Mediation helps both parties negotiate a voluntary agreement, while arbitration involves a binding decision made by an arbitrator.

Q6: How can a business litigation attorney help?
An attorney helps you navigate the legal process, respond to complaints, build a defense, and explore settlement or ADR options. Their expertise can make the difference between winning and losing your case.

The attorneys at The Orlando Law Group help all types of legal issues for non-profit organizations in Orlando, Waterford Lakes, Altamonte Springs, Winter Garden, Lake Nona, St. Cloud, Kissimmee, and throughout Central Florida.

Whether it is on this issue or one of the thousands of other issues facing non-profit organizations, The Orlando Law Group can help.

If you have questions about anything discussed in this article or other legal matters, give our office a call at 407-512-4394 or fill out our online contact form to schedule a consultation to discuss your case. We have an office conveniently located at 12301 Lake Underhill Rd, Suite 213, Orlando, FL 32828, as well as offices in Seminole, Osceola and West Orange counties to assist you.

The articles on this blog are for informative purposes only and are no substitute for legal advice or an attorney-client relationship. If you are seeking legal advice, please contact our law firm directly.

 

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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

Small Business Tax Tips: Do’s & Don’ts for Stress-Free Filing

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Tax time isn’t exactly the highlight of running your own business. For most small business owners, bookkeeping and tax filing feel like necessary evils—often pushed to the bottom of an already overwhelming to-do list. But whether you love it or hate it, staying on top of your taxes is crucial for your business’s health.

Did you miss the tax deadline? Still scrambling to pull everything together? Or maybe you’re simply trying to stay organized for next year? No matter where you are in the process, this guide will help you avoid costly mistakes, maximize deductions, and navigate the tax maze like a pro.

Let’s dive into the essential tax do’s and don’ts for small businesses.

Don’t Fail to File — Even If You’re Late

First and foremost: File your taxes, even if you’ve missed the deadline.

Failing to file can trigger hefty penalties that grow over time. The IRS imposes a failure-to-file penalty of 5% of the unpaid taxes for each month your return is late, up to a maximum of 25%.

If you’re behind, here’s what you should do:

  • File ASAP: Even a late return is better than no return.
  • Consider Filing an Extension: If you need more time, file for an extension to avoid immediate penalties (but remember, it doesn’t delay your payment due date).
  • Get Documents in Order: Gather receipts, invoices, bank statements, and any relevant documents to backtrack if needed.

💡 Pro Tip: If you can’t pay what you owe right now, still file your return. The IRS often offers payment plans that can help ease the financial burden.

Do Keep Simple, Organized Records

Good bookkeeping is your tax season secret weapon. It doesn’t have to be complex—just consistent.

Here’s what small business owners should track year-round:

  • Income: Sales, client payments, and other revenue streams
  • Expenses: Rent, utilities, supplies, software subscriptions, advertising, etc.
  • Receipts: Especially for large purchases or deductible expenses
  • Mileage Logs: If you use your car for business
  • Payroll Records: If you have employees or contractors

While spreadsheets or ledger books can work for very small operations, we strongly recommend using online accounting software like:

  • QuickBooks
  • FreshBooks
  • Wave (free option)
  • Zoho Books

These platforms simplify tax prep, generate reports, and help ensure you’re not missing any deductible expenses.

Don’t Miss Out on Deductions

One of the biggest mistakes small business owners make is leaving money on the table by not claiming all available deductions.

Common Small Business Tax Deductions:

  • Startup Costs: Initial expenses like licenses, legal fees, and website setup
  • Office Supplies & Equipment: Computers, printers, software, and office furniture
  • Home Office Deduction: If you work from home, a portion of rent, utilities, and internet may be deductible
  • Business Meals: 50% of meal costs for client meetings or travel
  • Mileage & Vehicle Expenses: Business-related driving is deductible
  • Insurance Premiums: Health, liability, and property insurance
  • Marketing & Advertising Costs: Website hosting, social media ads, print materials

💡 Important: Keep thorough records and receipts. The IRS requires proof for all deductions claimed, especially larger expenses.

Do Separate Business and Personal Finances

Blending personal and business finances is a major red flag for the IRS—and a bookkeeping nightmare.

Here’s how to keep things clean:

  • Open a dedicated business bank account.
  • Use a business credit card for all company expenses.
  • Pay yourself a salary or draw instead of transferring money freely.
  • Reconcile accounts regularly to catch mistakes early.

💡 Why it matters: In the event of an audit or legal dispute, having clean, separate records protects your personal assets and strengthens your case.

Don’t DIY If It’s Getting Complicated — Hire a Pro

Taxes can be simple—until they’re not.

If your business is growing, if you’re managing payroll, or if you’re unsure about complex deductions, it’s time to bring in an expert.

A good accountant or business tax attorney can:

  • Maximize your deductions
  • Ensure compliance with tax laws
  • Help with IRS disputes or audits
  • Plan for future tax seasons

💡 Choosing the Right Accountant:

  • Responsiveness matters: Look for someone who replies quickly to questions.
  • Industry experience is key: Choose someone familiar with your business type.
  • Referrals help: Ask fellow business owners for recommendations.
  • Find someone who fits your style: You’ll be working closely with this person, so good communication is a must.

When Should You Call a Business Tax Attorney?

While accountants handle routine tax prep, business tax attorneys step in when legal issues arise, such as:

  • IRS Audits or Investigations
  • Tax Disputes or Appeals
  • Back Taxes or Payment Plans
  • Filing for Bankruptcy Due to Tax Debt
  • Structuring Your Business to Minimize Tax Liability

💡 Pro Tip: If you owe significant back taxes or are facing an audit, a tax attorney can offer legal protections that accountants can’t.

Plan Ahead: Make Next Tax Season Easier

If this year was a scramble, use it as a learning experience. Simple habits can save you from future stress.

Tips for Better Tax Prep Next Year:

  • Schedule 30 minutes a week to review income and expenses.
  • Reconcile bank accounts monthly instead of waiting until year-end.
  • Use a bookkeeping system—even a basic one is better than none.
  • Stay on top of deadlines for quarterly estimated taxes (if applicable).

Final Thoughts: Don’t Let Tax Time Derail Your Business

Running a small business is hard enough—tax season shouldn’t make it harder. With smart planning, organized records, and professional advice when needed, you can maximize deductions, avoid penalties, and even save money in the long run.

Feeling overwhelmed? Our Orlando business law team can help you navigate complex tax issues, deal with IRS disputes, or guide you through legal matters that impact your bottom line.

💡 Don’t wait for an audit to get professional advice—reach out today and let’s make tax season a little less stressful.

FAQs About Small Business Taxes

Q1: What happens if I file my business taxes late?
The IRS charges a failure-to-file penalty of 5% of unpaid taxes per month, up to 25%. Filing as soon as possible reduces penalties.

Q2: Can I deduct my home office if I work remotely?
Yes, but only if the space is used exclusively for business. You can deduct a portion of rent, utilities, and internet based on square footage.

Q3: What’s the difference between an accountant and a tax attorney?
Accountants handle tax prep and filing, while tax attorneys manage legal tax issues like audits, tax disputes, and structuring businesses to minimize tax burdens.

Q4: Should I file taxes for my LLC if I made no income?
Yes. Even if your business had zero income, you may still need to file a return to stay in good standing with the IRS.

Q5: What if I can’t pay my taxes in full?
Still file your return to avoid late filing penalties. Then, contact the IRS to set up a payment plan or speak to a tax attorney for more complex debt issues.

Q6: How can a business lawyer help with taxes?
While accountants handle routine filings, business lawyers can assist with audits, disputes, back taxes, and legal strategies to reduce tax liabilities.

 

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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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Some Things You Need toKnow About the FLLC

Some Things You Need to Know About the FLLC

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One popular yet confusing estate planning tool is the Family Limited Liability Company (“FLLC”). FLLCs are frequently created as part of an estate planning strategy used to facilitate gift giving to a person’s children and grandchildren. FLLCs are also used to shield assets from creditors.

As the name implies, a FLLC is a type of business. When used as an estate planning tool, a FLLC is a company owned by several family members. Members jointly own any assets transferred to the FLLC. In order to create a FLLC, family members must enter into a written agreement that outlines its terms and conditions.
A FLLC has various non-tax benefits. Through a FLLC, a family can consolidate family assets into one bundle which can more efficiently be managed, controlled, and passed on from generation to generation. Assets transferred through a FLLC can also be easily transferred and gifted, because ownership interests in the FLLC – known as “membership interests” – rather than individual assets are transferred to beneficiaries. If it is important that certain assets be kept in the family, an FLLC can help maintain this family ownership by providing family members with right of first refusal before an asset is traded or sold outside the family.

Importantly, not all members of a FLLC need to be afforded decision-making privileges. The decision-makers are managing members, while the non-decision-makers are simply members. The members, often children and grandchildren, do not have an automatic right to contribute to the management of the FLLC. Conversely, managing members exercise shared control over the FLLC. Managing members may manage the assets in the FLLC in any way they see fit, they may buy, sell, trade, and otherwise operate FLLC assets without the consent of the non-managing members.

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Do You Need to Audit Your Buy Sell Agreement

Do You Need to Audit Your Buy-Sell Agreement?

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Your business is most likely a major asset and source of income to you and your family. However, it is probably not properly protected from life events of the co-owners.

Most business owners would be shocked to discover what happens to their business when “life happens” to one of the business co-owners. Many businesses have failed and many business owners have lost their business because the failure to have a comprehensive and updated Contingency Plan.

Can you afford to lose one of your major assets and significant source of income?

A Contingency Plan is what you would want to happen if something happens to one of the business’ co-owners. Most business owners would be shocked to discover what would actually happen.

Can you specifically say you would be comfortable explaining what would happen under the following circumstances?

You head into work just like any other day. Upon arriving, you hear the news that one of the co-owners:

  • Died
  • Had an accident/illness and is now in the hospital disabled and can no longer work
  • Spouse has filed for divorce
  • Is being sued personally
  • Is filing for bankruptcy
  • Quits
  • Needs to be fired
  • Just wants out of the business
  • Is ready to retire
  • Loses his/her professional license
  • Is using his/her equity in the company as collateral for financing a speculative investment
  • Doesn’t agree with you on the direction of the company and there is a deadlock
  • Wants to give his/her equity in the company to his/her son, the couch-potato
  • Has been approached by a major competitor who wants to buy out his/her shares in the company

One of the first thoughts you may have is “What does this mean to me and the business?” The answer to that question will depend greatly on your Contingency Plan. What is a Contingency Plan? It may be your documented “Plan B,” your “Business Owners Pre-Nup,” your “Back-Up Plan,” your “Pull Here in Case of Fire,” in other words, your Buy/Sell Agreement.

If you do not have a buy/sell agreement or if you have one and it doesn’t work, the results could be catastrophic. You could find yourself with a new partner, such as:

  • Your former partner’s spouse
  • Your former partner’s ex-spouse
  • A court appointed conservator
  • Your former partner’s children
  • A creditor of your former partner
  • A bankruptcy court trustee
  • A bank
  • One of your competitors
  • Some third party investor

Most of the people named in the above list won’t care about your company. They only care about maximizing their bottom-line. Usually they will do this by attempting to force the business to dissolve and liquidate its assets or by forcing you into buying out their interest at an inflated price.

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What are the Key Elements of a Business Contract

What are the Key Elements of a Business Contract?

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Business contracts are comprised of several key elements. These elements are included to make sure that all of the contents of the contract are legally binding. The key business contract elements also help to prevent misunderstandings that could occur if they were omitted. The key elements of a business contact are:

The parties. The contract must clearly and specifically identify the parties to the agreement. If one of the parties is a corporation
or other business entity, that must be so stated. The roles of the parties must also be specified, indicating who is the seller and who is the buyer. One party is usually the business that is paying for a product or service. An owner or manager typically includes her name in the payee spot. The other party is the service company or supplier. Each party must be giving something of value in return for receiving something of value, which is legally known as mutual consideration.

The agreement. Legally called the consideration, the agreement could be only a sentence or two in length. It includes a general statement of what the service or product provider is expected to do for the buyer. The agreement also indicates whether other parties are expected to complete part of the work.

Terms. More detailed information about the deal is included in the terms section of the business contract. This section spells out exactly what services or products are expected from the company doing the work. The terms section also includes the price, details of the payment, the length of the contract and when the services or products will be delivered. Some business contracts also include special terms, such as whether the contract can be canceled for any particular reason. For example, contracts that violate public policy or are not signed voluntarily are voidable, according to “Reference for Business” online. Special terms of a business contract also can indicate whether the buying party may transfer the contract to someone else.

The date. The date usually appears in at least two areas: within the contract where both parties entered their names or business names and next to each parties’ signatures. A date also might appear at the top of the contract, indicating when the contract was created. Businesses or lawyers who create business contracts usually include the date the transaction takes place at the top of the contract.

Signatures. The business contract must be signed by both parties. This indicates that the buyer accepts the payment conditions and the seller agrees to complete the work. The parties must document their consent to the terms and clauses of the contract by means of a signature. In the case of a business entity, this often requires the placement of the entity’s official seal on the contract. This is all referred to legally as the contract execution. Sometimes the contract execution will also be witnessed as indicated by the seal of a third-party notary.

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Do You Need a Buy Sell Agreement

Do You Need a Buy-Sell Agreement?

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As a business owner, you should know about buy-sell agreements. A closely held or family business could face a lot of financial and tax problems on an owner’s death, incapacitation, divorce, bankruptcy, sale or retirement, without one.

The cost of a buy-sell is very small compared to its benefits. A buy-sell agreement can ward off bickering by family members, co-owners and spouses, keep the business afloat so its goodwill and customer base remain intact, and avoid liquidity problems that often arise on these major events.

A buy-sell agreement makes sense for any business entity, including corporations, partnerships, LLCs and even proprietorships
. How much you need a buy-sell depends on how many owners there are and who else might be waiting in the wings with a financial stake in the business.

Cross Purchase vs. Redemption. One type of agreement is a cross-purchase: If you or Joe dies, becomes disabled, goes bankrupt, etc., the other can buy his share. With a redemption style agreement, the business itself would make the purchase so the owners don’t individually go out of pocket.

The price might be fixed, determined by appraisal or formula. The price might be paid in cash or installments over time. There can be different terms for different events, one price and terms for retirement, one for disability, and one for death.

Insurance features obviously in many buy-sell agreements. You don’t have to use insurance, but it can ensure there’s cash available when the time comes. For example, whether you or your partner dies first, a life insurance policy on each of you can fund the buyout so your business stays afloat and so spouses and heirs are bought out as agreed.

You may find it difficult to face these issues and to make some of the myriad decisions. But just about any buy-sell agreement is better than none. Besides, one of the beauties of the process is that buy-sell agreements are reciprocal. No one knows for sure if you or Joe will be the first to go by death, disability, or retirement. That reciprocal nature makes negotiating and agreeing on these issues easier than you might think.

Having a business or tax lawyer to help you in buy-sell agreements to help you choose the right type and draft it. But these agreements can be surprisingly simple and may cost as little as a few thousand dollars. Whatever you spend on a buy-sell, it will be worth it for what you can save.

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Drafting a Contract Form Favoring Your Business

Drafting a Standard Contract Form Favoring Your Business

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Your company should have a standard form contract that you use when dealing with customers or clients. Every contract can be tailored to be more favorable to one side or the other. You can start with your form of contract, and your clients can agree and sign or request changes be made. Working with a lawyer who is experienced with the right wording to use, can save you a lot of time and money in the long run.

Some key items to come up with your form of contract are:

  • Get sample contracts of what other people do in the industry, you don’t need to re-invent a contract.
  • Make sure you have an experienced business lawyer doing the drafting, one that already has good forms to start with.
  • Make sure you make it look like a standard form pre-printed contract with typeface and font size.
  • Don’t make it so ridiculously long that the other side will throw up their hands when they see it.
  • Make sure you have clearly spelled out pricing, when payment is due, and what penalties or interest is owed if payment isn’t made.
  • Try to limit warranties when possible, about products and services.
  • Include limitations on your liability if the product or service doesn’t meet expectations.
  • Include a “force majeure” clause relieving you from breach if unforeseen events occur.
  • Include a clause on how disputes will be resolved. Our preference is for confidential binding arbitration in front of one arbitrator.
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How to Be a Good Law Client

How to Be a Good Client

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Hiring an attorney can be a little scary. If you are like most people, you don’t have much experience with lawyers and legal issues. Sometimes we need them though. Meeting with lawyers to find out which one is best for you can be intimidating.

Working with an attorney is a genuine relationship, requiring mutual trust, understanding and cooperation. While plenty of people have tried to define what makes a good lawyer, few have taken the time to try to define what makes a good client.

Here are a few things you can do to be a good client:

Maintain Reasonable Expectations: Remember that your lawyer can only operate within the law in your State, and is constrained by that law and the Court in which you find yourself. Also, always keep in mind that each case is fact specific. Let your attorney help set your expectations based on their knowledge and experience, and trust them when they give you the range of possible resolutions.

Always Be Honest: Your attorney will be able to most effectively protect you if you tell the truth. Don’t withhold information from your attorney and don’t try to strategically keep secrets from him. When in doubt, always err on the side of telling your attorney something rather than keeping it to yourself. If your attorney knows all of the relevant facts, they can prepare for and address them. It’s best not to surprise them the day of court.

Be flexible: People don’t being wrong, and many clients want a judge or jury to tell them they were right all along. But, nobody can predict what the court will decide in any given case. Two different judges can hear the exact same evidence and come up with different results. In court, you take your chances, and you never know for certain what will happen.

Always have open lines of communication: When it comes to the facts of your situation, your attorney only knows what you tell him or her. Make sure that you’re communicating regularly and keeping your attorney apprised of any incidents or exchanges that might be relevant to your case. Sticking your head in the sand will only hurt your case and make it harder for your attorney to protect you.

Be Organized: Keep emails, invoices, and all other documents that are be related to your case. Make sure to send updated copies to your attorney as well. The Court appreciates when there is documentary evidence to support your position and it makes you attorney’s presentation more compelling.

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Cash Balances Plans for Closely Held Businesses

Cash Balance Plans for Closely Held Businesses

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Investing for retirement can be problematic for professionals in partnerships or other types of closely held firms. These individuals tend to spend their early careers focused on building their business. By the time they are ready to start saving money for retirement, standard retirement saving vehicles such as 401(k) plans can shelter only a small portion of their income. The rest is subject to taxes, often in the highest brackets.

Cash balance plans can help. A type of defined benefit retirement plan, cash balance plans have much higher annual contribution
limits than 401(k)s—nearly 10 times higher for older individuals, enabling participants to build substantial tax-deferred accounts. If individuals earn enough to take advantage of these contributions, they can accumulate secure retirement portfolios much more quickly than with traditional retirement plans. For this reason, the plans tend to be most popular with firms of relatively highly paid professionals, such as law firms, accounting firms, and medical and dental practices—although any type of business may find them attractive.

To get the most out of cash balance plans, firms need to make well-informed decisions about their plans’ terms and investment strategy, which can have a big impact on a plan’s relative success. Too often, firms make these decisions without a full analysis of their ramifications.

The chief attraction of cash balance plans is clear: greater potential for building tax-deferred wealth. By sheltering income from taxes when it is earned and allowing the invested assets to compound without taxes, these plans allow participants’ wealth to grow at a faster rate. If income taxes rise in the near future, as many expect, this tax-deferral feature may become even more attractive. One other attraction of cash balance plans has nothing to do with investment potential. It is the fact that a firm’s defined benefit plan is protected from the firm’s creditors. In today’s litigious world, a cash balance plan is one way to protect partners’ assets.

Cash balance plans are especially popular with professional practices, whether in the fields of law, accounting, medicine, or dentistry. But any closely held business may find the plans appealing, assuming the firm has:

  • A 401(k) and/or profit-sharing plan in place. Closely held firms should take full advantage of their ability to create 401(k) plans and/or profit-sharing plans before creating cash balance plans. Although their annual contribution limits are smaller, these types of plans are relatively simple and inexpensive to create.
  • Partners with substantial discretionary income to save. Cash balance plans, for the most part, are most effective when partners can take full advantage of their maximum contribution limits.
  • Relatively steady cash flow. Once created, cash balance plans require annual contributions, regardless of the company’s fortunes. Unlike 401(k) plans, contributions cannot be suspended in tough times. Therefore, anyone considering a cash balance plan should be relatively confident that there will be sufficient income to support the plan on an ongoing basis.
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Asset Protection for Business Owners

Asset Protection for Business Owners

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As a business owner, do you devote alot of time and energy “working in” your business to improve business operations and profitability, but neglect to “work on” your business by not addressing certain asset protection issues?

Business owners, particularly those owning their business in corporate form, should consider the following:

  • How to own C corporation or S corporation stock to minimize exposure to creditors, an outside asset protection issue.
  • Whether to implement several basic business agreements designed to protect and even enhance business value from the inside of the corporation.

A business owner who owns S corporation or C corporation stock should consider the asset protection benefits of converting or merging the corporation to a new Limited Liability Company. There are several limited liability organizations that can protect business assets from the personal liabilities of the owner. Limited partnerships, or limited liability limited partnerships, are treated as partnerships for federal tax purposes and therefore cannot own S corporation stock, but an LLC electing to be taxed as a corporation can.

The asset protection benefit of an LLC is a judicial remedy, called a charging order, that protects the owner’s interest in the LLC from their personal liabilities. If a creditor obtains a charging order, the creditor is limited to the rights of an assignee of a membership interest in the LLC. If a distribution is made from the LLC, what the creditor receives will be proportionate. The creditor doesn’t have any voting rights though, so they can’t force a distribution, liquidate the LLC, or otherwise manage the business.

Among the basic business agreements or legal documents that should be considered by business owners to protect business value include a Non-Compete and Confidentiality Agreement, Buy-Sell Agreement, and perhaps even a Deferred Compensation or Bonus Plan for key employees.

Few events can sap the value of a small business like a key employee or associate leaving the business and starting a similar enterprise, especially if the employee departs with trade secrets, confidential information or even customer lists. As a business owner, you should require your employees to sign Non-Compete and Confidentiality Agreements to prevent this from occurring. If the terms of such an agreement are considered reasonable, the agreement should be enforceable.

A Buy-Sell Agreement is another key document that if properly structured, funded, and updated will protect the value of both the existing and remaining business owner’s interest in the business. The Buy-Sell Agreement accompanied with proper planning will provide the existing owner a fair value for their ownership interest and provide the remaining owner a means to purchase the existing owner’s interest without depleting the business of cash flow and its value.

A Buy-Sell Agreement is designed to establish a predetermined and agreed-upon business value, at the occurrence of events such as the death, disability, voluntary or involuntary termination, or retirement of a shareholder or partner.

Planning needs to be done to ensure there are sufficient funds available to implement the buy-sell provisions when triggered. Funding at an owner’s death with life insurance may be the easy part. More problematic may be how to buy-out a departing owner’s interest in the event of disability, retirement or voluntary termination, especially if a portion of the business’ cash flow must be devoted to that purpose. Further, once in place a Buy-Sell Agreement should periodically be updated to reflect changes in the business value and the owners’ objectives.

Finally, business owners should consider putting into place a deferred compensation or bonus plan designed to reward key employees who meet certain performance targets. A properly planned deferred compensation or bonus arrangement can serve two purposes which will work toward protecting the value of the business. The plan should be designed so that employees are rewarded for achieving benchmarks that not only protect but increase the business value.

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Drafting a Commercial Lease Agreement

Drafting a Commercial Lease Agreement

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These critical and essential elements must be contained in a written commercial lease agreement:

Parties – Correctly defining the parties involved in clear and concise detail is extremely important, especially in a commercial lease situation. Your attorney must understand the business structure of the entities involved and comprehend what practical consequences and tax implications there are, if any.

Premises – The description of the leased premises must be clear. If the premises contain multiple tenants, the distinction between where one tenant’s property ends and where the other’s begins must be carefully delineated in order to avoid potential disputes. The square footage should also be listed in the written lease agreement.

Term of Rent – The lease agreement should include renewal options. Rent for a renewed lease in a commercial setting can be calculated by using the Consumer Price Index (CPI), fair market value, or a fixed percentage increase. In order to avoid disputes between tenant and landlord, using the CPI or a fixed percentage increase may be better than using the fair market value. The CPI and fixed percentage increase provides certainty whereas fair market value at the time the lease is set to expire leaves more uncertainty to the parties involved. Furthermore, when determining fair market value, the parties will need to hire an appraiser and if they’re unable to accept the appraisal, this may lead to arbitration or potential litigation. The parties should take a balanced approach and determine a method of rent renewal that’s both reasonable and provides a degree of certainty certainty without the need for additional cost or time commitments.

Expenses – Expenses refer to the cost of utilities, maintenance charges, common charges, cost of landscaping, cost of the parking lot, etc. Of course, landlords will seek to pass the costs associated with operation of the property to the tenant, while the tenant will seek to eliminate these costs as to not affect their bottom line. An effective attorney will be clear and concise in drafting the commercial lease agreement being sure not to leave anything out that would lead to future disputes regarding payment of expenses.

Use – The purpose of a “use clause” in a commercial lease agreement is to set forth the conduct a tenant may engage in on the premises. Naturally, the tenant will seek to expand the scope of the use clause, giving them maximum flexibility for engaging in their business operations. Conversely, the landlord will seek to limit the tenant’s permitted uses so as to control how such use will affect the premises and the other commercial tenants. Depending on the type of businesses involved, certain environmental and land use laws may be triggered by virtue of the tenant’s operations. Your attorney will be able to ascertain any environmental and land use laws that pertain to the subject property beforehand. They will then property draft the lease agreement to avoid governmental and regulatory complications.

Condition of the Premises – The landlord will want to transfer the property in it’s current state “as is” while the tenant will seek to be released from liability for conditions on the premises that existed prior to the tenancy. A well crafted compromise can be integrated into the lease agreement, giving the tenant reasonable time to report non-working conditions to the landlord and to avoid future disputes or possible litigation.

Alterations – It goes without saying that the tenant will want to alter the premises to accommodate their business needs, while the landlord will seek to limit such alternations in order to avoid changes to building structure and systems. The landlord will also desire certainty as to who is responsible for removing the alterations and if the landlord is entitled to keep the alterations if it were to suit the needs of a subsequent tenant. A well-drafted clause pertaining to alterations in the lease agreement should address these concerns.

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Can Property Owners be Sued for Inadequate Security

Can Property Owners be Sued for Inadequate Security?

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Did you know that property owners are lawfully required to provide guests with adequate security? Or that a lack of proper security that leads to an injury or assault can lead to a premises liability lawsuit? Property owners must maintain a reasonably safe environment for visitors, which includes keeping those on their premises protected from harm from outsiders. If anyone is physically harmed or sexually assaulted while on your property, you could be liable for their injuries due to lack of security, inadequate security, improper security, or negligent security. They can sue you for compensation for medical bills, pain and suffering, lost wages, or emotional trauma.

Negligent or inadequate security is often to blame for the preventable assault, rape, or homicide of an innocent crime victim.
Businesses whose negligence in failing to provide adequate security placed a tenant or customer at greater risk of being victimized by the criminal acts of a third party. Instances of improper security premises liability can take place in motels, hotels, apartment buildings, parking garages, parking ramps, shops, office buildings, banks, ATM machines, and even homes. Any victim is justified in asking whether the crime could have been prevented by better security measures. If there is sufficient evidence that needed security was lacking, inadequate or negligently performed, the culpable parties can and should be held liable for the victim’s damages.

Property owners of public properties such as apartment buildings, shopping malls, hotels and parking garages are expected to provide adequate security measures to protect the safety of people who come onto those properties. These security measures may range from sturdy locks and adequate lighting to security guards and video cameras. The adequate or proper level of security depends on the nature of the property as well as its location. For example, if property owners who are aware of incidents of crime in their neighborhoods, they may be expected to take stronger measures than owners who may not be in a known high crime area.

Unfortunately some property owners focus more on concerns about cost than on ways to maximize their visitors’ safety, or simply neglect to take appropriate safety measures. In such cases, the victims of crime who suffer injuries on someone else’s property may sue the property owner or manager. The victims will have to demonstrate that inadequate security measures contributed to the creation of an environment that made the crimes easier to commit. As in other personal injury cases, victims may receive compensation for their pain and suffering, as well as for medical bills, lost wages and other related expenses.

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How to Transfer Your Family Business

How to Transfer Your Family Business

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Family members start a major portion of new businesses launched in the U.S. every year. Owning a family business can be a very rewarding and prosperous venture. For family business owners, estate planning is crucial to the success of the business. If you have not already drafted an estate plan that includes the succession of your business, begin today. Early planning allows you to slowly implement the plan, which increases its chances of success. You will also ensure that your family’s main source of income is protected.

You will need to consider how you would like to transfer your business. Three common options are:

1. Sell Your Business Outright

One way to transfer your family business to your children is through selling them your interest, outright. This is a good option for those who need income from the business, such as retirees. Importantly, if you decide to sell your business, you must sell it at its fair market value. If you fail to do so, you may trigger gift taxes.

2. Use a Buy-Sell Agreement

Buy-sell agreements are ideal for those business owners who have selected the person they would like to transfer the business to, but who are not quite ready to hand over the reins. In a buy-sell agreement, a business owner can specify that, after a triggering event, the designated successor will be required to purchase his or her interest in the business. Common triggering events include retirement, incapacity, and death.

3. Transfer Through a Living Trust

Ownership in a business can also be transferred through a living trust. In order to do this, the business owner must first transfer the business to the trust, then name the intended successor as successor trustee to the trust. Prior to the business owner’s death, he or she would serve as both trustee and beneficiary of the trust. This allows the owner to run the business as normal for as long as he or she chooses. It’s very important that the trust agreement contain carefully-drafted provisions concerning the operations of the business and how ownership decisions get made if the owner becomes disabled or dies. And if the business is taxed as an S corporation, more specific tax-oriented provisions are necessary.

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