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If you have a successful business, the only thing worse than not having a business succession plan, is a poorly drafted plan.  How can you screw up your business succession plan?  Just,

  • Don’t hire a lawyer who specializes in this area.  Heck!  You can do your own will on line.
  • Don’t think through how you want your assets distributed.
  • Forget about the debt.

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Death and TaxesFace it, some day you will die.  The lack of a good estate plan will exacerbate the challenges your loved ones face.  There’s another inevitability, taxes.  Without a good estate plan, the tax bite may be bigger than necessary.  Further, if you have a business, the lack of a good estate and succession plan could be disastrous, destroying the value of the business you worked so hard to build up. Continue reading →

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lamingtonGreat!  You are investing in your friend’s business.  You followed The First Two Rules for Angel Investors;  The business is a Delaware C corporation.  The deal is documented.  Here are the next two things.  Be sure:  (1) your stock and the capital structure of the corporation are correct, and (2) you have appropriate rights of control.  This post will focus on the stock structure, the capitalization of the company.  The next post will focus on rights of control.

The structure of the company should incorporate your and the founder’s assumptions.  Basically, you want to document the deal.  This is not easy.  It is, however, infinitely easier to do this at the start.  Basic rights that seem fair at the start when the risk is high and the future unclear, may not seem fair when the business is mature, or there is an exit on the horizon.  At those points, your friend may think giving investors these rights is not “fair”.  She may not act in a friendly way.  So, structure right at the start.  Continue reading →

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lamingtonHere’s how it happens.  Your friend needs money for her business.  You look into it and conclude it is a good business.  You agree to invest.  Wait!  If the investment is not structured correctly, there could be trouble for you, the business and your friendship.   There are certain rules that should be followed, here are the first two: Continue reading →

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401kA 401(k) plan helps achieve two goals:  attracting and retaining employees; and ensuring employees are protected in their old age.  Setting up and running a 401(k) plan is complex.  If set up or run incorrectly, too large a portion of the benefits from a 401(k) plan will simply line the pockets of investment professionals.  Further, if the plan is not set up and run right, you may face personally liability. Continue reading →

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Unpaid InternDespite the recent ruling in Glatt v. Fox Searchlight Pictures, the best advice to businesses utilizing interns is:  Do the right thing.  The idea behind internships is laudable, provide hands on experience and mentoring in the intern’s career field. Done right, an internship is a valuable experience.  Done wrong, an unpaid internship can be abusive to the intern and put the business at risk. Continue reading →

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Self employment headerYou took a big step and started a business. Congratulations!  It was the right thing to do.  The business makes money!  You meet with your accountant.  She explains.  You are not an employee.  So, you have to pay self-employment tax of 15.3% on the earnings of the business.  This consists of (i) 12.4% on the first $117,000 earned for Social Security; and (ii) 2.9% on all earnings for Medicare.  The self-employment tax is on top of all the regular tax you have to pay.  Ouch!  Is there a way to minimize this tax bite?  For many, the answer is, yes. Continue reading →

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You found the perfect condo, excellent location, lovely building, good neighbors.  The price is right.  You a have a letter from your bank, indicating that you qualify for a mortgage.  You are about to sign the purchase contract.  Wait!  Even though all is good, you may not get the loan. Continue reading →

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IndependentContractorWhen does a worker cease being an independent contractor and become an employee?  There are no clear, hard and fast rules, but it is important to get it right.  If a business classifies a person as an independent contractor, who the government believes is an employee, the business could face financial disaster.

Here’s the way it works:  Dealing with and compensating an independent contractor is simple.  Just fulfill the obligations in the contract.  Dealing with and compensating an employee is complex.  Continue reading →

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“A verbal agreement is not worth the paper it is written on”

Samuel Goldwyn (popularly misattributed)

 

GutsNon-Disclosure Agreements (“NDA’s”) are a routine part of business.  They are so common, they make eyes glaze over.  Unfortunately, it is dangerous not to pay attention.  There is no such thing as a “standard” or “basic” or “simple” NDA.  It is a legal document that can bite you if you are not careful.  What are the terms of an NDA?  What rights and obligations do you have under an NDA?

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