Some owners of small businesses want to keep their ownership anonymous for various reasons. That just got a lot harder. The trend in many states is to require disclosure. Just last year, the District of Columbia joined other states in enacting legislation requiring the disclosure of beneficial ownership. Other states like Delaware have resisted the change. Now the federal government has entered the fray with the enactment of the Corporate Transparency Act (CTA). If you are a small business or if you are a small business lawyer assisting a small business, you definitely want to familiarize yourself with the CTA. Under the CTA, small business will have to submit beneficial ownership information to the Department of the Treasury’s Financial Crime Enforcement Network. The information will not be available to the general public. The new CTA accelerates that trend and it will become increasingly difficult to shield beneficial ownership information from government authorities and eventually the public at large.
The small business of all stripes cheered when the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act provides some relief to small businesses through providing economic injury disaster loans; easing payments on current SBA loans; and then the Mother lode, the Paycheck Protection Program (PPP). The PPP provides huge incentives to small businesses to keep workers on their payroll. There are undoubtedly many government programs in which the bureaucratic obstacles overwhelm the efficacy of the program. The PPP loan program does not appear to be one of them, although the jury is still out. Nevertheless, all small businesses should apply for a PPP loan as soon as possible.
Coronavirus (COVID-19) is the pandemic of a lifetime. Until a few days ago, everything looked normal. The extreme low tide lured everyone out onto the dry cove to collect seashells as the beachgoers glance up to see the impending tsunami on the horizon heading straight for them. The government seems utterly unprepared. How has this affected small business clients? In short, the coronavirus will be devastating for small businesses. This blog outlines some of the major legal issues affecting small business clients as the tsunami is about to rocket onshore.
If you spend the time and expense to incorporate your small business, then you should make sure you observe the corporate formalities. There are many reasons for observing corporate formalities. The most important reason is that if you don’t, you are leaving yourself open to someone trying to “pierce the corporate veil”—getting at your personal assets for the liabilities of the corporation. This blog describes the corporate formalities for a small business.
There are several essential questions that you must discuss with your small business attorney before forming a limited liability company. You must determine the name of the company. You have to decide in which jurisdiction the startup company will be formed. You need to decide how the company will be treated for tax purposes. The focus of this article is the management structure of the LLC, whether the business be managed by its members or by one or more managers.
Entity-choice-after-tax-reform. When you are ready to form your new small business, you probably have reviewed with your small business attorney various entity choices. The small business attorney likely discussed possible legal entities such as corporations, partnerships and limited liability companies (LLCs). Which entity is the best form for your business depends on many variables such as structure, liability, management as well as tax considerations. You have likely heard that there was a big change to the United States tax code starting in 2018 under the Tax Cuts and Jobs Act. Many of the tax reform provisions affect businesses. In this article, we will discuss how these changes may affect the calculus in deciding which legal form your want to choose for your startup business.
If you are a small business and are interested in government contracting work, then the most likely entry point will be an arrangement with another company. How you structure this cooperation will be a critical and significant element of success. This article discusses teaming agreements and summarizes some structures that may appeal to small businesses.
The great thing about our country is that even the least experienced entrepreneur can form a new company in a matter of hours. And the second best thing is that if you are a small business owner, you have the right to go out of business. This blog post will discuss the dissolution of an existing company. Since the vast majority of new businesses are limited liability companies, we will discuss the dissolution of LLCs in particular. If you don’t have a lot of debt, and simply want to move on, then you can dissolve your company without any stigma of bankruptcy. This blog post summarizes the steps you take to dissolve a limited liability company.
This article summarizes possible outcomes from a business divorce. There are rarely good options in a business divorce, only ways to minimize the risk and uncertainty. It is not unlikely that the partners will engage in a self-defeating street fight with only losers and no winners. There are several issues that may affect the partners’ respective negotiating positions. In terms of the company, there are a limited number of possibilities: the company will continue to exist or it will be dissolved. There are of course other variants such as the assets of the company may be purchased or the company may be merged into a different company. In terms of damages or other remedies to the aggrieved party, courts try to fashion a remedy depending on the alleged harm. Whatever the outcome in a business divorce, usually none of the parties is particularly happy. The best medicine is preventive medicine. You should go into business only with those whom you trust and those with whom you can manage a long term relationship. And before you go forward with that partner, even the most compatible partner, make sure you speak with your small business attorney to craft an agreement for what you and your partner should do when you disagree.
At one time or another there will be an end to your business. When you started your business, you should have developed an exit strategy, but sometimes things don’t go as planned. The business may end happily in a merger or acquisition and sometimes less happily by dissolution or bankruptcy. Without clear guidelines at the outside, you will find that extricating yourself from your partners may be costly. A business divorce may have similar acrimony to a family divorce. In a family divorce, there is the combustible combination of kids and money. In a business divorce, the business partners undoubtedly will also argue about money—and will contend for control over their business, which for founders, can be like an extension of their families. The disputes among partners are not easy disputes. And business divorces like their family counterparts have numerous moving parts in various areas of the law such as business organizations, contracts, unfair trade practices, employment law and trade secrets. This article summarizes some of the considerations you should keep in mind when discussing with your small business lawyer what steps you and your partners should take to minimize the risk of a messy divorce with your partners down the line.
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