What terms should you include in a buy sell agreement?

There are five key elements to a buy sell agreement: death, disability, retirement, withdrawal, and termination. Each of those elements needs to be thought through. What is commonly covered is death. You buy life insurance on each of the partners. If they die, their life insurance buys out their ownership interest. Each of the other issues is much more costly. If somebody is disabled, you have to buy disability insurance for them. The startup companyRead More…

When should I reserve URLs?

When you come up with your corporate name, the first thing you want to do is check the url to make sure it is available and then reserve it, so that somebody else cannot take them. You should also reserve names that are similar to your name, so somebody will not try to play off of what you are doing. Once you make those reservations, you then want to check trademark registrations. You can doRead More…

What is a subchapter S election?

Corporations are taxed federal and state in California, roughly 40% combined together. You get credit for the state taxes against the federal taxes. When you do an S corporation in California, there’s a very small tax. The taxation of the income that is left over at the end of the year goes to the shareholders proportionate to their shareholding interests.  Both the income and the losses are proportionate to shareholding interests. It is not theRead More…

How do you go public? What are the advantages of a reverse merger?

Let’s spend a few minutes talking about going public either through an initial public offering (IPO) or through a reverse merger. A reverse merger is when you have a company that’s already public and you take your company and put it into that company. In both instances, it’s a lot of work. It is costly, time-consuming, and is a good way to make capital, but it does not necessarily solve all of the problems ofRead More…

What is a term sheet?

When we go to put deals together for raising money, a strategic relationship, or even an employee or consulting agreement with key people, those agreements can be written relatively simply. They can be 3-4 pages and cover all of the basic terms that really need to be covered in the agreement. In issues where you haven’t covered it, you figure out a way within the agreement to determine a way to resolve disputes very simply.Read More…

What is asset protection?

Sometimes when you’re involved in a high-risk business, you will want to set up your assets in such a way that they’re more likely to not be accessible to your creditors if something goes wrong. This is called an asset protection plan. If you do a good asset protection plan in advance of those liabilities, you have a good chance of them not being subject to claims from outsiders. When people try to set upRead More…

Sale in Business

When a person goes to buy a business or to set a business, there are two basic types of transactions that can occur. The first is a sale of stock and the second is the sale of assets. A buyer generally wants to buy assets out of a corporation to avoid legacy issues in the old corporation. This is especially the case when the company does or sells high-risk things. When selling a company, itRead More…

ACTIONS TO TAKE DURING THIS CRISIS

Dear Clients and Friends: With all these changes in life going on, there are aggressive actions that you can you take to protect yourself, and your family, your friends, and your employees. Here are some ideas: Review your leases for a Force Majeure clause (a provision in commercial contracts that excuses the renter from performing when certain situations arise beyond the renter’s control making performance impractical, inadvisable, unreasonably expensive, illegal or impossible). Please note that these clauses often require special notices or timing. Then, contact your landlord in writing, to notify him/her of this situation and your inability to perform. Landlords must work with their tenants in a reasonable way. Contact the lender on your business or home loan to negotiate abeyance or delayed payments. Don’t wait for the government to mandate it. Many loan contracts receive such treatment due to a doctrine called Frustration of Purpose. In such a case, the purpose of the contract was frustrated by an event (pandemic) that would excuse its performance. For example, if your business was ordered to close as a non-essential business, you can argue that the reason for entering into the loan was to operate the business – which is no longer possible. Review and determine how to handle your accounts receivable and accounts payable. Work to make your cash flow match up with revised commitments. Contact the finance company carrying your car loan. Similar to the above, you may not be able to pay your car payments or even use the car. Therefore, you should be relieved of your payment obligations – even temporarily. If you plan to reduce staff, be sure to catch up on the latest employment support plans being made available by the Federal, state, and local governments. Furlough versus termination versus reduction of work time have very different consequences. Go through all of last month’s business and personal bills and see which can be reduced or eliminated. You will be surprised at how many things can be changed without dramatically impacting your employee benefits or work and personal lifestyle. Make sure all of your assets are in the name of your family trust, both for you and for your employees. If something happens to you or your spouse/significant other, or an employee, the costs and time involved in settling the estate can be prohibitive. If all of your assets are in your trust, the transition is usually seamless. Also, make sure your health care directives are up to date with the right decision-makers named. In the meantime, make sure that you are doing the best you can to be positive and aggressively pursuing solutions for yourself, your family, your friends, and your employees.Read More…

Summary of Government Financial Assistance to California Small Businesses and Individuals

Dear Clients and Friends: We are diligently working to keep you apprised of the new laws applicable to small businesses and individuals. Below is a summary of the new laws passed over the last week allowing for significant assistance to almost all small businesses. You will find the rules are relaxed significantly, including no personal guarantees, no requirement that you have tried to find funds elsewhere, and a quick turnaround time for funding that allowsRead More…

Client Update: Paycheck Protection Program Status and Expansion to Independent Contractors and Self-Employed

Dear Clients, Colleagues, and Friends: As those who have been involved in the Paycheck Protection Program (“PPP”) process know, it has been frustrating. Employers eligible for PPP have experienced limited windows to apply and conflicting directions from the SBA and their banks. When the PPP is planned to open to Independent Contractors and Self-Employed on April 10, 2020, we anticipate similar results but hope that the SBA and banks may have figured out their shortcomingsRead More…