Category: Business Law Blog

Business Owners: There’s No Time Like the Present

The biggest asset for many small business owners is the value of their business and they count on it for retirement funds. However, most of those owners do not actually know the value of the business. How will they know when they can stop working or what to expect in retirement?

Having the information needed to prepare adequately for retirement is just one of the many benefits to a business valuation. Here are several others:

  • Increase value. In life, what is measured improves – this applies equally to business valuation.
  • Capital infusion. To raise money on the right terms you need to know your value.
  • Mergers & Acquisitions. You need certainty on your value to properly negotiate a deal.
  • Exit of an Owner. The more you understand the value, the more likely you will be to reach an amicable split.
  • Too often people guess or estimate and one side or the other losses.
  • Tax strategies. Good tax and financial planning requires beginning with good data. The best plan in the world won’t do you much good if the initial assumptions about value of your assets was wrong.
  • Employee incentive programs. Companies with employee incentive plans may want or need to share value information each year with employees.
  • Insurance planning. Many small businesses do not have adequate insurance coverage. In order to get adequate coverage, you need to know how much value you are covering.

Many business owners avoid valuation because traditionally it has involved an extensive, expensive, and invasive process. Epiphany Law is different and our technology has changed the process. Now we can provide a valuation report that costs a fraction of the traditional model and takes a fraction of the time.

To get started on your business valuation, simply go to https://epiphanylaw.bizequity.com/.

 

Avoid Piercing the Corporate Veil

Piercing the Corporate Veil

A corporate veil is like a “bubble” that will surround an LLC or Corporation and protect its owners from being personally liable for the company’s actions. The veil is normally very secure; however, there are times when that “bubble” can be popped and owners of a company become personal avenues for law suits normally reserved for the LLC or corporation.

Tips to avoid personal liability: Continue reading “Avoid Piercing the Corporate Veil”

Exit Planning: It Takes a Team

Exit Planning is very comprehensive.  Accordingly, several key players must be involved including your financial advisor, CPA, banker, insurance professional, business broker, or investment banker and attorney.  When selecting your team of advisors it is important to identify players that will work well together and will be able to help with any of the issues in a comprehensive plan.  No one person or advisor has the expertise to design a comprehensive plan.

Continue reading “Exit Planning: It Takes a Team”

Exit Planning vs. Succession Planning?

Often times the terms Succession Planning and Exit Planning are used interchangeably but they should not be.  Both Succession Planning and Exit Planning should be addressed as separate plans.

Succession Planning is planning for leadership continuity.  It identifies and fosters the next generation of leaders within a business. It’s a process because it requires a company to develop internal people with the potential to fill key positions within an organization. With a proper Succession Plan, a business will seamlessly transition leadership.

Continue reading “Exit Planning vs. Succession Planning?”

Employee Policies and Procedures: Costly if Not Monitored

There’s been a lot in the news lately about huge settlements that big companies have made for employment law issues. Whether it be for misclassification of workers or violation of wage and overtime laws, businesses continue to pay large fines for not following employment laws. For example, Uber drivers recently filed a class action lawsuit claiming they have been misclassified as independent contractors and are entitled to be reimbursed by Uber for expenses such as gas and vehicle maintenance. This lawsuit was costly. Uber agreed to pay $100 million to settle independent contractor misclassification claims.

Continue reading “Employee Policies and Procedures: Costly if Not Monitored”

Buying and selling real estate. Do I need an attorney?

The process of buying and selling real estate can be complex and it often represents one of the most substantial investments made by an individual or a business. Although using an attorney to assist with the process will not be free, the fees are a minor expense in relation to the significance of the transaction, and is certainly money well spent.

Handling a real estate transaction without an attorney may complicate the process in the short-term and increase risks and expenses long-term.

So, how can an attorney assist you in the buying or selling process?

  • Attorneys are able to negotiate the terms of the real estate purchase agreement to ensure your interests are protected, whether you are buying or selling.
  • Attorneys are able to structure the transaction in a way to minimize present and future tax liability and limit personal liability for matters relating to the real estate.
  • Attorneys are able to prepare agreements between partners in a real estate investment, as well as lease agreements with potential tenants.
  • Attorneys are able to conduct due diligence with respect to the real estate, to help you fully understand what you are buying and identify issues ahead of time. This includes reviewing the title work relevant to the property.
  • Attorneys are able to coordinate with other parties to the transaction, including real estate brokers and title companies, to ensure that the closing happens in a timely and efficient manner.

In summary, if you are buying or selling real estate, a real estate attorney will work for you to ensure you get the most out of your investment.

New Overtime Guidelines – Mitigate Penalties and Employee Lawsuits

We’ve all probably read about the new overtime guidelines for “white collar” workers that the Department of Labor released on May 18, 2016.  But do you know what your business needs to do to be compliant with the new rules by December 1, 2016?  First, you need to understand the new rules. Information about the new rules can be found on the Department of Labor’s website: https://www.dol.gov/WHD/overtime/final2016/faq.htm#8.   These rules can seem overwhelming, but an attorney at Epiphany Law can verify that you are interpreting the law correctly.

Secondly, employers must understand how the changes will affect their current workforce and understand their options if an employee is subject to and does not meet the salary threshold. For example, in response to the new rules, employers way want to make changes to how they pay employees.

To avoid penalties or even worse, a lawsuit, we suggest you consult your Epiphany Law employment attorney before implementing any changes. The attorneys at Epiphany Law will review your classification of employees, overtime procedures and employee handbook to ensure your risk for penalties and employee lawsuits is mitigated.

Wisconsin Worker’s Compensation for Business Owners

Wisconsin Worker’s Compensation for Business Owners

For most Wisconsin employers, the thought of a Worker’s Compensation claim is scary. Trying to keep your business afloat while navigating the countless rules seems impossible. At first glance, the rules appear to be stacked against the business. With the right guidance, however, a Wisconsin worker’s compensation claim should not mean the end of your business. In fact, a claim shouldn’t even be all that scary.

The Wisconsin Department of Workforce Development defines worker’s compensation as a system of no-fault insurance that pays benefits to employees for accidental injuries or diseases related to an employee’s work. Payment to employees is typically prompt, and much more certain then other states. In exchange, employers have limited liability. The question for every business owner then, is why do claims appear to threaten the success of my business? That answer is two part.

First, and the most likely answer, is perception. Because every bad story is told a thousand times more than every good story, the perception is that every worker’s compensation claim shuts down a business. But, perception is not reality in this situation. The second reason is a failure to obtain insurance. Like anything, not having insurance places 100% of the risk on the business. As if that risk weren’t enough, the business can also face penalties and fines. But, once insurance is in place the insurance company assumes nearly all of the risk. So, the first step to not allowing a worker’s compensation claim to shut down your business is obtaining the right insurance.

But, even after obtaining insurance, a business may still be liable to an injured worker. Worker’s compensation insurance does not cover every risk associated with a workplace injury. The two most common uninsured scenarios are (i) safety violations and (ii) an employer’s failure to timely report a fatality or injury.

A safety violation may result in an employer being liable for a 15% increase in compensation, up to a maximum of $15,000.00. Or, in other words, a penalty equal to 15% of the compensation awarded to the injured employee. Safety violations can include a violation of a safety order/statute, failure to use a safety device or failure to obey an established safety rule. Thankfully, by following safety rules, installing safety devices and providing employees with training and guidelines, employers can limit their risk.

An employer’s failure to timely report a work place incident is susceptible for two different penalties. First, an intentional failure to report a work place injury may result in an employer being assessed a penalty of up to $15,000.00 or 200% of the compensation paid to the injured employee. On the other hand, an employer who negligently fails to timely report an injury may be assessed a penalty of 10% of the injured employee’s compensation if the delay in reporting causes an untimely payment. Thankfully an employer’s reporting period is pretty generous. In the event of a work-related fatality, an employer must report said fatality to the Wisconsin Department of Workforce Development and the Worker’s Compensation Division, Madison Office, within 24 hours of the fatality. This doesn’t seem to extreme considering the severity of the triggering event. On the other hand, employers must report a work place injury to their insurance carrier within 7 days of the incident. This time frame also seems very reasonable.

Although this article is not an exhaustive list of the different ways an employer can be susceptible to liability, it does include two of the biggest risks under Wisconsin’s worker’s compensation laws. Even though a business has limited liability, it is still very important to make sure you properly navigate each worker’s compensation claim. The attorneys of Epiphany Law are always happy to help reduce that risk and ensure your future success.

Trademarks: Selecting the Right Name

Trademarks: Selecting the Right Name

One legal topic we at Epiphany Law often advise businesses on – whether a New London startup, or a Neenah multi-national company – is trademark protection. Trademarks are one of the “big three”( intellectual property rights, along with copyrights and patents.) A trademark is a brand name. Trademarks include any word, name, symbol or device used to identify and distinguish the goods/services of one business from those of another. In other words, a trademark indicates the source of goods/services (such as your Appleton, Wisconsin headquarters!). Many businesses rely heavily on their brand name, because it signifies the quality, reputation, or other characteristics of the business and its products or services. It is important for these businesses to ensure their trademarks are on solid legal ground.

The best time for a business to seek legal advice regarding the strength of a potential trademark is before the trademark is used. The relatively small upfront investment in researching a trademark is worth the peace of mind in knowing that your trademark is protectable and not already being used by someone else. Litigation and disputes about trademarks once already used in commerce can be a very expensive distraction.

Although there are many nuances involved in analyzing a trademark, the two most crucial factors are (1) likelihood of confusion and (2) distinctiveness. The likelihood of confusion essentially means that a trademark cannot be too similar to an existing trademark that is in use by another company for a similar set of goods and services. Distinctiveness means that a trademark cannot be too generic. For example, a Kaukauna bakery named “The Good Bakery” would not receive much, if any, trademark protection.

Some trademark rights can be automatically “earned” simply by using the mark. However, those rights are generally limited. For example, if your business only does business in Menasha, it likely won’t have rights in Little Chute, Kimberly or Waupaca. In order to secure stronger protection your trademark should be registered with the United States Patent and Trademark Office (USPTO.) Start by searching the Trademark Electronic Search System (TESS) on the USPTO.gov website to determine the viability of your trademark. Then contact Epiphany Law to assist with your registration. Using a knowledgeable law firm will ensure success and keep costs at a reasonable level (generally $1,000-$2,000 per trademark).

How to Get Paid on an Overdue Bill

A reality of doing business is that, at some point, you’ll have a customer who can’t or won’t pay their bill. Which approach is best depends on the situation, the customer and your overall goals.

A contractor’s first and best option is a construction (mechanic’s) lien. The best way to protect yourself is to make sure you follow your state’s requirements, including advanced notice to the customer, to ensure you can file one. If you cannot get a construction lien for some reason, there are generally five other options available.

 

1. Send a collections letter: A collections letter is sent by you or your attorney to the customer and details the services provided, specifies the amount due and the consequences of non-payment. It is usually the first option to use when an account becomes overdue. In some cases, a collections letter is enough to prompt the customer to pay or to start negotiating a payment plan. However, some customers will simply ignore them. The best collections letters are more than empty threats–you have to follow through on the consequences.

2. Negotiate: The chances of collecting the full overdue amount are reduced the minute the account becomes overdue. For that reason, it might be cost-effective to negotiate a deal to accept less than the full amount. This is a particularly good option if the customer is truly unable to pay the full amount or you’d like to keep their business.

3. Use a collections agency: A collections agency is a third party that will attempt to collect the debt for you. Some agencies will buy the debt from you for a percentage, while others charge a flat fee. While using a collections agency frees you up to concentrate on your business, the costs can often be high. Make sure to do your homework and find a reputable agency.

4. File a lawsuit: Collections lawsuits are often a last resort. If you’re lucky, filing a lawsuit can scare the customer into paying. On the other hand, lawsuits (even in small claims court) can be time-consuming and expensive. They can be especially frustrating if you win your case only to find out that the customer is “judgment proof” (i.e., has so little that he or she is protected from having to pay) or files bankruptcy. Lawsuits are most effective against debtors who have the ability to pay you, but won’t. And remember: if you hope to continue a relationship with your customer, a lawsuit will probably put an end to that.

5. Write off: Ultimately, there will be some debts you simply can’t collect, either because you decide it’s not worth it or because other options fail. In that case, you should write off the debt on your books and chalk it up to a learning experience.

When choosing an option, you’ll need to weigh the amount of time and effort it would take to pursue a debt and the chances of success. There are also “big picture” issues to consider: for example, you could sue every customer the day after their account become overdue, but that probably won’t help your business reputation.

Understanding your options in the event a customer doesn’t pay can help you deal with the situation efficiently so you can get back to running your business. There’s no way to guarantee you’ll get paid, but you can reduce the chances of overdue accounts and increase your chance of collecting debts if you take a proactive approach.

Regardless of which option you choose, make sure you document all of your interactions with the customer: contracts, change orders, invoices, e-mails, phone calls, and payment arrangements should all be written down. Given the nature of home improvement, it can also be a good idea to include pictures of the work you’ve done as it progresses, including “before and after” photos.

Ultimately, the most effective tool to prevent overdue accounts in the first place starts at the beginning of the relationship, with solid terms and conditions and detailed, written contracts that let everyone know what to expect. It continues with timely invoicing and consistent follow up on overdue balances. And all of the options above work best when they’re part of the system. A good business or real estate attorney can help start you in the right direction