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Author: Evon Spangler

Spangler and de Stefano PLLP > Articles posted by Evon Spangler (Page 3)

Using the Buy-Sell Agreement for Business Succession Planning

If your business partner died, and you do not have a Buy/Sell Agreement, are you aware that your business partner’s spouse or other heirs are now your new business partner?  Planning for the succession of your business is an important consideration many business owners fail to make. The Buy/Sell Agreement is a simple solution for most business owners in these circumstances. The Buy/Sell Agreement is a legally binding contract that outlines what happens if a co-owner dies, files for bankruptcy, there is an involuntarily transfer to a creditor (e.g., an ex-spouse),  becomes disabled, resigns or retires. Usually, Buy/Sell Agreements are funded...

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Your LLC Board May Not Have Authority to Act

As you are aware, as of January 1, 2018, all LLCs organized in Minnesota are now governed under the new LLC Act regardless of when your LLC was created. The transfer of your LLC to the New LLC Act happened automatically under law on January 1, 2018. Under the old law, all LLCs created in Minnesota were board-managed as the old law had a board governance structure for all LLCs. Under the new law, there are three options for management: 1) board-managed; 2) manager-managed; and 3) member-managed. However, all LLCs under the new law are member-managed, unless your operating agreement expressly...

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Common Estate Planning Mistakes

Determining whether or not you should have a trust or a will depends on your unique circumstances and goals. Hypothetical #1: Barb and Ken are married. Barb has two children from a previous relationship. Barb and Ken’s wills have one-half of the estate being distributed to the other spouse, and the other-half of the estate being distributed to Barb’s children. Barb dies. Ken then does a new will and does not leave anything to Barb’s children. Analysis: It is not uncommon in “mixed marriages” (i.e., when spouses do not have children together, but at least one spouse has children from a previous...

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The Mistake of a Business Owner in Not Formally Dissolving their Business

Hypothetical: Amanda owns Amanda’s Cleaning Products, Inc. Her business makes and distributes different cleaning products. As common for most businesses, she had to go into debt in order to start manufacturing her products. She took out credit cards in her business name, and a couple of personal loans from friends and family. One year after opening her business, Amanda decides that being a business owner is not for her. So, she meets with her accountant who tells her to simply file a final tax return, and to not worry about dissolving her business because she had only been in business...

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S-Corp vs. C-Corp

The most common types of legal entity structures for multi-owner businesses are a Corporation, Limited Liability Company or a Partnership. Deciding which type of legal entity structure is best for your business depends on numerous factors. Each type of legal entity has advantages and disadvantages. There is no one type of legal entity structure for multi-owner businesses that are not without serious disadvantages. However, the type of legal entity that you chose is complicated because it depends on several different factors. In addition to tax and liability implications, an often over-looked factor is ownership structure. This blog article discusses ownership...

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Avoid Creating Personal Liability for a Business Debt

It is very easy and common for a business owner to inadvertently create personal liability for a business debt. For example, “your business” enters into a contract, but the name on the contract is your personal name rather than your business name.  Another example is when you sign your personal name rather than signing for the business entity. The proper way to enter into a business contract and ensure that the debt is a business debt and not a personal debt is to follow these steps: 1)Make certain that the name on the contract is the business name as it appears in...

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Common Mistakes Regarding Assumed Names

If your business uses a name other than the name filed with the Minnesota Secretary of State (“SOS”), you must file the assumed name with the SOS, and publish the assumed name in a legal publication pursuant to Minnesota law. Whether or not you have to file an assumed name depends on your particular circumstances. In our experience, there are three common mistakes that businesses make regarding assumed names.  First, a business uses a name other than the one filed with the SOS.  For example, the name of your business that is registered with the SOS is Wholesale Flowers, Inc., but...

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No Good Deed Goes Unpunished

Good Deed: You and your best friend Sam open up a cleaning business   together in Minnesota. Since you are friends, a simple handshake and a promise works for both of you. Your business does its "bookkeeping" by hand because you don't issue invoices. Your business uses your personal account for the business. You don't file sales tax because you are in the service industry, and one of your  friends (who is an engineer) told you that services aren't taxed in the State of Minnesota. Both of you believe that hiring professionals to help you with bookkeeping, accounting and legal issues is not necessary due to...

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Checklist for Proper Formation of a Corporation

Simply filing articles of incorporation at the Minnesota Secretary of State's office does not result in the proper formation of a corporation.  The primary considerations for the proper formation of the corporation, even a corporation owned by a sole shareholder, are as follows: ___ My corporation has filed Articles of Incorporation with the Minnesota Secretary of State. ___ My corporation has completed the written action of the incorporator(s), subscription agreement letter of investment intent, first meeting of the board of directors, first meeting of shareholders, bylaws, and issued stock certificates. ___ My corporation has up-to-date minutes that have been approved by...

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Top Ten Legal Mistakes Businesses Make

As professionals, we work hard every day to ensure the success of our businesses.  Unfortunately, if we are not well prepared and protected, our business, our reputation, and even our personal assets can all be lost, due to a single mistake or oversight. As business owners ourselves, we understand the limits all of us face in regard to time and money, but as attorneys, we have seen the consequences, which can financially destroy a business and the owners personally. The most common legal mistakes we see business owners make are in the following ten areas: Failure to Incorporate (incorporating your business...

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