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Contracts and Leases: Are You Protected?

Entering into a contract or lease as either an individual or a business owner or both is often seen as a simple process. However, that view is deceptive because the process is actually quite complicated. One issue arises when there is a request for the business owner to sign a personal  guarantee. As a result, if the business fails, the business owner is still on the hook for the entire amount of the lease. Even more problematic is when the lender requests that the spouse of the business owner signs a personal     guarantee. If the spouse is not an owner...

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Corporate Formation Tips for Business Owners

Tip 1: Are you aware that prior to forming a corporation, you should seek the advice of a business accountant to make certain that you are choosing the best type of structure for your business from a tax standpoint? Best practice is working with your business accountant and business attorney to make certain that your business structure provides the best protection. Tip II: Are you aware that the designation of a corporation to what is referred to commonly as a S-Corp is that the S-Corp status is a tax designation that you must separately apply to obtain from the Internal Revenue Service?  Make...

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The Mistake of a Business Owner in Misclassifying a Worker

Hypothetical: Jessica owns Jessica’s Cleaning Services, LLC. Her business provides residential cleaning services. Jessica uses independent contractors. That way, she does not have to provide workers compensation, pay taxes on her workers, and it provides her with the flexibility to terminate a worker without worrying about all of those “pesky employment laws.” However, Jessica advertises that her workers are employees and refers to them as such. Jessica has been cautioned by her friends that her workers are employees, and that she is going to find herself in legal trouble one day. She ignores it because it “isn’t a big deal.”...

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Business Succession Planning

Business succession planning is how a business is going to remain successful in the future through proper, strategic planning for the eventual change of ownership. Spangler and de Stefano, PLLP helps business owners prepare for the future change of ownership through the use of business succession planning. Business succession planning usually comes up in two different ways. First, as part of a business owner’s preplanning for distribution of their assets upon death. Second, when a business owner decides that it is time to retire. It is wise to start the process of business succession planning at least five years from when...

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LLCs Profits/Losses/Voting

In Minnesota, properly organizing your LLC becomes high stakes for majority LLC owners on January 1, 2018. On January 1, 2018, all LLCs are automatically under the New LLC law, which has been implemented in different stages since 2015. As a result, unless your LLC has an operating agreement stating the distribution of profits/losses and the governance of voting rights, as of January 1, 2018, all owners share equally in the profits/losses/voting. This is a big deal. Hypothetical: All Things Wonderful, LLC has been owned by best friends, Henry and Gabby for the past twenty years. Henry is the majority owner...

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Due Diligence When Buying a Business

Regardless of whether you are a serial business owner or you are looking at becoming a business owner for the first time, engaging in due diligence will be a key factor in whether or not the business succeeds. That’s because the success of a current business is often dependent, as a starting point, on the information you received prior to actually purchasing the business. Due diligence requires, at a minimum that you review several years’ worth of tax returns, profit and loss statements, balance sheets, and current leases and contracts, including employment contracts, insurance policies, review federal and state taxes, UCC...

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The Personal Guarantee of a Business Owner

Hypothetical: Jordan owns Jordan’s Delights, Inc. She has been in business for 5 successful years. However, after thinking about her options, Jordan decides she wants to expand her business. She believes that the expansion of the business is a wise financial decision. Jordan’s Delights, Inc. is approved for an SBA loan, which requires Jordan to sign a personal guarantee. In addition, when Jordan goes to the landlord to request additional space, the landlord agrees to a new lease for the expanded space (with increased rent). The new lease with the expanded space is in Jordan’s name as that is how...

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Cyber Policies

As a business owner, it is essential that you have written policies and procedures regarding providing confidential private information, such as payroll information in response to a request (which usually is submitted via e-mail), even in what appears to be from an internal e-mail. For example, cyber criminals now are masking themselves as the firm’s owner/CEO and sending an e-mail to payroll asking for a copy of W-2s for everyone for an audit. Replying to that e-mail with the W-2s just compromised all of your employees’ information. So, you need to establish “checks and balances” before sending out confidential or...

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Updating Contracts

Once a contract has been finalized it is important that you do not continue to use the same contract year-in and year-out without having it updated. The law is continually changing, and as a result, your “excellent” contract from five years ago could be completely or mostly outdated today. Or your “excellent” contract from five years ago could be missing key laws that have been passed since the contract was originally drafted. It is extremely important to have your contracts reviewed each year by an attorney. Not only does the law generally change in a year’s time, but your contract could...

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Sick/Safe Time Ordinances in Saint Paul and Minneapolis

Contrary to popular belief, the Minnesota legislature did not pass a law that disallowed cities, such as Saint Paul and Minneapolis, from passing its own laws related to sick and safe time. As a result, effective July 1, 2017, your business had to cover sick/safe time for your employees as required under the ordinances. It is important to analyze each ordinance separately as it relates to your business as the ordinances, while having several similarities are also vastly different. For example, the Saint Paul ordinance covers every business that has one or more employees the same. On the other hand, under...

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