Planning for the Success of Your Business Through Business Succession Planning

Hypothetical:  Susan owns Susan’s Delights, LLC, a highly successful catering company.  When she turned 60 she decided that she wanted to sell it.  She had vague plans to sell the company previously when she turned 60, but hadn’t taken any steps to sell it.  She immediately starts looking for a buyer.  However, no one is interested in buying the business because Susan’s financials do not show a successful business.  As a result, Susan gets discouraged, and simply closes down her business. 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...

Estate Planning Check-In (Part II)

It is important if you have your estate plan done, to review the documents periodically to make certain that your wishes are still valid. First, if you have written on the originals (such as crossing out an address, and writing in a new address) any word or made any mark of any type, you most likely have invalidated the document. If the originals have writing or marks on them that were done after they were signed, you will need to redo them, and re-execute them. Second, make certain that you have all of the pages of the documents. You need to go through your documents page-by-page and make...

Estate Planning Check-In

Do you have a will and/or a trust that directs to whom you wish your assets to be distributed to upon your death? If you do not, then the Minnesota legislature has decided for you to whom your assets will be distributed. Most likely, to whom you wish your assets to be distributed will not be distributed as you wish because you do not have a will and/or a trust. But, have you thought that even though you do not have a will and/or trust everyone knows who gets what because you have told people so a will and/or a trust is not necessary? Your oral representations are meaningless...

Harassment – It’s a New Era

Hypothetical: Jordan owns Jordan’s Construction, Inc. She hired her first employee the first day she opened up her business. She did not consult with a business attorney or a human resources consultant. There was no time. The business needed to start immediately, and she couldn’t take the time to “dot the i’s” or “cross the t’s.”  This was her third business and she had never had any problems.  She had 10 employees. Two of them were supervisors. One of them, Chris, was a flirt. It was well-known that Chris was a flirt, but in the construction industry “it was acceptable.” A new employee, Sam started working. Chris sent Sam...

The Mistake of a Business Owner in Using a Progressive Disciplinary Policy

Hypothetical 1:  Sue started Beautiful Endeavors, Inc. fifteen years ago. The company now has five employees. Sue heard that she needs to have a progressive disciplinary policy so she implements one at her business. Then, Sam, an employee, physically assaults Chris, an employee. However, since Sam did not have any disciplinary issues, the policy requires that Sam is provided with a verbal warning. Hypothetical 2:  Jill has a florist business. She uses an employee handbook from the internet and implements it prior to hiring her first employee. The employee handbook has a progressive disciplinary policy, but the employee handbook...

When the Weather Impacts Your Employees’ Safety

In Minnesota, employees’ safety can be impacted by the weather. Severe cold in the winter and extreme heat in the summer are two common examples. Although OSHA (Occupational Safety and Health Administration) does not have specific standards for weather related conditions, employers have a responsibility to provide workers with conditions that are free from recognized hazards, including winter and summer weather related hazards, which are causing or likely to cause death or serious physical harm. Best practice is to have a policy regarding safety for conditions impacted by the weather, train your workers and monitor your workers. Even if your...

THE OFTEN-OVERLOOKED IMPORTANCE OF INSURANCE: IS YOUR BUSINESS ADEQUATELY PROTECTED?

Insurance coverage – what the policy covers and what it does not cover – is often misunderstood by business owners.  A business owner assumes that they have adequate insurance, but generally, upon a review of the business’ unique circumstances, the business if oftentimes not adequately covered.  Hypothetical:  A taxi cab company has insurance on all of its vehicles, but the insurance limits are the lowest allowed in the State.  One of the drivers is involved in an accident where the other driver is seriously injured.  The medical expenses are $300,000 and rising.  In this scenario, the taxi cab company will likely be sued and a claim to pierce the corporate...

Corporate Checklist

A corporation formed under Minnesota Chapter 302A has to follow strict corporate formalities, including maintaining its corporate books (note: nonprofit corporations are formed generally under 317A). Generally, a corporation is considered either an S-Corp or a C-Corp. However, those designations are tax designations. In order to be taxed as an S-Corp, you must file Form 2553 with the IRS. It is important as you start the New Year that you ensure that the following items are completed for your corporation:    o Articles of Incorporation filed with the Minnesota Secretary of State. o Completed the written action of incorporator, subscription agreement letter of investment intent, first meeting of the board of directors,...

The Mistake of a Business Owner in Purchasing a Business Hypothetical: Heidi and Gail want to purchase Couture Cupcakes, Inc. (CC). CC’s business attorney drafts the documents for the sale, and Heidi and Gail believe that the documents look reasonable. They do not consult with a business attorney prior to purchasing CC. After they purchase CC, numerous problems arise. Heidi and Gail seek the advice of a business attorney.  Issue: Three months after the purchase, Heidi and Gail find out that there were leases and contracts in the name of CC. Heidi and Gail claim that they are not responsible for those leases and contracts, which total...

Steps For Hiring an Employee

Oftentimes business owners make the mistake of rushing through the process of hiring an employee. The owner focuses solely on hiring someone without first making certain that the owner is protecting the business (and the owner’s personal assets). This article focuses on employees and not independent contractors (note: the law looks generally disfavorably upon independent contractors, and there are legal tests that must be met to lawfully classify a worker as an independent contractor). Best practice is first to form a legal entity such as a corporation or an LLC (limited liability company). The type of entity structure you would choose...