Business Owners Frequently Asked Legal Questions
We have compiled a list of common business and tax legal questions from business owners. If you have additional questions or need legal representation for your company, call us at 800-970-7071 today!
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Before you decide to buy or sell your construction business you must assess what the contemplated transaction entails:
What you are buying or selling and for how much: First figure out the Asset you are buying or selling a revenue stream, contacts or clients, know-how or intelligence, a recognized brand name, accounts receivables, short term versus long term contracts, depreciable furniture and equipment, and or real estate. Conversely, one should evaluate the Liability or debt, accounts payables, and risk associated with purchasing or selling that asset. Additionally there is something completely intangible called “Goodwill”, stated in a simplistic manner it is the intangible factor of how “good” the business “will” run after the sale of business given the reputation, unique processes, uniqueness of the services, non-legally binding relationships, etc. Only through careful consideration and valuation, of each of these factors can one assess the essential value of the asset.
Purchase of Assets versus Corporations:
Asset - If one purchases an asset, then they are only purchasing the value of that asset minus any debt that comes with it. For example, if you decide to buy a machine valued at $5,000 and with it comes $3,000 of debt, then the net price for it should be $2,000. Determining the debt related to a specific asset is usually done through questionnaires, and searching mortgages and UCC statements.
Corporation - If one purchases a corporation, then the transaction needs much more due diligence and close attention has to be paid to disclosed versus undisclosed asset, such as good will, or liability such as a potential lawsuit due to past conduct. All facets of the corporation have to be evaluated, from leases, contracts, employees, revenue generating clients and contracts. How to ensure a fair value for your business: Earn-out Provisions – Many times, if the Seller is willing to stick around after the sale and ensure that the Buyer is getting what the Seller said would be the business, one can use what’s called the earn-out provisions. The earn-out provisions is a pre-negotiated part and portion of a sale price that is contingent upon the outcome of certain results after and once the new owner takes over. Hence a buyer could promise to pay the seller, supposing $500,000 to be paid at time of sale, and $500,000 to be paid 1 year after the sale, provided that year over year the financial results are the same; the same scenario could also be done with a variable formula.
When you need the assistance in buying or selling your business, you will want the knowledge and experience of buying and selling businesses on your side, the ability to limit liabilities, the ability to secure your business without someone trying to take it. At The Mirza Law Group, LLP we represent Businesses, Business Owners and Taxpayers, we help and strive to get our clients to that optimum position. Call us at the number on this page to discuss your purchase or sale of a business, and put our team to work for you.
Before you renew your general or professional liability insurance you really need to review your liability policy. You can start with the following three things:
- Persons or Types of Events Covered – Find out who it covers, and what the exclusions are.
- Types of Insurance Policies – There are two types of liability insurance policies, a “claims made” or an “occurrence made” insurance policy. The “claims made” policy covers the adverse event or occurrence if it occurs during the policy period and the claim is made during the policy period. The “occurrence made” policy covers the adverse event regardless of when the claim is made. To bridge the gap between one insurance company to another or one employer’s policy to another, “tail coverage” should be purchased from the latter carrier. The quality of financial strength should be A+ or better.
- Exclusions – Insurance is presumed to cover an event or occurrence, that is generally sudden and unexpected. Exclusions are usually special provisions of the insurance policy that insurance will not cover. Ask for your exclusions to the policy to be reviewed.
There are many other important insurance clauses such as defend and indemnify. Those clauses require a keen understanding of the law and your practice. At The Mirza Law Group, LLP we represent Businesses and Business Owners, we help and strive to get our clients to that optimum position. Call or email us at the number on this page and put our team to work for you.
Before you sign or renew your office lease agreement:
- Typical Standard Contract – When you hear people say “that’s the standard contract”, that should mean nothing to you. There is no such thing. All contracts are different, and all contain language that is unique to each vendor. If you are entering a lease, large or small, you should closely review your lease. Even a small $1,000/month lease can add up to be a $36,000 contract over just three years.
- Term Period – Find out what time period is the lease for, and how many renewals it has, with renewal and/or termination notice requirements. Most leases are for several years at a time. Many do not contain renewal clauses. Do you know what your rights and obligations are at the end of the lease? Renew or Vacate?
- Repair versus Maintenance – Commercial leases come in many forms. There is a difference in who is responsible for repairing versus who is responsible for maintenance. Many lessee’s are shocked to find out what they are responsible for and what their rights are under the lease
There are many other important lease provisions such as default, termination, defend and indemnify clauses. Those clauses require a keen understanding of the law and your practice. At The Mirza Law Group, LLP we represent Construction Contractors and Design Professionals, we help and strive to get our clients to that optimum position. Call or email us at the number on this page and put our team to work for you.
Licensees are still required to complete CPE, Continuing Professional Education, but there is no longer a need to report. Florida requires completion of 80 hours of CPE for each re-establishment period. The 80 hours must include 20 hours of accounting and auditing, 4 hours of a Board approved ethics course, and no more than 20 hours in behavioral subjects. Florida statues do not allow a CPA to obtain ethics credit for ethic courses not approved by the Florida Board of Accountancy even if courses are accepted by other jurisdictions. More