Small Business Growth and Success Improves with Good Legal Counsel

Proactive legal counsel for small businesses involves not just resolving problems when they emerge but also carefully putting the company in a position to succeed over the long run. Proactive legal counsel helps protect the company, maximize operations, and promote sustainable growth by foreseeing any legal issues and incorporating legal considerations into business strategy.

Legal Foundations for Small Business Success

The success and longevity of any organization can be greatly enhanced by taking a proactive approach to comprehending and handling its legal issues. An astute business attorney will aid in the expansion of a company by educating new owners about the several legal traps they may encounter.

Business Formation and Structuring

The choice of business structure has significant legal implications, affecting liability, taxes, and management. The most common types of business entities are:

• Sole Proprietorship - requires minimal paperwork. The owner has complete control over business decisions and operations. Income and expenses are reported on the owner's personal tax return. The owner is personally liable for all business debts and obligations. This means personal assets, such as your home or savings, can be used to settle business liabilities. General partners manage the business and make decisions, while limited partners typically do not participate in day-to-day operations. Income and losses are passed through to partners and reported on their personal tax returns.  In a general partnership, all partners are personally liable for business debts and obligations. In a limited partnership, general partners have full liability, while limited partners' liability is restricted to their investment in the business.
• Limited Liability Company (LLC) - requires filing articles of organization with the state and creating an operating agreement to outline management and financial arrangements. Flexibility in management structure; members can manage the LLC directly or appoint managers.  LLCs can choose how they are taxed—either as a sole proprietorship, partnership, or corporation.  Provides limited liability protection, meaning owners (members) are generally not personally liable for business debts and liabilities.
• Corporation - requires more extensive paperwork, including articles of incorporation and bylaws. Corporations must also adhere to regulatory and reporting requirements, such as holding annual meetings and maintaining detailed records Managed by a board of directors elected by shareholders. The board oversees major decisions, while officers handle day-to-day operations. Subject to corporate income tax rates. Profits may be taxed twice: once at the corporate level and again as dividends on shareholders' personal tax returns (C-Corporation). An S-Corporation election allows profits and losses to pass through to shareholders' personal tax returns, avoiding double taxation. Provides strong liability protection; shareholders are generally not personally liable for the corporation's debts and liabilities.
• Partnership -  requires a partnership agreement to outline the roles, responsibilities, and profit-sharing arrangements among partners. General partners manage the business and make decisions, while limited partners typically do not participate in day-to-day operations. Income and losses are passed through to partners and reported on their personal tax returns. In a general partnership, all partners are personally liable for business debts and obligations. In a limited partnership, general partners have full liability, while limited partners' liability is restricted to their investment in the business.

Making the right decision regarding formation is important and a skilled business attorney will take the time to understand the goals and expectations of the entrepreneur.

Compliance and Regulatory Guidance

Small firms typically encounter complex regulatory settings. By ensuring that companies adhere to local, state, and federal regulations, proactive legal counsel lowers the possibility of fines and other legal repercussions. Legal requirements are subject to regular modification. Businesses can keep ahead of these developments and modify their procedures with the support of proactive counsel.

Strategic Business Advice

A business needs strategic business guidance to be guided toward long-term success and growth. To facilitate success, a proactive approach to risk mitigation, brand protection, and strategic growth planning are required.

Risk Management and Mitigation

Legal advice that is proactive assists companies in foreseeing and resolving possible legal concerns before they become issues. Businesses can prevent expensive litigation and disputes that might otherwise take resources and attention away from growth by addressing issues as soon as they arise.

One can prevent possible legal disputes by creating and revising internal policies and procedures ahead of time. Having a policy in place for alternative dispute resolution can assist in reducing expenses and saving time when issues do arise.

Contract Drafting and Negotiation

Contracts with employees, vendors, and service providers should reflect the best interests of the business. Some of the key clauses which should be included are:

• Confidentiality — include provisions for protecting sensitive information.
• Dispute Resolution — specify how disputes will be resolved (e.g., mediation, arbitration, litigation).
• Governing Law — which jurisdiction's laws will govern the contract.
• Indemnification — outline how parties will handle claims or losses arising from the agreement.

Each party to a contract has distinct roles and responsibilities, and understanding these roles is crucial for drafting and negotiating effective contracts. An experienced business attorney can help draft the proper contracts to protect the interests of the business.

Enhancing Client Relationships and Trust

Building trust and strengthening client connections are critical to any business's long-term success. To make sure a business owner has the resources necessary for success and sustainability, legal assistance is essential.

Building Long-Term Client Relationships

Transparency and dedication are demonstrated by keeping clients updated on legal issues, case developments, and pertinent changes to the law. Regular reports, bulletins, or briefings can help achieve this.  

By removing ambiguity and building trust, simple English explanations of legal concepts assist clients in understanding their alternatives and the consequences of legal judgments.

Anticipate possible problems and provide answers or preventive actions, rather than waiting for clients to present with difficulties. This demonstrates your forward-thinking nature and sincere concern for their well-being.

Proactive Legal Counsel

Spend time getting to know your clients' larger objectives and aspirations in addition to the legal details of their personal or corporate circumstances. This will enable you to give guidance that is more pertinent and encouraging.

Provide clients with information and updates regarding pertinent legal developments and their potential effects. Exhibiting a thorough comprehension of the law and its real-world applications instills trust in your skills.

Be prepared to modify business strategy in response to changing needs and client feedback. Enhancing client happiness and trust can be achieved through flexibility and adaptability. Even in cases when there isn't a pressing legal matter, regular communication is necessary.

It takes a combination of proactive service, professional ethics, attentive listening, and efficient communication to improve client relationships and foster trust. By concentrating on these elements, proactive legal advice can surpass client expectations and build stronger, more reliable connections that will benefit the client in the long run.

Supporting Small Business Growth through Expansion and Scaling

The goal of small business owners is to grow their business. A business attorney's role is to support that growth. This can be done by helping ensure the business owners have the protections they need to facilitate growth including:

• Intellectual Property Protection — help business owners protect their brand by explaining the importance of patents, trademarks, copyrights, and trade secrets and helping ensure they understand the process of protecting them as well as using them for leverage when appropriate.
• Employment Law Compliance — navigating wage and hour laws, and other employment regulations can be challenging for any business, but those in the start-up phase may need more guidance. The ability to explain these laws, and provide advice on hiring practices, employee contracts, and workplace policies can help a business stay in compliance.

Ensuring a business has the protections necessary to prevent intellectual property theft, or employment law issues can help ensure the company is ready to begin expanding. As a company grows, these aspects of law are even more important. 

Understanding Financial Statements and Budgeting

When working with any business, it is important to have a basic understanding of the typical financial statements used in business. Additionally, having an understanding of business budgeting will be crucial to assisting a business owner seeking additional financial resources for expansion.

Some of the key metrics and ratios a proactive legal counsel should review include:

• Liquidity Ratios
• Profitability Ratios
• Leverage Ratios
• Efficiency Ratios
• Valuation Ratios
• Cash Flow Metrics
• Growth Metrics
• Working Capital

These numbers can help a business attorney offer strategies for cost control and maximizing profitability. Additionally, they can offer helpful information which can provide understanding of the business to better advise on financing options.

Navigating Business Disputes and Avoiding Litigation

The goal of any legal counsel is to avoid costly and time-consuming litigation. Having proactive legal counsel can help a business avoid some of the more common types of disputes through good contracts, open communication, and an understanding of business law.

However, in those instances where a dispute does arise, the best option is always the use of alternative dispute resolution. Not only does this help save time, it can be far less costly. Some of the options include:

• Mediation - A neutral third party facilitates discussions between the disputing parties to help them reach a mutually acceptable settlement. Confidential, often faster, and less expensive than litigation, and can preserve relationships.
• Arbitration - A neutral third party makes a binding decision on the dispute after hearing evidence and arguments from both sides. This is often faster and more flexible than court trials, with the possibility of choosing an arbitrator with specific expertise.
• Negotiation - The parties involved in the dispute engage directly with each other to reach a mutually acceptable agreement without the involvement of third parties. The parties have direct control over the outcome, flexible process, and can be conducted at any time.

In some cases, this type of settlement may not be feasible or acceptable in which case it will be imperative to be prepared for litigation. The goal of proactive legal counsel at the point of litigation becomes managing the litigation process to minimize disruption to the business.

Entrepreneurs should always seek guidance from qualified legal counsel before launching a business to prevent potential legal and compliance issues in the future. Your goal should always be to be as proactive as possible to ensure they do not face issues which could have been avoided with good pre-planning.

What Actions Can Result in Being Held in Contempt of Court in Family Law Cases

 

Anyone who is involved in family court proceedings should understand what actions can result in them being held in contempt of court. It is understandable that emotions run high during these proceedings, but it is equally important to ensure that you do not find yourself on the wrong side of the court. 

Once legal proceedings are underway, you can protect yourself from a contempt of court charge, which can result in imprisonment for up to 30 days, fines, or court mandated counseling.  Here are some of the types of issues which can result in a contempt charge. 

Discovery Request Avoidance

The discovery process is an important part of all family law cases. Discovery may involve interrogatories, statements, and documents. When any of these items are requested, they must be accurate. If someone refuses to produce a document, or intentionally withholds information which should have been disclosed, it is possible they could face a contempt of court charge. 

There may be some information requested in discovery which may be considered privileged and may be withheld. The best way to determine this is to work with your family lawyer, which can help you avoid a contempt charge.

Some of the documents which may be asked for involve personal finances such as:

• Paystubs and tax returns
• All bank statements
• Investment account information
• Mortgage statements and property deeds
• Business ownership documents when applicable
• Credit card statements and loan documents
• Insurance policies

Defying Court Orders Without Cause

Before, during and after a divorce, there may be several court orders issued in a single case. These may include orders about paying child or spousal support, undergoing counseling or treatment, use of marital property, visitation schedules, and more. These orders must be taken seriously, or the other party may file a complaint for contempt of court. There may be other orders which address disposing of assets, changing insurance coverage, or orders to force disclosure of income, assets, and debts.

Keep in mind, court orders are binding on both parties in a divorce or custody proceeding. Abiding by the letter of these orders can help you avoid the potential consequences of a contempt of court charge.

Some of the court orders which may apply following a divorce proceeding include:

• Visitation orders and parenting plans
• Payment of Child or Spousal support
• Transfer of assets to other party

The consequences of violating a court order are serious but you can avoid the serious issues created by a contempt charge by following through on the directions in these orders.

Lack of Decorum During Court Proceedings

There is little doubt that when a complex divorce proceeding is underway, there are difficult issues to content with. Unfortunately, many of these issues are extremely sensitive and oftentimes difficult to hear broadcast publicly.

It is important to remember that a court is not a place for displaying any type of aggression. Courts expect all participants, including attorneys, parties, witnesses, and observers, to adhere to certain standards of behavior to maintain the integrity and fairness of the judicial process.

When participating in a court proceeding, you must remember to avoid shouting, arguing, or engaging in heated exchanges with the judge, opposing counsel, or witnesses. The consequences of these types of actions could result in a contempt of court charge, along with the associated penalties.

Alienation of a Parent

Divorce is never an easy decision. As difficult as it is for the adults involved, too often, it is the children who suffer the most. Courts frown on parents who take steps to undermine the other parent before, during and after the finalization of a divorce.

Parents must always consider the best interests of their children, regardless of the animosity they may feel between them. Children should have a healthy relationship with both parents, regardless of their marital status.

Parental alienation may also include behaviors such as speaking negatively about the other parent in front of the child, limiting contact between the child and the other parent, making false allegations against the other parent.

The court will take these types of actions seriously and if they believe this is what is occurring may hold the party in contempt of court.

Who can Request a Contempt of Court Proceeding?

Too many people believe that it is challenging to prove a contempt of court violation. However, it is also important to understand who has the option to file a request for a contempt hearing:

• Judges — obviously a judge can initiate contempt proceedings if they believe someone is in contempt by their mannerisms or dress is court, or if they believe one party is disobeying their orders.
• Parties to the Case — parties involved in a family law case typically include the two adults who are disputing their case in court. However, their attorney may also file a request for a hearing if they believe one party is being harassed, or that there is a violation of a court order.
• Grandparents or Legal Guardians — the court has the discretion to grant these parties standing to file a contempt complaint. These occur in very rare cases.

The best way to avoid having to face a contempt hearing is to ensure that all of the directives from the court are being adhered to and that you are dealing in good faith with your spouse. Ensuring your emotions do not get the best of you and maintaining a positive environment for your children can also help you avoid these issues.

What's the Difference Between Pre-qualifying and Qualifying for a Loan?

When you start searching for a home, your real estate broker may ask you about potential financing options. Before you start discussing your financing, there are some terms you should be aware of. It is important to understand these terms could be used interchangeably but they are very different. These terms are prequalifying, qualifying or preapproval.  Here’s what each of these terms mean for you as a home shopper.

What does prequalifying mean?

If you are considering getting prequalified before shopping for a home, you will provide to a mortgage lender or broker certain information. This information will include your monthly income, monthly credit card expenses, and information about other bills such as a car payment, or insurance which are paid on a monthly basis. Your mortgage lender or broker will ask you specific questions regarding your credit including whether or not you have had any late payments during the last 12 – 24 months. None of this information will be verified by your broker or lender.

Once your mortgage professional has obtained this information, they will help you determine how much of a mortgage you may be qualified to obtain towards purchasing your new home.  This information is helpful because it will give you the flexibility of knowing approximately the price range at which you can purchase your home.

What does preapproval/qualifying mean?

While preapproval and prequalifying often are confused as the same process, there are very significant differences. During the preapproval phase, a lender will have you fill out a mortgage application, run a credit report, and verify the information they request from you. This process allows you to know how much money you actually can get approved for, versus an estimate of how much of a mortgage you qualify for.

In most cases, a lender will issue you a preapproval letter with certain caveats including that information provided on your initial application does not materially change between the preapproval or qualifying process. For example, if you maxed out a credit card which had a zero balance when you applied, that could impact your final qualifying. The same is true if you missed payments, changed jobs, or other financial circumstances which materially changes your initial application.

The advantage of a preapproval when shopping for a home is clear: When you are negotiating with a seller, you know exactly how much of a loan you will be eligible for, and you also know that unless something materially changes, you will be approved for that loan.

What happens after prequalification?

Once you obtain a prequalification, you can start searching for your home with the confidence that you know what range you can qualify for a mortgage. Once you identify your dream home, you will fill out a mortgage application, provide documents to your lender, and your credit will be checked. Assuming there are no material changes from the original information you provided to the lender, you may then receive a mortgage approval.

What happens after preapproval?

Preapprovals will significantly shorten your process of finalizing your home purchase. Your mortgage lender will verify your pay for the period between your original preapproval, ask you about any changes in your finances, and pull your credit report again to make sure there are no material changes since the preapproval. Assuming there are no material changes, your mortgage will be ready for the final step.

The homebuying process is exciting and you will likely hear several terms you are unfamiliar with. Never hesitate to ask questions of your realtor or your mortgage professional during this process so you understand what steps to take next.

Nine Great Options for Using Your Home Equity Today

Most people who have equity in their home think about using that equity using one of two methods. First, there are those who opt to refinance their home and get the equity in cash — a cash-out refinance. Others opt to take out a home equity loan which has a similar result, you get the cash value of the usable equity in your home. Another option to consider however is the home equity line of credit. Like the other two options, a home equity line of credit — a HELOC — allows you to access the equity in your home. However, unlike the other two options, you decide how much of the funds you want to use, and when you want to access them.

Home equity lines of credit give you more options because if you are not ready to use the funds, you need not take the funds. Only when you draw funds down from the line of credit are you obligated to make any payment. Depending on the terms, you may also have the option of using the same funds repeatedly, much like you would a credit card. As you make a payment and reduce the amount of principal owed, you have the option of reusing the line of credit. Here are nine ways millennials, and others, can take advantage of the equity in their homes.

1. HELOC For Debt Consolidation

According to a study conducted by Experian, millennials have an average amount of $4,712 each in credit card debt as calculated during Q1 2019. Credit cards have notoriously high interest rates when compared to a home equity loan. On the lowest end, credit card issuers charge about 14 percent interest while a HELOC rate can be as low as six percent. This is a significant difference and can save you a lot of money over the repayment period.

2. Real Estate - Investing for Your Future

While there is no guarantee that real estate values will always remain high, another practical and creative way to use a HELOC is to fund the purchase of an investment property. When you apply for a mortgage for a second home which you do not intend to occupy, there are different down payment requirements. In nearly all cases, you should be prepared to make a down payment of 25 percent of the purchase price. A home equity line of credit could offer you the cash you need. Additionally, investment property can add a new stream of revenue to your monthly income when you rent out the property. Remember, when you make a significant down payment, you are also creating additional equity which may give you the option of obtaining another home equity line of credit later.

3. Educational Expenses — Reduce or Prepare

Whether you have several student loans and you are considering consolidating the loans, or your children are currently thinking about college, education is expensive. A HELOC can help you prepare for college, or help you reduce your current student loan debt. According to a recent release by the Bureau of Labor Statistics (BLS) millennials have the highest levels of student loan debt.  If you are planning to use a HELOC for reducing existing student loans, be sure to review your current payments and interest rates carefully so you are not paying more using your HELOC.

4. Investing in Your Current Residence

Regardless of how long you have lived in your home, the chances are high there is something you would like to change. Whether you are considering upgrading your roof, going solar, or you are considering landscaping your property, a home equity line of credit can provide you the funds you need to invest in your current home.

5. Fulfilling a Dream

Destination weddings, a dream vacation, or a cruise for the entire family — these are some of the more exciting ways of using the equity in your home. Make sure before you decide to use your HELOC in this manner you are not going to regret later. After all, using the funds from a home equity line of credit to splurge may not fit your overall financial goals.

6. Making Self-Employment a Reality

For millennials who have the entrepreneurial spirit but are having problems securing business loans, a home equity line of credit can provide the funding you need to launch a new business. Many studies over the last several years have shown that millennials are more likely to forgo traditional business models and go to work for high-tech start-ups or opt to work for themselves. Using a HELOC to fund a new business can be rewarding in the long run.

7. Saving for a Rainy Day

There is no doubt many of us are poor savers. However, a HELOC can help you get a leg up on some of your savings needs. If you have no current emergency fund and you are concerned that a sudden problem with your car, furnace, or other big-ticket item could wipe you out financially, a home equity line of credit could be a great fallback. Remember, if you have not drawn any funds down from the HELOC, you are not making any payments. If you do take a draw of funds, you are only making payments on the amount drawn, not the entire balance.

8. Creating a Nest Egg and Taxes

Millennials may feel retirement is years away, and for most it is at least a couple of decades in the future. However, this time gap does not mean you should avoid planning for retirement. In addition to the earnings on your retirement savings, there may be tax benefits available which could help offset the cost of using your home equity line of credit to fund your annual retirement account or start your retirement account for the first time. Before using a HELOC in this manner, make sure you explore the pros and cons.

9. Caring for Family

Millennials are often faced with the challenge of caring for an aging parent or grandparent. Having some financial flexibility can be very helpful in this situation which is when a HELOC can be very beneficial. You may also be expecting a new family member either through birth or adoption and having access to additional funds could prove helpful.

While a home equity line of credit is not right for everyone, these are some simple idea to make use of the equity you have worked so hard to build up in your home.

Best strategies for refinancing your home

Chances are that your local newspaper has advertisements from home mortgage lenders advertising new, lower interest rates.  You log onto your computer and all over the internet you see ads for lower interest rates.  You might be wondering if it is time to consider refinancing your home.  Let us look at the best strategies for refinancing your home since interest rates are lower.

• Calculate the difference - the first thing you should do is determine how refinancing your home is going to affect your monthly payments.  Not only should you consider how much your mortgage payment will change but, you should also look at how it will impact your homeowner’s insurance and your income tax.  Since your mortgage interest can be deducted on your taxes, determine the impact.
• Can you consolidate? - if you have credit card debt or other debt that you can pay off by refinancing your home, you should also calculate the amount that you may be saving. There are mortgage calculators that are available on-line that will help you determine (based on set rates) how much your mortgage payment will be.  Gather all of your credit cards together, and sort them by interest rate.  Write down the current balances and use a credit card calculator to determine how long it will take to pay them off if you do not include them when refinancing your home.
• Contact a Realtor - get an approximate market value of your property.  Once you have obtained a market valuation (not to be confused with an appraisal) you can determine if you are eligible for a refinancing of your home.
• Obtain your Credit Report - before you take any further steps towards refinancing your home, contact all three credit reporting agencies and request a copy of your credit report.  Remember, you may request one free copy of your credit report every twelve months.  Verify that all the information on your credit report is accurate.

Once you have completed these steps you then can decide if you will benefit from refinancing your home. The next best strategies come when you begin discussing your situation with lenders. Here are some strategies for helping ensure you get the best possible refinancing terms for your home.

• Contact your current lender - if you currently have an adjustable rate mortgage (known as an ARM) you should discuss with them the possibility of refinancing to a fixed rate mortgage. Let them know how much work you have already done in research.  Advise them that you have done the calculations (and at what rates), if you are paying off credit card debt (known as a cash out refinance).  Also let them know what you have found out about the current market value of your home and any information that might be pertinent from your credit report.
• Contact other lenders - contact other lending institutions after you speak with your current home lender (regardless of what they tell you) and find out if you can get a quote for a lower interest rate.  While these quotes are usually non-binding until contract, they will give you some leverage with your own lender.  Make sure you provide these lenders with the same information you provided to your lender (with the addition of your current outstanding mortgage).
• Negotiate - there is usually room for negotiations with your lender. You may be able to get them to waive all (or some) of the closing costs, if you decide to stay with the same lender many times there are other fees they would consider waiving.   You should attempt to get the best deal possible when you are attempting to refinance your home. 

These are some of the best strategies to employ when you are considering refinancing your home. After you have thoroughly reviewed all the implications of refinancing your home, you will see that these best strategies can help you successfully close the deal.

Credit card debt reduction tips

In a study conducted by Creditcards.com it was estimated that the average adult with a credit card maintains debt on those credit cards in excess of $5,600.  This amount is staggering, and many people are searching for opportunities to reduce their credit card debt but are uncertain as how to get started.  Here are some simple to implement credit card debt reduction tips.

• Stop using them - all too often, having a credit card in our wallets is like having permission to purchase anything we want at any time. Rather than carrying your credit card (or cards) with you, leave them at home. If you commit to using your credit cards only for emergency purposes, this will be one way to immediately reduce your credit card debt. Avoid using your credit cards for "want-to-have" items instead of saving for them.
• Consider consolidation - check all credit cards and determine which one has the lowest APR. Once you do that contact them and ask about transferring balances from your higher APR cards. If this is not possible, consider searching for a lower APR credit card and consolidating all your balances to that card. Some credit card companies may offer 0% APR for a specific period of time for transferred balances.
• Contact Creditor - contact your credit card company and ask them if they would be willing to consider a reduction in your APR. This can be accomplished if you have an excellent history with the card company. Many card companies are willing to negotiate if you are not delinquent in your payments.
• Double payments - instead of making your minimum monthly payment, try making payments that are equal to two monthly payments each month. This will help reduce the interest you are paying on your credit cards and help lower your balances faster. This is especially helpful if you are double paying your higher interest rate cards.

Instead of swimming in credit card debt, plan today to help reduce the amount you owe. If you use these simple to follow credit card debt reduction tips, you may soon find your credit card debt down to far more manageable levels. Get free of credit card debt beginning today. Remember, you did not accumulate your credit card debt in one day, and credit card debt reduction will not happen overnight. Using a sensible plan, you can free yourself of your credit card debt.