Las Vegas Small Business Attorney, Lawyer

Online Business Portal Under Construction

Gina Madsen — Tue, 27 Jul 2010 21:24:00 GMT

The Nevada Secretary of State has contracted with a technology company to create a $4.5 million online portal that offers "one-stop shopping" to the business community. When complete, this website promises to allow companies to conduct nearly all state and local government business through the Secretary of State's site (www.nvsos.gov). Currently, to open a business in Las Vegas, one must contact several different offices located all over the state. The process is confusing, tedious, and often results in businesses unknowingly operating without the proper licensing.

Not only will this new website help the state capture millions in additional revenue, but it will help entrepreneurs and business owners start and maintain their companies more quickly, easily, and correctly.

The initial phases should be completed by March 2011. Let's keep our fingers crossed!

Nevada Tax Amnesty Starting July 1, 2010

Rich Vallari — Tue, 27 Jul 2010 10:08:00 GMT

By Guest Blogger Rich Vallari Southwest Sales Tax Solutions (702) 233-0049

Nevada Governor Jim Gibbons has approved a tax amnesty program that will be effective from July 1, 2010 to September 30, 2010. Specific rules regarding the amnesty program have not yet been announced, but are expected soon.

In general, tax amnesty programs encourage people to file and to pay back taxes without incurring interest or penalties. In return, the tax jurisdiction benefits by collecting delinquent revenues and fees.

Nevada last enacted a tax amnesty in 2008. For that amnesty, companies with delinquent Sales/Use Tax liabilities, Modified Business Tax liabilities, and Business License Fees were included in the group allowed to participate in the amnesty program. Under the 2008 amnesty program, taxpayers who were delinquent were required to remit all taxes owed to the state by the end of the amnesty program period to receive a full waiver of penalties and interest. However, the 2008 amnesty program only applied to taxpayers registered with the state. Additionally, participating in the amnesty program did not preclude a business from being randomly selected for audit. I believe the rules for the 2010 amnesty will mirror the rules of 2008.

If you are an unregistered taxpayer and owe taxes to Nevada, you are not allowed to participate in the amnesty program and will have to request a voluntary disclosure agreement from the state to become compliant. Unlike amnesty programs, voluntary disclosure is always available. Prescribed rules by the Nevada Department of Taxation must be followed in order to qualify. Like amnesty, voluntary disclosure allows a business to become compliant, while having interest and penalties abated.

Questions? Call Rich at (702) 233-0049.

Using a 401(k) to Fund a Startup - CAUTION

Gina Madsen — Tue, 22 Jun 2010 11:41:00 GMT

With the credit crisis, rolling over a 401(k) to fund a startup business is becoming an attractive option. However, with anything that seems like a good idea involving the terms "tax-free" or "tax-deferred," the IRS is swooping in to make sure they're not missing out on any taxable revenue.

The proper procedure requires the entrepreneur to create a new entity with its own 401(k) plan and roll over existing 401(k) funds into the new plan. The new 401(k) money is then used to buy shares in the new company, providing much-needed capital for a startup. Without the rollover, the money would be subject to income taxes.

Upon closer examination, the IRS is finding that business owners push the envelope - fudging the valuation of the company's shares, or not using the 401(k) money for business expenses.

Like everyone else, the IRS is hurting financially and it seems that small businesses are its focus. We're like the person walking past the panhandler claiming we have no money while coins jingle in our pockets. The IRS is not above turning us upside down and shaking us until all the change falls out.

If you are considering rolling over your 401(k) to fund a startup, be sure you follow the rules. Insist that your financial advisor and your CPA communicate with each other, because if you get audited, it's your keester in the fire.

How to Start a Business in Las Vegas

Gina Madsen — Thu, 17 Jun 2010 20:00:00 GMT

By popular demand, here is the checklist for starting a business in Las Vegas, Henderson, North Las Vegas, Boulder City and Clark County.

1. Choose a name.

Start with my article Naming Your Business. Make sure no one else has it. When you've chosen a name, move on to step 2.

2. Figure out your business address.

Whether you use your home address, a virtual office, or an actual office, you'll need a business address for almost all the paperwork you fill out to open your business. It's much easier to have this address from the start than to change it down the road. The Nevada Secretary of State alone charges $175 for an address change, not to mention the paperwork involved.

You can have a separate mailing address for most applications, which is handy if you want to use a PO box or your home address, but the business address is what will be public record, so choose wisely.

One final word on a business address. Many businesses somehow get away with a box at a mail store as their business address. Be warned that the city licensing bureaus don't like to license businesses that just hang their licenses in a mail store. You may get away with it; you may not. Have a backup plan just in case.

2. Get an EIN number.

The EIN number is like a social security number for your business. With rampant identity theft concerns, it isn't wise to use your social security number for your business, which is what you have to do if you don't have an EIN. I've written an article on why you should have an EIN. It's free to apply and takes only a few minutes on the IRS website.

3. Form your entity and get your state business license.

You may want to consult with an attorney as to the best choice of entity for your business, but here are the basics. You file the documents to form your entity, whether it's an LLC, a corporation, or a limited partnership, with the Nevada Secretary of State's office.

You certainly can apply for a business license as a sole proprietor, but without a separate entity, you will personally be on the hook for all of the business' debts and obligations. Maintaining an entity costs a few hundred dollars a year, but the peace of mind is well worth the price.

You'll first fill out and submit your Articles of Organization (LLC), Articles of Incorporation (corporation) or Certificate of Limited Partnership with a filing fee. Then, once the Secretary of State has processed that filing, they'll send you a form asking for your Initial List of Managers/Members/Officers/Partners. Fill that out and send it back with another filing fee and your state business license fee of $200. Once those documents are processed, you'll receive your corporate charter, the official looking document with the foil seal that says you're incorporated.

Now that the Secretary of State has taken over processing of state business licenses, you will receive your state business license with your corporate charter.

The Secretary of State usually takes a few weeks to turn around an application. For an additional $125 you can opt for a 24-hour expedited application. Because you need this before you can proceed, it's usually worth the extra money.

4. Register with the Nevada Department of Taxation.

To apply for a business license, you must provide proof that you're registered with the Nevada Department of Taxation. What license you need will depend on whether you're a retailer, a service provider, or whether you purchase items for consumption from companies that didn't charge you sales tax. The Taxpayer Information Packet contains all the information you need to get started.

5. Apply for your city business licenses.

Registering with the taxation department can be tricky, and so can getting city business licenses. First, where is your business located? If you're in the City of Henderson, you'll go to their licensing bureau. Same with Boulder City. The City of North Las Vegas doesn't currently post business license applications online. Instead, you must request an application for your specific business online.

What if you're in the City of Las Vegas? Are you sure? The lines that separate the City of Las Vegas from Clark County aren't anything close to straight and make no logical sense. To be sure which license you need, check the Jurisdiction Locater. Look only at the Jurisdiction field, NOT the "Minor Civil Division" field which usually says "Las Vegas Township." The Jurisdiction field will show you whether you need a license from the City of Las Vegas or Clark County.

What if your business is mobile? If you're a plumber, carpet cleaner, mobile detailer or other business that services the entire valley, you'll need a license from every jurisdiction in which you plan to do business. This can be cumbersome, time consuming, and expensive. I sometimes stare out the window, envisioning a world in which you can apply for all your licenses in one location with one application, but until that day, be prepared to do some paperwork.

Have a home based business? Most jurisdictions will require you to fill out a Home Occupation Permit which requires you to acknowledge that you're either the owner of the home or someone allowed to do business there. Because residential zoning is, well, residential, you'll have to promise that you won't create a traffic jam having people park in front of your house and you won't start hanging neon signs outside your front door advertising your business. Your neighbors would NOT be happy. If you live in a homeowner's association, be sure to check your CC&Rs to make sure you can list your home address as a business.

The cost of your business license varies with the jurisdiction and the type of business it is. Some businesses even require background checks and those licenses are usually far more expensive.

Don't forget that it's your entity that's applying for the business license, not you as an individual. So, it's ABC, LLC applying for the license, not Adam Charlie. It's very important that you remain consistent with your business name. Don't get lazy and leave off the LLC when listing your business name. On ALL official documents, you must list the entire name of your business, INCLUDING the entity. The entity is part of the official name of your business. Be sure you use it, otherwise you will create a snafu across agencies that is a real chore to untangle.

6. Do you need a fictitious firm name?

A fictitious firm name, or a DBA, is required if you're doing business in a name other than the one registered with the Secretary of State. So if you're ABC, LLC but the name of your company is Adam's Weight Training and Cake Bakery, you'll need to file a fictitious name form with Clark County. Then, whenever you're asked for the name of your company on an official form, like a contract, you'll want to list it as "ABC, LLC dba Adam's Weight Training and Cake Bakery."

If you've followed my blog at all and are STILL operating as a sole proprietor (smacking you on the wrist), you can be "Adam Charlie dba Adam's Weight Training and Cake Bakery."

Are you exhausted yet? Great, because now that you've jumped through all the hoops, it's time to actually DO some business! Good luck!

New 1099 Rules for Businesses

Gina Madsen — Tue, 15 Jun 2010 11:43:00 GMT

Many businesses are familiar with the method of reporting payments to independent contractors to the IRS. Request a W-9 form from the contractor, keep track of how much you pay them, and any contractor who receives more than $600 in a year gets a 1099-MISC form from the company. Easy, right?

Now imagine you have to apply that $600/year threshold to everyone you pay, including vendors, suppliers, and service providers. Ridiculous, huh?

Unfortunately, it may become reality. According to a small section on page 737 of the new healthcare bill, companies will have to start issuing 1099 forms to any vendor who receives more than $600 a year starting in 2012. This includes goods AND services. Stop and think about how many of your vendors would be included. "Hi, Apple, this is Gina. Can I get a W-9 form from you? And OfficeMax, and Costco, and Verizon, and Best Buy..."

See, this is what happens when a bunch of lawyers sign off on something they didn't bother to read. Damn lawyers, anyway.

One person in Congress has avoided the Kool-Aid. Republican Representative Dan Lungren from California is trying to get this provision withdrawn. Let's keep our fingers crossed he's successful.

Firing At-Will Employees

Eric Swenson — Mon, 10 May 2010 10:44:00 GMT

By Guest Blogger Eric Swenson, Managing Director of RSJ/Swenson, an HR and Management Consulting firm with offices in Las Vegas and Los Angeles.

When the phone rings at an HR consulting company late on a Friday afternoon, it’s usually not good news.

A former client – the principal of a professional services firm in Henderson – was clearly exasperated.

“I want to fire my assistant right now. She’s been late 11 times this month. Is it OK to fire her?”

“Let’s back up. Have you talked to her about this?”

“No. I’ve let it go, but this is getting ridiculous.”

As an at-will employer, you have the right to fire an employee at any time, for any reason – as long as it is not illegal or discriminatory. But the burden of that proof is on you – the employer.

So we always recommend that when an employee comes in late, you begin by talking to the employee, and if the behavior continues, issuing a written warning. By building a file, you’re proving that the discipline or termination is based on a business decision, not a discriminatory reason.

Another benefit of addressing the issue quickly is it might correct the behavior, or you might find out there are other problems (such as medical issue). If an employee is aware you're displeased, then the eventual termination is less of a shock and more expected, diminishing the chances of unpleasantness (or a lawsuit) later.

A fundamental maxim of management is this: What you allow, you encourage. Address improper behavior immediately. Don’t let it go too far.

I’ve worked with many managers and business owners who regret taking too long to fire a poor employee.

Very few regret firing them too soon.

How to Network Effectively

Gina Madsen — Mon, 03 May 2010 11:05:00 GMT

I recently attended one of my favorite networking events, the CEO-CFO Group. The room is filled largely by other people who serve the same clients I do and every time I enter the room, I hug and shake hands with a bunch of people with whom I've developed relationships over the course of the last year and a half. As I stood chatting with someone I hadn't seen in a few weeks, I was buzzed by a BCC - a business card collector. This woman worked for a national bank, was a new face at the lunch as far as I could tell, and clearly wanted only to trade cards with people. She didn't even bother to introduce herself and find out my name. It was just, "here's my card, can I have one of yours?"

Now in this particular group, that behavior stood out because the rest of the people in the room understand true networking is not about being a BCC. It's about building relationships. There were easily 50 people in the room and I came out with maybe three business cards. That's not to say the meeting was a waste. Far from it. I reconnected with people I don't usually see other than at that meeting and they introduced me to a few new people. It's not about the quantity of cards you collect, it's about the quality of the relationships you build.

The next time you attend a networking event, change your mindset. Don't just try to collect as many cards as possible and immediately add everyone to your mailing list. Set a goal to meet three people, at most, with whom you have more than a 10-second conversation. Ask them what kinds of clients they serve and ask what types of people they want to meet. If their business complements yours in any way, meet them for coffee later in the week.

True quality networking takes time. Don't expect to attend an event, give your 30-second spiel, and come away with six new clients. Take the time to get to know people, learn about their businesses, and the relationships will grow. Out of those relationships, referrals will come. Trust me, I'm a lawyer. And if you don't trust me, check out this article from WomenEntrepreneur.com that backs me up: I'm at a Networking Event, Now What?

IRS to Increase Focus on Self-Employeds

Reg Baker — Mon, 26 Apr 2010 10:22:00 GMT

By Guest Blogger Reg Baker, CPA (702) 360-2823

If you are self-employed; beware! The Internal Revenue Service plans to increase audits of the self-employed by checking for unreported or understated income during correspondence audits.

Estimates by the IRS show that at least $68 billion of the tax gap (tax gap is defined as the difference between what the IRS estimates should have been collected in taxes and what was actually received; the gap was estimated at $345 billion in 2001) was due to self-employeds not filing or not accurately reporting revenues and expenses. The IRS conducted over 5 million correspondence examinations during the past 5 years that resulted in about $35 billion in additional taxes. For each self-employed tax return examined about $6,800 in additional taxes resulted. With the federal deficit increasing at rates never seen before, the collection of these taxes on unreported income and/or overstated expenses has become critical.

Current IRS procedures for correspondence audits of self-employeds do not require IRS examiners to complete minimum checks unreported income. It has been recommended that the IRS require correspondence examiners to check for unfiled returns and to probe for unreported income. These checks are required of IRS examiners who conduct in-person and office visit audits, but not of correspondence audits.

"Sole proprietors who underreport their income can create an unfair burden on honest taxpayers and diminish the public's respect for the tax system," said Treasury Inspector General J. Russell George in a statement. "It is imperative that the IRS institutes policies to address this problem."

In response, the IRS agreed to develop “selection filters” to identity and refer to IRS examiners those self-employeds who did not file required returns or have indicators of unreported income or overstated expenses.

Should you have any questions or concerns, or wish to file an amended tax return, please contact your CPA.

Naming Your Business

Gina Madsen — Tue, 20 Apr 2010 11:19:00 GMT

When naming your business, it's important to check the public records to be sure there isn't any other business already using the name.

I received a call today from a client who wanted to use the plural version of a name already in use for the exact same business. In support of his using the name, he said that the city business license bureau was willing to issue him a license.

Licensing bureaus are only too happy to take your money and issue you a license. It's not their job to check to see if the name is already in use. In fact, if you end up getting a license under a name already in use, the first company can come after you for infringing on their name.

I suppose I should clarify - you don't have to actually register a trademark in order to have some protection against someone else using it. You only have to use it in "commerce," which means you actually have to use it in conducting your business, and you have some protection. Granted, registering it does provide additional protection. See "Should I Register My Mark?"

Finally, you cannot steal a name from someone already using it by registering it. Simply by virtue of using the name in commerce, they have established intellectual property rights in the name. Any attempt to steal it will most likely trigger a lawsuit.

How do you know if the name you want is already taken? Google it first. Then check the business license bureaus, the Secretary of State, and the county DBA database. Here are some links:

City of Las Vegas

City of North Las Vegas

City of Henderson

Boulder City

Clark County, Nevada

Nevada Secretary of State

Nevada Use Tax - Are You at Risk?

Rich Vallari — Mon, 12 Apr 2010 22:12:00 GMT

By Guest Blogger Rich Vallari Southwest Sales Tax Solutions (702) 283-4686

Nevada Use Tax may be an area of exposure for individuals and businesses that purchase goods from out of state.

Nevada Use Tax is imposed upon property purchased for storage, use or consumption within Nevada. As a corollary to Nevada Sales Tax, Nevada Use Tax is imposed upon purchases from non-resident vendors and is intended to remove any incentive to avoid Nevada Sales Tax. Businesses and individuals risk exposure when the transaction meets the following criteria:

Tangible property is purchased from a non-resident vendor;
The non-resident vendor does not assess Nevada Use Tax upon the purchase;
The purchaser would have paid Nevada Sales tax had the transaction occurred within state borders.

Consider this example: Your Nevada business purchased a computer from a non-resident vendor in Pennsylvania. The vendor ships the computer to you, billing only for the computer and shipping cost. The non-resident vendor does not charge Nevada Use Tax. In this example, the purchaser becomes and remains liable for Use Tax remittance to Nevada.

Individuals who purchase goods from non-resident vendors are required to remit Nevada Use Tax. Consider your holiday shopping on the Internet. If you purchased from a non-resident vendor, it is likely you were not charged any tax. Legally, any purchase from a non-resident vendor that would be subject to Nevada Sales tax had the item been purchased in Nevada is subject to Nevada Use Tax. You become and remain liable for Use Tax Remittance to the state of Nevada. Questions? Call Rich at (702) 283-4686.

Homemade Pizza Dough

Gina Madsen — Sun, 04 Apr 2010 17:32:00 GMT

After suffering for years with the dough-in-the-can and graduating to the dough-in-the-bag from the store, I finally decided to put my cherry red KitchenAid 90th Anniversary stand mixer to work on pizza dough. It came out absolutely delicious, fluffy and crispy, and it was much easier than I thought it would be. And so I share...

Pizza Dough Recipe:

1 package active dry yeast (if you have the Costco-sized bag of yeast, use 2 1/4 tsp)

1 cup warm water (heated in microwave for no more than 30 sec)

1/2 tsp salt

2 tsp olive oil (extra virgin or don't bother)

2 1/2 to 3 1/2 cups all-purpose flour

1 Tbsp cornmeal (optional)

Warm the mixer bowl by turning it upside down in the sink and running hot water over it for a few minutes. I do NOT recommend you microwave the metal mixer bowl or even the glass one with the ring on the bottom. I'm a lawyer, trust me on this one.

Dissolve the yeast in warm water in the warmed mixer bowl. Add salt, olive oil, and 2 1/2 cups flour. Attach the bowl and dough hook to mixer. Turn to speed 2 and mix for about 1 minute.

Continuing on speed 2, add remaining flour a little at a time and mix until the dough clings to the hook and cleans the sides of the bowl, about 2 minutes. If you add too much flour the dough will start to break into pieces, so slowly add a little water until the dough comes together again. Knead on speed 2 about 2 more minutes.

Put the dough into a bowl greased with olive oil. Again, extra virgin or don't bother. Turn the dough over a few times to make sure it's coated in the oil. Cover and leave in a warm place for about an hour or until doubled in size. An hour later, take out your frustrations by punching the dough down.

Now you're ready to bake. Brush a pizza pan with oil or sprinkle a nonstick cookie sheet with cornmeal, or use a pizza stone, whatever you have. Warning: if you try to do the whole pizzeria toss into the air thing, be sure you've made a spare batch of dough in case it ends up on the floor. Not that I did this, I'm just saying.

Add your toppings. For mine, I used fresh mozzarella (the squishy watery kind, not the dry kind), fresh chopped garlic, halved cherry tomatoes, halved kalamata olives, and fresh basil. Drizzle the entire thing with olive oil, paying special attention to the crust and sprinkle some coarse salt over the whole thing.

Bake at 450 degrees for 15-20 minutes.

Mangia!

How to Keep Your Lawyer's Bill Low

Gina Madsen — Thu, 01 Apr 2010 11:11:00 GMT

A new client will often present me with a thick file folder full of e-mails, faxes, letters, receipts, and handwritten notes, all in disarray. One of the most time-consuming yet unproductive tasks I undertake is getting this kind of file into some logical order. As the client, you know far more about the situation than your lawyer does or probably ever will. The best way to help your lawyer understand all the nuance is to organize your file. When in doubt, organize everything chronologically and, if you're so inclined, make a separate timeline (we lawyers LOVE timelines) as a quick reference for the chain of events. My favorite clients even make use of the little sticky tab thingies and make a table of contents so I can easily find what I need. (Hint, hint.)

If you can spare your lawyer having to organize your file, you will save money.

Self-Help Legal Services

Gina Madsen — Tue, 30 Mar 2010 11:16:00 GMT

An insurance agent in one of my networking groups recently explained why one insurance company in particular can consistently offer much lower rates than his competition. By allowing customers to choose their own coverage, no agent of the company is involved and the customer assumes all responsibility for choosing his liability coverage. Are you confident that you'd choose the right coverage for your property given your geographic area, the likelihood you'll have a claim, and the replacement value of your belongings? Or would you sleep better at night knowing you spoke with an agent who has knowledge of all those facts and figures and who would back you up if you had a claim?

There is a parallel in the legal profession. Legal forms businesses and online legal document banks "provide self-help legal services at your specific direction." You can certainly go buy a Do-It-Yourself will packet, but are you confident you'd know exactly how to fill it out and execute it properly? Did you know that an improperly executed will is almost worthless? You could similarly go online and form your business and download an operating agreement, but do you know why you'd choose to be a corporation rather than an LLC? Do you know what your operating agreement should say?

By all means, do things yourself to save some money...AFTER having done your homework to figure out what "your specific direction" should be. And if you don't happen to have four or five years to spend in law school and business school, call a lawyer.

How to Choose the Right Lawyer for Your Business

Gina Madsen — Tue, 30 Mar 2010 11:00:00 GMT

Open up the yellow pages to the "lawyers" section. Pretty thick, huh? We used to joke here in Las Vegas that the lawyers section was even thicker than the adult escort section, which topped 150 pages at one point. In this sea of names and faces, how do you choose the right lawyer for your business?

Let's start with firm size. I've heard many business owners complain that they can never get their lawyer on the phone. Nine times out of ten, these business owners have hired big firms. It may be that the lawyer is overwhelmed with work, or that the business owner isn't one of the "big fish" clients, but whatever the reason, the client is unhappy. It's time to decide what's important to you - branding or client service.

If it's important to you to say, "my lawyer is with [insert giant intimidating firm name here]," by all means, hire the big firm. But if you want to be able to get your lawyer on the phone and not be passed off to an associate or paralegal, a smaller firm may be the way to go.

It seems to me that smaller companies in many industries are enjoying a resurgence of customer support. As I said, many clients are unhappy with big law firms. We've all seen the mass exodus from big banks in favor of community banks. Client service is climbing higher and higher on the list of priorities and the larger companies who never cared much about client service are now feeling the pinch.

Let's move on to credentials. If you've decided to go with a big law firm, you can stop reading. Big law firms have enough lawyers running around that there's bound to be someone with the necessary credentials to handle your issue. If you've decided a small firm is the way to go, the lawyer's credentials should be your next consideration.

Lawyers and doctors are historically horrible business people. Their professions are so specialized that finding a lawyer or a doctor who also has a mind for business is like finding a needle in a haystack. It's important to choose a lawyer who understands how to run a business. These days, many business lawyers have set themselves apart from the pack by earning an MBA or by operating businesses aside from their law firms. Finding a lawyer who has experience with your specific business is ideal, but a lawyer with at least some business knowledge is crucial.

Once you've found a business lawyer with actual real-world business experience, the next consideration is accessibility. Running a business involves daily decision making and you want to be able to consult with your lawyer on decisions that could impact the business legally. Will your lawyer be available when these decisions have to be made? Will they be able to work quickly enough so that you can make an informed decision and move on?

Now let's talk personality. Business lawyers do the most good when they're in regular contact with their clients. As a client, you're not likely to keep in contact with your lawyer if he or she is a jerk, and this lack of contact can be detrimental to your business. The attorney/client relationship is just that, a relationship. Make sure your lawyer is someone you like.

Finally, price. You had price at the top of your list, didn't you? Well, price is definitely a consideration, but it should be at the bottom. You certainly need to find a lawyer you can afford, but a lawyer can save you money in the long run. It's true. We're like insurance policies. You may not want to shell out the premium now, but it can get very expensive very quickly if there's trouble down the road.

Ideally, you should look for a lawyer willing to get creative with their billing. This is not to say find a lawyer who will work for peanuts, but many of us business lawyers have abandoned the traditional retainer/hourly rate model in favor of more business-friendly billing structures. Flat fees and membership programs may enable you to have a qualified, accessible, personable business lawyer at a price you can afford.

Why Every Business Needs a Lawyer

Gina Madsen — Mon, 29 Mar 2010 11:00:00 GMT

I just posted an article about what you should do if you're ever sued. One of the many reasons every business needs a lawyer is to deal with a lawsuit when, not if, it happens. If you're in business long enough, you will be sued. It's unfortunate, but as a business owner you must be prepared.

Many business owners believe a lawyer is only necessary in the event of a lawsuit. In fact, a lawyer can help keep you from getting sued. Now, I understand that most people think lawyers love lawsuits because that's where we make the real money. While that may be true, I prefer to keep my clients out of court if at all possible because going to court is always a losing proposition, for everyone except maybe the lawyers. Even if you win, you've paid a lawyer a bunch of money to represent you. Even if you get your attorney's fees awarded, it might be impossible to collect them. Most of all, attention better devoted to your business has been diverted for months or even years to a lawsuit.

So how can a lawyer keep you from being sued? Boy, where do I start? By reviewing your contracts, by writing owners' agreements, by being kept in the loop about your business relationships, by consulting with you on hiring and firing employees, by mediating disputes before they get out of hand, and by being an integral part of your management team. We are trained to look at everything with what-can-go-wrong x-ray vision that reveals things most business owners never think about. This allows us to see holes in agreements, weaknesses in processes, and relationships that are headed south in time to fix them.

Make it a point to meet with a business lawyer soon. At the very least, find out the ways in which they could help keep your business out of trouble. Your peace of mind is worth it.

Are You Being Sued?

Gina Madsen — Sun, 28 Mar 2010 23:16:00 GMT

I run across a surprising number of business owners who simply ignore a lawsuit. Maybe they don't realize they've been sued. Maybe they believe they've received just their first notice. Maybe they believe if they ignore it it will just go away. But they have, they haven't, and it won't.

A Plaintiff, the person suing, will list facts and legal reasons for their claims in a legal document called a Complaint. The Complaint is filed with the court, then attached to a Summons and handed off to be served. A Summons is the document that often begins with "NOTICE: YOU HAVE BEEN SUED." This isn't your first notice; it's your ONLY notice.

Serving a lawsuit is often performed by a process server, who will hand deliver the Summons and Complaint to the person being sued, the Defendant. As of the moment the Defendant receives the Summons and Complaint, the clock starts ticking. In Nevada, the Defendant has 20 days, and 20 days ONLY, to respond by filing an Answer with the court. An Answer simply addresses each of the Plaintiff's claims as listed in the Complaint. If the Defendant fails to file an answer within 20 days, the Plaintiff can file for a Default, which means the Plaintiff wins. Period. It is very difficult to set aside, or cancel, a Default, so it's imperative that the Defendant file an Answer within the 20 day time frame.

Keep in mind, even if you call up the Plaintiff and make other arrangements, the court must still be notified. Think of two parallel universes. One is the real world, where you might very well speak to the Plaintiff or the Plaintiff's lawyer, decide to settle, or negotiate another solution. The other universe is down at the courthouse. All the court knows is that a Complaint has been filed and the clock is ticking. The court doesn't know that you're making other arrangements, or that you've convinced the Plaintiff to drop the lawsuit. If the 20 days pass without the Defendant filing an Answer, or without the Plaintiff filing to withdraw the case, the court will find in favor of the Plaintiff.

If you're in business long enough, you will be sued. Plan ahead. Unless you intend to represent yourself, which I do not recommend, decide which lawyer you will call. And as soon as you receive those documents, call your lawyer. Don't wait until Day 18.

Why Systems Are Important

Gina Madsen — Fri, 05 Mar 2010 05:43:00 GMT

A few weeks ago I broke my left elbow. "Good thing you're not left-handed" my doctor said with a chuckle. Well, I am left-handed so that's a big help. Now what?

As a true solo practitioner I had a brief moment of panic - how am I going to work with my arm in a sling? Now, I realize I'm not laying tile or playing the violin for a living but losing the use of my dominant hand for two weeks really slowed me down. I found myself in a situation where I could have easily turned to an assistant, if I had one, or even to a virtual assistant, if they could just SEE my desk and what needed to be done.

It occurred to me at this point that having my procedures written down would have been a big help. Something as simple as sending a fee agreement could have easily been handled by someone other than me, if only I could explain how.

That epiphany was followed by another - if I had been out of commission for longer than two weeks, could my business have survived without me? Maybe. Maybe not. Certainly not if I didn't have my systems written down for someone else to follow in my absence.

We all have our systems - how to bill customers, doing collections, following up on service, contacting potential customers, etc. But are they written down where someone else could follow them and execute the same thing without you hovering over them?

Putting your systems in writing serves several purposes. First, it allows you to delegate tasks you shouldn't be handling so that you can focus your energy on your core product or service. Ronda Henderson of Service Point said of business owners getting mired in administrative tasks, "any activity tied directly to revenue or relationships should be handled by the business owner. Everything else should be delegated." Second, it empowers your employees because they aren't just winging it and hoping they do it correctly. Third, it prevents you from becoming a micro-manager. Finally, and possibly most importantly, the process of reducing even your most mundane tasks to writing forces you to carefully review your methods where you may even find room for improvement.

Why Incorporate in Nevada - Low Taxes

Gina Madsen — Tue, 02 Mar 2010 03:55:00 GMT

I recently attended a luncheon where Nevada's Secretary of State Ross Miller spoke about why Nevada has become an attractive state in which to incorporate. Chief among them is the low tax climate. Nevada has no state personal income tax; in fact, it's prohibited by our constitution. Nevada similarly doesn't charge income tax on domestic or foreign corporations. We also don't have an estate tax or a franchise tax, which can be a costly startup expense for a new business. Nevada has no gift tax, which allows business owners to pass on their property and money without having to put money in our state coffers. Businesses enjoy no tax on inventory and no tax on corporate shares or LLC membership interests. Finally, our laws are written to limit tax increases, which is great for escalating property taxes.

Delaware has historically been the favored state for incorporating new businesses. Nevada's Secretary of State is working toward making Nevada just as attractive.

For more information, visit http://www.whynevada.com

What to Expect from an Initial Consultation

Gina Madsen — Mon, 01 Feb 2010 10:24:00 GMT

There seems to be a significant difference between what lawyers have been taught to provide and what potential clients expect to get from an initial consultation. I blame those TV commercials that suggest lawyers can and will solve all your problems in one meeting. No lawyer can do that and if any lawyer tells you otherwise, call someone else.

An initial consultation serves three basic purposes: 1) for the lawyer to determine whether he or she can represent the potential client, 2) for the lawyer and potential client to determine whether they want to work together, and 3) for the lawyer to explain how the representation will proceed if the potential client decides to retain the lawyer.

A lawyer cannot represent every person who calls. Lawyers are required to follow a whole host of ethical rules, most of which aren't particularly obvious. In fact, we have to pass an entirely separate exam on the ethical rules in order to be licensed. For example, we are prohibited from representing someone when the relationship would create a conflict of interest with a current or even a former client. Lawyers use the initial consultation to learn more information about the potential client in order to make sure the relationship wouldn't create a conflict of interest.

A lawyer doesn't have to represent every person who calls. Because a lawyer and client work closely together for what could be years, the initial consultation presents an opportunity for both to decide whether they want to work together. Personality conflicts should not be ignored, especially if they arise during this first meeting. Lawyers are expensive and heaven knows you don't want to be shelling out thousands of dollars to someone you can't stand.

Lawyers are not required to provide legal advice during a consultation. People often believe they can have all their legal questions answered at this first meeting, at little or no cost. Unfortunately, lawyers are not supposed to give legal advice until after they have been retained, which usually requires a signed fee agreement and payment. This protects the lawyer from having to decline future clients because of a conflict of interest they weren't compensated for, and it protects the potential client from being misinformed about a situation the lawyer hasn't had a chance to thoroughly research and analyze.

Lawyers are permitted to provide the potential client with information about the legal process. For example, a lawyer can describe the process of incorporating a startup and the fees involved, but should not discuss whether a company should elect to be an LLC or a corporation until the representation officially begins.

So go easy on us lawyers when we suddenly stop the conversation and insist on a signed fee agreement. We're just trying not to break our rules.

Personal Guaranty - Taking Scissors to the Corporate Veil

Gina Madsen — Mon, 25 Jan 2010 11:31:00 GMT

A few weeks ago I wrote about the concept of piercing the corporate veil. I received an e-mail asking what happens when someone breaches a contract he signed that included a personal guaranty. Short answer - get a lawyer. Here's the long answer...

A personal guaranty is sometimes required for a contract. Commercial landlords often require one before leasing space, as do banks when issuing lines of credit. The terms of the guaranty are usually set forth in a separate section of the contract, or sometimes in an entirely separate contract. Personal guaranties are signed by someone not in his capacity as a business owner, but in his capacity as an individual. This is a significant difference and you should be aware of the implications when you're asked to sign a personal guaranty. While we're on the topic, be sure of what you're signing. Personal guaranties are often at the end of whatever contract they're attached to and apparently they can be easy to miss. I've spoken with too many people who, after breaching a contract, are surprised to see that they signed a personal guaranty and are now losing sleep worrying about their personal assets.

When you sign a personal guaranty, you are in essence handing the other party a pair of scissors they can use to shred your corporate veil. Before you sign a personal guaranty, be sure you can utter the following statement with a straight face: I [insert name here] am personally on the hook for all the promises I made in this contract. If I don't live up to these promises in this contract, you can have my life savings and my house.

Virtual Offices and Executive Suites

Gina Madsen — Mon, 18 Jan 2010 12:54:00 GMT

Virtual offices and executive suites provide a fantastic alternative for business owners who want the trappings of an office without the significant overhead. As beneficial as these arrangements are, they can leave clients high and dry if the virtual office owner stops paying rent.

There are three rungs on this particular ladder:

Building Owner

Virtual Office/Executive Suite Owner (VOO)

Virtual Office/Executive Suite Client (VOC)

The VOO rents space from the building owner and their relationship will be set forth in a lease agreement. Similarly, the VOC rents space from the VOO and their relationship is set forth in a lease or license agreement. Things get tricky when the VOO stops paying rent and the building owner evicts the VOCs. Unless a VOC's lease agreement with the VOO says otherwise, the building owner owes the VOC no duties as the subtenant and the VOC is SOL.

If you're a VOC, it's important to read your lease agreement carefully to see what happens if the VOO stops paying its rent despite collecting rent from the VOCs. Ideally, you should ask to read the lease agreement between the VOO and the building owner, which likely explains what obligations, if any, the building owner has toward the subtenants. Keep in mind if you are kicked out of your virtual office, changing your address with the state, any business license bureaus, department of taxation, and the IRS can be an expensive proposition.

If you've found yourself in a situation where your VOO has left town and your office is locked, you may be able to appeal to the building owner to unlock the doors long enough for you to retrieve your belongings. If you haven't found yourself in this situation, it might be a good idea to set aside the fees you'll need to change your address, just in case.

Do I Need an EIN Number?

Gina Madsen — Wed, 13 Jan 2010 07:47:00 GMT

Yes. The End.

Just kidding.

The IRS, business license bureaus, taxation departments, and sometimes secretary of state offices require an identifying number for your business. Without an EIN, your social security number is used, which causes identity theft concerns. Also, obtaining an EIN is another way to distance yourself from your business in the interest of keeping your corporate veil intact.

The IRS provides a quick and simple way of obtaining a separate identifying number for your business, called an Employer Identification Number. The application takes only a few minutes, the process is free, and most banks require the number to open a business account.

So what are you waiting for? In the immortal words of Toy Story's Woody, "if you don't have one, get one!"

What Does a Registered Agent Do?

Gina Madsen — Wed, 06 Jan 2010 12:09:00 GMT

Last week I met with a small business owner whose registered agent had access to her business bank accounts. A short investigation revealed this particular registered agent had formed dozens of corporations and named himself secretary, giving him access to the bank accounts. We quickly dissolved the corporation and reformed an LLC with no one but the business owner having access to the company's money.

Registered agents are required for businesses but serve a very limited purpose - they provide a physical location where a human being can accept service (lawsuits and official papers from the state or taxation departments) on behalf of the company during business hours. The business owner can act as his or her own registered agent, but it may be difficult to ensure someone is available either in the office or at home during business hours year-round. There are a number of commercial registered agent services, charging anywhere from $100-$400 per year. Some business owners prefer to have their lawyer serve as registered agent so that a lawsuit can be addressed more quickly.

I can't think of a situation where a registered agent who isn't otherwise involved in the company would need access to the company's bank accounts or be named an officer in the company. This particular small business owner completely trusted the advice of this registered agent, and her business was placed at serious risk.

Small business owners can learn two lessons from this situation:

1) Be sure you understand what role someone should have in your company, whether it's your registered agent, your lawyer or your accountant.

2) Be sure you understand the professional advice you're receiving. If you aren't sure why your registered agent is listing himself as secretary, why your lawyer has decided you should be an LLC rather than a corporation, or why your accountant has advised you to elect subchapter-S status, ask. An advisor worth his salt will be able to explain why. If he can't, find someone else.

Spanakopita - My New Year's Eve Tradition

Gina Madsen — Thu, 31 Dec 2009 16:21:00 GMT

I make spanakopita, a Greek appetizer, every New Year's Eve. It keeps for a few days, reheats well in a toaster oven, and saves me from having to cook New Year's Day when I just want to sleep in. This is especially important this year because tonight I am breaking out the margarita machine I got for my birthday.

I believe the traditional recipe calls for spinach, which always tastes gritty to me, no matter what kind of spinach is used. And requires it to be layered like a lasagna in a baking dish, which lacks the flaky deliciousness of phyllo dough. I thought I'd share my recipe for your NYE celebration.

The trick to working with phyllo dough is to thaw it in the refrigerator, unroll it onto a baking sheet, and cover it with a damp (not wet) towel or paper towel. The sheets are so thin they dry out quickly and the damp towel keeps them from crumbling in your hands.

Enjoy!

Spanakopita

20 Triangles

¾ cup crumbled feta cheese

½ cup ricotta cheese

1 egg

2 tbsp chopped Italian flat-leaf parsley

½ tsp freshly ground black pepper

1 lb phyllo dough (found in freezer section)

1 cup butter, clarified

Combine feta, cottage cheese, egg, parsley, and pepper in bowl. Mix well. Using 1 strip of dough at a time, brush with melted butter. Fold into thirds lengthwise to form 4-inch wide rectangle.
Place a heaping tablespoon of cheese mixture in corner at bottom of strip of dough. Fold, flag fashion, to form triangle. Place on ungreased baking sheet. Brush surface of triangle with butter. Continue to fill and form dough strips into triangles, brushing each with butter until all are used.
Bake at 350 degrees for 20-30 minutes or until golden brown.

Year End Tips for Small Business Owners

Gina Madsen — Thu, 31 Dec 2009 07:00:00 GMT

The holidays are almost over and you're looking forward to the new year. You may have taken some time off in December to spend with family and friends and your business has taken a back seat. In a day or two it's time to get back into the swing of things. For the new year, what should you do with your business?

Make sure you've attended to all your corporate formalities - holding an annual meeting and putting your minutes in your corporate book, assembling all your receipts and records for your accountant, and making any last-minute charitable contributions. But what about the bigger picture?

First, take a few minutes to clear your head of any negative thoughts about the previous year. We all make mistakes and it's important to learn from them and move on rather than dwell on them and torture ourselves. If you're obsessing over a screwup, write it down on a sheet of paper and under that write some instructions on how you'd avoid that screwup in the future. Stare at it for no more than five minutes. Then shred it. Let it go. Deep breaths. In...2...3...4...Out...2...3...4. All clear? Good.

Next, dig out your business plan. If you don't have one, that's your assignment for January. Having a business plan - written down, not just in your head - is crucial to maintaining your focus and keeping your business on track. If you have a business plan, read through it. Don't just scan it, but really read it. Have you met any of the objectives? Is it time to raise the bar? Have you fallen short? Why are your numbers not where they should be?

Next, step away from your business, physically and mentally, and try to look at it from the perspective of your clients and potential clients. This is often the most difficult task facing any business owner, which is why business coaches are so valuable. You can find fault in anyone else's operations but try to look at your own and it's as if you're standing in a fog. If you're having a really hard time, contact some of your clients and ask them some questions - how was their experience, what would they improve, what do your competitors offer that you don't? Ask your employees the same questions. And really listen.

It's important that you take the information you receive from this analysis to heart. It's easy to continue doing the same things over and over again, even if they're not working, because it's comfortable. It isn't easy to take a risk and switch things up. But, as my favorite internet consultant constantly tells me, "it's not a tattoo." You can certainly go back to the way things were if the new approach doesn't work. But if you're falling short of your projections it may be worth shaking up the snowglobe.

We all make New Year's resolutions, right? Mostly about losing weight, exercising, maybe quitting smoking. When you're making your list this year, don't forget your business. Here are some examples from my list:

1. Attend a brand new networking event every month.

2. Follow up on every new contact I make at each networking event.

3. Review my business plan every quarter.

4. Network with others in my field, even competitors.

5. Learn more about how to use social media in my marketing efforts.

These examples aren't unique to the legal profession. Anyone in business can use them. I'd encourage you to make your own list and post it in the comments section of this article so others can benefit.

I wish you happiness and prosperity in the new year!