Archive for the ‘ 10 Things ’ Category
10 Things About the Board of Directors
1. Representative Democracy. The primary purpose of the Board of Directors is to represent the shareholders, to protect their investments, and to ensure that they receive an adequate return. Directors are elected by the shareholders to serve terms of one or more years, concurrently or staggered, as provided in the Bylaws. 2.. The Big Picture. The Board [...]
10 Things About Choosing the Right Business Entity
1. Human Error. Carrying on business without a business entity means that each of the owners is 100% personally responsible for all of the business’s liabilities. This isn’t good. A business entity (corporation, limited liability company (LLC), or limited liability partnership (LLP)) protects the owners from personal liabilities, except professional liabilities and personal wrongdoing. 2. Pass the [...]
10 Things About Florida Homestead
1. Three-In-One. Florida homestead has special status in three different contexts: (1) ad valorem (property) taxation, (2) creditor exemption, and (3) rules of descent. In most cases, property that qualifies as homestead in one context qualifies in the other two, but not always. 2. Taxing Questions. Florida homestead is entitled to a $25,000 property tax exemption. Homestead [...]
10 Things About Selling Stock
1. The Other SEC. Whatever you call it—stock, units, interests—outside investment in a business is a security. The sale of any security is regulated by Federal and state law. This doesn’t mean that you have to “go public” through an IPO just to sell your stock, but it does mean that you have to worry about [...]
10 Things About Life Insurance Trusts
1. A Problem of Inclusiveness. The death benefits payable on life insurance that you own is included in calculating the value of your estate subject to Federal estate taxes. Even though you cannot spend the death benefits yourself, you control who will receive them, and that’s good enough for the IRS to tax them. 2. ILITs: Better [...]
10 Things About LLCs
1. Corporate Gymnastics. LLCs are a flexible form of business entity, because there are fewer mandatory rules that apply to LLCs than to corporations or partnerships. However, this flexibility means that all of the details governing each LLC must be spelled out in long, complicated Operating Agreements. 2. Limited Liability. Like corporations and (some) partnerships, LLCs offer [...]
10 Things About Probate Administration
1. What is Probate? Probate is the process for wrapping up the legal affairs of a decedent person. It involves confirming the decedent’s Last Will, collecting and managing his or her property, paying his or her just debts, and distributing the remaining property among his or her beneficiaries. Probate is administered by a local court where [...]
10 Things About Stock Options
1. A Range of Options. Stock options are just one form of employee incentive, all of which are intended to encourage key employees to make the company successful. In evaluating the alternatives, there are two important questions: What will incentivize the employees? How much ownership should the employees have? 2. Don’t Believe the Tax-Free Hype. [...]
10 Things About Trusts
1. What It Is. A trust is a contract involving three people—the trustmaker, the trustee, and the beneficiary. The trustmaker (called the settlor or grantor) makes a contract with the trustee to hold property (called principal or corpus) for the beneficiary. Sometimes the trustmaker, trustee, and beneficiary are all the same person—which is common for [...]
10 Things About Owners Agreements
1. Unless You’re Microsoft, You Need an Owners Agreement. Having an Owners Agreement is important for every non-public company with more than one owner. Owners Agreements go by different names—Shareholders Agreement or Buy-Sell Agreement for a corporation, Operating Agreement for an LLC, Partnership Agreement for a partnership. Whatever it’s called, it’s essential. 2. “We Already Have Bylaws.” [...]