How to Get Out of a Business Partnership

When you started your business partnership, everything was going great. You and your partner had a great working relationship and envisioned the same goals for your business. However, now it appears you and your partner are moving in different directions, and you may be considering getting out of your business partnership. “Ending a business partnership can be as challenging and emotionally difficult as ending a marriage. The best outcomes are possible when both parties to a partnership can negotiate toward an amicable separation. Unfortunately, it’s not always possible.” Business Attorney Michael Long Learn the signs indicating it may be time to leave your partnership. Then read on to learn how to legally get out of a business partnership. It may be possible to preserve the business—and your relationship with your partner. Signs It’s Time to Leave Your Partnership Partnerships can be challenging to endure if you are always at odds with your partner. You may have started your business with a harmonious relationship, but lately, things have soured. It may be difficult to determine when it’s time to leave your partnership. If you haven’t already, review your partnership agreement to determine if your partner is upholding their responsibilities. Additionally, the following topics provide insight into whether it may be time to get out of your business partnership.  Someone Isn’t Carrying Their Weight  If you consistently feel that you are carrying the burden of keeping the partnership afloat, it may be time to end your business partnership. In a partnership, both partners should have equal responsibilities. It may be time to reevaluate your partnership if you are continually working and strategizing a successful path for your business while your partner reaps the benefits of your efforts. Disagreements  Disagreements in planning business strategies are universal. Learning how to compromise and work effectively with your partner provides a clear path forward. Collaborating on a business strategy regarding finances, personnel, and customer service prevent issues that halt productivity. However, if you and your partner are never in agreement and can’t seem to resolve your conflict, it may be time to legally get out of your business partnership. Different Work Ethic When you started your business partnership, you and your partner may have each possessed a strong work ethic. Driven by the excitement of a new business, you both worked around the clock to ensure success. However, business growth is not always immediate. In the meantime, you may feel that your partner has lost the drive they once possessed. Furthermore, you continue to work diligently, staying focused on the ultimate goal of your business.  You may consider discussing your concerns with your partner. But if your conversations have failed to create change and your frustrations continue, it may be time to leave your business partnership.  Steps to End a Business Partnership  There are several steps you need to take to end a business partnership. Review Your Partnership Agreement  Once you’ve decided to leave your business partnership, review your partnership agreement. The agreement may provide a procedure to leave or end the partnership. If your partnership agreement includes these procedures, review them carefully. Consult with an experienced business attorney to ensure you properly adhere to the agreement’s procedures. An attorney can assist you in avoiding opportunities for future legal conflict. Heeding the advice of a business attorney is likely to end the partnership more smoothly. Inform Your Partner of Your Intent to Leave  If the relationship between you and your partner has soured, informing your partner of your intent to leave may be a difficult conversation.  Prepare for the conversation and prevent retaliatory acts by doing the following:  Put a hold on all credit cards associated with the partnership; Move cash to an account that doesn’t permit immediate withdrawals; and  Cap lines of credit on the partnership. While it may seem excessive, this action may preserve the value of your business partnership. Upon dissolution, there may be proceeds remaining to divide between you and your ex-partner.  Consider All Alternatives  If you wish to continue the business without your partner, consider buying out your partner’s interest. Evaluate the financial and operating consequences of a buy-out. Buying out your partner may result in an entity shift from partnership to sole proprietorship. Consider the tax implications of that transformation. In a possible buy-out, be prepared to negotiate your interest and the value of the partnership. Engaging the services of a business attorney unrelated to the business partnership is important.  Tips to End the Partnership Well  Ending your business partnership is never an easy decision. As you navigate your business partnership’s demise, there are various tips for how to move forward smoothly. Limiting the possibility for conflict between you and your partner ensures the business you created may continue to succeed. Additionally, it may be possible to preserve the relationship with your ex-partner without permanent harm. Calm Communication  It’s crucial to communicate with your partner when you are calm and rational. Avoid, to the best of your ability, personal feelings of anger, resentment, or frustration in any conversations. The ability to separate your own feelings from business decisions reduces opportunities for conflict. Determine Priorities  Before any discussions with your partner, determine your priorities. If you wish to buy out your partner’s interest and continue the business, prioritize how best to achieve this goal. Consult with an attorney to identify any unforeseen obstacles or considerations. Presenting your partner with your plan creates a starting point for conversations regarding the future, or end, of the business partnership.  Create a Dissolution Plan  If dissolving the business partnership is the only way forward, create a plan, preferably with your partner, for dissolution.  Determine a timeline for when the formal dissolution will occur.  Hire a professional to appraise the value of your business. Knowing the value of your partnership allows for more productive negotiations during the dissolution process.  Determine the resolution of payments and any obligations. This includes tax obligations as well as payments to vendors, contractors, and employees.  Why Hire a Lawyer Deciding when…

What-You-Need-to-Know-About-Florida-Trademarks

Operating a business encompasses a lot of things and nearly every aspect requires attention. One of the most important is how potential customers view and recognize your business. A trademark is one way to set your business apart from others. Multiple benefits exist upon deciding to undertake a Florida trademark registration. Companies must always be aware of imitators seeking to engage with potential customers and benefit from your hard work. These imitators can detrimentally affect your business’s reputation by producing subpar products or services. Florida trademark registration is a vital step to protect the future of your business. A company’s names, logos, and designs do more than just identify that company–they add value to the company and its products. Protecting these trademarks is just as important as protecting the company’s cash deposits, equipment, and other tangible assets, if not more so. Florida Trademark Attorney Ashley Brewer What Is a Trademark?  According to the United States Patent and Trademark Office (USPTO), a trademark is “a word, phrase, symbol, and/or design that identifies and distinguishes the source of the goods of one party from those of others.” Once registered, trademarks never expire. Trademarks rights arise from actual use. They arise from the date of first use for goods and services. Therefore, as long it is in constant use for products and services, a trademark can last forever. Factors to Consider in Choosing a Trademark  Factors to consider when choosing a Florida trademark include the following: Strength of Mark Trademarks range from weakest to strongest depending on how distinctive they are. Trademarks including words or symbols that are unusual or unrelated to the product they represent are more likely to receive trademark protection. For example, Google is distinctive because the word “Google” has no meaning apart from the company’s name. Likewise, Apple has trademark protection for its name and symbol because apples have nothing to do with computers. On the other hand, it would be difficult to trademark the word “ice cream” in connection with your ice cream business. Ice cream is a generic word identifying your product.  Commonality of Mark Whether a Florida trademark is used commonly by other third parties affects the strength of a mark. For example, the term “gym” and “fitness” about a personal gym are likely widespread. Multiple businesses with the same words in the title likely exist. Therefore, it’s important to research similar businesses in your area. Your business name and symbol should be unique to your business. This assures it does not get confused with similar businesses in the area. Long-Term Goals  Examining the long-term goals of your business is also important. For example, let’s say you name your business, “Orlando Press.” Your business begins to grow exponentially, and you wish to expand nationwide. However, you now feel your Florida trademark pigeonholes you to business within Florida state limits. If you can see your business changing in a way that may affect the desirability of your trademark down the road, you should take that into account. Trademark Search Undertaking an extensive trademark search through the national database is vital to the trademark process. The trademark process is relatively straightforward. However, significant delays can occur if you discover your trademark already exists. A trademark database provides information regarding what businesses were first to use a particular mark. The first business to use a trademark has priority over others. Additionally, if you use someone else’s trademark in your business, they may be able to bring a trademark infringement claim against you. Florida Trademark vs. Federal Trademark  There are a few differences to be aware of between registering your trademark in Florida and registering it with the federal government. Florida Trademark Registration Trademark registration in Florida is governed by the “Registration and Protection Acts.”  Registering in Florida does not afford you the same level of protection as a federal registration. While Florida trademark registration prevents others from using your name or design, those protections are limited to use within the state. In Florida, trademark rights exist from the first use of goods and services in commerce. Trademark registration in Florida is valid for only five years. Trademarks may be renewed so long as renewal fees are paid six months before the five-year expiration.  Federal Trademark Registration Federal trademark registration is governed by the USPTO. As long as federal registration renewals are current, registration for a trademark can also theoretically last forever. In contrast to Florida registration, federal registration of a trademark is required every ten years. Renewal fees must be paid six months before each ten-year expiration. Additionally, between the fifth and sixth year, one must file a Declaration of Use. Between the ninth and tenth year, you must submit a Combined Declaration of Use and Application of Renewal. Missing deadlines may result in your registration’s expiration.   Why Should I Trademark? Recognition Trademarks are an essential part of any business. A business’s name and symbol are the definitive ways it is distinguished from other similar companies.  Trademarks make it easy for customers to find you and your business. A trademark symbol captures customer attention and makes your business stand out. Protection Federal trademark registration creates a legal presumption of ownership over that mark nationwide. A Florida state trademark creates that same legal presumption of ownership statewide.  Registering your trademark gives your business the exclusive right to use the trademark connected with the goods and services identified in your registration. Other businesses are prohibited from using your trademark for financial gain. If you discover unlawful use of your trademark, you may file a lawsuit against that person or business.  Value A trademark is an added value to your business. As your business value grows, so does the value of your trademark. Trademarks may also help pave the way for entry into other industries. Trademarks can be bought or sold. They are an asset to any company. They can also be used as a security interest to secure a business loan.  Permanence As provided above, so long as trademark registration remains…

Hiring-Independent-Contractors-vs-Employees

Whether a worker is an independent contractor or an employee impacts company expenses to employ the individual. Additionally, a worker’s classification affects the individual’s rights in the workplace. Correctly classifying worker status is an essential element of Florida employment law.  Growing companies, particularly when they are starting out, often want to minimize their own labor expenses by engaging independent contractors. However, this can backfire, particularly if an independent contract is actually an employee for legal purposes. Florida Employment Attorney Kristi Benson What Is the Difference Between an Independent Contractor and an Employee? The Florida Department of Revenue aids in assessing employee or independent contractor classification. The following nine determining factors aid in the classification: The extent of control the business exercises over the work;  Whether the employee engages in a distinct business;  Whether completion of work is supervised or independent; The level of skill required;  Whether the employer or the worker supplies equipment and tools;  The length of employment;  Whether the job is part of the regular business of the employer; Whether parties believe they are creating an employer/employee relationship; and  Whether the hiring party is a business. Another vital issue in classification questions is whether the individual is financially dependent on the company. An economically dependent individual is likely an employee. On the other hand, a financially independent individual is likely an independent contractor. What Are the Rights of Employees vs. Independent Contractors?  An employee classification affords workers many federal protections. The Fair Labor Standards Act (FLSA) permits employees to earn federal minimum wage and overtime. Florida sets minimum wage at $8.56 per hour. Federal youth employment standards outline the jobs and number of hours minors are permitted to work. Legally mandated benefits afforded to employees also include workers compensation, unemployment compensation, and military leave.  Additionally, the Family Medical and Leave Act (FMLA) applies to employees.  Employers are subject to record-keeping requirements for all employees. What Are the Benefits of Hiring an Independent Contractor? Hiring an individual as an independent contractor offers businesses multiple benefits.  There is a labor cost reduction in hiring independent contractors in Florida. Companies are not required to pay employment taxes or other benefits. These benefits include retirement, paid time off, workers’ compensation, or overtime pay. The avoidance of these expenses is beneficial for smaller companies with less profit.  Independent contractors provide more flexibility. Businesses typically hire independent contractors on a project basis. Therefore, independent contractors offer more flexibility to businesses. Businesses may scale up or scale down project needs based on customer demand. For example, if your business thrives on project-based production, an independent contractor may be a perfect choice.  Florida independent contractor rules dictate employers have considerably less control over independent contractors. The performance of independent contractors is typically result-based. A standard employee/employer relationship measures performance through everyday observation and monitoring.  Employers are not immediately responsible if an independent contractor is injured while working. Reduced liability exists for claims of wrongful termination, job discrimination, and sexual harassment. Employers may still be liable in certain circumstances as state and federal laws regulate these areas. What Are the Benefits of Hiring an Employee?  The benefits of hiring an employee often outweigh the added expenses to your business.  Generally speaking, employees personally invest in your business. The relationship between an employer and employee may provide increased loyalty, productivity, and engagement. Less employee turnover results in less modifications to a company structure. There are more predictable salary and wage costs to a business. Additionally, investments in training employees provide added benefits to business productivity and success.  In addition to the above points, employers exert more control over employees. Employers determine how, where, and when their employees perform their specified tasks. Increased control allows for uniformity in production and performance by all employees. Further, employers control employee hours of work. For example, an employer may demand that all employees work from 9:00 a.m. to 5:00 p.m.  What Should I Include in My Independent Contractor Agreement?  An independent contractor agreement in Florida can protect you and your business from potential lawsuits or liability. Defining terms of employment and expectations prevents confusion related to worker classification.  You can also use the agreement to support your classification of the worker if a dispute arises later. For example, imagine an independent contractor files for workers’ compensation by claiming they are your employee. However, you have an agreement that outlines responsibilities typical of an independent contractor and states that the person is an independent contractor. You can use this agreement as evidence that the person is an independent contractor and defend against the workers’ comp claim. An independent contractor agreement should include the following key points:  Statement of relationship indicating the worker is an independent contractor; Project description outlining the independent contractor’s responsibilities;  Payment and billing terms;  Project timeline and deadlines; and Non-disclosure terms and confidentiality clauses. Florida’s independent contractor rules do not require independent contractor agreements. However, clearly defining these terms in an independent contractor agreement helps both the contractor and client know what to expect. What Are the Penalties for Misclassification of Independent Contractors?  Florida independent contractor laws charge strict penalties for misclassification of worker status. Unintentional misclassification does not prevent the imposition of penalties. According to the IRS, baseless misclassification of an employee as an independent contractor results in liability for employment taxes for the worker. However, if a reasonable basis exists for the misclassification, relief exists from liability for employment taxes.  Penalties include a $5,000 penalty for each misclassified employee. The IRS may also institute a penalty of 1.5% of the employee’s federal income tax liability and another 20% of the amount of Federal Insurance Constributions Act (FICA) tax that should have been withheld from the employee’s wages. Intentional misclassifications result in penalty increases.  Contact Us Classifying a worker as an employee or independent contractor is a challenging task. Correct classification of workers protects your business from unnecessary penalties and litigation. The attorneys at BrewerLong have extensive experience in the field of employment law. We work solely for employers….

Why-Ignoring-a-Lawsuit-Summons-Is-a-Bad-Idea-for-Your-Business

As a business owner, receiving a summons for a lawsuit can be a stressful experience. Understanding the proper procedure to defend yourself and your business requires an understanding of legal terms and documents associated with your case. In a civil case, a person files a claim against another. The plaintiff is the party filing the lawsuit. The defendant is the party against whom the lawsuit is filed. Civil lawsuits involve disputes for a monetary award. These types of lawsuits encompass various conflicts, including property damage, non-payment of a debt, and contract disputes. Have you been served with a lawsuit? If so, seeking the counsel of a qualified business law attorney can mean the difference between successfully defending your position and losing a lawsuit. Business owners and officer must always take immediate action when a summons or subpoena has been served. Failure to act promptly could cause serious damage to the company. Business Litigation Attorney Michael Long What Is a Summons? A summons is an official court document requesting action on the part of the defendant. In a civil lawsuit, a summons notifies an individual or a company that they need to defend their position in a case. A summons provides case information, including:  The name of the court issuing the summons;  The name of the party receiving the summons;  The case number; The names of the parties;  A description of the case; and Information for the defendant on response procedure and deadline. In a lawsuit, personal service on the defendant is required for both the summons and complaint. What Is a Subpoena? A subpoena is a document the court uses to compel a person’s appearance at a trial, hearing, or deposition. A subpoena may also direct a person to produce documents or things. Subpoenas are served on individuals or companies referred to as non-party witnesses. A subpoena provides the following information: The court requesting your presence; The case number, party information, and the matter;  The place, date, and time for your appearance;  A statement of the penalty for failure to comply with terms of the subpoena. A subpoena for business records is a demand by the court to turn in specific evidence related to your business. The subpoena will provide the time frame and the particular business documents requested. If you object to the terms of a subpoena, you need to show that valid grounds exist to support the challenge. Grounds to challenge a subpoena include: Improper service; Documents requested are privileged or not relevant; The document request is too vague;  Complying with the subpoena would be too difficult;  The request violates the witness’s privacy rights; and Requiring the witness to respond would violate their Fifth Amendment rights. A subpoena, like a summons, is an official court document. The failure to comply with a subpoena has consequences. The requesting court may find you in contempt and charge a penalty. Penalties come in the form of monetary sanctions, imprisonment, or court orders requiring payment of attorney fees for the filing party.  Why File an Answer?  An answer is a response to the claim filed against you. Once you are served with a summons and complaint, proper notice requirements are satisfied. The summons will provide you with the deadline for filing an answer.  If you do nothing, the party filing the lawsuit may ask the court to grant a default judgment. A default judgment typically gives the filing party everything requested in the lawsuit. If the court grants a default judgment against you, you may be able to ask the court to vacate it in certain circumstances. The most common reason for granting a request to vacate is where the plaintiff failed to satisfy proper notice requirements.  The opportunity to settle your case is always possible. However, settlement negotiations typically do not begin until both parties have responded to the lawsuit. The presentation of evidence permits both parties to assess their respective positions to determine whether appropriate settlement terms exist.  Contact Us Ignoring a lawsuit has serious implications. The knowledgeable legal team at BrewerLong understands the correct procedure and response to defend your position successfully. As a business owner, any diversion away from your operations to respond to a lawsuit means your business suffers. However, the consequences of failing to respond to a lawsuit may sink a thriving business. Our attorneys are available to explain all your legal options regarding your lawsuit. Since 2008, we have maintained an independent, relationship-focused law firm delivering legal services and client experiences of the highest caliber. Time is of the essence, so contact us today.

Is-It-a-Contract-When-Emails,-Text-Messages,-and-Oral-Discussions-Become-Enforceable

Contract disputes may arise when one party didn’t even realize an enforceable contract existed. In Florida, some contracts must be in writing to be valid and enforceable. Some oral contracts are also enforceable. However, evolving technology adds to the confusion regarding valid contracts. Many wonder whether agreements made over email or text message are legally binding. Consulting with an experienced business law attorney assists in answering complex questions related to contracts and contract validity. Today, business is often done quickly and informally over emails, text messages, and other forms of electronic communication. This makes it much harder and much more important to understand when an enforceable contract has been formed. Florida Business Attorney Trevor Brewer What Is a Contract? A contract is a legally binding agreement between two or more parties to do something. Upon formation, a contract requires all parties to agree to perform their duties under the terms of the contract. Failure to perform constitutes a breach. The non-breaching party can sue the non-performing party to either enforce the agreement or obtain monetary damages.  Elements of a Contract  There are three essential elements of any valid contract: offer, acceptance, and consideration. Generally speaking, if these three elements exist, the contract is likely valid and enforceable.  Offer An offer is a written or spoken statement by one individual to another. In other words, the offer expresses an intention to be bound by the terms upon acceptance by another. The Offeror is the person making the offer. The Offeree is the person bound to whom the offer is made.  Although it appears very straightforward, disputes arise between parties as to the existence of an actual offer. One party may believe they made an offer, whereas the other party believes it was just a discussion.  Within the statement itself, the presence of additional factors may indicate whether the statement is an offer. An offer made in jest is not considered valid. For example, a party stating they will sell their company for a $1 will likely not be serious. However, an offer expressing the willingness of the offering party to be held to the terms is valid. Additionally, a statement is more likely to be considered an offer if it is specific with definite terms and conditions.  Acceptance The recipient of an offer must accept, if at all, while the offer is still open. Consider the example of an offer that provides, “I will pay you $1,200 for your car if you accept within four days.” If the receiver of the offer fails to accept within four days, the offer will no longer be valid. The receiver of the offer cannot accept the offer after seven days have passed.  A counter-offer is not an acceptance of the original offer. However, if the original Offeror accepts the terms of the counter-offer, that creates a valid contract. Acceptance comes in many forms. Reasonableness is the more general standard for determining whether acceptance is valid. Additionally, the “mailbox rule” provides that written acceptance of an offer is valid once placed into the mailbox. For example, the Offeror submits an offer. The Offeree mails acceptance of the offer and puts it in the mailbox. After the Offeree places the acceptance in the mailbox, the Offeror withdraws the offer before receiving the acceptance. In this situation, pursuant to the mailbox rule, the Offeree can enforce the terms of the contract despite the Offeror’s attempted withdrawal.  Consideration Consideration is the third element of a valid contract. It is also referred to as “the benefit of the bargain.” Consideration is a legal concept describing something of value exchanged for something else. The presence of consideration distinguishes an offer from a gift. For example, if someone said, “I am going to give you this jacket for nothing,” this exchange would likely be a gift. By contrast, if someone said, “I will give you this jacket for $20, and the other party agreed to pay, this would constitute a valid contract. The exchange of something of value, here the jacket, for another thing of value, $20, fulfills the consideration requirement.  When Is a Contract Enforceable? The presence of the elements mentioned above supports a valid argument for the existence of a contract. However, the form of a contract may affect its validity.  Is a Verbal Agreement Legally Binding?  A verbal contract is one formed in the absence of a writing. In Florida, specific contracts must be in writing. If made verbally, they are unenforceable. Contracts required to be in writing are the following:  Property transactions;  Goods transactions with a value over $500; Marital settlement agreements and premarital agreements; and,  Contracts with a completion date longer than 12 months. However, verbal contracts that pertain to other types of agreements can be legally binding if they contain all the necessary elements of a contract. Is an Email Agreement Legally Binding?  Today, the majority of communications are online. This fact leaves many wondering whether email communications can be considered a contract. Florida has adopted the Uniform Electronic Transaction Action (UETA). The UETA provides that electronic communications are sufficient to satisfy any statute requiring a contract to be in writing. Therefore, an email is sufficient to form a contract as long as the required elements of a contract are present. Additionally, in Florida, a binding contract can be found even without written signatures. Simply signing an email with your name is often sufficient. If a person uses contractual terms in the course of multiple email communications, a valid contract may be found. You may avoid inadvertent contracts via email by stating that your negotiations are “subject to contract” and that you don’t intend the communications to be binding. Are Text Messages Legally Binding?  Subject to the UETA, a contract can arise though any electronic medium, not just email communications. Therefore, although a chain of text messages may seem casual and, therefore, unenforceable, the UETA says otherwise. If a chain of text messages includes necessary contractual language, the text messages are legally binding.  It’s important…

Business Required to Pay Severence in Florida

Under Florida law, a business is generally not required to pay severance to a terminated employee. The U.S. Department of Labor generally does not require employers to offer severance pay. However, the existence of an agreement outlining severance terms creates a legal obligation to satisfy those terms. What Is Severance Pay? Severance pay is compensation an employer provides to an employee after termination of their employment. Monetary payment is not the only form of severance. Severance may include include extended benefits such as health insurance, retirement accounts, stock options, and assistance in searching for new work. Severance pay in Florida also includes payout of unused accrued “paid time off” or PTO, vacation pay, or sick leave. The months of service or the term of employment typically provides the basis for monetary severance calculations. In Florida, severance pay usually applies when an employee is laid off or retires early—not terminated or fired. Severance pay protects the newly unemployed and is typically viewed as a gesture of goodwill. Severance pay provides a previous employee with support until they secure a new job. However, when the employer has had a dispute with a departing employee, severance pay may be bargained to deter future legal action. Elements of a Valid Severance Agreement A strong severance agreement may protect against any future legal action by the employee. Because employees are only required to be paid severance according to an agreement between employer and employee, it’s important for that agreement to also include the benefits the employer gets in exchange for paying severance to the employee. Employers’ Attorney Kristi Benson Depending on the facts of the termination, an employer may want to include the following terms in a severance agreement. Release of Legal Claims If the potential for future litigation exists, the inclusion of a release of future claims is necessary. A release of general claims requests that the employee also agrees to release the employer from any potential claims they may have against the company. Confidentiality and Non-Compete Restrictions Confidentiality or non-compete restrictions may be a vital element of a severance agreement in Florida. Specificity of confidentiality clauses vary and request that the employee not divulge any proprietary information about the company or the employee’s employment. Non-compete clauses limit the employee’s future employment in a similar business over some time and in a certain geographic area. Non-compete clauses in Florida are enforceable as long as they are reasonable and protect a legitimate business interest. Mutual Non-Disparagement A mutual non-disparagement clause provides both the employer and the employee agree not to speak negatively about the other.  Mutual General Release A mutual general release releases both the employer and the employee from any future legal action. Neutral Reference or Reference Letter Severance agreements may include a neutral reference or reference letter. A neutral reference provides that employers may provide only dates of employment and position to requesting future employers. A reference letter goes further and provides dates of employment, position, and a positive statement. Contact Us If you are contemplating the termination of an employee or need assistance drafting strong severance agreements, contact the experienced Florida business law attorneys at BrewerLong. We are the premier employer’s law firm in Orlando and work tirelessly to protect you and your business from future litigation. Contact us today!

How to Form an S-Corp in Florida

Electing to be treated as an S-corp offers many benefits to both the business and the owner in Florida. An S-corp election may save money for your business especially when business profits are greater than your reasonable salary. Determine whether an S-Corp election is right for you and contact the qualified business attorneys at BrewerLong today! Making an S corporation election is often in the best interest of Florida corporations and LLCs, especially when the owners of the company are also working in company. Business Attorney Trevor Brewer What Is an S-Corp? A Florida S-corporation is a for-profit corporation or limited liability company (LLC) that has requested to be taxed under Subchapter S of the United States Tax Code. A Florida S-corporation reduces its tax burden by passing losses, deductions, income, and credit to its shareholders. S-corps avoid the double taxation of traditional corporations. Eliminating double taxation may potentially save your company hundreds of thousands of dollars. Florida taxes S-corporation income in the same manner as sole proprietorships and partnerships. The income of corporations is passed to shareholders for reporting. Shareholders use their income tax returns to report losses and income. A S-corp in Florida is essentially an election for special tax status. However, the same laws and rules apply to S-corporations as other Florida corporations or LLCs. Why File as an S-Corp? An S-corp offers many advantages to businesses in Florida. These advantages may outweigh any disadvantages or limitations. Pass-Through Taxation Filing as an S-corp provides the formal structure and limited liability of a corporation and pass-through taxation of business profits. There is no income tax imposed at the corporate level. Income is taxed only on shareholder returns. Following federal rules, Florida treats S-corp income as pass-through income. Business losses offset other income on shareholders’ tax returns reducing any income tax paid. This feature is particularly advantageous to start-up businesses with limited initial income. Business Growth An S-corp election in Florida may permit your business to raise capital more efficiently. S-corporation election allows for the issuance and sale of stock as evidence of interest in the corporation. Some financial lenders may require personal guarantees of business owners limiting the financial liability protection of S-corporation shareholders. S-corporations only permit one class of stock. The transfer of stock or change in business ownership is simplified. Simplifying class of stock limits interruptions to business operations and avoids unfavorable tax consequences. Eliminating complex accounting analysis saves on unnecessary business expenses. Limited Liability Each shareholder may lose only as much as they initially invested in the corporation. S-corporations in Florida are treated as a separate entity. Shareholders are not personally liable for any legal judgments, debts, or obligations of the corporation. For example, if a corporation goes bankrupt, creditors may not pursue the personal assets of shareholders to pay business debts. However, shareholders are liable for any crimes committed or corporate regulations violated. In a sole proprietorship or partnership, owners and the business are considered the same, leaving personal assets vulnerable. Benefits to Business Owners S-corporations still enjoy some benefits of a corporation such as insurance benefits, retirement plans, bonuses, and stock option plans. Additionally, there can be a separation of organization and management of a company. The management of the company is not required to hold ownership of the business, in contrast with the structure of partnerships, and sole proprietorships. Credibility Due to the formal commitment to their corporate structure, s-corporations may be viewed as more professional than sole proprietorships or partnerships. Customers and future investors may view your business more favorably, aiding in its success. Disadvantages of an S-Corp The disadvantages to filing as an S-corp in Florida may not align with the goals for your business. Tax Qualification Obligations Mistakes regarding the election of S-corp status, notification, consent of shareholders, stock ownership, and filing requirements may disqualify S-corporation status. Mistakes may be remedied easily, however, consultation with a qualified business attorney ensures these mistakes do not occur. Calendar Year Missing the registration requirement deadline for S-corporation status in Florida results in the failure to receive favorable tax treatment for that calendar year. Saving on tax expenses for your business requires satisfaction of these important deadlines. Stock Ownership Restrictions An S-corporation in Florida may have only one class of stock. Therefore, no varying classes of investors entitled to different dividends or distribution rights exist. Flexibility in Allocation of Income and Loss A traditional corporation easily allocates income and losses to particular shareholders; however, since S-corporations issue only one class of stock, this is more difficult. Allocation of losses and income is governed by stock ownership. Limitations on S-Corp Structure There are limitations on what types of companies may register as an S-corp in Florida. It is not the right choice for every kind of business. S-corps in Florida must be based in the United States. Some businesses, such as financial institutions, insurance companies, or domestic international sales corporations, are not eligible to register as S-corps. Additionally, the business may not have more than 100 shareholders. Only U.S. residents and citizens are permitted to operate as shareholders in Florida. Shareholders may not be other corporations, limited liability companies, partnerships, or certain trusts. Additionally, Florida S-corporations issue only one class of stock. Can An S-Corp Be Reversed? In the event a Florida S-corp is no longer an advantageous option for your business, reversal of your S-corp status is possible. Limitations exist, however. Reversal of the S-corp election may be done only after one year. You must wait for the following tax year before refiling with the IRS to revert to a traditional corporation. Need Help with Your Business? BrewerLong attorneys possess years of dedicated experience in business law matters and can ensure that your company’s formation is correct from the start. Our dedicated attorneys provide clients with knowledgeable legal counsel and answers to your complex legal questions. We understand the complexity of the small business culture and the quality representation smaller businesses require. BrewerLong attorneys are here to provide you with focused consultation and…

Business Interruption Insurance Claims

Business interruption refers to an unexpected disruption to the operation of a business. There are many reasons why businesses may suffer interruptions to their operations. Interruptions are usually the result of a catastrophic event, such as a natural disaster or possibly a pandemic such as COVID-19. When a business is not able to operate, the ability to generate revenue ceases or is drastically limited. Despite operational limitations, business obligations continue. Business interruption insurance, or loss of revenue insurance, provides a solution for businesses in these unexpected situations. What Is Business Interruption Insurance? Business Interruption Insurance is a form of insurance set up to support businesses in the event of a temporary ceasing of operations. This type of insurance is especially crucial for businesses relying on a physical location to generate income. Coverage plans operate to include replacement of lost revenue and payment of expenses when unexpected events require a business to shut down temporarily. The purpose of business interruption insurance is to place the business in the position it would be in had the interruption not occurred. While property damage is the most common reason for business interruption insurance, various scenarios exist that may result in an interruption to business operations. What Is Covered by Business Interruption Insurance? Business interruption insurance provides coverage for various losses that a business may suffer including: Actual losses: The loss sustained by the insured business resulting from the interruption to business operations is an actual loss. Business income: Business income is income the business would have received had the interruption not occurred. Period of restoration: Period of restoration is the time when business operations cease in order to repair, restore, or replace damaged or destroyed property. Period of restoration is applicable in situations where a natural disaster has damaged the business premises and business is interrupted until repairs are complete. Coverage plans offered under business interruption insurance assist in the following scenarios: Lost revenue. An example includes the loss of revenue suffered after substantial property damage closes a business while the owner completes repairs.  Rent or mortgage payments. If a business closes, rent or mortgage payments must continue even if the business is not operating. Relocation costs. Relocation costs refer to situations when a business must relocate to a new location due to an unforeseen event. Payroll. Despite the closure of a business, payroll obligations continue. Taxes. Payment of quarterly or annual tax obligations must continue, despite the business’s ability to generate revenue. Loan payments. Payments for loan obligations of the business. Property damage. Damage to the business premises. Other expenses. The insurance plan may outline specific definitions of “other expenses.” Policies may also include “extensions of coverage.” Extensions of coverage may include the following: Service interruptions. Service interruptions refer to damage to the sewer, electrical, water, telephone, or other utilities resulting in a disruption to business operations. Contingent business interruptions. Contingent business interruptions cover interruptions caused by losses of third-parties, such as suppliers. Leader property. This extension of coverage is applicable in situations where there is a loss, damage, or destruction to property not owned by the insured but that may affect the insured’s business. An example of a leader property is a large department store that attracts business to smaller stores in the same mall. Interruption by civil or military authority. This refers to situations where the government disrupts continuing business operations. This may be particularly applicable as many businesses are forced to cease operations due to COVID-19. When looking for business interruption insurance, you should choose a policy that  sufficiently covers your company expenses for more than just a few days. Prices of plans depend on the type of business seeking coverage. Higher risk businesses will likely have higher policy rates than businesses with a lower risk of business interruption. What Is a Business Interruption Claim? A business interruption claim is filed with the insured’s insurance company and details the specific request for coverage. A business must present the most recent income and expense reports, business history, and employee information. Most insurance companies require you to file specific documents to complete a claim. An essential element of any business interruption claim is the ability of the business to quantify the losses suffered by the business accurately. Accurate and up-to-date records of business operations are an essential element of any successful claim. These documents provide insurance companies with the detailed information needed to prove that a business did, in fact, suffer extensive losses as a result of the business interruption. How Are Business Interruption Claims Calculated? Business interruption claims intend to place the business back into the position it would have been in had the interruption not occurred. Business interruption insurance most commonly addresses losses in the following areas: Loss of profits due to the ceasing of operations; Additional expenses and the business’s inability to pay the costs due to loss of revenue; and Claim preparation costs to an attorney and accountant. A simple formula used to calculate business interruption claims is net expenses + continuing expenses + additional expenses = business interruption losses. Once calculated, it’s crucial to determine the extent of the business interruption insurance plan’s coverage. Any difference exceeding the plan limits will not be covered and is deemed a loss by the business. What Damages Are Recoverable from Business Interruption Insurance? Damages will vary from business to business, so careful calculation of the losses sought in addition to detailed records ensures a more successful claim. It is particularly vital for businesses to continuously maintain detailed income and expense reports, not just for the year in question, but from previous years. This useful information generates an accurate picture of the losses suffered from the business interruption by comparing the performance of the business to that of prior years.  In addition to income and expense reports, your claim should include property damage estimates and invoices, careful records of the dates of business interruption and commencement, and any other records related to your claim. How Can BrewerLong Help with Your Business…

What Employers Should Know About Working From Home Laws

The COVID-19 global pandemic has turned many business structures upside down. Nationwide, employers have notified their employees to work from home to slow the spread of the virus. Despite this change in structure, maintaining the productivity of your employees ensures the survival of your business. Employers must consider legal implications, procedural issues, and technological factors associated with this new telework environment. From payroll to tax considerations, if employers are advising employees to work from home, there are many issues to adapt to in the new workplace landscape.  Even when employees are working from home, employers must comply with the same federal and state laws intended to protect employees. Employment Attorney Kristi Benson What Are the Factors to Consider for Working At Home? There are several factors for employers to consider when determining whether the implementation of a work-at-home policy is feasible for their specific business. Making the Decision to Switch to a Telework Environment Employers should review their existing company policies and agreements with their employees and with third parties, such as customers, to determine if remote work is feasible for all or some employees. Does a telework or implementation procedure exist? If not, employers should prepare for clear communication with employees regarding expectations, reimbursement of any related expenses, and management of employee productivity. Employers should also internally review existing insurance plans and policy coverage data to determine if workers’ compensation and employee benefits, among others, remain in place despite the work environment change. Technological Factors Employees should be technologically equipped to work from home with internet connectivity, a computer, a printer, and other business-specific needs. Employers must consider whether privacy and data controls are sufficient to protect the business and any other private information. These may include the following: The implementation of added security measures to protect data and its transmission; The maintenance and storage of company data on company servers and not personal servers; and The requirement of all company communications conducted exclusively through company emails and accounts. It is important to consider the specific needs of your business in determining the level of privacy and controls you need. Communication with Employees Employers should provide defined expectations of employees working from home. It’s also a good idea to ensure clear communication channels to encourage employee communication with upper management. Employers should also confirm with employees how existing company policies, such as workplace harassment and employee benefits, extend into the working-from-home environment. Employee Agreement Where possible, employers should obtain a written agreement from their employees of the new telework policy. The agreement should covers the following points: Which employees are permitted to work from home; Employee expectations when working from home; Employee hours of availability; Employee understanding of the company procedures related to the protection of private information and general security; Monitoring of employee productivity; and  That the work from home policy is temporary and in response to the COVID-19 global pandemic. An employee agreement can help cement employee expectations and encourage continued productivity. Payment of Employees Rules regarding how you need to pay your employees vary depending on whether the employees are considered “exempt” or “non-exempt” under the Fair Labor Standards Act (FLSA). Exempt Employees As defined, FLSA exempt employees performing work outside of the office will earn their salary. These employees are exempt from overtime but will be paid for a full workweek if they performed any work during the week. If exempt employees did not work during a workweek, they need not be paid. However, if the exempt employees are directed not to work by the employer, then they must be paid their full salary. Employers must track the “type” of work exempt employees are carrying out. Monitoring procedures to measure productivity of exempt employees is essential, especially when employees are working away from upper management. Exempt employees must perform their primary duties to maintain their exempt status. Non-Exempt Employees Non-exempt employees are those that are paid on an hourly basis and are eligible for overtime pay. Employers must pay non-exempt employees the hours that they have worked. If a non-exempt employee does not work, the employer is under no obligation to pay. If non-exempt employees are called upon to work extended hours as a result of the COVID-19 emergency, employers may be required to provide extra overtime pay.   Even more so than with exempt employees, monitoring the hours of work completed by non-exempt employees is important because it can affect overtime pay and other benefits. Disability Considerations Employers must ensure that the same accommodations afforded to any employees with existing disabilities still exist when working from home. For example, if an employee has a disability that requires extended breaks, those considerations must be implemented even though the employee is no longer working in the office. As more businesses adapt their platforms online, accommodations should be made for employees with vision or hearing disabilities. The federal Equal Employment Opportunity Commission (EEOC) requires an employer to make “reasonable accommodations” for a disabled employee, including: Modifying work schedules and policies, Providing qualified readers or sign language interpreters, and Providing devices or modifying equipment. The EEOC ensures that employees with disabilities are able to work just like their co-workers. Business Expenses and Tax Considerations Employees may be able to claim their home office as a tax deduction as a result of mandated work-from-home policies. An employee may request a home office deduction if required by your employer and the employer pays no rent to the employee. If challenged by the IRS, the employee is required to show documentation that the employer required the employee to work from home. The home office of the employee must be exclusively used for work with no personal use at any time during the tax year. If an employer requires an employee to work remotely due to COVID-19, they may wish to consider reimbursing the employee for any new phone, internet, or other expenses incurred, if the additions permit the employee to telecommute successfully. However, they are not required to do so. By contrast,…

Modifying Child Support and Alimony Payments Due to COVID-19

State and Federal shelter-in-place orders due to COVID-19 have resulted in unprecedented interruptions to the economy. Many people have lost part or all of their income due to layoffs, furloughs, and business closures. Because of this, child support and alimony payment orders that depend on income are in question. Despite the current global turmoil, people must pay child support and alimony unless a court issues an order modifying the existing orders. Without a court order modifying or terminating child support or alimony payments, a motion for contempt may be filed against the individual behind on payments. When Can I Modify My Child Support or Alimony Payments? Florida permits courts to modify child support and alimony payments if the financial situation of the payor experiences a “substantial change in circumstances.” Modifications of child support and alimony orders are considered very serious; however, when the proper circumstances exist, modifications may be granted. To modify child support or alimony payments, you will need to file a petition with the court in the county where the case originated. A “substantial change in circumstances” must exist to warrant a modification of any existing child support or alimony orders. The change in circumstances must also be unforeseen. Nationwide, millions of Americans are experiencing substantial and unexpected changes in their financial situation due to COVID-19. Therefore, the inability to pay existing child support or alimony orders due to COVID-19 may warrant a modification. Your income does not need to have changed by any set amount before filing a petition for modification. However, in child support orders, the modification must result in a difference of $50 or 15% (whichever is greater) from the prior existing order. Whatever the reason, losing your job or being furlough for an extended period can have a devastating impact on your financial resources. The responsible thing to do in these situations is to evaluate your ability to continue to make child support and alimony payments in the same amounts that were determined in the past. Family Law Attorney Holly Derenthal What Is the Process for Seeking a Modification? Requests for modification of child support are likely to be granted if the modification serves the best interests of the child or children. Your supplemental petition to modify child support outlines the basic details of the case, specifically the purposes and facts surrounding the request for modification. Due to COVID-19, some counties may have closed their courthouses to non-essential hearings. Determining whether your situation qualifies as an emergency requires the review and support of an experienced family law attorney. How Can BrewerLong Help Me Modify My Support Obligations? Each county in Florida has different local requirements for a petition to modify child support or alimony payments. The process can be confusing, further complicated by the stress and uncertainty in the time of COVID-19. In Orange County, legal services are considered an essential business. BrewerLong attorneys continue to work in the office without interruption in serving client needs. Contact BrewerLong to learn more about your options for modifying your child support or alimony orders in the time of COVID-19.