There are many advantages to forming a corporation for your business such as limiting liability for the owners, potential tax savings, and the ability to raise capital for your business. In order to receive the advantages of a corporation, you must follow the “corporate formalities” required by law. This may seem like a daunting task, but it is quite simple. Below is a list of the corporate formalities that must be adhered to by California corporations.
When people get married, it is not always “happily ever after.” Approximately 52% of first time marriages end in divorce, and 70% of second marriages do not last.
Divorce is never easy. Emotions run high with couples battling over the division of property, custody of children and support payments. When one or both spouses own a small business, the entire process becomes more complicated. Business owners are extremely attached to the business they started, grew and built. This belief is justified considering the countless hours of work and considerable resources it likely took to get the business to succeed. But the one item most business owners forget or neglect is the planning for the possibility of the end of their marriage.
In California, a community property state, your spouse could be entitled to up to 50% of your business if you divorce. Assuming you do not want your ex-spouse as your business partner, take steps now to protect your business interests. Below are descriptions of the most common methods of protecting your small business interest.
A prenuptial agreement is a written contract signed by both parties at least seven days before the wedding that details the expected division of property and spousal support in the event of a divorce. Each party should be represented by their own separate attorney. Through the use of a prenuptial agreement, the parties can agree what assets will be considered separate property and what will be considered community property. A business can be designated as the separate property of one spouse so that the new spouse would be excluded from any ownership rights to the business in the event of divorce.
A postnuptial agreement is similar to a prenuptial agreement except the agreement is signed after the wedding. A word of caution, postnuptial agreements are challenged more frequently than prenuptial agreements and are held to a higher standard of “fairness” because it is presumed the parties have less bargaining power once married.
Every business with two or more owners should have a buy sell agreement in place. A buy-sell agreement defines how and under what terms a transfer in ownership of the business will occur upon a “triggering event.” A triggering event can include the divorce, death, disability, or retirement of one of the owners.
The above methods of protecting your business in the event of a divorce involve complicated laws and have very strict requirements, which is why it is best to consult with an experienced business attorney when deciding which course of action is best for you and your small business.
As part of Facebook founder Mark Zuckerberg’s tax planning for his eventual sale of Facebook stock when it went public was to create a trust which passed some of his assets to his unborn children, thus saving him millions in gift tax. His wife was not even pregnant when Mr. Zuckerberg set up this key estate planning tool.
The birth of a child is such a momentous event in a person’s life. Parents start planning the design of a nursery, the selection of a pediatrician, planning the baby shower, selecting a name, and scheduling birthing classes. The list can go on forever. But how many parents think about adding estate planning to their to-do list to protect and provide for their children if something were to happen to the parents.
Here are a few important practical estate planning items that soon-to-be parents should consider implementing now to ensure their children will be taken care of in the event something happens to them:
If you should have any questions about these estate planning tools, please contact our Orange County estate planning law firm. We would be happy to answer your questions and help you protect your family for the future.
Just like with a newborn child, one of the first decisions new business owners make is the name of their business. Practically speaking, an entrepreneur’s decision for a business name is primarily based on marketing, business values, products/services provided, and goals for each business. However, when selecting a business name, new business owners should also take into consideration legal aspects such as trademarks and other applicable laws.
Here are 6 legal and practical things to consider when selecting a name for your business:
With every new year, there comes changes in the law, many of which affect California businesses and their owners. This year, there are three laws that are going to heavily impact companies in California.
Minimum Wage Increase
As of January 1, 2016, the minimum wage in California increased to $10 per hour, which is the highest state-wide minimum wage in America. There are some employees who are exempt from the minimum wage law, such as outside salespersons and individuals who are the parent, spouse, or child of the employer. There are also exceptions for employees who are mentally and/or physically disabled.
In some cities such as San Francisco, the minimum wage is scheduled to increase to $13.50 per hour on July 1, 2016. In Los Angeles, the minimum wage will increase to $10.50 per hour in July 2016 and eventually increase to $15 per hour in 2020. A person may not agree to accept less than the California minimum wage.
Employee Protected Time-Off
As of January 1, 2016, SB 579 expanded the ability of employees of business of 25 or one employees to take protected time off from work to find a school or licensed child care provider and to enroll or re-enroll a child and time off to address school emergencies.
Additionally, pursuant to SB 579, employees may use up to one half of their paid time off or sick leave for the care of a parent, child, spouse, domestic partner, parent-in-law, grandchild, grandparent, or sibling of the employee.
California Fair Pay Act
SB 358, also known as the California Fair Pay Act, revises and expands the prohibition provided for in Labor Code 1197.50. Prior to January 1, 2016, an employee had to prove that other workers “within the same establishment” were being paid an unequal amount for the same work. Under the new law, employees can compare wages of employees that work at different locations of the same employer that perform “substantially similar” work.
Additionally, employers cannot prohibit employees from discussing or disclosing their wages to other employees.
If you would like to know more about the new laws affecting California businesses, please contact an experienced business law attorney.