spacer spacer
    Joshua and Laura Meier Newport Beach Trust and Estate Planning Attorneys Focused on Helping Families with Young Kids
    Joshua and Laura Meier

    Social Networking

    Facebook Facebook Google Plus LinkedIn LinkedIn Twitter

  • Archives

  • Categories

  • spacer

    Category Archives: Small Business

    If It Walks Like a Partnership in Newport Beach and Quacks Like a Partnership in Newport Beach…

    you have an arrangement that might be viewed as a partnership, the safer course
    is probably to get a partnership agreement drafted or more likely form an LLC
    and have an operating agreement drafted.

    DuckThere are quite a few ways of
    structuring a business entity. But how do you choose between the veritable
    alphabet soup of LLCs, S Corps, C Corps, LPs, LLPs, and so on and so forth?
    This can be quite a headache, since not all of them do the same thing.

    A golden rule for business is to
    do business the way your business is structured, and to structure your business
    entity in the way you need to be doing business! If you mix and match, it has
    an unfortunate tendency to create serious liabilities which often come with a
    fairly aggressive tax assessment.

    With liabilities and taxes in
    mind, consider reading a recent Forbes
    article titled “Beware Of Partnership Status Sneaking Up On
    Your Business Venture

    While this advice is nothing
    new, yet another tax court case has come down the pike to confirm this
    conventional wisdom. In the case a father and son operated a moderately large
    agricultural business. The father and son, however, each formed their own
    entities, worked together to do the work, split the income equally, but
    disproportionately split the expenses. The IRS determined that this juggling of
    the books didn’t compute, so the IRS slammed both father and son with the taxes
    that would have applied on a single “partnership.”

    You could say this was another
    case of “substance over form.”

    Teaching point: if there are two
    business entities, then they must act like two businesses in order to be separate businesses. Otherwise, there
    should be only one entity, if such is an accurate reflection of how the work is
    being done.

    Of course, the accidental partnership
    is not the only pitfall. Be sure to read the original article for the full

    Contact your Newport Beach
    estate planning attorneys at Meier Law Firm to discuss all of your estate
    planning needs

    Reference: Forbes
    (October 21, 2012) “Beware Of Partnership Status Sneaking Up On
    Your Business Venture

    When Business (Founding) Partners “Divorce”

    How you go about handling the situation [of a business partnership
    split-up] can mean the difference between an amicable split, where you run the
    business as you see fit, and a messy divorce, in which you wind up losing
    money, clients, resources or other critical assets.

    In every end there is a beginning.
    When it comes to the founders of a business, there also ought to be an end. An
    amicable end.

    As Stephen Covey noted so
    adroitly, one of the keys to effectiveness is to “begin with the end in mind.”
    Accordingly, the founders of a business should structure and run the business
    with a clear commitment to their shared ultimate goals for themselves and their
    business. In the vernacular of business planning, this oftentimes is called
    “exit planning.”

    If you fail to “begin with the
    end in mind” and make legal plans to memorialize the end game for your personal
    and business relationships, then you likely will only enrich lawyers. So, when
    it comes time to part ways down the road, what steps should you be taking now?

    The Wall Street Journal
    recently addressed this subject in an article titled “Breaking Up (With a Co-Founder) Is Hard to

    One key takeaway from the
    article is the “when and how” of exit planning. The best time to address the
    issue is when the business is founded. Consequently, the best way to
    memorialize the exit strategy in the event of the disability, retirement or
    death of a founder is through various legal documents created when the business
    is founded. For example, an Limited Liability Company (LLC) can use the LLC
    Operating Agreement, while a corporation may use its Bylaws or various
    Shareholder Agreements.

    Regardless, one thing is clear:
    do not bury your head in the sand. For every business, an “exit” will be
    required. As a result, you can either make plans now, or leave it up to lawyers
    to clean up (literally) later.

    Contact Meier Law Firm to discuss all of your Estate Planning needs. 

    Reference: The Wall Street
    (September 22, 2012) “Breaking Up (With a Co-Founder) Is Hard to

    Family Business Non-Succession?

    The problems founders face when an heir
    announces he/she refuses to reign are significant and extend far beyond the
    hassle of hunting for a replacement in a 
    poor quality applicant pool.  The
    real damage done in this circumstance comes from what happens after the founder
    aborts his retirement plans and attempts to change the mind of his/her child.

    Succession of the family
    business can be a fairly difficult transition for just about everyone involved.
    This can be especially true for the heir apparent. What happens when the heir
    pulls away or even outright rejects the business? Well, the transition gets
    tougher still.

    If you are a family business
    owner, are you intending to keep the business in the family even as you step
    down from control? Have you considered the possibility of designating an heir
    who does not want the family business and do you have a “Plan B” to adjust your
    succession plans accordingly? The reasons why an heir may resist taking up the
    reins to the family business are many facetted, but that doesn’t necessarily
    mean they are making a final, informed decision. No, it may take time, talk,
    and some understanding, and there are lessons to be gleaned from a recent Forbes article on the subject titled “5 Ways Family Business Founders Can Change A
    "Made Up" Mind

    Perhaps it’s best to think of it
    this way: when it comes to succession, your estate planning is simply no longer
    just about your wishes, your hopes, or your dreams. Even if they are selfless,
    everyone else has to do his or her own thinking and planning. This can take
    patience, time and understanding.

    Reference: Forbes
    (September 10, 2012) “5 Ways Family Business Founders Can Change A
    "Made Up" Mind

    Small Business Owner Quandary

    The weak economy has been tough for
    small-business owners across the board … but for entrepreneurs in their 60s and
    70s, the consequences have been particularly vexing.

    The current recession has been
    tough on just about everyone, but few have felt such dire consequences greater
    than small business owners. This especially is the case when they are on the
    verge of retirement.

    The Wall Street Journal considered this topic in a recent article aptly
    titled “'The Economy Stole My Retirement.'

    If you are a small business
    owner on the one hand – a role that requires flexibility and ingenuity – and a
    baby-boomer on the other, then this recession has been more than a case of
    terrible timing. No, it’s thrust you into “business purgatory.” Do you find
    yourself with one foot in management and the other foot (or maybe just that big
    toe) in the golden sands of retirement?

    A baby boomer who is a small
    business owner faces a very tough call right now. Should he or she sell for the
    best offer today, which is generally the low-ball offer, or hold out for some
    future value which more accurately reflects what the business is truly worth? A
    tough call, indeed.

    For the owners of small
    businesses and the heads of family businesses, make no mistake about the
    difficulty of your position. It’s impossible to foretell the future, but since
    you already know what is most valuable to you (your family and your business),
    take the time to carefully weigh your options and contact Meier Law Firm to discuss your options.

    This is not the time to make
    emotional decisions.

    Reference: The Wall Street
    (September 12, 2012) “'The Economy Stole My Retirement'

    Naming Your Business Matters

    There are a number of reasons you might want
    to put your name on your business.

    But before you launch your eponymous company,
    project yourself into the future—the very reason you’ve chosen to name your
    company after yourself may be the reason you shouldn’t.

    When it comes to forming and
    operating your business, sometimes thinking about where to begin means thinking
    about where you will end. For the family business, or the succession-minded
    businessperson, the stumbling block is often the basic question: what do you
    name the business? Should your business bear your name, or should the family
    business bear the family name?

    While some may consider the
    decision a matter of personal or family pride, or even a matter of vanity, that
    doesn’t mean there aren’t important issues in play. The consequences of naming
    your business was tackled recently by Forbes in an article titled “How Having Your Name On Your Business Limits
    Your Options

    The essential point, however, is
    that putting your name on the company forges an inextricable link. On the plus
    side, this can be a boon if your business and brand do well, especially if your
    heirs carry on the business. On the down side, doing so may not be in the best
    interests of the business, or even your heirs.

    The original article is a quick
    read for a review of some practical considerations and problems. In the end,
    this decision is a tough one.

    Reference: Forbes
    (August 17, 2012) “How Having Your Name On Your Business Limits
    Your Options

    Tax Time Bomb Ticking for Small Business Owners

    Last week a colleague and I were discussing a C Corporation with nearly three-quarters of a million dollars in retained earnings, with owners who want to get the money out. The owners wondered about any “fancy tax ideas.” My colleague immediately stated, “Yeah; distribute it.” He was right. No muss; no fuss. Just sound advice.

    Planning is one thing, but taking action is another. Right now, when it comes to taxes, the time may be right for small business owners to take action.

    Forbes recently wrote an article titled, “Taxes are Low – Move it or Lose It!,” explaining that taxes may take a turn for the worse – and soon – once the calendar rolls over to 2013!

    Right now capital gains and dividend taxes max out at 15%. After the year’s end, however, these rates are set to lapse and skyrocket to 23.8% on long-term capital gains and 43.4% on qualifying dividends. So, what is a small business owner to do?

    The original article in Forbes provides some practical actions to take, including:

    • If you are selling all or part of your business, do it now.
    • If you have any qualifying dividends available for distribution, do it now.

    What else should be done? Certainly the original article offers some additional pointers, but the specific actions depend on your unique circumstances.

    Regardless, this is a perfect time to schedule that consultation with your financial, tax and legal advisory team, sooner rather than later.

    Contact Meier Law Firm to discuss all of your small business needs.

    Reference: Forbes (July 24, 2012) “Taxes are Low – Move it or Lose It!

    Rules Can Keep Your Family Business and Family Together

    Can you imagine spending half of your working life in a family business, beside your mother, father, and brother, and all getting along? And then spending the next half of your work life with your brother, your spouse, your four sons, and three nephews, and still all getting along?  I pinch myself. We have been able to create an environment of mutual respect and trust, one where we can function as a team that shares the emotional and intellectual challenges of business along with its financial rewards.

    How do you successfully transfer your family business within your family? It can be a tricky situation. One successful trick that CNNMoney recently highlighted is the power of rules.

    The article, titled “Family business: How to pass the baton,” is a story about the Mitchell family and the rules they developed to keep their family, as well as their business, intact. As the article illustrates, rules are a way of promising to yourself and future generations that you’ll maintain a strong shareholder’s agreement, operating agreement, or other founding document of the business itself.

    So, what guidelines will help keep your family together and in business at the same time? For some practical ideas, consult the original article for the “Mitchell” rules and consider how they might work for you family business.

    Contact Meier Law Firm to discuss creating a business succession plan for your business.

    Reference: CNNMoney (July 9, 2012) “Family business: How to pass the baton

    Family Meetings = Family Succession Success

    Succession plans are not one size fits all. Entrepreneurship is always about personal freedom and personal choices, and every entrepreneur has a different mix of goals, values, skills, and circumstances. The succession plan might in fact be the grand finale of these choices.

    Are you the head of a family business and perhaps the head of your family, too? Consider including your family when deciding the fate of your business. In short, a family meeting may be in order.

    Whether a family meeting is an emotional conversation or a very business-like exchange will vary from family to family and business to business. A New York Times article titled “Is My Family Business Going to Be an Orphan?” provides some firsthand wisdom and a practical template to follow.

    Contact Meier Law Firm to discuss business succession planning for your business.

    Reference: The New York Times – You’re The Boss (April 25, 2012) “Is My Family Business Going to Be an Orphan?

    Shark Attack Nearly Foils Succession Planning

    Briggs never imagined he would need another succession plan so quickly. If the shark had killed him, his clients and employees would have been left out in the cold. His wife would likely not have realized any of the value of the practice he had built up over 15 years, he says.

    Sometimes it takes a shark attack to get someone’s attention. For the rest of us, however, the threat threshold shouldn’t be so high. This is especially true when planning for your business succession.

    So even if you never get much closer to sharks than a screening of Jaws, there’s something to learn from the story of someone who survived the attack and went on to ensure the survival of his business. This tale was recounted in a recent issue of Financial Advisor Magazine titled “Succession Survival Guide.”

    Meet Max Briggs, CEO of FLC Capital Advisors and a business owner with a penchant for skin diving in dangerous waters. Nine months before his shark encounter, Briggs set up a succession plan with his business partner. Thereafter, his partner passed away at age of 42 and the buy/sell agreement provision in the succession plan kicked in. Not only did the arrangement save the business, but the plans also had not been reset before Briggs took his ill-fated dive. As a result, had he not survived the shark attack, the business would have fallen apart.

    Even if you don’t spear fish or run an investment firm like Briggs, the need to make proper succession plans is universal. Without proper planning, your business (and any personal family wealth) could collapse.

    What proper succession planning will mean for you and your business will vary given your unique circumstance, however, it is worth dedicating some time and energy into building a viable plan.

    Contact Meier Law Firm to discuss business succession planning for your business.

    Reference: Financial Advisor Magazine (June 2012) “Succession Survival Guide

    Business Entity Selection Secrets

    If you have a corporation—one you formed or inherited—should it be S or C? What does this alphabet soup even mean?

    A business is what you make of it, and that’s not just a marketing tactic or a business school platitude. When it comes to structuring your business, your selection of “entity” is key.

    Do you own, stand to inherit, or are just plain curious about how to start a business (especially if you have been downsized in this economy)? If yes, then you should read a recent article in Forbes explaining the differences between a “C” and an “S” corporation. It is titled “C or S Corporation Choice is Critical for Small Business.”

    Spoiler alert: the main distinctions between the two basic corporate structures are all about the tax code. Yaaaawn. That noted, however, there are other significant differences between the two. Not to muddy the already murky waters, the article explores the terrain between these old standards and the new standard that is the LLC, or Limited Liability Company.

    LLCs are, by and large, simpler entities, but that doesn’t mean they are ideal in all situations. For some current reading on the capabilities of the LLC, it’s worth taking a hop over to the Wall Street Journal, which recently published an article titled “An Inspired Financing Choice for Artists and Patrons."

    These articles only scratch the surface regarding what you need to know about the veritable alphabet soup of available business structures. Ultimately, you will need to bite the bullet and obtain qualified legal counsel to help you select and structure the appropriate entity for your unique circumstances and objectives.

    Contact Meier Law Firm for additional information on business planning.

    Reference: Forbes (May 3, 2012) “C or S Corporation Choice is Critical for Small Business

                      The Wall Street Journal (May 21, 2012) “An Inspired Financing Choice for Artists and Patrons

  • Frequently Asked Questions

    Click Here To Call Our Office

    Click here to Read Our Blog
    Wealth Counsel Member

    Orange County Young Executives  
  • spacer
    Welcome | Practice Areas | About Us | FAQs | Becoming a Client | Events | Advisors Forum | Newsletters | Contact Us | Blog | Disclaimer
    Meier Law Firm | 2103 Vista Entrada, Newport Beach, CA 92660
    phone: 949.718.0420 e-mail: