The Franchise Disclosure Document (FDD) is a legal document that franchisors must furnish to prospective franchisees, by law. The Federal Trade Commission (FTC) is the regulatory body that enforces it. That makes it kind of a big deal. The FDD contains information…facts and figures on the franchise business opportunity, and is provided to help you analyze the offering. You, as a prospective owner of a franchise, must receive the FDD at least 14 days before you are asked to sign any contract or pay any money to the franchisor or an affiliate of the franchisor. You have the right to ask for and get a copy of the disclosure document once the franchisor has received your application and agreed to consider it.
Look for more on this subject in next month’s July 2015 issue of the Bottled Business Sense Newsletter.
by: BEST ASSET PROTECTION LAWYER FOR BUSINESS: http://www.wfblegalconsulting.com
SETTING UP AN LLC: Take a look at what it takes to set your business up as a Limited Liability Company.
1. Choose a Name
Your name will be the first thing people see or hear as it relates to your new business, so make it a good one. Next, make sure you are only one using the selected company name. You can do that with a free corporate name search in your state.
2. Register the LLC and File Your Paperwork
Call WFBLC, Inc. and I’ll file your state’s Articles of Organization paperwork for only $600.00.
3. Get Your LLC’s Tax ID
Before you can start operating as an LLC, you need an Employer Identification Number. This is like a social security number for your business, and one you’ll need before opening a business bank account. This is included in my price above.
4. Create Your Operating Agreement
This document outlines the rights and obligations of the members of your LLC, as well as lists the distribution of income of the Limited Liability Company to its members. Your Operating Agreement doesn’t need to be filed with your state, however you do need to keep one on premises, signed, if you have other shareholders. This is separate and apart from the filing fees, and is particularized depending upon the particular needs of your company.
5. File Business Licenses and Permits
Additionally, you should apply for any business licenses or permits you’ll need to operate your business. It’s best to do this before you start operating your business to avoid potential fees or issues down the road. This is usually accomplished through your local city or county offices.
6. Keep Your LLC Compliant
Once you’re operating as an LLC, your work isn’t done for good. Each year, or every other year depending upon your state of residence, you will need to file your Statement of Information. The due date for this report depends on where you filed your LLC. For example, if you filed it in Michigan, Delaware, North Carolina, Georgia, Florida, or Texas, there’s a specific date that your annual report is due. In other states, it’s due on the anniversary of when you filed your LLC.
7. Finally, Take Care of Loose Ends
Depending on where you’re based, you may need to publish your intent to form an LLC in a local newspaper. If you form an LLC in New York, for example, you are required to run that intent in an approved newspaper for 6 consecutive weeks. This is not so in California.
PRACTICAL BUSINESS ENTITY TIPS—DO YOU KEEP YOURSELF SAFE?
What do the terms “articles,” “meeting” “bylaws” and “minutes” mean?
Articles of Incorporation
The Articles of Incorporation is the primary legal document of a corporation; it serves as a corporation’s constitution. The articles are filed with the proper state government to begin corporate existence. The articles contain basic information on the corporation as required by state law.
Organization Meeting
The organizational meeting completes the formation of the corporation. At the organizational meeting, a number of initial tasks are completed such as: the Articles of Incorporation are ratified; the initial shares are issued; officers are elected; bylaws are approved; and a resolution authorizing the opening of bank account is passed. If the initial directors are named in the Articles of Incorporation, they can hold the organizational meeting. If they are not named, then the organizational meeting is held by the incorporator.
Bylaws
Bylaws are rules and regulations adopted by a corporation for its internal governance. They usually contain provisions relating to shareholders, directors, officers and general corporate business. At the corporation’s initial meeting, the bylaws are adopted. Bylaws are a private document not filed with any state authority.
Minutes
The Board of Directors and shareholders transact business at meetings, with decisions being typically made by majority vote. Certain formalities must be followed in holding Board of Directors and shareholder meetings. The meetings must be held pursuant to notice. Notice may be waived if the waiver is done in writing. The secretary or other person mailing the notice should complete an affidavit of mailing notice, and the minutes of the meeting should be recorded. The notice document, affidavit or waiver should all be attached to the minutes of the meeting.
Are directors’ and officers’ names a matter of public record?
Yes. Names and addresses are filed with the state and are therefore available to anyone. Nevada requires this filing annually. They do not require notification of intervening changes.
What is the responsibility of the president, treasurer and secretary?
What is the responsibility of the president, treasurer and secretary? The president is typically responsible for entering into contracts on behalf of the corporation; the treasurer is responsible for maintaining and accounting for corporate funds; and the secretary is responsible for observing corporate formalities and maintaining corporate records. In addition to these required officer positions, a corporation may also have vice presidents and/or assistant secretaries or assistant treasurers. Typically, the authority and responsibilities of each officer is described in the corporate bylaws and may be further defined by an employment contract or job description. The President: The president has the overall executive responsibility for the management of the corporation and is directly responsible for carrying out the orders of the Board of Directors. The Board of Directors usually elects him or her. The Treasurer: The treasurer is the chief financial officer of the corporation and is responsible for controlling and recording its finances and maintaining corporate bank accounts. Actual fiscal policy of the corporation may rest with the Board of Directors and be largely controlled by the president on a day-to-day basis. The Secretary: The secretary is typically responsible for maintaining the corporate records.
What are the directors’ and officers’ corporate liability?
Under normal circumstances, officers, directors, managers, etc. do not have personal liability for lawful acts of the corporation. In addition, in Nevada statutes, the owners are not the “appropriate” party to a lawsuit. The company may also indemnify any officer, director, manager, etc. from personal liability.
What is a Board of Directors?
The Board of Directors is essentially the management body for the corporation. Responsibilities of the Board of Directors include establishing all business policies and approving major contracts and undertakings. In addition, the board may also elect the president. The officers and employees under the directives and supervision of these directors carry out ordinary business practices of the corporation. The directors must act collectively for their votes and decisions to be valid. That’s why directors may only act at a Board of Directors meeting. This, however, requires certain formalities. One such formality is that the directors all must be notified of a forthcoming meeting in a prescribed manner, although this can be waived or provided for in the corporation’s Articles of Incorporation or bylaws. For a directors’ meeting to be valid, there must also be a quorum of directors present. A quorum is usually a majority of the directors then serving on the board; however, the bylaws may specify another minimum number or percentage. The Board of Directors must meet on a regular basis (monthly or quarterly), but in no case less than annually. These are the regular board meetings. The board may also call special meetings for matters that may arise between regular meetings. In addition, boards may call a special shareholders’ meeting by adopting a resolution stating where and when the meeting is to be held and what business is to be transacted. The first meeting of the Board of Directors is important because the bylaws, the corporate seal, stock certificates and record books are adopted. Board members, like officers, have a fiduciary duty to act in the best interests of the corporation and cannot put their own interests ahead of the corporation’s. The board must also act prudently and not negligently manage the affairs of the corporation. Finally, the board must make certain that it properly exercises its authority in managing the corporation and does not abrogate its responsibilities to others. This means that the board must be very careful to document that each board action was reasonable, lawful and in the best interests of the corporation. This is particularly true with matters involving compensation, dividends and dealings involving officers, directors and stockholders. The record or corporate minutes of the meeting must include the arguments or statements to support the board’s action and they must detail why the action was proper.
Bottled Protection Points provide tips for the business owner to contemplate and, if applicable, implement into his or her everyday operation. The Protection Points span the three interwoven areas of Business Law–Asset Protection; Estate Planning Protection; and Employment Law–all important considerations for the knowledgeable entrepreneur.
Bottled Protection Points are driven by Bottled Business Sense Newsletter; The Bottled Business Sense Show; and
WFB Legal Consulting, Inc.
A “Crummey” power is a provision contained in certain irrevocable trusts that permits specified trust beneficiaries to withdraw gifts you make to the trust for a limited period of time. Whether or not the beneficiaries exercise their right, the gift still qualifies for the annual gift tax exclusion.
Make sure you have a LAWYER FOR BUSINESS who provides you with the BEST ASSET PROTECTION available.
Bottled Protection Points provide tips for the business owner to contemplate and, if applicable, implement into his or her everyday operation. The Protection Points span the three interwoven areas of Business Law–Asset Protection; Estate Planning Protection; and Employment Law–all important considerations for the knowledgeable entrepreneur.
Bottled Protection Points are driven by Bottled Business Sense Newsletter; The Bottled Business Sense Show; and
WFB Legal Consulting, Inc.
Many times employers improperly classify their employees as independent contractors so they, the employers, do not have to pay payroll taxes, the minimum wage or overtime, comply with other wage and hour law requirements such as providing meal periods and rest breaks, or reimburse their workers for business expenses incurred in performing their jobs. Moreover, employers do not have to cover independent contractors under workers’ compensation insurance, and are not liable for payments for unemployment insurance, disability insurance, or social security.
Make sure you have a LAWYER FOR BUSINESS who provides you with the BEST ASSET PROTECTION available.
Below is a brief recap of relevant estate planning guidelines. Please see an Estate Planning attorney at WFBLC, Inc. for a plan tailored to your particular business and family needs. Highlights of a bill Congress passed Tuesday aimed at averting wide tax increases and budget cuts scheduled to take effect with the New Year. The measure would raise taxes by about $600 billion over 10 years compared with tax policies that were due to expire at midnight Monday. It would also delay for two months across-the-board cuts to the budgets of the Pentagon and numerous domestic agencies. Highlights: —Income tax rates: Extends decade-old tax cuts on incomes up to $400,000 for individuals, $450,000 for couples. Earnings above those amounts would be taxed at a rate of 39.6 percent, up from the current 35 percent. Extends Clinton-era caps on itemized deductions and the phase-out of the personal exemption for individuals making more than $250,000 and couples earning more than $300,000. —Estate tax: Estates would be taxed at a top rate of 40 percent, with the first $5 million in value exempted for individual estates and $10 million for family estates. In 2012, such estates were subject to a top rate of 35 percent. —Capital gains, dividends: Taxes on capital gains and dividend income exceeding $400,000 for individuals and $450,000 for families would increase from 15 percent to 20 percent. —Alternative minimum tax: Permanently addresses the alternative minimum tax and indexes it for inflation to prevent nearly 30 million middle- and upper-middle-income taxpayers from being hit with higher tax bills averaging almost $3,000. The tax was originally designed to ensure that the wealthy did not avoid owing taxes by using loopholes. —Other tax changes: Extends for five years Obama-sought expansions of the child tax credit, the earned income tax credit, and an up-to-$2,500 tax credit for college tuition. Also extends for one year accelerated “bonus” depreciation of business investments in new property and equipment, a tax credit for research and development costs and a tax credit for renewable energy such as wind-generated electricity. —Unemployment benefits: Extends jobless benefits for the long-term unemployed for one year. —Cuts in Medicare reimbursements to doctors: Blocks a 27 percent cut in Medicare payments to doctors for one year. The cut is the product of an obsolete 1997 budget formula. —Social Security payroll tax cut: Allows a 2-percentage-point cut in the payroll tax first enacted two years ago to lapse, which restores the payroll tax to 6.2 percent. —Across-the-board cuts: Delays for two months $109 billion worth of across-the-board spending cuts set to start striking the Pentagon and domestic agencies this week. Cost of $24 billion is divided between spending cuts and new revenues from rule changes on converting traditional individual retirement accounts into Roth IRAs.
BEST ASSET PROTECTION SERVICES GROUP: WFB Legal Consulting, Inc. *Please be advised that this communication is for general public informational use only and does not establish an attorney-client relationship. For more information, please contact WFB Legal Consulting, Inc.—a BEST ASSET PROTECTION Services Group at (949) 413-6535.
Introducing…GAITE-way Business Solutions to the business community! WFB Legal Consulting, Inc. is proud to announce its affiliation with a new brand of professionals—all geared to building your business acumen.
GAITE-way Business Services is a unique group of individuals, who provide startup and existing businesses with the ability to manage, grow and protect both their business and personal assets. The objective of the professionals at GAITE-way Business Services is simple: uniquely organized legal, consulting, tax and insurance services, collectively provided for the convenience and security of the entrepreneurial business owner.
This short expose briefly focuses on different types of business entities and gives some insight as to which one might be better suited to general goals and situations. You should always consult with a business lawyer who can than better fashion the entity that is right for your particular business.
Professional Corporation Professional corporations, known as PCs, are available options to those in certain occupations. This structure is available to accountants, lawyers, medical professionals, architects, and engineers. Although PCs don’t offer the level of personal liability protection of S corps or LLCs, this structure does protect owners from malpractice claims filed against other associates. PCs must usually be approved by the state agency that licenses the professionals. Remember, PCs will not protect you against malpractice suits, but will eliminate your liability for claims directed at your associates. S Corporation An S Corp is much like an LLC. Net profits in an S corporation are “distributed” to stockholders, who then add these profits to their personal income for tax reporting purposes. S corps are similar to all other corporations, except for this tax issue. Other corporate requirements–holding regular management meetings, for instance–are identical to all other corporations, be they a single stockholder company or Microsoft. You create your corporation in the usual manner, as specified by your state regulations, and subsequently “elect” to be taxed as an individual, thereby creating an S Corp for IRS purposes. Limited Liability Company An LLC functions like a standard corporation in many ways, including personal asset protection, but is much less complex to organize, file, document, and manage. LLCs combine the best features of partnerships and corporations, offering limited liability to owners, while dividing up profits among the partners. Similar to S corporations, you enjoy protection for your personal assets regardless of financial or operating problems that may befall the LLC. In most cases, company creditors cannot seize the assets of the owner/members. Like a classic partnership, LLCs must file an IRS form 1065, which displays the ownership percentages of the members, for taxable income distribution. Liability Protection Warning There are some situations that may jeopardize your personal asset protection offered by corporations or LLCs. Small businesses often endure this problem because the owner(s) are frequently asked to give “personal guarantees” for loans, leases, and other obligations. When you agree to provide a personal guarantee of corporate debt, your assets–homes, autos, bank/investment accounts–are legally at risk. Other actions, such as performing illegal activities or injuring someone else, can also allow a court to remove the personal asset protection offered by corporations and LLCs. The Best Option Professionals can choose to use an S Corp or an LLC, in addition to forming a PC. The malpractice protection offered by a PC is often the most important consideration, particularly for accounting and medical professionals. If you are not a “professional,” and if your company is a one-person entity or a partnership, the LLC is often the best choice to receive the personal asset protection you want without complex corporate necessities. Should you want to attract more stockholders however, but yet plan to keep your company private (no public stock offerings)–an S Corp is often the best choice.
*Please be advised that this communication is for general public informational use only and does not establish an attorney-client relationship. For more information, please contact WFB Legal Consulting, Inc.—A BEST ASSET PROTECTION Services Group at (949) 413-6535.
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