Preparing for Fire Season

4302-black-forest-fire-coloradoWildfire season is upon us.  After the last two years, those of us living in the South Metro area of the Front Range are particularly aware  of the risks we face here in Colorado.   This risk is still  very real despite the good moisture we have received this winter and spring. Make sure you, your organization, and your family are prepared for the active season ahead with this Wildfire Checklist.   Don’t live in a wildfire-prone area? Click here to check out these tips from Ready.gov on preventing home fires.  

5 Steps to Preserve Liability Protection

Business owners of any size should make sure that they have protected their personal assets from business liabilities. This matters whether you run a multi-million dollar corporation with hundreds of employees or simply own a couple rental properties.  

Business owners often choose to operate their companies as a Limited Liability Company (LLC) or Corporation (usually as an S-Corporation), since these business structures provide what is known as a “liability shield”. However, a court can dissolve this liability shield (pierce the corporate veil) if the proper steps are not taken by the business owner to keep this shield in place.

If you operate an LLC or S-Corporation, be sure you have taken these five important steps to preserve your liability protection:

1.  Don’t use it to commit misconduct. If you use your business entity to commit serious misconduct or fraud, a court could likely “pierce the veil” and hold you personally liable for business claims.

2.  Always use the name of the entity on contracts and business communication.  Business owners should not sign contracts or any important business communication with their personal names.  Use the name of your LLC or Corporation in all business dealings so it is clear to third parties that they are dealing with an entity and not you personally.

3.  Keep business and personal finances separate.  There should be no overlap of business and personal finances.  Maintain separate bank accounts and records for your personal accounts and business accounts. This includes credit cards and other debt or loans associated with the business or personal property.

4.  Follow the rules.  While the rules for an LLC are less stringent than those for a corporation, a limited liability company still requires an operating agreement and needs to track and document its business decisions.  For a Corporation, you require bylaws, annual meeting minutes, and corporate resolutions.  Make sure that you file your annual report and keep your registered agent information up-to-date with the Colorado Secretary of State.  An easy way to do this is to sign up for email notifications. If you need support with compliance, let us know. We can help.

5.  Be sure the business is adequately capitalized.  If a business entity lacks adequate capitalization and something goes wrong, that may cause a court to pierce the veil of the business.

If you have questions about taking the right steps to protect your existing business or have not yet set-up a  business entity to protect your personal assets from business liabilities, call us today at 720-248-7621 to schedule an appointment to see how our firm can help you.

The 4 Legal Agreements Every Business Owner Needs

One of the most common questions small business owners want to know is what kind of legal agreements they need. And while the answer to this question depends a lot on what kind of business you operate, there are four key legal agreements that virtually every business owner needs to protect and operate their business legally:

1. Owner Agreements. If you are in business with another person, it doesn’t matter if your business structure is a partnership, an LLC or a corporation – you will need an owner agreement. These can take the form of a partnership agreement, an operating agreement, a founders’ agreement or a shareholders’ agreement. The agreement, or sometimes multiple agreements, detail how ownership in the company is being distributed, how compensation will be paid to owners and managers, how capital contributions will be handled and other operational issues – including what happens if someone wants out, becomes incapacitated or dies.
2. Employee/Contractor Agreements. These agreements set the rules for how your relationship with employees and contractors will be governed. Business owners that use independent contractors want to be sure that the relationship is documented properly, especially in terms of allocating responsibility for payment of taxes and exclusion of such items as workers’ compensation and unemployment. Having employment and contractor agreements for everyone that works for/with your business ensures that expectations for job performance are spelled out and what the grounds are for termination.
3. Vendor Agreements. Every business needs formal agreements with vendors and suppliers that help ensure the needs of the business are being met as agreed upon. Issues of exclusivity, indemnification and liability all need to be set forth in your vendor agreement to protect your business against claims where a supplier is at fault.
4. Customer Agreements. Whenever you make a sale to a customer or client, you have entered into a contract. Thus you want to be sure that the terms and conditions of your agreement for sale of goods or services is designed to provide both the business and the customer with the proper legal protections. If you are making sales online, you need to be sure you have the proper terms of service and privacy policy agreements on your website that details what customers can expect from the business.

If you are interested in learning more about business protection strategies, call us today at 720-248-7621 to schedule an appointment to discuss how we can help you set up your business for success.

Six Tax Questions to Ask Before Year-End

Everyone’s “to-do” lists seem to grow longer at this time of year, but yours may be incomplete if you haven’t yet reviewed  and answered these six tax questions before the end of the year. If you need help answering these questions, please call our office at 720-248-7621 for an appointment or a referral to a trusted tax professional that can help you.

Should I defer or accelerate income?  If it looks like you’ll be in a higher tax bracket in 2014, ask if you should pull more income into this year.  Conversely, if you will be in a lower tax bracket next year, ask if you should defer income until January.  In addition, find out if you should accelerate deductions by paying any income or property taxes not due until 2014 this year.

Should I take any gains or losses this year?  If you are currently in a low tax bracket and have made gains on your investments this year, you may want to consider selling some investments to realize lower tax rates on those gains.

Should I do a Roth conversion?  If you have a traditional IRA, you may want to convert all or some of the assets to a Roth IRA, especially if your retirement is years away.  While you will pay taxes on those assets now, your earnings will grow tax-free in a Roth IRA.

Should I make any changes to my FSA or HSA for 2014?  If you have a flexible spending account or health savings account through your employer and anticipate bigger medical expenses in the new year, you may want to increase those funds to allow yourself to use pretax money for out-of-pocket medical costs.

Should I be making charitable contributions?  If you made more money this year, you may want to think about reducing your taxable income with charitable contributions.  Gifting appreciated securities will allow you to avoid the capital gains tax while still deducting the full amount of the donation.

Should I be making gifts to family?  In 2013, you can give up to $14,000 (or $28,000 if you are married and your spouse participates) to as many individuals as you want.  This allows you to assist family members while removing taxable assets from your estate.  It’s important that if you are going to be giving financial gifts, you call us before hand to discuss options available to so those gifts are protected from bankruptcy, divorce or other creditors forever.

If you would like more information about tax-saving strategies, call our office today at 720-248-7621 to schedule a time for us to sit down and talk.  Everyone’s calendars are pretty full this time of year, so call today to make sure you can get in.

Don’t Bet the Family Business on No Estate Plan

Don’t Bet the Family Business on No Estate Plan

Being the owner of a family business can complicate your personal estate planning, since no doubt much of the wealth you want to pass on to your heirs is tied up in the business.  Being able to do so in a tax-advantaged way – and in a way that won’t cause a family feud – is one of the best reasons you should be talking with a lawyer about a business succession or exit plan as part of your own estate plan.

Even if you don’t have to pass on as much as the Waltons (Walmart), the Fords or the Murdochs, you do need to plan for what you have.  Here are some things you should be considering:

  • How to handle not only the death of a family business owner, but also his or her possible disability, incapacity, bankruptcy or retirement.  The owner needs to not only think of the impact on the business for any of these events or circumstances but also on his/her family, both now and in the future.
  • Do your heirs want to continue to run the business without you?  If so, a business succession plan needs to be put into place.   If you transfer family business assets to the next generation before you die, you will be able to lower estate and gift taxes.  If not, then an exit strategy for selling the business and divvying up the proceeds would be a necessary task.

Remember not having a plan is a plan… just a really bad one.  Not taking steps to provide instruction and cover a variety of circumstances will in the best case result in unnecessary expense for the business you built and your loved ones, and in the worst case mean the end of your business.

If you’re a small business owner, call us today at 720-248-7621 to schedule a Family Wealth Planning Session to ensure that your estate plan takes into account your business needs.

It’s National Small Business Week – Find Out What’s Happening in Colorado or Online

This week is National Small Business Week, celebrating 50 years of by the U.S. Small Business Administration.   The SBA is offering a number of online webinars as well as local activities around the country.  The main events are being streamed live at http://www.sba.gov/nsbw/

Some of the great webinar/Google+ offerings include:   Getting Started with Social Media, Managing Your Business’s Online Reputation, How a Mentor Can Help Your Business and How to Get a Business Loan.

There are also local events being held around Colorado.   If you want to find something near you, a great place to start is the Colorado SBDC.  There is also great information on activities in Colorado Springs from the CS Business Journal.