Archive for the ‘Running a Business’ Category
Monday, June 21st, 2010
Starting and building a business can provide a way to personal and financial success. Watching your business grow is exciting! While most small business owners strategize and plan for ways to expand their product line, services, and customer base, many small business owners don’t plan for events like the death of a key employee or business partner. The type of small business that is most vulnerable to this kind of loss is a partnership.
What is a Partnership?
Actually, you may very well be conducting your business as a partnership without realizing it. Under California law, a “partnership” is an association of two or more people who agree to carry on a business as co-owners and share the profits. Unlike a corporation, a partnership can be created without legal formalities, although a written partnership contract and the related legal documents can be important to long-term success.
How a Cross-Purchase Plan Protects Your Business if Your Partner Dies
If there are only a small number of owners working every day to provide a product or service, negotiate with vendors and customers, manage shop, and attend business meetings, you can imagine the impact that the unexpected death of one owner would have on the ability of the business to survive. This is especially true when you consider that the business would, at the same time, be legally required to pay out the value of the deceased partner’s share to his or her heirs. This could force the sudden liquidation of the business, or use up its cash cushion and require a sale of business assets.
One way you can protect against the impact of such an unfortunate situation is with a “cross-purchase plan,” drafted by a skilled business attorney and signed by each partner. In a cross-purchase plan, each partner agrees that the remaining partners will have both the duty and the right to purchase a deceased partner’s interest in the business. To fund this purchase, the partnership takes out a life insurance policy on each partner for the benefit of the surviving partners. The cross-purchase plan typically sets the buy-out price at either a pre-determined amount or an amount determined by an independent valuation of the business at the time of death. The surviving partners then use the life insurance money to buy the shares of the deceased partner, and the money goes into the deceased partner’s estate and eventually is distributed to his or her legal heirs.
Purchasing a life insurance policy to benefit you in your role as a surviving business partner is not something that may naturally occur to you when you start or formalize your business. But if your business is the source of your family’s income or the beginning of a legacy you hope to leave behind, a cross-purchase plan with a life insurance policy on your partner(s) can be your best protection. If you are the surviving partner you can not only preserve your business but also satisfy the financial needs and legal rights of your deceased partner’s family, while providing the same sort of protection and peace of mind for your own family if your business partner survives you.
At San Diego Law Firm, our experienced business attorneys understand the passion and work that goes into operating a small business. A cross-purchase plan is just one of the many beneficial strategies available to you when you formalize your partnership, whether it is new or ongoing, with a written partnership contract and other related legal documents. We can prepare every document you’ll need to give your partnership the greatest legal, financial, and tax benefits, and advise you on the wide variety of ways you can protect both your business and your personal finances. We remain available to help you with both minor and serious legal problems whenever you need us. To learn more or set up a consultation, please call San Diego Law Firm at (619) 794-0243.
Posted in Running a Business, Starting a Business
Friday, May 14th, 2010
As a San Diego business owner, are you taking any steps to minimize risk of employee lawsuits? One obvious way to help avoid employee lawsuits is simply to have happy employees.
For instance, sometimes tension is created because of a flawed management approach. In ManagingEmployees.net, longtime business manager and blogger Pat Brill explains that effective managing means finding a balance between your focus on employee performance and establishing a connection with employees. (more…)
Posted in Business Disputes & Lawsuits, Running a Business
Friday, April 23rd, 2010
You may be thinking of growing your San Diego business by adding another co-owner. Maybe this person will bring needed resources to the business, or has the connections, skills, or knowledge to boost or expand your business.
You’re probably cautious about who to bring in as a co-owner, and you might not be sure of what criteria to focus on. Professional consultant Mary Abbajay writes in her blog about “The Partnership Paradox: How to Choose a Business Partner.” She suggests that you first look at yourself, because this will help you identify the things you need in a business partner. This includes examining your own goals, strengths, and weaknesses. Abbajay then suggests a few more questions to ask, including: (more…)
Posted in Business Disputes & Lawsuits, Running a Business, Selling a Business, Starting a Business
Friday, March 12th, 2010
If you’ve started or bought a business here in San Diego with other partners, then you know the value of surrounding yourself with the right people. In his blog, “Drew’s Marketing Minute,” business marketing expert Drew McLellan details five ideas for how you can create a committed team and create an environment that makes your business venture more rewarding. These include letting team members have a voice, loving your team and your work, having a clear and important team goal, celebrating all successes, and thanking your team in large and small ways.
Putting his practices into play can also have the added benefit of promoting a greater sense of loyalty and a stronger relationship among your business’s co-owners. Business partners aren’t always on the same page, and disagreements are to be expected whenever you go into business with someone else. Even so, your actions and that of your partners must always be tied to an underlying goal founded on your business’s shared best interests. (more…)
Posted in Running a Business, Stating a Business, Uncategorized
Tuesday, February 9th, 2010
In his first State of the Union address, President Obama proposed a temporary tax credit that can fuel job growth through small business hiring, and this may prove to be a great incentive for local San Diego businesses that have been thinking about bringing on another employee. The Wall Street Journal’s Elizabeth Williamson reports on more of the details of the President’s plan, as revealed a few days after delivering the State of the Union address. As things stand now, the Small Business Jobs and Wages Tax Cut, one of the White House’s main small business proposals, will provide businesses a $5,000 tax credit for each net new employees hired in 2010, and start-up businesses can receive half the tax credit, all subject to a cap of $500,000 as a way to make sure that most of this tax credit is used by small businesses. (more…)
Posted in Business Disputes & Lawsuits, Current Events, Running a Business, San Diego, Stating a Business, Taxes
Thursday, January 7th, 2010
In seeking out opportunities to further your business goals and grow your profits, you may be considering a joint venture with another San Diego business, or with businesses in markets elsewhere in California or beyond. A “joint venture” can be created when two or more persons or businesses join together for a single project or for a series of transactions. This forms a short term business that operates separately from your already existing independent business. In most ways, a joint venture is like a partnership, but the main difference is that a joint venture is meant to last for only a limited period of time to carry out a specific business project, while a partnership is usually meant to be an ongoing business. Often, businesses or entrepreneurs decide to join together because their products or services complement each other. Through a joint venture, you may want to combine products, unite manufacturing, create joint marketing or cross-endorsement plans, share technology or research and development efforts, expand product distribution, or combine resources and expertise in real estate development and investment. Whatever the plan, the objective is always to create a vehicle for greater mutual gain through the joint pursuit. (more…)
Posted in Running a Business, Stating a Business
Thursday, December 10th, 2009
A non disclosure agreement (NDA), often called a confidentiality agreement, protects your business’s information when it isn’t generally known to the public. Time and time again in the business world, there’s financial incentive to make sure you keep your secrets well…secret. For example, well before Sarah Palin’s book was released, it was widely known that San Diegan Lynn Vincent was Palin’s ghostwriter, so why didn’t the press manage to get any information from her before the book’s release? Not surprisingly, Vincent’s lips were sealed by a non disclosure agreement, reported San Diego Union Tribune columnist Diane Bell. Just as Palin’s publisher uses all tools available to protect its own interests, your business likely has confidential information that gives you a competitive advantage over others, such as: (more…)
Posted in Business Disputes & Lawsuits, Running a Business
Wednesday, December 9th, 2009
If you own a San Diego business with more than one owner, do you know what will happen to the business if one of your business partners wants to sell his or her share, or decides that it’s time to retire – should anyone be allowed to take that co-owner’s place? What if instead a co-owner divorces, becomes disabled, or dies – will that business partner’s spouse or other family members suddenly become new owners, and how can that affect the business? A buy-sell agreement (also called a buyout agreement) answers these and other important questions by detailing how ownership will be restructured once certain events occur. For each business partner, the potential benefits of creating a buy-sell agreement are seen from two perspectives: if your partner leaves, the buyout agreement can promote business continuity and protection for you during this transition; on the other hand, if you decide to leave, the agreement can plan for your own exit or retirement, and can help protect your family in the event of death or disability. (more…)
Posted in Business Disputes & Lawsuits, Running a Business, Stating a Business
Wednesday, November 18th, 2009
As some San Diego businesses have withstood the recession well, others have seen profits drop or may even be struggling to keep their doors open. If your business falls into the second category, you probably haven’t been able to escape the question: Should you close your business? It may be possible to ride things out until the business becomes profitable again or try to turn things around by changing your business model, e.g. promote a new marketing strategy or introduce new products/services. But financially, these options may not be available to you, and it might be time for you to move on to another investment or career. (more…)
Posted in Running a Business, Selling a Business
Tuesday, September 29th, 2009
If you’re a San Diego business owner, then you know that when looking for commercial space, the last thing you want to do is blindly sign the lease being offered to you, because a commercial lease always needs to be negotiated. Looking at the Chargers’ lease of Qualcomm Stadium with the City of San Diego, the San Diego Union Tribune reports that the agreement expires in 2020. Before then, the lease provides that the Chargers have a month-long window every year to notify the city of its intent to leave, with penalties at $54.6 million if the team moves next year, but dropping to less than half that amount in 2011 (an amount which some say could be a penalty the team is willing to pay). At least according to Chargers’ special counsel Mark Fabiani, quoted in a Voiceofsandiego.org article, the city got a “bad deal” considering the limited revenue generated by Qualcomm. (more…)
Posted in Business Real Estate, Lease, Real Estate, Running a Business, San Diego
|
|
