(858) 432-3923 tara@cheeverlaw.com
The Cost of Misclassifying Employees as Independent Contractors

The Cost of Misclassifying Employees as Independent Contractors

The rise of the “gig economy” has led to a dramatic increase in the number of businesses using independent contractors (IC) instead of traditional W2 employees. At the same time, there’s been a sharp rise in the number of companies being penalized and/or sued for misclassifying workers as ICs.

Indeed, within the past 10 years, there’s been heightened scrutiny from regulatory agencies at all levels and numerous lawsuits filed over the issue. These lawsuits have forced companies like FedEx, Uber, and Citigroup to pay out hundreds of millions of dollars to those they’ve misclassified.

State-level studies show that between 10 and 20 percent of employers misclassify at least one employee as an IC, and you can be penalized regardless of whether or not you did it intentionally. Given this, you should carefully scrutinize all of your workers and have the proper contracts in place to shield your business. Fortunately, with legal guidance from me, you can easily avoid these risks and stay totally compliant.

However, since you can save an estimated 20 to 40 percent on labor costs by not contributing to a worker’s Social Security, Medicare, and other benefits, you may be tempted to take your chances and pass off some of your employees as ICs. But in doing so, you’re risking serious consequences, which have the potential to destroy your business.

Getting busted
It’s easy for the IRS to be alerted to a potential misclassification. A worker can file an SS-8 form, alleging you’re in violation of the law, or he or she might simply receive a 1099 and W-2 in the same year. Beyond that, you can also get caught if a worker tries to claim unemployment or disability, as this results in an audit of your business.

Plus, because there’s no single test to determine a worker’s classification, it can be easy to misclassify a worker by mistake. And regardless of whether or not the misclassification was intentional, if the allegation proves valid, you’re potentially on the hook for paying back taxes, benefits, and numerous fines.

Fines, Back Payments, and Penalties
If you misclassify an employee, you face fines from the U.S. Department of Labor, IRS, and state agencies that can total millions of dollars. Moreover, you can be held responsible for paying back-taxes and interest on employee wages, along with FICA taxes that weren’t originally withheld. Failure to make these payments can result in additional fines.

You can also be held liable for failing to pay overtime and minimum wage under the Federal Fair Labor Standards Act as well as under state laws. Such claims can go back as far as three years if it’s found you knowingly made the misclassification.

If the IRS believes your misclassification was intentional, there’s also the possibility of criminal and civil penalties. Additional penalties and fines can be assessed depending on the severity of your misclassification.

Back benefits and a tarnished reputation
Outside of the fines paid to state and federal agencies, if an employee is misclassified, they’re eligible to claim employee benefits he or she missed out on. These can include healthcare coverage, stock options, 401(k) matches, PTO, and even unpaid break time.

Don’t Take The Chance
’With such severe consequences, it’s simply not worth taking the chance of misclassifying your workers. To this end, you should consult with me to make sure you have all of your bases covered.

Whether you need help reviewing your IC classification practices or would like assistance with creating sound employment contracts, I can be of service to you. Contact my office at (858) 432-3923 to get started.

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Rewarding Your Employees By Giving Them the Business

Rewarding Your Employees By Giving Them the Business

Retiring from your business can a tough decision. To ensure that what you have built continues on, there needs to be a plan for succession. For some people, they have spent years grooming a child or other family member to take over, wanting the business to stay in the family. Others look to sell to a third party for a quick way out that will also give them a nest egg for their next phase of life. However, there is a third option–transferring the business to your employees. If you like the idea of transferring your business to long-time faithful employees who have contributed greatly to the company’s success over the years, below are a couple of options for you to consider.

Management Buyout

This type of transfer is a process, not an event. The management team comes together with the financing and arranges a deal with you to buy the assets and operations of the business. A management buyout has the benefit of being quicker and more confidential than a third party transaction, and the structure of the deal can be more flexible. There is also the added benefit that the legacy of the company will continue in the hands of those in management who have earned the opportunity to buy the business with his or her loyalty and hard work.

With this option, you may also be able to provide some continued service to the company as an officer and/or director. In addition, you may even be able to continue in some part of the business that you enjoy. And you may be able to keep some control over the company.

When considering this option, it is important that you consider the following:

  • How much cash, debt, and earn-out will be involved?
  • When will the transfer of control occur?
  • If management has little or no capital, where will they get the money for the buyout?

Employee Stock Ownership Plans (ESOPs)

An ESOP is a qualified plan under the Employee Retirement Income Security Act of 1974 (ERISA). Instead of selling directly to management, you are making the sale to the ESOP, which has been set up by the company. The ESOP can either attempt to get bank financing to purchase the stock from you, or you can take a note for the value of your shares and have the repayment taken care of internally. The employees become plan participants, similar to other employee incentive programs and are entitled to benefits at certain points as determined by the terms of the ESOP.

This option is similar to a management buyout, but with potentially valuable tax benefits. With an ESOP, you are selling stock in the company, not the assets, so the taxes are capital gains, not ordinary income taxes. Because of this distinction, there are planning techniques available that may help save on taxes with this transaction.

When reviewing this option, there are a few things to consider:

  • In order to repay the note, most (if not all) of the excess cash flow from the business may be needed, instead of using it to grow the company;
  • The company must set aside money to meet repurchase obligations on the ESOP when an employee retires, dies, becomes incapacitated or terminates his or her employment after vesting;
  • Stock in an ESOP is allocated based on payroll, so there are no extra management incentives.

Both management buyout and ESOPs are options that should be considered if you are looking to transfer your business to your employees.  I am a knowledgeable Estate Planning and Business Attorney and I am here to help you. Give my office a call at (858) 432-3923 and I would be happy to discuss these options more and find a solution that best protects you and your legacy.

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Passing Along a Benefit, Not a Burden

Passing Along a Benefit, Not a Burden

Why Incapacity Planning for Business Owners is an Indispensable Component of Your Plan

Most business owners have their estate planning prepared because they are worried about what will happen to their business after they are dead. However, proper estate planning has the added benefit of allowing you to make plans for what will happen if you are incapacitated or needing to be away from your business for an extended period of time.

As the owner, you are responsible for the day-to-day operations of your business. This is a full-time responsibility. But what will happen if you can’t be there all the time? You don’t necessarily have to be in a coma to be unable to participate in your business. You could be on an extended vacation or have a medical diagnosis that requires you to take several months away for treatment or recovery. During this time, your business needs to continue on so that you and your employees can continue to take home money.

It is important to think ahead about who will be in charge of the day-to-day operations because a ship without a captain can be dangerous. Not only does this individual need to understand the business, he or she needs to have the respect of your employees, and be confident in making tough decisions in your absence. Without this planning, everyone could jump to the conclusion that he or she is in charge, or alternatively, no one will step up, resulting in chaos either way.

If you have family members working in your business it is also important to explain to them what will happen in your absence and who will be in charge so that someone does not assume they are in charge just because they are family. Importantly, remember that just because your family is involved with your business does not mean that he or she is the best choice to succeed you.

I can help you develop a plan to keep your business running while you are away. From choosing the right individual to putting processes in place for your incapacity, I am here to help.  Feel free to contact me at (858) 432-3923 for any questions you may have.

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Retirement Planning for Business Owners

Retirement Planning for Business Owners

For many employees, saving for retirement is usually a matter of simply participating in their employer’s 401(k) plan and perhaps opening an IRA for some extra savings.

But, when you’re the owner of a business, planning for retirement requires proactivity and strategy. It’s not just the dizzying array of choices for retirement accounts, there’s also planning for the business itself. Who will run the business after your retirement? Additionally, your estate plan must integrate into your retirement and business transition strategy.

Owners of businesses (like employees and everyone else) want to make sure they will have enough money in retirement. Business owners recognize the value of their businesses, so they are often tempted to reinvest everything into the enterprise, thinking that will be their “retirement plan.” However, this might be a mistake.

Retirement Accounts for Business Owners

Rather than placing all your eggs in one basket, it makes sense to have some “backup” strategies in place. There are many retirement account options open to business owners. Although the number of options can make things confusing, a tax and financial professional can often quickly make a recommendation for you.

For example, you may consider opening a 401(k), SEP-IRA, SIMPLE, or pension plan. This can reduce your income taxes now, while simultaneously placing some of your wealth outside your business. From a financial perspective, these account are tax-deferred, so the investment growth avoids taxation until you retire, which greatly boosts returns. The “best” plan really depends on how much income your business earns, how stable your earnings are, how many employees you have, and how generous you want to be with those employees. You must consider how generous you’ll be with employees because the law requires most tax-deferred plans to be “fair” to all employees. For example, you can’t open a pension or 401(k) for yourself only and exclude all of your full-time employees. When making this decision, consider that many employees value being able to save for their retirement and your generosity may be repaid with harder work and loyalty from the employees.

Depending on how many employees you have, you may even consider “self-directed” investment options, which can allow you to invest some or all of your retirement funds into “alternative” investments, such as precious metals, private lending arrangements, real estate, other closely held businesses, etc. These self-directed accounts are not for everyone, but for the right person, they open up a wide world of investment opportunities. The tax rules surrounding self-directed tax-deferred accounts are very complex and penalties can be incredibly high. So, if you choose to do self-directed investments, always work with a qualified tax advisor.

Outside of your business, you can likely contribute to an IRA or a Roth IRA. This can allow you to add more money to your retirement basket, especially if you’ve maximized your 401(k), SEP, or SIMPLE plan. Like the other tax-deferred accounts, self-directed IRAs are also an option, opening up a broad world of investment options.

As a business owner, you likely have a great deal of control over your health insurance decisions. If you’re relatively young and healthy or otherwise an infrequent user of health care services, consider using a high deductible health plan (HDHP) and a health savings account (HSA) to add additional money to your savings. These plans let you set aside money in the HSA which can be invested in a manner similar to IRAs. At any time after you setup the account, you can withdraw your contributions and earnings, tax-free, to pay for qualified medical expenses. And, after you turn 65, the money can be used for whatever purpose you want, although income tax will need to be paid on the distributions.

Selling or Transferring the Business

Many business owners dream of a financially lucrative “exit” when a business is sold, taken public, or otherwise transferred at a significant profit for the owner. This does not happen by accident – a business owner must first create and sustain a profitable enterprise that can be sold. Then, legal and tax strategies must be coordinated to minimize the burdensome hit of taxes and avoid the common legal risks that can happen when businesses are sold. When a business is sold, the net proceeds can form a significant component of the owner’s retirement. When supplemented by one or more of the retirement accounts discussed above, this can be a great outcome for a business owner.

On the other hand, other businesses are “family” businesses where children or grandchildren will one day become owners. Like their counterparts who will sell their businesses, these business owners must also focus on creating and sustaining a profitable enterprise, but the source of retirement money is a little less clear. In these cases, clearly thinking through the transition plan to the next generation is essential. Although the business can be given to the next generation through a trust or outright, there are also transition options to allow for children, grandchildren, or even employees to gradually buy-out the owner, if the owner needs or wants to obtain a portion of the retirement nest egg from the business.

The Importance of Estate Planning

Regardless of which retirement accounts (401(k), SEP, SIMPLE, IRAs, HSAs) you select, it is wise to integrate them into your estate planning. You’ve probably already considered who you want to take over your business after you retire (perhaps a son or daughter or a sale to a third party). For your retirement accounts, an IRA trust is a special trust designed to maximize the financial benefit, minimize the income tax burden, and provide robust asset protection for your family. These trusts integrate with the rest of your comprehensive estate plan to fully protect your family, provide privacy, all while minimizing taxes and costs.

Leverage the Team Approach

Let me work with you, your business advisors or consultants, your tax advisor, and your financial advisor to develop a comprehensive retirement, business transition, and estate planning strategy. When we work collaboratively, we can focus on setting aside assets for retirement, saving as much tax possible, while freeing you to do what you do best – build your business!

Give me a call today at (858) 432-3923 so I can help you craft a retirement, business transition, and estate planning strategy.

This article is a service of Tara Cheever, Personal Family Lawyer®. I don’t just draft documents; I ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why I offer a Family Wealth Planning Session,™ during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. You can begin by calling my office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.

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Estate Planning When Not All of Your Kids are in the Family Business

Estate Planning When Not All of Your Kids are in the Family Business

Owning your own business can be a great endeavor that takes a lot of passion and drive. Many small business owners focus on the day-to-day management and growth of the business, rather than thinking about a time when he or she may not be in the business. This is a far too common mistake. Future plans for your enterprise are even more important when one child works in the business but the others do not. Keeping the peace among your children after you are no longer able to participate in the business requires careful balancing of your estate plan.

Planning Ahead

Before considering whether or not to pass your business to the next generation — as opposed to selling it to a third party — make sure at least one of your children is capable of (and willing to) running the company. Once that has been established, then early planning is the next step to ensuring the best outcome. Ideally, succession planning should start at least five years before you decide to retire. And because life is unpredictable — you may become incapacitated or pass away without warning — the best time to start planning is now. There are several things to consider when planning for your small business if not all of your children are involved. It is important to keep in mind that treating your children fairly does not necessarily mean you will treat them equally when it comes to your estate planning. For this reason, being proactive will make sure your desires will be followed even after you can no longer run your company.

Factors to Consider

First, minimizing the risk of conflict among your children once you are gone requires a mindful weighing of your estate, your successor trustee, and other aspects of your estate plan to ensure your wishes are recorded and can be easily followed.

Second, you must consider the value of the business as well as control and management issues. This can be done by clearly identifying the roles and responsibilities of your successor in a written plan.

Third, if you have a sizeable estate, there are financial strategies that a knowledgeable estate planning professional like myself can use to equalize distributions. This can also be done with other assets such as IRAs, 401(k)s, investment real estate, life insurance, as well as stocks, bonds, and/or mutual funds.

Finally, there must be an analysis of how the business is capitalized in order to ensure your estate plan is fair when it comes to your children — whatever you consider fair to be in your particular circumstance. Notably, how a person’s business is organized has a direct effect on how it is treated, taxed, and administered upon his or her death.

Don’t Leave It To Chance

Ignoring or delaying estate planning for your small business is not financially prudent. As a successful business owner who already has the next generation involved in the company, you must take charge of the future so that the fruit of your hard work can continue on. More important, clearly writing down your desires will help keep your family from bickering — a likely result if you just leave the business’s future to chance. As a Family Business Lawyer® Give me a call today, so we can craft an estate plan that will allow your business to continue to thrive for generations to come.

This article is a service of Tara Cheever, Family Business Lawyer®. I don’t just draft documents; I ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why I offer a Family Wealth Planning Session,™ during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. You can begin by calling my office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.  I also offer a complete spectrum of legal services for businesses and can help you make the wisest choices on how to deal with your business throughout life and in the event of your death.  As part of this service, I offer a LIFT Start-Up Session™ or a LIFT Audit for an ongoing business, which includes a review of all the legal, financial, and tax systems you need for your business. Call me today to schedule.

Estate Planning Best Practices Gleaned From Famous Celebrity Deaths

Estate Planning Best Practices Gleaned From Famous Celebrity Deaths

Discussing death can be awkward, and many people would prefer just to ignore estate planning all together. However, ignoring—or even putting off—such planning can be a huge mistake, as these celebrity stories will highlight.

The next time one of your relatives tells you they don’t want to talk about estate planning, share these famous celebrities’ stories to get the conversation started. Such cautionary tales offer first-hand evidence of just how critical it is to engage in estate planning, even if it’s uncomfortable.

The Marley Family Battle
You would think that with millions of dollars in assets—including royalties offering revenue for the indefinite future—at stake, more famous musicians would at least have a will in place. But sadly, you’d be wrong. Legendary stars like Bob Marley, Prince, and Jimi Hendrix failed to write down their wishes on paper at all.

Not having an estate plan can be a nightmare for your surviving family. Indeed, Marley’s heirs are still battling one another in court three decades later. If you do nothing else before you die, at least be courteous enough to your loved one’s to document your wishes and keep them out of court and out of conflict.

Paul Walker Died Fast and Furious at Just 40
While Fast and Furious actor Paul Walker was just 40 when he died in a tragic car accident, he had enough forethought to implement some basic estate planning. His will left his $25 million estate to his teenage daughter in a trust and appointed his mother as her legal guardian until 18.

But isn’t 18 far too young for a child to receive an inheritance of any size? Walker would have been far better advised to leave his assets in an ongoing trust, with financial education built in to give his daughter her best shot at a life well lived, even without him in the picture.

Most inheritors, like lottery winners, are not properly educated about what to do after receiving an inheritance, so they often lose their inheritance within just a few years, even when it’s millions.

Indeed, none of us has any clue when we’ll die, only that it will happen, so no matter how young you are or how much money you have—and especially if you have any children—don’t put off estate planning for another day. You truly never know when it’ll be needed.

Heath Ledger Didn’t Update His Estate Planning
Even though actor Heath Ledger created a will shortly after becoming famous, he failed to update it for more than five years. The will left his entire fortune to his parents and sister, so when he died unexpectedly in 2008, his young daughter received nothing, as she hadn’t been added to the will. Fortunately, his parents made sure their granddaughter was provided for, but that might not always be the case.

Creating an estate planning strategy is just the start—be sure to regularly update your documents, especially following births, deaths, divorces, new marriages, acquiring new assets, or retiring. Many estate plans fail because most lawyers don’t have built-in systems for updating your estate plans, but we do—mostly because we don’t want this to happen to your family.

Paul Newman Cut Out His Daughters Too
Though it’s a good idea to regularly update your estate plan, be sure your heirs know exactly what your intentions are when making such updates, or your family might experience significant shock by not knowing why you did what you did.

The final update to Paul Newman’s will, which was made just a few months before his death in 2008, left his daughters with no ownership or control of Newman’s Own Foundation, his legendary charity associated with the Newman’s Own food brand. Prior versions of Newman’s will— and indeed his own personal assurances to his family—indicated they’d have membership on the foundation’s board following his death.

Instead, the final version of his will left control of the foundation to his business partner Robert Forrester. Some allege that during his final months, when Newman was mentally unstable, he was secretly persuaded to change his estate plan to leave control of the Newman’s Own brand and foundation to Forrester. Newman’s daughters are currently fighting Forrester in court over the rights they believe they’re entitled to receive.

While changes to your estate plan may seem perfectly clear to you, make sure your family is on the same page by clearly communicating your intentions. In fact, if you are making significant changes to your plan, and your children are adults, we often recommend a full family meeting to go over everything with all impacted parties, and we often facilitate such meetings for our clients.

Muhammad Ali Made His Wishes Clear
Boxing great Muhammad Ali wanted multi-day festivities to be held in his honor, including a large festival, an Islamic funeral, and a dazzling public memorial at the KFC headquarters in Louisville, KY. Given such elaborate plans, he worked with his lawyers for years, ensuring his wishes would be properly carried out.

While you probably won’t need a multi-day festivity to celebrate your life, you may have wishes regarding how your life should be memorialized when you pass or how your care should be handled if you’re incapacitated. If you eat a special diet or want certain friends by your side while incapacitated, you have to make these wishes clearly known in writing or they very well might not happen. At the same time, you should spell out exactly how you want your remains cared for and what kind of memorial service, if any, you prefer.

As your Personal Family Lawyer®, we can help ensure your final wishes are carried out exactly how you want. But more importantly, we’ll help protect your family and keep them out of conflict and out of court in the event of your death or incapacitation. With a Personal Family Lawyer® on your side, you’ll have access to the exact same estate planning strategies and protections that A-List celebrities use, so don’t wait another day—contact us now to get started!

This article is a service of Tara Cheever, Personal Family Lawyer®. I don’t just draft documents; I ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why I offer a Family Wealth Planning Session,™ during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. You can begin by calling my office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.

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Small Business Owner? Know What Can Happen to Your Business If You Become Incapacitated or Pass Away

Small Business Owner? Know What Can Happen to Your Business If You Become Incapacitated or Pass Away

Preparing your company for your incapacity or death is vital to the survival of the enterprise. Otherwise, your business will be disrupted, harming your customers, employees, vendors, and ultimately, your family. For this reason, proactive financial planning — including your business and your estate plan — is key. Below are some tips on how to protect your company and keep the business on track and operating day-to-day in your absence.

Preparing for the Unexpected

If you are a small business owner, your focus is likely on keeping the company running on a daily basis. While this is important, looking beyond today to what will happen if you can’t run your business should be on the top of your to-do list. If you die or become incapacitated without a plan in place, you will leave your heirs without clear instructions on how to run your company. This can jeopardize the business you worked so hard to build. The right plan along with adequate insurance can help keep your business running regardless of what happens.

Execute the Proper Business Documents

If your company has several owners, a buy-sell agreement is a must. This contract will outline the agreed upon plan for the business should an owner become incapacitated or die. Provisions in the buy-sell agreement will include:

  • how the sale price for the business and an owner’s interest are determined,
  • whether the remaining owners will have the option to buy the incapacitated or deceased member’s interest, and
  • whether certain individuals can be blocked from participating in the business.

Execute the Proper Estate Planning Documents

A properly executed will or trust will allow you to state how you would like your assets to be transferred — and who will receive these assets — at your death. A will or a trust also lets you identify who will take charge of the assets and manage their disbursement (including your business accounts) according to your wishes.

Although a will can be used to pass assets at death, creating and properly funding a trust allows any assets owned by the trust to bypass the probate process making distribution of assets to heirs much faster, private, and may reduce the legal fees and estate taxes your heirs will owe.

Additionally, a trust can help your loved ones manage your trust assets if you become incapacitated. While you are alive and well, you typically act as the trustee of the trust, so you can manage your business and assets with little change from the way you do now. But unlike a will, a trust allows your successor trustee to step in manage things if you become incapacitated. This process avoids court involvement, allows for a smooth transition of trust management (which can be very important if your business is an asset of your trust), and proper continuing care for you in your time of need. Although having a will can be a great way to start, most business owners are much better off with a trust-based estate plan.

Purchase Additional Insurance

Whether you own the business by yourself or are a co-owner, it is important to have separate term life insurance and a disability policy that names your spouse and children as beneficiaries. The money from these policies will help avoid financial hardship while the buyout procedures of buy-sell agreement are being carried out.

Contact a Family Business Lawyer®

Having a plan for your business in the event you are unable to continue managing the company is essential to keep the company going. A Family Business Lawyer like myself can explain the many options you have to protect your enterprise so that you can focus on what you do best — running your company. Give me a call today to get started protecting your business.

This article is a service of Tara Cheever, Family Business Lawyer®. I offer a complete spectrum of legal services for businesses and can help you make the wisest choices on how to deal with your business throughout life and in the event of your death. I also offer a LIFT Start-Up Session™ or a LIFT Audit for an ongoing business, which includes a review of all the legal, financial, and tax systems you need for your business. Call me today to schedule.

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Business Conflict: Tips for Settling Business Disputes Part 2

Business Conflict: Tips for Settling Business Disputes Part 2

In part 1, I discussed the importance of knowing how to negotiate business deals and mitigate conflict whenever possible. Besides being a financial drain, business disputes can also create conflicts that require precious time and energy to resolve. Setting clear boundaries and realistic expectations when making professional agreements is essential in setting yourself up for positive outcomes.

Although avoiding conflict is preferred in professional matters, it is imperative to be prepared to handle business disputes properly when the need arises. Following these valuable tips will increase your chances of a positive outcome when business disputes must be settled.

Clarify the Actual Dispute: Ensure you understand what the desired outcome the other party seeks for resolution. It is equally important to clarify your own desired outcome. It can be challenging to see what’s actually going on when emotions are high. Speak with a trusted advisor to help you get clarity.

Offers Without Prejudice: Once you are in the dispute resolution process, be mindful when making offers for resolution. Ensure that you state that your offer is “without prejudice” and with no admission of guilt, so that if you do end up having to go to court, the offer cannot prejudice your case.

Use Alternative Dispute Resolution Models: Going to court is a lose/lose scenario for everyone involved. Be sure you have mediation and arbitration provisions built into every agreement you sign. Resolve matters outside of court, whenever possible.

Don’t Rely Solely on Your Legal Rights: If you want to avoid going to court—and it’s usually in your best interest to do so— put a good faith effort into finding a mutually beneficial solution on which to agree while still invoking your rights. I can help you with that as we focus on finding resolve in every conflict, by seeking to identify where the respective parties’ needs can be met and matched up as part of your conflict resolution process.

Watch Your Wording: Settlement offers can be complicated. The way an agreement is worded or structured can affect the outcome, especially if that outcome is a financial judgment. Make sure you have a thorough understanding of the terms and conditions in any settlement offer. And never make a settlement offer without having me strategize and review the wording with you first.

Most importantly, get legal advice from a dedicated and trusted business lawyer. A lawyer can help you avoid all of the above mistakes and will protect your best interests during settlement negotiations.

This article is a service of Tara Cheever, Family Business Lawyer®. I offer a complete spectrum of legal services for businesses and can help you make the wisest choices on how to deal with your business throughout life and in the event of your death. I also offer a LIFT Start-Up Session™ or a LIFT Audit for an ongoing business, which includes a review of all the legal, financial, and tax systems you need for your business. Call me today to schedule.

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Business Conflict: Tips for Settling Business Disputes Part 1

Business Conflict: Tips for Settling Business Disputes Part 1

A large part of being a successful business owner is knowing how to make deals and facilitate conflict when it arises.

When in a dispute over a deal or an agreement that has been made, the potential costs are endless. The potential cost of litigation, the potential cost of loss of reputation, the potential cost of the energetic drain from the conflict.

What do you need to know about conflict to mitigate these costs?

First and foremost, remember that costly conflict most often arises because the agreement process was not properly handled to begin with.

The ideal time to surface conflicts is in the beginning of a relationship by creating clear boundaries and expectations, using the agreement process.

The best agreement process will support both parties to share the parts of themselves they may typically hide while making an agreement, while at the same time, asking the hard questions they may not ask.

It’s often difficult to see the things we are hiding when making agreements, or to ask the challenging questions, and that’s why it’s so helpful to have a trusted advisor support you each time you are entering into an agreement with anyone, whether it be a new team member, a business partner, or a strategic partner.

When the agreement process is used to create each of your agreements, and before you ever finalize a deal of any type, the number of expensive business disputes you will have will be greatly diminished, if not eliminated completely.

But what happens if there is a conflict?

In Part 2, we will cover what to do once a conflict has happened. Look for that next week.

No one wants to end up in a dispute. Fortunately, there are steps you can take to reduce your chances of conflict in the future. To start, find a trusted legal professional who will help you put protective measures in place to avoid the most common mistakes businesses make. That’s why a Family Business Lawyer® is there to help you face the challenges of owning a business.

I help small business owners negotiate settlements and channel their time and energy toward growth and potential instead of putting out fires. I’ll begin by sitting down to discuss how you can implement a robust legal, insurance, financial and tax system that will streamline your business operations and minimize your risk of encountering contract disputes.

This article is a service of Tara Cheever, Family Business Lawyer®. I offer a complete spectrum of legal services for businesses and can help you make the wisest choices on how to deal with your business throughout life and in the event of your death. I also offer a LIFT Start-Up Session™ or a LIFT Audit for an ongoing business, which includes a review of all the legal, financial, and tax systems you need for your business. Call me today to schedule.

 

Do You Have a Business Succession Plan In Place?

Do You Have a Business Succession Plan In Place?

As a business owner, you’ve taken on a big responsibility to your family, your clients/customers, your team and your partners. Most businesses are not sufficiently liquid to keep the company going and the owner’s family thriving, in the event of death. But with the right plan in place, you can ensure the people you care most about are well provided for if anything happens to you.

While facing death is not the most pleasant prospect, doing so can actually make your life and business a whole lot better. A life and death plan – also called a succession plan – for your business will ensure you have:

  • Enough insurance (and the right kind of insurance) to provide cash to keep your business going in the event of your death;
  • A written plan to designate who will run your business (or prepare it for sale), when you are no longer able to do so;
  • Documented access to your digital business assets so your business can continue to serve customers, collect payments and pay expenses;
  • A plan to keep your business (and your family) out of probate court, which is totally unnecessary and avoidable;
  • An updated inventory of your business and personal assets so nothing you own is lost to the State Department of Unclaimed Property and so your intellectual property is well-protected and capitalized upon;
  • The story of your business, written, video or audio recorded, so you can leave a documented legacy of the lessons and experienced you learned along the way.

With a succession plan in place for your business, you can rest easy knowing that if anything happens to you, the people you care about most — your family, clients and customers, your team and partners — will be well cared for, in just the way you want. The peace of mind which comes with that knowledge frees you up to focus on creating more income and a bigger impact now.

Creating and documenting a business succession plan is truly a win-win-win situation. If you are ready to set up yourself, and your business, and the most important people in your life to win, no matter what, we can help you accomplish just that. I’ll ensure you get from where you are now – no matter what stage your planning is in currently – to exactly where you want to be. That’s my commitment to you.

This article is a service of Tara Cheever, Family Business Lawyer®. I offer a complete spectrum of legal services for businesses and can help you structure your operations for success. One of our primary services is a LIFT Start-Up Session,™ in which we guide you through the right choice of business entity, location of business entity, start up agreements, intellectual property protection, employment structuring, insurance, financial and tax systems you need to start your next business and succeed right out of the gate. This session is normally $5,000, but if you are one of the first three people to schedule, I’ll take you through the entire LIFT Start-Up™ process for half that investment. Call me today to schedule a time to have a conversation!

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