August 23, 2016

WHAT IS AN "OPERATING AGREEMENT" AND WHY DOES MY LLC NEED ONE?

             Say you've decided to form a limited liability company, commonly referred to as an "LLC." You've heard that an LLC needs an "operating agreement" in Maryland but you don't know what that means or how to proceed. This article will guide you.

            The first thing is to be sure that you have the correct legal entity for your business (see prior blog link on choosing a proper legal entity. You may want to consult a lawyer to discuss the pros and cons of each. If you do decide that an LLC is the correct entity for you, you first need to register the entity with the Maryland State Department of Assessments and Taxation (SDAT). A good link on creating an LLC can be found at http://www.dat.state.md.us/sdatweb/artorgan.pdf.

            Maryland law does not require that an LLC have a written operating agreement. However, it is advisable to put your agreement with your fellow LLC members in writing. The agreement itself is not filed anywhere. Nevertheless, it is a binding contract with legal ramifications. 

            The operating agreement, while not filed with the state, should be kept with the LLC's permanent documents. The operating agreement is an important binding agreement that outlines the roles and responsibilities of the member(s). It should set forth the framework of how the LLC will be funded, run, organized, and managed. It should include specific and detailed information regarding, for example, the name of the LLC, the registered agent, the address, the date of formation, the terms under which the LLC will operate, the purpose of the LLC, the names of the member(s), and procedures relating to meetings. It should specify who will fund the LLC and make financial decisions for the LLC. It should specify the percentage of member(s) ownership, voting rights and responsibilities, and sharing of profit and losses of the LLC. It may include provisions on how to modify or amend the agreement or make changes to the LLC or deal with dissolution of the LLC. The Maryland statute on operating agreements can be found in the Corporations and Associations Annotated Code, Section 4A-402, and linked here for your convenience: http://www.lexisnexis.com/hottopics/mdcode/.

            Sometimes people ask if an LLC has shares of stock like a corporation. It does not. The members own "LLC interests" or "membership interests." The interests that each member has is set forth in the operating agreement and may also be documented in a certificate of ownership or interest. Even if LLC interests are not documented in a certificate, like a stock share, it is very important to documents when interests are transferred, bought or sold.

            The whole purpose of an operating agreement is to provide a well thought out structure of the LLC in advance of starting it. Much of the work in creating a strong operating agreement is a clear vision for your business and a well thought out way to execute it.

            A well thought out and planned operating agreement can get an LLC off to a strong start, with a clear purpose and a way to achieve it clearly spelled out. This can avoid costly litigation and ill will among members should there be a dispute on how the LLC is run. Planning ahead is both wise and cost effective.


            If you search online you can find a number of sites with "free" or "for a small fee" websites that will provide forms for your operating agreement. Be careful. While these can be a good starting point, if you haven't fully thought out all the angles of setting up and running your LLC, these may not be advisable for you. An experienced business attorney can make sure you have considered all the issues important to your specific LLC and mission, and prepare an operating agreement that covers what you need.

August 17, 2016

SHOULD I HAVE A LAWYER REVIEW MY COMMERCIAL LEASE AGREEMENT?


            You're an owner leasing commercial rental property or a tenant wishing to lease. You've
agreed on the important lease terms such as square footage, rent, and term. So why should you
spend the time and money to involve a lawyer you ask? On both sides, it's advisable.

            Leases are contracts and commercial leases are usually contracts involving a lot of money
over a long term. Therefore, you want to be sure that the written lease agreement actually
reflects what you agreed upon. The precise wording in these contracts is critical and has
legal ramifications. Lay people may not be aware what the terms mean legally. It's important
before you sign any lease agreement to understand what you are signing, what rights you are
getting and what rights you are giving up.

            You also need to know what liability you may face. In addition, you need to protect
yourself in case problems arise. Many questions can arise after a lease agreement is signed.
These are as varied as the individual deal itself. For example, if something major like the heat or
air conditioning breaks, is the landlord or the tenant responsible for the cost of repair? Another
example could be who is responsible to clean snow from the sidewalks, landlord or tenant?
Other issues may include use of the property, term, rent (there are different types of commercial
rentals, and ways to calculate the rent), subletting, renewal, default, warranties, insolvency,
signage, parking, covenants, restrictions, maintenance and repairs, build outs and property
changes, lease modifications, zoning, insurance and utilities, taxes and assessments, rights with
respect to other tenants, and  other issues particular to your lease. You can see that the list of
issues is long.

            When you've gone through all of the stress of getting to the point where you sign the
lease, you may be just ready to sign the lease. But don't, without carefully reviewing the lease
and your understanding of it with a business attorney. This extra step can make for a sound
deal that meets your needs. A knowledgeable attorney can advise you before you sign if the
lease has potential problems. If so, addressing them in advance is often much easier and cost effective.

April 21, 2016

Why Every Designer Needs a Lawyer

Why Every Designer Needs a Lawyer

If you’re a designer, you’ve undoubtedly pushed out many of your personal creative projects online. In all likelihood, you’ve spent a lot of your time and hard work to create designs that affect others in a profound manner. All you ask for is recognition and credit for your creative expression — yet what happens if somebody claims your work as their own?

This is, by and large, a huge fear for many designers. Whether you’re a graphic designer, a web developer or a UI/UX artist, it can be a flagrant offense when others steal your intellectual property. What you should know: you can legally protect your creative property. By partnering with the right lawyer, you can grant yourself peace of mind.

All designers are defined by the content they produce and when something as subjective as ‘creativity’ comes into play, it can become a breeding ground of legal issues. Take a look at Apple and Samsung’s patent lawsuit: after Apple had initially won the lawsuit in 2014, its victory was overturned on Samsung’s appeal.

Designers need their own contracts and their rights protected above all. Here’s how a lawyer can help you with all of that:

A lawyer can draft a contract tailored to your needs

Prior to entering any agreement between yourself and a client, a lawyer would urge you to prepare a contract. This contract exists as a formal legal document that both you (the designer) and your client are blinded to. The client must understand that before they acquire your services and commission you, the contract is there to protect your rights. Especially when time is of the essence, a lawyer will help you draft a contract based on the context of your needs and requirements even under the pressure of time constraints.

A lawyer saves you time and reduces your risks

In most — if not, all — contracts, a proper contract will have the designer’s terms and conditions included in it. This is to create transparency and clarity between both parties. Your terms of services are another layer of protection for your and your creative property. Undoubtedly, you’ve come across other businesses’ or designers’ individual terms and conditions and they’re seemingly filled with legal jargon. You might be tempted to find a terms and conditions template and substitute your name in, but it may not give you the customization and proper protection you need. Instead of putting yourself through the risk and hassle, a lawyer grants you the security that your terms and conditions are done the right way.

Lawyers help designers understand their rights

It’s important to distinguish the difference between selling your work and selling your rights. While both reward you with your livelihood, only one protects your copyright. In the harsh reality of the world, companies can and will discretely add clauses to contracts that abolish your rights to your work. Without any experience, a designer can negligently gloss over the fact. A lawyer can help you identify these clauses, and can then proceed to either have the clause removed or, in the very least, have its scope mitigated. As a designer, it’s important you protect your brand as much as your intellectual property.



Hiring a lawyer is the smartest investment you’ll make. Not only will you grant yourself peace of mind, but you’ll free up your time from handling the legalities of your profession. You’ll have more time to focus your energy towards your passion, rather than redirecting it towards the constant worrying of protecting your intellectual property.


Written by Daza Design

Daza Design is an online design agency that provides website, logo, and print design services. Their top-notch services have helped clients in a wide range of industries. They love all things design. It’s what they do from pixels to print.

You can reach Daza Design at:

Tel: (213) 674-0048

November 16, 2015

Independent Contractor or Employee? (Or, am I like an Uber driver?)

INDEPENDENT CONTRACTOR OR EMPLOYEE?
            Are you an independent contractor or an employee? How do you find out and why does it matter anyway?
"Independent contractor" and "employee" are not just insignificant names or labels in Maryland. This distinction is legally important and just calling someone by one name or the other,or reporting earnings on a Form 1099 instead of a Form W-2, does not make them what they are called. The specifics of the work must be looked at. A  multi-pronged test is used under both Maryland and federal law to determine whether you are an independent contractor or an employee. These terms are explained in a complex web of Maryland and federal case law, statutes, and regulations. This article does not answer specific questions, but gives a general guideline of the factors applied in determining whether you are legally deemed to be an independent contractor or an employee. Some of these factors are: control, hours, work location, pay schedules, expense reimbursement, tools and materials, training, continuing relationship, reporting, benefits, supervision, level of flexibility, and hiring and firing.
In general, an independent contractor is likely to have more control over his or her work and more flexibility to work when and where he or she likes, with less supervision and accountability on the daily steps of the work involved. Often, an independent contractor can schedule their own hours, may work offsite, and may not have a typical boss or supervisor. An independent contractor is responsible for getting the specified work done in the manner that they choose. This, however, does not mean that they lack accountability. An independent contractor still has a specified job to do and a deadline by which to have it done. Independent contractors may be paid hourly or per project. They typically do not receive benefits such as health insurance, disability insurance, unemployment insurance, sick leave, or vacation pay.
In contrast, an employee, in general, has much less control and flexibility. Typically,an employee has a boss or supervisor, specified hours, and parameters set by an employer on how and when work should be done, to the employer's standards.  While many employees work in an office, some tele-commute or work remotely, but are still under the control of the employer. Employees may be entitled to receive benefits including health insurance, life insurance, disability insurance, unemployment insurance, pension or profit sharing, and sick and vacation leave.
So why does it matter whether you are an employee or independent contractor? First, employees are protected by a variety of wage and anti-discrimination laws that do not necessarily apply to independent contractors. Another ramification of the classification as an independent contractor or employee is that an employer is required to withhold certain federal and state taxes, such as Social Security or "FICA" taxes, worker's compensation and unemployment taxes, and other payroll taxes, from an employee's paycheck. An independent contractor, however, does not have these taxes withheld and instead must file and pay quarterly tax returns and pay estimated tax with Maryland and the Internal Revenue Service. If an employer improperly classifies a worker as an independent contractor when the person is actually an employee, the employer can be liable for back withholding taxes and even fines and penalties.
An overall summary of these issues can be found on the Maryland Department of Labor, Licensing and Regulation website at:
and at the Maryland Workers' Compensation Commission website at:
                For federal tax status, the IRS has published helpful information on the factors taken into consideration by the federal government in evaluating whether one is deemed to be an independent contractor or employee:

                                                               The Uber Case     
           In addition to many of the challenges faced by Uber worldwide, a recent hot issue has arisen in the US as to whether Uber drivers are employees or independent contractors. State courts have come to different conclusions. Maryland has not considered this issue in the Uber context, but it stands to reason that this issue is one with nationwide appeal. 
           Recently, a California Labor Commissioner decided that Uber's classification of its taxi drivers as independent contractors is wrong. In 2014 an Uber driver in California named Barbara Ann Berwick filed a wage complaint in California, seeking reimbursement for business expenses -- gas and bridge tolls. Some other states considering this same issue found that people working for Uber were, in fact, independent contractors. In the California case, Uber refused to reimburse these expenses arguing that Berwick was an independent contractor, not an employee entitled to such reimbursement. 
           The California Labor Commissioner awarded Berwick these expenses, finding that Ms. Berwick was an employee under a detailed "economic realities" test under California law. The Commissioner noted that Uber provided iPhones to its drivers, monitored and required certain ratings for all drivers, and had sole discretion to set and negotiate the prices customers would pay. The Commissioner also found that Berwick's job did not require a special skill. In addition, in weighing these factors, the Commissioner found that Uber had a large degree of control over its drivers, thus making them employees, with the full protections to which employees are entitled. 
          While Maryland is not bound by a California decision, it can be persuasive. The Uber issue is a prime example of the varied factors and interpretations used in determining whether one is an independent contractor or employee.

What Should a Maryland Employer or Employee Do?
When accepting a position or hiring, it is critical to keep in mind that whether you call someone an independent contractor or an employee has significant ramifications. Simply calling a person an independent contractor will not legally make it so. Misclassifications can cause independent contractors to miss out on key employment benefits and protections and can result in penalties for an employer, including payment of back taxes, fines, and other penalties.
For people working in the construction, home improvement, and landscaping areas, Maryland law provides some protection against misclassification by employers. The Maryland Workplace Fraud Act of 2009, which was amended in 2012, sets requirements for the classification of a person as an independent contractor or an employee. This was enacted because too many people in these jobs were automatically told they were independent contractors, when they might have legally been employees entitled to employment law protections and benefits.
Because the classification of a worker as an independent contractor or employee requires a careful analysis of many factors, it is wise to obtain legal counsel and speak to an accountant when you are unclear on this important issue.

November 9, 2015

WHY DO I NEED AN ADVANCE DIRECTIVE?

WHY DO I NEED AN ADVANCE DIRECTIVE?

            What is an "advance directive" and why do I need one? An advance directive includes two major components -- an appointment of health care agent, in which you direct a person to make decisions for you if you cannot; and what is sometimes called a "living will," a legal document that specifies your health care wishes when you are no longer able to do so. The key is to prepare this in advance, before you have health issues, and while you are still competent to make these decisions. An advance directive covers all health care issues, physical and mental. It could cover simple things like routine health care decisions that you can no longer make, or more complicated issues including whether you wish to have life support, cardio-vascular resuscitation, tube feeding, pain medications, or surgery.

           In order to make a valid advance directive, it must be signed in the presence of two witnesses, while you are mentally competent and can understand what you are directing. The person that you are appointing as your "health care agent" to make such decisions if you become incapacitated, cannot be a witness. In addition, at least one of the witnesses must be someone who would not financially benefit by your death or handle your estate.  It does not have to be notarized. You should discuss your wishes in detail with this person and be comfortable that they both understand and agree to carry out your wishes if needed. Often a spouse or parent fills this role but there is no requirement on who can serve as a health care agent. This is a personal decision that should not be made lightly.

            You do not have to hire an attorney to draft an advance directive, but many attorneys, including the attorneys at Taylor Legal, routinely include these documents as part of an overall estate planning package. The Office of the Maryland Attorney General has an approved advance directive form on its website at https://www.oag.state.md.us/healthpol/adirective.pdf.  However, you are not required to use this form.

            What do you do once you have an advance directive? Be sure to keep a copy
with your permanent documents and give a copy to your health care agent and doctor. You can
also obtain a wallet card showing that you have an advance directive.

            Suppose you do become incapacitated and cannot make an informed medical decision,
what happens if you have an advance directive? Before an advance directive is used a doctor must certify in writing that you are not capable of making such a decision. Once these steps are completed, your advance directive should be honored.

            While Maryland law does not require that anyone have an advance directive, it can alleviate a lot of stress and uncertainty.  Thus, discussion and planning ahead with an advance directive, is advisable.

            You need not worry about being locked into your advance directive. As long as
you still have legal capacity to understand what you are doing, you can always change or revoke
it. This gives people added assurances that any changing wishes or needs can be carried out.  


November 2, 2015

Why Do I Need a Will and What Will Happen if I Die Without One?

                                   WHAT HAPPENS IF I DIE WITHOUT A WILL?

            It is very difficult, emotionally, to think about needing a will, because it makes us think about death. Many people occasionally think about this and plan to look into it but don't go any further. The reason why is obvious -- it's not a fun thought and easy to say "I'll get to this later, when I'm less busy." But for many, "later" never comes. The result can have far reaching negative consequences. So, while difficult, thinking about a will is very important and could be the best gift you leave to your heirs or descendants.

            In order to understand this whole process, a little background information is helpful. 
First, what is a "will?" A will is a written legal document directing a person's wishes regarding their property and other financial affairs, or nominating a guardian for minor children, after death. In order to make a valid will in Maryland, a person must be at least 18 years old and be competent. A will must be in writing and signed by two or more credible witnesses. A will can do many helpful things including:

            1. Appointing a "Personal Representative," the person you select to administer the closing
of  your estate, pay your bills, and carry out your wishes.
            2. Appointing a "Guardian,"  who will have legal custody of your minor child or child
with a disability.
            3. Dispose of your personal and real property as you direct.
            4. Make charitable bequests.
            5. Set up a trust or special needs trust (for persons with a disability).
            5. Safeguard your finances through proper tax planning.
            6. Avoid family disputes by clearly setting forth your intentions.
            7. Explain, if you chose to, why you are doing certain things in your will.

In failing to make a will, you lose the opportunity to control all of the above important
matters after your death.
            
          If you already have a will, but need to make a minor change, a change after a will is made to part of the will is called a "codicil" (like an amendment). A properly drawn codicil will keep a will intact with a change only to the part specified in the codicil. This enables a person to make a change without the time and expense of drawing up a whole new will.  If you have major changes to an existing will, it is best to have an entirely new will prepared. Most wills should have a provision that any prior will is "revoked" by a more recent will. 

          If you do not have a will, or if no valid will can be located, each state, including Maryland, by statute, sets forth what happens if you die without a will. Thus, you are leaving important decisions up to the State, rather than taking control of your own affairs. 

         First, because an "estate" handled by someone, State law will determine who should serve as the Personal Representative of your estate. The Personal Representative is the person who must identify the decedent's assets and file required forms and tax returns, pay estate taxes and other expenses, pay bills and funeral expenses, and then distribute any remaining assets pursuant to Maryland law. State law cannot determine if a certain person is ready, willing or able to handle this work and the job may to to a person not suited to the task at hand.

         Second, State law will direct how your assets are distributed under the rules of "intestate succession" (without a will). There are many possible scenarios. These include a decedent who:
            1.  is married or unmarried;
            2.  has surviving children or grandchildren;
            3.  has siblings or parents; and/or  
            4. has grandparents or more distant lineal relatives.

            The rules of intestate succession set up a complicated division of assets based on the surviving family and relationship with the decedent. An overall scheme of this is set forth by the Office of the Register of Wills (http://registers.maryland.gov/main/publications/wills.html). An example of some or the rules of intestate succession are
  • If a spouse and minor child/children survive, the spouse receives only one-half of the probate assets and the child/children receive the other one-half.
  • If there are no surviving minor children but other surviving children or parents, the spouse receives the first $15,000.00 plus one-half of the balance of the estate; the remainder passes to the decedent's children, if any, otherwise to his or her parents.
  • If a spouse but no children or parents survive, the spouse receives the entire probate estate.
  • If children but no spouse survive, the children will receive everything.
  • If no relatives (brothers, sisters, nieces, nephews, cousins, etc.) survive, the assets will be distributed to the Board of Education in the jurisdiction where the estate was administered.

            The rules that apply to intestate succession are complicated and the above is a simplified
version. The actual statutes must be consulted in estate planning and checked regularly for any
changes or new requirements. This article does not attempt to cover every scenario or guarantee
what will happen if you die without a will. In addition to the Maryland Office of the Register of
Wills website, another helpful website for general information is Maryland Orphans Court,

            Because there are complicated personal, financial and legal ramifications involved, it is
advisable to hire an attorney at the outset of estate planning and to review your will regularly for
legal sufficiency and changing needs and circumstances of your surviving loved ones.

            Most people find that making a will and doing estate planning relieves a lot of underlying
stress and is something they wish they would have done sooner.



October 26, 2015

What is the Maryland SDAT and why do I care?

SDAT OVERVIEW FOR MARYLAND BUSINESSES

Anyone doing or planning to do business in Maryland should be familiar with the State Department of Assessments & Taxation ("SDAT").  As a broad overview, SDAT governs business formation and taxation.  The SDAT website,  http://www.dat.maryland.gov, provides a wealth of information and many forms and required filing information may be found there.

Register, Change, Revive or Dissolve a Business
SDAT filing services include filing forms to register a business in Maryland. These can include: Maryland Limited Liability Company, Foreign (Non-Maryland) Limited Liability Company, Stock Corporation, Tax-Exempt Nonstock Corporation, Close Corporation, and Foreign (Non-Maryland) Corporation.  SDAT also has forms to change, revive, or dissolve a business. However, a business owner should be cautioned that many considerations go into what type of business to register and what the tax and other legal ramifications are. SDAT does not provide legal advice on these issues. Instead, an experienced business attorney can offer such advice.

Look for an Existing Business or Find Out if a Business Name
 is Taken for Your New Business
SDAT also provides a search engine for business name availability. You can search to see if any other company has registered a company name you want to use. If not, you can.register the name. You can also register a trade name which is commonly known as a t/a or d/b/a name. This name is different from the actual registered entity name but one that the SDAT authorizes you to use. (For example, my business is registered as Katherine L. Taylor, P.A., but the trade name is registered as Taylor Legal.)

Obtain Information About a Business
The status of a business can be checked through SDAT. SDAT can provide certified copies of Articles of Organization or Incorporation.  It lists the "Resident Agent," (person authorized to receive service of process for a Maryland business) and the legal status of a business (whether the charter is active or forfeited). In addition, SDAT can provide specific information about a business. For instance, you may want to see if a business is legally registered in Maryland, whether it is a close corporation or a stock corporation, the purpose of the business, or if it is in good standing or forfeited.

File Personal Property Tax Returns
SDAT has forms for filing personal property tax returns. SDAT administers the valuation of annual property taxes based on the value of a business' personal property.  SDAT automatically registers corporations, limited liability companies, limited partnerships, and limited liability partnerships for this type of tax and once your business is registered, you will receive notice that you are required to file property tax returns. However, sole proprietorships and general partnerships, which are not registered with the SDAT, must obtain an SDAT registration number and file an annual business personal property form for this assessment.

Learn How the SDAT Website Can Help You!
The website is easy to navigate but can be overwhelming, content wise, for someone not familiar with the intricacies of business requirements in Maryland. While attorney advice is recommended, it is a good idea to check out and become familiar with all SDAT has to offer.