September 2, 2014
March 11, 2014
Whether you decide to sell, retire, or leave your business due to health reasons, it is important that you plan for the day you will no longer be able to run your company. Succession planning is a very important part of business planning and is something that you should address when you first go into business. Small businesses have unique challenges if one of the owners or managing partners can no longer fulfill his or her duties running the business, and this is especially true for businesses that have only one owner (sole proprietors) who are responsible for making all business decisions. Simple transactions such as paying bills or payroll may not be able to be done without a court order.
Unfortunately, succession planning is not often a priority among small business owners. A survey conducted by Zen Wealth found that sixty percent of small business owners do not have a succession plan in place.
What this means for your business is that the details of how your business is run could be at risk at any time. Do you even know who will inherit the business? That’s the person who’ll be making all of the important decisions about how it operates—can you afford to leave that role open to chance?
A succession (or exit) plan outlines who will take over when the owner leaves, and also identifies the best way for the owner to exit the business. Creating a succession plan will help you implement factors far in advance that will future-proof your business for sale or transfer of ownership when the time comes.
Here are some typical problems that a succession plan can address:
§ the business owner “is” the business, leaving the company unable to function without the owner
§ the business is reliant on a few large clients with an undiversified revenue stream
§ there is a non-transferable lease on business properties
All these things are correctable if they are caught beforehand.
A succession plan also allows you and your successor time to prepare for the transfer of ownership. Your successor will need to go through certain training before they’ll be ready to take over your business. The time you’ll need for adequate training will depend on the complexity of your business. It’s best to achieve this training over a gradual period of time, so that you’re available to help your successor make the transition. You should not put off this preparation until the last minute.
Lastly, having a succession plan in place is important because you need to know how much your business is worth if you intend to sell your business, which means you have to identify the factors that determine your business’ fair value. You should be able to document the changes in your business’ revenue over time, thus showing past growth and profitability, which can then be used as estimates for future earnings. The U.S. Small Business Administration (SBA) offers resources to help with your succession planning. If in doubt, it never hurts to consult with an attorney during this planning process.
February 28, 2014
Real Estate and Boundary Disputes
Q. What should I do if a neighbor’s structure encroaches my property?
A. As the saying goes, fences make great neighbors. But sometimes fences (or sheds, home additions, driveways, patios, etc.) cause significant disputes when one owner believes the other owner’s structure has encroached onto their own property.
Before you get into a dispute with your neighbor, check your deed, property stakes and any survey to locate descriptions of your property lines. If, indeed, it seems the structure is encroaching your land, try and talk to your neighbor first.
If an actual dispute exists, your next step should be to hire a surveyor to prepare a boundary survey or both properties — at a cost of several hundred dollars or more per lot — to draw up a new survey of the land. It’s not uncommon for deeds that are decades or more old to be less than accurate; a new survey will set the record straight for you both. Whether you pay for the survey or split the cost is an arrangement you have to make with your neighbor.
In some cases, the property lines will be so different from what you thought was yours, you and your neighbor may mutually agree upon where your property begins and his ends. With the help of a real estate lawyer, you can draw up and sign a new deeds which redistribute the property boundaries. This can be problematic, however, if the property is in a subdivision. Also, for those with a mortgage, it’s important that you get the mortgage holder’s approval before the new deed can become official.
As a last resort, if you feel confident that your property is being encroached upon, you can file a claim in court and ask a judge to decide the boundaries—but the more you involve the legal system, the more cost you will incur.
Whatever course you take, however, there are some important points to remember: Don’t remain quiet. If you let the construction go forward and you never speak to your neighbor about the discrepancy, then it’s likely that if you ever do want to fight the boundary lines, a court of law will assume you gave up rights to the land long ago. What’s more, if you go to sell your house, a title company may refuse to issue a title to the home because your neighbor’s structure is on your property
Additionally, if you and your neighbor do agree on new deeds, sign them and get them filed in your county’s land records office. A deed that isn’t signed and/or properly filed really isn’t worth the paper it’s written on.
February 13, 2014
CEF Meeting with Zoning Board - Chapeldate Presbyterian Church
2600 Marriottsville Rd., Marriottsville
3/5/14 at 7PM
February 1, 2014
One of the major differences between independent contractors and employees are that independent contractors are responsible for paying their own taxes from their earnings. The hiring company is not responsible for withholding state and federal taxes, Social Security or Medicare taxes for a contractor or vendor. Employers are responsible for paying the income of their employees as well as withholding all taxes and offering healthcare benefits under law.
The IRS has a 20 point checklist to help businesses properly classify their workers as either independent contractors or employees. Here are the major points used to classify independent contractors:
- Who has control? A worker is an employee if the person for whom he works has the right to direct and control him concerning when and where to do the work. The employer need not actually exercise control; it is sufficient that he has the right to do so.
- Right to fire. An employee can be fired by an employer. An independent contractor cannot be fired so long as he or she produces a result that meets the specifications of the contract.
- Training. An employee may be trained to perform services in a particular manner. However, independent contractors ordinarily use their own methods and receive no training from the employer.
- Set hours of work. Workers for whom you set specific hours of work are more likely to be employees. Independent contractors, on the other hand, usually establish their own work hours.
Misclassifying an employee as an independent contractor can result in serious fines and penalties by the IRS. 1099 refers to the form companies issue to independent contractors for tax purposes. It’s very important you aren’t issuing a 1099 designation to someone who should be classified as an employee and receive W-2 forms instead, which documents how much money was withheld throughout the year for federal, state, Social Security and Medicare taxes. To help you determine the right classification for your workers, consult the complete IRS checklist. If you’re still unsure, it might be best to consult an accountant or a business attorney who specializes in small business and corporate laws.