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Business Law

Friday, August 17, 2018

Family Business: Preserving Your Legacy for Generations to Come

Your family-owned business is not just one of your most significant assets, it is also your legacy. Both must be protected by implementing a transition plan to arrange for transfer to your children or other loved ones upon your retirement or death.

More than 70 percent of family businesses do not survive the transition to the next generation. Ensuring your family does not fall victim to the same fate requires a unique combination of proper estate and tax planning, business acumen and common-sense communication with those closest to you. Below are some steps you can take today to make sure your family business continues from generation to generation.


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Friday, August 3, 2018

Where to Incorporate Your Small Business

Should you incorporate your business in your home state? What about Delaware or Nevada, long known as havens for corporate entities? This decision should not be taken lightly because incorporating your business in a particular state will determine, to a significant extent, the laws that will apply to your business.

Often times, the best choice for corporate jurisdiction is the home state where your business is located.  There are several reasons for this. First, filing in a different state will not absolve you of the obligation to pay corporate taxes and comply with filing requirements in the state where your corporation has its operations. For example, if the corporation is located in California it will be subject to California fees and taxes, either as a domestic California Corporationor as a “foreign corporation” doing business in California. Additionally, if you are incorporated in a state other than where you are physically located, you will likely incur another set of filing fees and expenses for a registered agent who is physically located in the state of incorporation.


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Friday, July 27, 2018

Buying Out a Partner When There Is No Shareholders’ Agreement in Place

Like most relationships, business partnerships frequently experience highs and lows, with periods of both prosperity and turmoil. When ongoing disagreements cannot be resolved, or one partner decides to leave the business, the remaining partner(s) often seeks to buy out the shares of the departing party. If there is no shareholders’ agreement in place, and the partners are in agreement, the dissolution of the partnership can usually be accomplished with the help of a qualified business law attorney and a CPA.

If the business is a corporation, the purchase would likely be structured as a stock sale. In essence, one party would purchase the exiting partner’s shares of stock in the corporation, in exchange for the purchase price. The purchase price could either be paid up front at the closing, or some, or even all, could be paid to him over a period of time. If any of the purchase price is to be paid over a period of time there normally would be a promissory note that the remaining partner(s) would sign documenting that the departing partner is owed the money, and providing for payment terms. These payment terms would include the interest rate, number of payments, and frequency of payments. Typically the remaining partner(s) stock in the company would be pledged as security for the repayment on the note. If the business is not a corporation the steps would be similar but slightly different.


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Friday, July 13, 2018

More Opportunities for Businesses to Solicit Investors but What Are the Legal Challenges and Risks?

Since the 1930s, businesses wishing to secure investment dollars have faced regulations banning them from appealing directly to the public via advertising. Instead, businesses have only been allowed to pursue investment funds via prescribed channels and from wealthy individuals. The reasoning behind the ban was that if the general public were subjected to direct appeals for investment by hedge funds, venture capitalists, start-ups and others, the rate of financial fraud would increase.

The investment advertising ban has long been considered an obstacle to entrepreneurship; it has been identified as a drag on growth, employment and businesses’ ability to raise funds, as well as an impediment to everyday investors’ awareness of legitimate and promising investment opportunities.


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Friday, July 6, 2018

Protecting Your Business through Tactical Electronic Evidence Management

Email, intra-office messaging and digital image transference are hardly new concepts, however few business owners realize the long-term implications of this style of free-flowing communication, particularly in light of litigation and e-discovery requests. If you are a business owner either engaged in litigation or preparing for possible conflict in the future, one of the best strategies for your company is to implement and maintain an electronic evidence policy for employees. Too often, damaging information, accidental concessions or discriminatory language is casually exchanged between two employees -- believing to be engaged in a private chat -- only to be uncovered by a sweeping e-discovery request from opposing counsel. To avoid this result and protect your business from unnecessary exposure to liability, consider meeting with a business litigation lawyer about your company’s electronic information policies.

Electronically Stored Information and Litigation Holds


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Friday, June 29, 2018

Does My Business Need a Registered Agent?

A registered agent is someone that you as a business owner designate to accept legal papers if your company is sued or named in any type of administrative agency case. If your business is legally established within a state in which you don’t maintain a physical presence, you are often required to appoint a registered agent that is physically located within its borders

A registered agent can be an individual or a corporation. Many small businesses simply list one of the owners as the registered agent, if any of them reside in the state in which the business is formed. In situations where none of the owners are residents of the state in which the business is formed, there are a number of options. Some attorneys are willing to serve as the registered agent for their clients’ businesses and may do so for no additional fee, provided that the attorney herself is a resident. There are also companies that will serve as the registered agent for an annual fee. Generally, you must name your company’s registered agent when you file your articles of formation with the appropriate government agency (in most states, the Department of State).



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Monday, June 11, 2018

Protect Your New Business with Preventative Legal Planning

Most Legal Issues Can Be Resolved Before They Even Arise. Here’s How.

Most people are familiar with the idea of “preventative” legal action. The term refers to anticipating legal issues and conflicts and working to prevent them, rather than solving them or “winning” them once they occur. Companies can benefit from implementing preventative legal strategies as this approach is often less expensive than litigation, mediation, arbitration, and local, state and federal fines.


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Friday, June 1, 2018

Family Businesses: Simple Steps to Avoid Common Pitfalls

If you have a family business or are thinking about starting one, kudos to you! There are few better ways to create tradition, meaning and bonds within a family, and a family business can be a gratifying way by which to build wealth.

Family enterprises, however, can bring conflict, legal challenges and financial distress when simple preventative steps are not taken. A business law attorney can assist you with the following issues commonly faced by family businesses:

  • The absence of a succession plan. If the leader of a business dies, sells or becomes incapacitated, the business he or she leaves behind will appoint a leader, somehow, by necessity. The succession process at that point, however, will likely be complicated, and the result may not be optimal for the business or your family. An attorney can assist in identifying all of your options, and help you select one that works best for you and your business. For instance, if the business belongs exclusively to you, you can simply leave it to the person you feel should own and run it. If the business is professional in nature, such as a medical or legal practice, you can identify an outside buyer/successor and prepare him or her using a process agreeable to both of you. If the business belongs to two or more family members or other individuals, a contractual succession plan can be devised, lessening stress both now and at the time the succession occurs.


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Friday, May 25, 2018

Securities Sales: When Do You Have to Register a Transaction?

SEC Registration Exemptions Under Regulation S

Following the stock market collapse of 1929, Congress tightened restrictions on businesses’ activities related to the sale of securities. A key provision of the Securities Act of 1933 is the requirement that, with few exceptions, securities issuers must register securities transfers with the SEC. Now, seven decades later, the strict registration requirements of the Securities Act continue to apply.

An exception to securities registration requirements is Regulation S which allows securities issuers to solicit and sell to investors outside of the U.S. without registering the sale with the SEC. But how does the SEC determine when a securities sale qualifies as occurring fully outside of the U.S.? And how do securities issuers ensure they are in compliance with the Securities Act when choosing not to register a securities sale under Regulation S?


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Friday, May 18, 2018

Terminating a Franchise Agreement

Buying a franchise can be a great opportunity for an entrepreneur to start a business using a successful operational structure of a proven model. Despite all the resources that a franchise provides, not all are successful. Unfortunately, with most franchises, you can’t just shut your doors and cut your losses; getting out of a franchise agreement can be difficult, leaving a once hopeful entrepreneur stuck in a business that may not be profitable or enjoyable to operate.

If you are looking for a way out of a franchise agreement, it’s absolutely imperative that you contact an attorney who has experience with franchise law and understands the many complexities of the franchisor-franchisee relationship. In determining whether you can terminate the agreement, you will need to carefully review the contract which should clearly outline the circumstances which must be met for either party to terminate it. If the franchisor has not met all of its duties, such as failing to send you the marketing plan and materials for the spring line, you will likely have a much stronger case for ending the relationship. Be sure to document any shortcomings or errors made by your franchisor and keep records of any correspondence which have expressed these concerns.


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Friday, May 4, 2018

Protecting Your Business with the Right Insurance

Starting a business is the dream of a lifetime for many Americans. While most entrepreneurs prefer to focus on the aspects of the business that will result in profit, it’s equally important to consider what will happen in the event of an emergency, injury or even sudden death. In preparing for the “worst case scenario”, insurance coverage must be carefully considered. Selecting insurance policies can be challenging; there are dozens of options and the necessity of some will depend largely on the type of business, the number of employees (if any) and the physical location(s).

To help you get started with your planning, we’ve compiled a quick checklist of different types of insurance that all business owners should consider:

General Liability Insurance – Regardless of the type of business or where it is located (even if it is in your home office), all owners should purchase this type of insurance which provides protection if you or your employees cause bodily harm or property damage to a third party. This type of insurance can protect against a customer who brings legal action after taking a sip of hot tea that you served in the reception area or even a vendor who was injured when an item from a closet shelf fell on him during a delivery to your office.


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The Law Offices of Richard Palumbo, LLC assists clients with Real Estate Law, Business Law, Probate, Evictions for Landlords and Property Damage matters in Rhode Island including Cranston, Warwick, Coventry, Johnston, Providence, Pawtucket, Central Falls and all areas throughout RI.



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