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Business Law

Tuesday, December 11, 2018

Rhode Island Beer Industry Boosted Through Regulatory Changes


Beer has long been beloved by Americans and Rhode Islanders are no different. But for years, state residents have remained stiff-armed in their consumption of beer by strict regulations that limited just how much they were allowed to consume and buy at Rhode Island breweries.


Recent Changes Greatly Increase Business


Recent changes in Rhode Island law are helping to contribute to the explosive growth of the craft beer industry. According to WPRI-TV, the Rhode Island state Department of Business Regulation found that since lawmakers passed a 2016 law allowing for breweries to sell products coming from their own plants, the number of microbreweries in the state has almost quadrupled. The General Assembly had voted to allow distilleries and breweries to sell limited amounts of their products to plant visitors for purposes of off-site consumption; before then only wineries were allowed to do that.
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Monday, November 26, 2018

Considerations When Selling Your Business

Finding yourself in a position to sell your business is a monumental achievement. Establishing a business is hard work, and preparing to sell your business is no different. There are many reasons to sell your business: you may be looking to retire, take a less involved role, resolve an ownership dispute, or perhaps your business is now struggling and you are looking for a buyer to try to turn it around. Regardless of the reason that you’re selling, there are some key considerations that you need to be aware of.

Establishing a Strong Team

Selling a small business has many moving parts that will be discussed further below. As a result, it is essential that you establish a strong team to help you through the sale. The three team members that you will want to identify early on are an attorney well-versed in the sale of a company, an appraiser who can accurately value the business, and potentially a broker who will work hard to identify potential buyers. Your choice on these team members, and whether to include all three, will depend upon the complexity of the business and its potential valuation.


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Monday, November 12, 2018

An Overview of Debt Collection for Small Busines

For many small businesses, getting the sale is just the first step in the process. Many small businesses rely on extending credit to the purchasers in business to business transactions. As a business with many transactions, purchasing on credit from a seller can be ideal as processes are streamlined: purchase as necessary and then making payments within a set period of time. Given the thin cash reserves for many small businesses, having the flexibility to pay at a later date is necessary due to periodic cash flows. All in all, this system of seller-financed credit (the seller not requiring payment at the time of the sale) allows small businesses to flourish.

However, despite the agreement to pay, the purchaser may not always make good on the agreement, and as the seller providing the purchaser’s credit, you may be stuck with attempting to collect on that debt. The failure of the debtor to pay the bill can result from a few possibilities. First, the debtor could have simply forgotten to pay the bill in an administrative oversight. Second, the debtor could be illiquid or have insufficient cash on hand to pay the bill. Third, the debtor could be refusing to pay due to an issue such as nonconformity of goods (the goods received weren’t what they ordered). Finally, the debtor could be refusing to pay in bad faith in hope that you as the creditor will not attempt to collect on the debt, or would be willing to collect at a reduced amount. Regardless of which of the above is the case, you need to act to resolve the outstanding debt.


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Friday, October 19, 2018

3 Must-Ask Questions if You Are Considering Buying a Business

If you are considering buying a business, you need to ask several questions first. Getting the right information will be integral to determining whether this is a smart business decision for you. It will also help you decide how to best carry on the business after you have purchased it. You should ask the following questions before you commit to buying a company.

1. Do the financials seem sound?

The books are going to be very important if you are considering buying any type of business. As a buyer, you should be asking for bank statements and profit and loss statements. You may also want to see any contracts with employees, suppliers, or lessors. Ongoing deals with advertisers should also be examined.

Looking at the financials for specific product areas or by quarter can also be helpful. Smaller businesses may not have as detailed of records as you would like, but taking a look at what they have can be helpful. If they don’t have any records at all or the records consist of receipts in a shoebox, that can indicate a problem. Tax records may be a helpful place to start if the seller doesn’t have anything else.


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Friday, October 12, 2018

The Basics of Withholding Taxes for Employees

Getting tax withholdings right can be extremely daunting. Failure to pay the IRS or state taxing authority the correct amount could end up costing you thousands of dollars in penalties and interest. For many employers, an outright failure to pay could result in personal liability for employment taxes.

Payroll tax withholding covers more than just federal taxes. It also addresses any state tax obligations, local tax requirements, and Federal Insurance Contributions Act (FICA) Taxes. If you, as an employer, do not pay these correctly, you could have both the federal and state taxing authorities upset with you, and your employee may have to pay into the government at the end of the year. You can avoid all of these potential problems by simply ensuring that you are withholding for everything you are supposed to—in the right amount.


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Monday, October 1, 2018

Fiduciary Responsibilities and Your Business

As a business owner, you have certain responsibilities that must be fulfilled.While being a sole proprietor gives you more leeway, business owners who use any other business formation must be familiar with fiduciary responsibilities. These obligations extend to corporate officers and even managers in some situations. So, what are fiduciary responsibilities for business owners and corporate officers?

What are Fiduciary Duties?

A fiduciary duty is a legal requirement that applies to anyone who has a relationship of trust with another person or organization. While fiduciary responsibilities extend to more than just the business context, they are often associated with corporations and partnerships.


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Friday, September 21, 2018

Developing a Disciplinary Policy as an Employer

Very few employers like to discipline employees for misconduct or poor performance. However, it may be necessary to do so to prompt t workers  to fulfill their job duties appropriately or behave in a specific way. Establishing a disciplinary policy long before you need it will clarify your expectations of employees and also help you avoid legal liability for wrongful termination or similar claims. This article is a brief discussion of how to  develop a disciplinary policy that works for your business and your employees.


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Friday, August 31, 2018

Can My Employer Enforce a Covenant Not to Compete?

Many employers require their employees to sign agreements which contain covenants not to compete with the company.  The enforceability of these restrictive provisions varies from state-to-state and depends on a variety of factors. A former employee who violates an enforceable non-compete agreement may be ordered to cease competitive activity and pay damages to the former employer.  In other covenants, the restrictions may be deemed too restrictive and an undue restraint of trade.

A covenant not to compete is a promise by an employee that he or she will not compete with his or her employer for a specified period of time and/or within a particular geographic location. It may be contained within an employment agreement, or may be a separate contract. Agreements which prevent employees from competing with the employer while employed are enforceable in every jurisdiction. However, agreements which affect an employee’s conduct after employment termination are subject to stricter requirements regarding “reasonableness,” and are generally disallowed in some states, such as California which has enacted statutes against such agreements except in very narrow circumstances.


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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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