Record-Keeping Requirements for Sacramento LLCs

July 27, 2012,

Limited liability companies (or LLCs) are quickly becoming the organizational structure of choice for many Sacramento small businesses. Sacramento business attorneys are frequently contacted about how to form a limited liability company, but few business owners think that further consultation with an attorney is necessary once the business is organized and up-and-running.

What these business owners fail to realize is that, although a limited liability company offers a great deal of protection from liability suits, there are many more ways in which a business organized in this manner can be susceptible to harm. In particular, there are a host of government-mandated rules that have to be followed if the business is to be allowed to continue to operate. One such requirement is that the limited liability company maintain several categories of records.

The most important record-keeping requirement for a limited liability company is that it make its incorporation papers available for inspection. In most cases, the incorporation papers for an LLC are called 'articles of organization.' In some cases, it may be termed the 'certificate of formation.' Whatever it is called, this document essentially sets out the legal existence of the organization and the rights of the organization to operate in a particular manner. It is the same document the business owner would file with the appropriate state agency to obtain permission to operate. A copy of this document must be present and accessible at all times, in case a dispute were to arise as to the legal existence of the organization.

Limited liability companies must also maintain a complete and accurate record of any business permits and licenses it has obtained from the State of California and the individual city or town in which it operates. For example, most businesses are required to obtain a permit in order to conduct sales and services on behalf of the business. This type of permit ensures that the appropriate state agency is on notice that the business is lawfully collecting sales taxes from its customers. Another typical permit is one that differentiates the legal entity name from the name under which the entity does business. For example, "ABC, LLC" might do business as "ABC Furniture Store," and the proper permit must be on file so that this relationship can be explained.

Yet another record-keeping requirement for LLCs is an exhaustive list of all contributors to the LLC. This includes any managing members, regular members, investors, and other entities that have a stake in the business. The LLC must maintain everyone's names and contact information, past and present, in case there is a future legal dispute or an audit by the Internal Revenue Service.

This is by no means an exhaustive list of the record-keeping requirements that are expected of owner-managers of limited liability companies. The extent of record-keeping that may be required is dependent on the specific operating location of your business. If you are the owner-operator of a Sacramento limited liability company, it would be in your best interest to contact a Sacramento small business lawyer for a full explanation of your business's record-keeping requirements.

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Sacramento Merchants to Benefit from Credit Card Settlement

July 18, 2012,

Sacramento small business owners are set to join millions of other nationwide merchants in reaping the benefits of a class-action settlement. According to a recent article in the New York Times, the nation's major credit card companies have settled an antitrust claim filed by thousands of merchant plaintiffs. The good news for local Sacramento businesses is that they don't have to have been part of the lawsuit to benefit from it.

The gist of the lawsuit was the accusation that the major credit card companies were colluding with one another to prevent merchants from adding surcharges to business transactions where the customer used a credit card. In essence, merchants were having to pay fees to the credit card companies in order to be able to accept payment with those brands of credit cards, but the merchants themselves were unable to recoup the money from their customers.

On average, it costs a small business owner a few cents on the dollar to be able to accept payment in the form of a credit card transaction. Merchants sued on the theory that they should be able to pass those costs onto their customers, so as not to affect their profitability. The credit card companies argued that if the customers were forced to bear the cost of each credit card transaction, the customers would be less inclined to keep using credit cards altogether. After all, if cash or checks are free to use as payment for merchant products or services, why would customers even choose to own a credit card?

Area merchants argue that despite an initial surge in consumer prices, adding a surcharge would not permanently burden consumers. It would, instead, force the banks and the credit card companies to reduce their fees so that merchants would no longer have to place a surcharge on purchases. gavel.jpg

In short, small business attorneys view the settlement as a victory for small business owners, even if it is at the expense of consumers. Where once a small business owner had to offer a marginal discount for transactions paid in cash or check, now he or she can legitimately add a surcharge for transactions paid by credit card. The difference can be quite significant for business owners who already have slim profit margins, as it could add several cents on every dollar in business revenue.

If it is still unclear how this settlement will affect your business, consider speaking to a Sacramento small business lawyer. Your lawyer can help you determine what price adjustments you need to make to shift the costs back to the consumers and the credit card companies, while keeping your prices competitive in the market in which you operate.

Additionally, if you are a Sacramento business owner who believes you may be entitled to a share of the settlement proceeds, contact your attorney for a professional interpretation of the settlement language. In class action settlements, the methods of collecting your share can often be complicated, requiring you to jump through a number of hoops to collect what is already yours. A skilled Sacramento business attorney can take the guesswork out of the settlement distribution process.

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Sacramento Small Business ADA Compliance

July 11, 2012,

Sacramento small business attorneys routinely provide consulting services to help various enterprises comply with the Americans with Disabilities Act. The Americans with Disabilities Act (ADA) is a comprehensive federal law designed to prevent discrimination against people with physical or mental impairments. The Act is intended to ensure that these people have reasonable access to the same activities and opportunities that an unimpaired person would enjoy.

ADA (Keoni Cabral).jpgIn order to qualify as disabled under the ADA, a person's particular ailment must substantially limit one or more major life activities. These major life activities include, but may not be limited to, seeing, hearing, walking, working, learning, breathing, speaking, and others. This federal disability standard is not particularly stringent. As a result, a vast number of physical and mental impairments can qualify.

What this means for a small business owner is that, in a given day, someone with a federally-recognized disability will undoubtedly walk into your place of business. The customer may not need any special accommodation from your business in order to interact with your business. If this is the case, you as the business owner have been lucky, because the very next customer that walks in the door may need accommodation. Some accommodations are more difficult to provide than others. For instance, it may be relatively easy and inexpensive to provide a Braille menu at a restaurant, while it may be considerably harder and more expensive to install a wheelchair ramp.

The general standard for when an accommodation must be provided is as follows: Accommodations must be made: 1) if the accommodation would not create an undue burden on the business owner, and 2) if the change to business facilities is readily achievable. These phrases are interpreted on a case by case basis, but certain actions are typically viewed as readily achievable and not an undue burden on a business owner. One such action would include the removal of barriers in one's place of business so that a wheelchair or similar device could easily move about. Another might be the provision of a handicapped parking space near the primary entrance.

The law is deliberately vague to allow for a lot of latitude in what businesses should provide in terms of accommodation. The intent of the law is not to impose so many requirements that a typical business would lose its profitability in order to attain compliance. The intent of the law is to provide disabled people with enough accommodation that they are afforded reasonably similar opportunities. The trouble with ADA compliance is that doing too much can be costly, while not doing enough can be just as costly in terms of potential fines and lawsuits.

That's where a Sacramento business lawyer can be a valuable asset. Your attorney can help you determine, in light of your particular business model, what reasonable ADA accommodations should be made so as to avoid fines and liability. Using your Sacramento small business attorney as an ADA compliance consultant is almost always cheaper than fighting a lawsuit in court or cutting a check to the authorities. Take preventative measures to protect your business and to make sure everyone can enjoy your products or services.

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Kristina M. Reed Honored By SUPER LAWYERS

July 6, 2012,

Kristina M. Reed Recognized As A 2012 Rising Star In Northern California By SUPER LAWYERS

Kristina Michelle Reed has been named to the Northern California Rising Stars list as one of the top up-and-coming attorneys in Northern California for 2012. Rising Stars are 40 years of age or younger or have been in practice for 10 years or less. Each year, no more than 2.5 percent of the lawyers in the state receive this honor.

The elite list of Northern California Rising Stars, which represents more than 70 practice areas, will be published in the August 2012 issues of the Sacramento Magazine and the San Francisco Magazine and in a special issue of Northern California Super Lawyers magazine.

"This is a tremendous honor" says Kristina Reed. "Receiving this unsolicited recognition highlights my success in doing quality real estate and business work in the Northern California community."
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Kristina focuses her practice on the areas of real estate and business transactions and related litigation. Kristina's practice spans a variety of industries in which she predominantly represents commercial property owners, commercial property management companies, agents/brokers, and business owners. Kristina is known for using unique and innovative solutions to handle her clients' legal needs. She has successfully negotiated complex business deals and large commercial leases and secured favorable results for her clients in court. Kristina routinely serves as a DRC Judge Pro Tem for the El Dorado County Superior Court. She earned her J.D. from McGeorge School of Law in 2000 and her B.S. from Christopher Newport University in 1995. Kristina is admitted to practice law in California and Virginia.

Attorneys selected for inclusion in the list of Super Lawyers and Rising Stars are nominated by their peers before undergoing "rigorous" evaluations in a number of areas of "peer recognition and professional achievement," according to Super Lawyers selection process. The objective, the magazine says, is to "create a credible, comprehensive and diverse listing of outstanding attorneys." Recognition is based on surveys of approximately 52,000 active lawyers in Northern California, independent research by Super Lawyers magazine, and review and recommendation by practice-area panels of top lawyers.

Small Business Premises Liability

July 5, 2012,

California small business owners should take note that premises liability claims are on the rise in recent years. This can mean one of two things: Either business customers have become clumsier, or the likelihood of recovering damages on a premises liability suit has increased. Either way, Sacramento small business attorneys encourage small business owners to take preventative measures to ensure that their premises are safe so that their exposure to lawsuits is kept at a minimum.

The general rule in most states, including California, is that when a member of the public lawfully sets foot on property used for business operations, the business can be liable to that person for injuries he or she sustains while on the business property. These people are called business invitees because the business essentially welcomes their presence on the property so that the business may conduct a sale or provide a service. As a business owner, it is important to note that a person need not purchase a good or service to be a business invitee. Merely browsing or inquiring about a business transaction is sufficient to confer that legal status on the person.slippery (loop oh).jpg

Once a business invitee enters the property, the business or its owner/operator owes several legal duties to the invitee. Generally speaking, a business owner must take "reasonable care" to protect invitees from hazards by keeping the premises in a safe condition. This means that invitees must be kept safe from open or known hazards on the property. By contrast, a business typically has no legal duty to keep invitees safe from obvious, hidden, or unknown hazards.

However, be aware that skilled personal injury lawyers can convince a jury that you, the business owner, should have known of a particular hidden or unknown hazard if you had undertaken a reasonable inspection of the property. These are the facts on which most premises liability suits are litigated. There is no bright line rule as to what constitutes a reasonable inspection for hazards, or what steps a business can take to convince a jury that the injury was a plain and simple accident.

This is where a skilled California small business lawyer can be an invaluable ally. Premises liability consulting services are available to educate the business owner as to the best practices and procedures that demonstrate reasonable care for your business invitees.

In particular, your attorney can help you determine how best to prevent accidents in the first place. Some easy fixes include adequate lighting, warning signage, maintenance records. Additionally, your premises liability consultant can help draft employee training procedures so that your employees know the proper methods for reporting potential hazards, can find the right people to eliminate the hazard, and will document what preventative measures were taken. Finally, and most importantly, your attorney can help determine whether your insurance coverage is adequate to cover premises liability claims.

Though these procedures may be cumbersome and even expensive to implement, premises liability is an area in which an ounce of prevention can be worth a pound of cure. Let a California business attorney help you craft a proactive approach to protecting your business from liability.

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Forming a Sacramento LLC

June 26, 2012,

For those who are just starting a business, one of the primary concerns should be the organizational structure of the business. We have discussed in a previous post the many benefits of incorporating a business. For many small businesses in the Sacramento area, the Limited Liability Company (LLC) has become the organizational structure of choice.

tax calculator (Dave Dugdale).jpgIn general, any Sacramento small business attorney will vouch that the LLC structure is favored by small business owners for its ease of formation, its flexibility, and its tax and liability features. Any drawbacks to the LLC structure are typically immaterial to the small business owner, as they apply only to specific business models and businesses of a certain size.

ADVANTAGES OF THE LLC

For one, the LLC can consist of as few as one member. As a result, a sole proprietor can very easily convert his or her business into an LLC without the need for a board of directors or shareholders. The LLC can also have an unlimited amount of members. In fact, its members do not have to be actual humans. Corporations and other LLCs can be "members" of an LLC.

The principal reason for forming an LLC is for the liability protection if offers its members. When a business owner forms an LLC, the LLC becomes a separate legal entity for the purposes of suing and being sued. This means that the LLC absorbs the liability of its members who are acting within the scope of the LLC's business operations. As a result, if a member of an LLC were to commit a tort upon or breach a contract with another person or business entity, the LLC's assets are the only assets that can be recovered in a court of law. The assets of the individual members are protected, absent extraordinary circumstances.

In many cases, the managing member of the LLC can choose how the LLC is to be taxed. In some jurisdictions, the LLC is treated like a sole proprietorship or a partnership, meaning that the managing member simply pays the LLC's taxes on his or her individual tax return.

DISADVANTAGES OF THE LLC

In California, a small business attorney should inform his or her prospective clients about the limitations of forming an LLC. For example, in California, banks, insurance companies, architects, and accountants are among the business models that are forbidden from forming an LLC.

Additionally, the LLC is generally not viewed as a permanent fixture in the same way a corporation may be. As a result, the members of an LLC may have more difficulty obtaining a loan or securing investors than their incorporated counterparts.

Finally, the state filing and reporting requirements are considerably more lax for an LLC than for a corporation. This may seem like an advantage on its face, but this leniency can tend to cause problems if the LLC does not draft a formal operating agreement.

If you are unsure whether your Sacramento business would benefit from its formation as a limited liability company, consult a Sacramento business lawyer to discuss your options. You may be surprised to learn how it could help your business moving forward.

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Business Licensing in Sacramento

June 20, 2012,

As we have detailed in previous posts, owning and operating a business in Sacramento is no small feat. There are a number of financial and administrative hurdles a Sacramento business owner must navigate before opening up shop. A proper business license is among the most important of these hurdles.

open for business.gifAny Sacramento small business attorney is sure to get a host of questions about the particular business licensing requirements for operating within city limits. As a threshold matter, nearly every type of Sacramento business is required to obtain a license. It is best to assume your business falls among those that need a city license than it is to assume your business will not need a license.

All license applications are made to the City Finance Department's Revenue Division. Technically speaking, the license your business will obtain does not so much function as the City of Sacramento's permission for you to conduct business, but rather as the City's acknowledgement of your legal standing as a taxable entity. The typical business license, in fact, is called a Business Operations Tax Certificate.

In exchange for your Business Operations Tax Certificate and the City's permission to operate, your business promises to pay the City's yearly Business Operations Tax, the amount of which is determined by the type, size, and nature of your business. The Business Operations Tax is a yearly filing that must be paid on time if you wish to maintain the City's permission to operate within city limits.

The initial application process is lengthy, complicated, and often requires you to provide an exceptional amount of documentation, depending on the business. A Sacramento business lawyer will be familiar with the types of documentation necessary to obtain a Business Operations Tax Certificate, and can help you estimate how much your Business Operations Tax will be each year.

Your lawyer will also explain the possible penalties of failing to pay your Business Operations Tax. A lapse in your tax payments can result in late fees, penalties, or, at worst, the revocation of your Business Operations Tax Certificate. Remember that the Business Operations Tax is a yearly expense that must be budgeted in order to ensure the smooth operation of your business, free of fees and penalties.

Some particular types of business may require special licenses in the City of Sacramento. The necessity of these special licenses is often tied to the nature of the products or services offered at these businesses, and the degree to which the products and services are regulated by the federal and local governments. Some examples of businesses that may require special licenses include adult book, video, and clothing stores; gaming parlors such as Bingo halls, pool halls, and arcades; businesses that are publicly perceived to foster illicit activities, such as massage parlors or escort services, and others.

No matter the nature of your business, proper licensing will ensure its continued operation. Consider the aid of a Sacramento business licensing lawyer to ensure that you fulfill this critical need.

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Proposed Legislation Could Make Self-Employment Easier

June 12, 2012,

In light of some pessimistic job creation statistics in recent months, legislators have begun to look outside the box to help Californians find work. If a new bill passes the state legislature, entrepreneurial training could soon become part of California's existing job creation initiatives.

According to a recent article in The Sacramento Bee, Rep. Lois Capps, a Democrat from Santa Barbara, recently introduced what she calls the Entrepreneurial Training Improvement Act of 2012. Congresswoman Capps wishes to expand the missions of California's Workforce Investment Boards so as to include funding for entrepreneurial skills training in addition to the existing placement initiatives for traditional employment.

This state subsidized entrepreneurial training, she says, will foster the creation of new small businesses. In the end, she hopes that the creation of new small businesses could in turn lead to increased job opportunities overall. In theory, as these new businesses expand, new employees will need to pick up the slack, leading to a net increase in overall jobs.

Capps also recognizes a significant side effect of fostering the entrepreneurial spirit: innovation. Whereas in previous years, California's job placement initiatives would have tried to place creative and self-motivated workers into traditional careers, the new legislation would help promote healthy competition in the marketplace of ideas by giving the self-employed the skills they need to create innovative products and services. The entire community stands to benefit. Suppose just one of these people who would have previously been placed in a traditional job was instead able to create the next big invention or a significant improvement to an existing product or service. Congresswoman Capps would say that it is a possibility worth state funding.

capitol.jpgOpponents of the bill say that California would be subsidizing dozens of pipe dreams for every success story, and doing so when the state budget can ill afford to be wasting taxpayer money. Others opponents say that the money will almost certainly be misused for illegal activities. In all likelihood, however, some form of this bill is likely to pass the state legislature.

California small business attorneys are applauding the proposed legislation, but caution entrepreneurs not to start a business without a comprehensive plan in place. Owning and operating a business creates a number of complications. If you are just starting up, you are strongly encouraged to incorporate your California business by filing the appropriate paperwork with the appropriate state agency. A California business lawyer can help you determine which type of corporate entity is right for your new business.

Additionally, starting a business can have drastic tax implications for the business owner. If you are selling goods and services, you will need to collect local sales taxes on your products and file these taxes with the appropriate authorities. Moreover, a business must file an income tax return just like an individual does.

Your business may need to rent or purchase commercial space. If so, a California small business lawyer can help negotiate and prepare a fair lease document or help with the commercial purchase process.

Starting a business can be both exciting and scary. Make sure you have a legal professional on your side to ensure that your business venture is running properly.

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Kristina Reed Appointed to Heald College Paralegal Program Advisory Board

June 7, 2012,

Kristina Reed Appointed As A Heald College Paralegal Program Advisory Board Member

Kristina Reed has been appointed to Heald College's Paralegal Program Advisory Board. Heald College only invites select legal professionals to serve as Advisory Board members. The Advisory Board assists Heald College with the development of the paralegal program curriculum by recommending additions, revisions or removal of various academic programs. The Advisory Board is instrumental in helping Heald stay abreast of current trends as the practice of law evolves.

"I am honored" says Kristina Reed. "Being a part of a successful education system that adds well qualified professionals to the legal industry is truly amazing. I am proud to offer my experience and assistance."

Heald College was founded in 1863. Heald's mission is to prepare students for business careers by providing them with career education that focuses on practical, hands-on learning. Advice and guidance from legal professionals are the building blocks that create a strong foundation for Heald College. By collaborating with select legal professionals, Heald College is able to successfully equip its students by offering a competitive curriculum that focuses on current industry demands.

Extending a Commercial Lease in California

June 6, 2012,

A common feature of a Sacramento commercial lease is the option to extend the lease beyond its initial duration. For the successful California business owner, this is a good option to have, considering the goal of a business is to be alive and profitable for many years. lease.jpg

A commercial lease, however, can differ substantially from a residential lease, especially in the length of the lease period. Owners of commercial real estate are typically more interested than their residential counterparts in lessees who will remain in a retail space for a longer period. It is not uncommon for commercial lease periods to endure for up to 5 or 10 years.

Excited entrepreneurs are quick to rejoice in the stability that a lease period of 5 or 10 years can bring. But, what many business owners fail to consider is what will happen to their lease once the 5 or 10 year period expires.

There is no wonder why an extension provision can be overlooked. After all, a business starter cannot project the state of his or her business that far into the future. However, as discussed in a recent Smart Business article, overlooking a commercial lease extension provision in the present could have disastrous consequences in the future.

Thinking Long-Term
Consider, for example, a family-owned brick oven pizzeria. The business produces quality pizzas, strombolis, calzones, and pastas that the locals have come to love over the course of its five-year existence. The pizzeria uses a host of proprietary family recipes that make it quite distinguishable from other similar businesses in the area. As a result, about three quarters of its sales on a given day are from repeat customers.

Unfortunately, Mario, the business owner, did not carefully review the lease extension provisions when he signed the lease five years ago. The commercial property owner is fine with Mario's restaurant remaining in his shopping center. However, the property owner is demanding twice as much in rent as before. He informs Mario that if Mario is unwilling to pay twice his previous rent, he is free to look elsewhere for commercial space.

The property owner has considerable leverage over Mario. For starters, the success of Mario's business is tied to its location, and the fact that most of his revenue is generated by repeat customers in the area. Additionally, Mario's business is dependent on its authentic brick oven, which would be costly to disassemble and reassemble elsewhere. Mario is left with little choice but to agree to double the original rent, all because Mario was not careful when he reviewed and signed the original lease.

Don't be Mario. A Sacramento commercial real estate attorney can help your business protect its leasing rights by negotiating a lease extension provision that is both fair and equitable. Your California commercial lawyer will ensure that the extension provision includes neutral methods for determining future rent, fair extension notice deadlines, and impartial dispute resolution procedures. Armed with these protections, you can ensure that your commercial lease does not turn into a ticking time bomb several successful years from now.

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What Should your Commercial Lease Include?

May 30, 2012,

California small business owners routinely sign their commercial leases without any legal guidance. However, any Sacramento small business attorney would strongly caution against it. The modern small business lease, depending on the space to be leased, may include a host of complicating factors you may not encounter in a typical residential lease.

SPELL IT OUT

Your leased space is your business's most important asset. It connects your products and services with your potential customers. What many business tenants fail to think about, however, is what the lease includes beyond the actual square footage to be leased.

For example, a business owner will want to be exceptionally clear about their retail space's access to things like common walkways, parking, and utility services. Additionally, a business owner may want to be clear about his or her right to post advertisements for the business in the common areas of a retail center. Whatever the circumstances, it is imperative for the lease to provide an accurate and detailed description of the property to be leased, including the condition of the structure and anything within the structure that is to be included with the space.

strip mall.jpgIn addition to the physical and artificial boundaries, you will want to be clear about your business's responsibility for utilities like phone, internet, electricity, and water. In some cases, business owners mistakenly agree to take on responsibility for certain maintenance, insurance costs, and property taxes. A California small business lawyer can make sure the language accurately reflects your understanding and expectations for the property, and can protect your rights against an over-imposing landlord.

THINK BEYOND THE SPACE

Renting business space differs from renting residential space primarily because business space is designed to invite members of the public onto the premises. As a result of this public access, a number of federal regulations can apply to your ability to use the space to conduct business. For example, the Americans With Disabilities Acts (ADA) prescribes certain standards for access to retail environments for those with impaired mobility. If the lease is not specific as to the landlord's responsibility for the cost of ADA compliance measures, your business could be on the hook for those costs. Failure to comply may restrict the free operation of your business or halt all business operations entirely until compliance is achieved.

Also, your business may want to negotiate with the landlord for additional rights and protections. For example, if your business is to open its doors in a strip mall or shopping center, you may want to negotiate a provision in which the landlord promises not to rent any other nearby space to a competitor of yours.

Finally, you will want to ensure that the zoning regulations that attach to the leased property will not interfere with your business practices. If the property is not already zoned for your brand of business, you will want the lease to include provisions about who is responsible for the cost and effort of obtaining the proper zoning licenses.

The world of commercial leasing can be difficult to navigate. A Sacramento commercial real estate attorney can help a business owner protect his or her rights by negotiating and drafting a lease that is fair to both your business and your landlord.

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Transferring Property in Sacramento

May 24, 2012,

Sacramento real estate attorneys know that the transfer of property in California can be a complex process. Nonetheless, many people choose to prepare much of the paperwork by themselves. Below is an overview of the process and some of the common pitfalls a do-it-yourselfer might encounter without the aid of an experienced legal professional.house and money.jpg

Most people are so preoccupied with the financial aspects of buying or selling property that the actual mechanics of the transfer get overlooked. Especially in light of the mortgage crisis, those with less-than-stellar credit often are finding banks that are much less willing to lend. If they are lending, many banks are doing so at higher interest rates if they view the borrower to be a credit risk. The first pitfall to avoid in transferring title in real estate is to think that the process is over once the capital is secured.

The actual transfer of real estate is a highly technical process which can be made even more so if the real estate has unique features or the improvements upon the real estate are substantial. The official mechanism of real estate transfer in California is a "quitclaim deed". Quitclaim deeds are, in essence, legal contracts signed in the presence of a notary in which the transferor (the "grantor") grants the property described to the transferee (the "grantee"). The most crucial - and most overlooked - portion of this document is the description of the property and its improvements.

The reason the description is so crucial to the transfer is that a quitclaim deed must be absolutely precise in what tangible and intangible things are to be transferred. Without this precision, the grantor and grantee run the risk of creating a situation in which the parties and the State are unsure of who actually holds title to the item. Title can be described as the right to use - and exclude others from - an item of property. If the description of an item of property is vague or ambiguous on a quitclaim deed, its ownership may later be disputed.

In the case of real property rather than tangible property, the grantor and grantee must be exceptionally careful that the description of the property includes the city, county, and state in which the parcel sits. Additionally, a well written description of real property will include some language to delineate the parcel from adjacent parcels, as well as the access rights to any natural resources within the property. For example, the quitclaim deed should accurately describe any water access rights or restrictions, as well as zoning prohibitions that may affect the value of the property, among other things.

The quitclaim deed also contains important tax information related to the transfer. The taxed amount is tied to the value of the property. In some cases, certain transfers may be exempt from this taxation.

If the prospect of self-preparing such an important legal document seems daunting, consider contacting a California real estate lawyer who is familiar with the complex legal language needed to secure the transfer. Property transfers happen infrequently for most people. In our area a Sacramento real estate attorney will be more familiar with the process and better equipped to anticipate any pitfalls.

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Selling Your Business in Sacramento

May 17, 2012,

for sale.jpg California business owners may have a number of different reasons they want to sell their business. Among the most common reasons are retirement, change of career, and change of life circumstances. Others make a living starting up small businesses and then selling them a short time later for a profit. Whatever the reason, a California small business attorney is often a valuable asset to guide the process.

In our area, one thing your Sacramento business lawyer will tell you is to be prepared for a lengthy process. The primary reason the process is lengthy is that businesses are living, breathing entities. The sale of a business is unlike selling a tangible object, or even something like real estate. In fact, the sale of a business can actually include tangible objects like equipment and inventory and real estate in the form of retail space.

This is not, however, what makes a business difficult to value. The particular problem with selling a business is that the value of the business is also tied to its current customers and its ability to bring in new customers. These factors determine a business's ability to generate profit. This concept is called the goodwill of a business. Not surprisingly, the goodwill of a business is an ever-changing and shapeless figure.

Your attorney can connect you with financial professionals whose expertise is examining businesses to determine their value. These professionals are skilled at compiling figures on the value of the business's inventory, equipment, property, and goodwill. When these factors are combined, a Sacramento commercial lawyer can utilize the information to prepare the sale documents.

The preparation of these documents is a matter best left to an experienced professional. One reason is that the sale of a business can create sensitivities among certain groups. Employees may feel wary about the sale of a business due to their perception that their job may be in jeopardy. Vendors and business partners may also be wary of the sale of a business due to their perception that their revenue streams and business relationships may be jeopardized. The best way to alleviate these sensitivities is to entrust the business transaction process with someone who recognizes the value of confidentiality. Legal professionals are accustomed to protecting your confidentiality, and can take proactive measures to make sure your decision to sell is private and not panic-inducing.

Your attorney can also help you decide how to structure the sale. Some business sales occur in one lump sum. Others occur once a prospective buyer secures a loan, not unlike a mortgage for a home. Other deals are done in installments over a period of time. It is in your best interest to consult an attorney with ties to the location of your business. This way, your attorney can draw on the local knowledge of business practices and the particular business transaction laws within your jurisdiction.

The sale of a business can be a daunting and stressful prospect. You worked hard to build your business. Make sure its transition to new ownership is in good hands.

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May 9, 2012,

Should my Sacramento business purchase or lease commercial property?

contract.jpg Sacramento commercial lawyers would all agree that there is no one-size-fits-all solution. Every business model has unique location considerations, seeks different types of clientele, and has varying amounts of capital with which to work. A Sacramento commercial real estate attorney may be the best resource for determining what it best for your particular business model.

For those just starting a business, leasing may be the only option since there may not be enough initial capital to post a down payment on a commercial space and to maintain a mortgage thereafter. For those with enough capital to choose between purchasing and leasing, however, many Sacramento small business attorneys will tell you that leasing may actually be the more attractive option.

WHY SHOULD I LEASE?

The primary benefit of leasing commercial property is the flexibility it affords the business owner. Leases are most often written for one-year terms, with some ranging from as little as six months to two or more years. Regardless of the lease term, leasing typically locks in the business owner to a particular commercial property site for a shorter period than ownership of the property would. The advantages of this flexibility are particularly appealing to those who are just starting their business, as a lease is far less risky than the purchase of commercial property in the event that the business does not reach its desired profit potential. Further, the flexibility of leasing keeps the business owner from becoming too invested in a property in the event the business wishes to expand. It is easier to finish a short lease term and then move on to lease a bigger space than it is to sell an existing space and purchase a newer, bigger one.

The other advantages of leasing commercial space are similar to the advantages of leasing residential space. Business owners who elect to lease are typically not responsible for the everyday maintenance of the space or its surrounding areas. If something happens beyond a commercial tenant's control, many find comfort in the notion that a property manager is responsible. From a purely financial perspective, lease rates more closely mirror the fair market value of the commercial property at a given time, whereas those who purchase commercial property do so at the fair market value that existed during the purchase. As a result, those businesses who have been renting during the recession have often benefitted from lower lease rates, while owners of commercial property have seen their property values plummet.

WHY SHOULD I OWN?

The foregoing advantages of leasing should not entirely eliminate the option of ownership. The primary advantage of owning commercial property is the freedom to use the property as the business sees fit. Commercial leases often contain "use clauses" that can limit what activities are permissible in the leased space. For some types of businesses, the inability to engage in certain activities within the leased premises can really inhibit the growth of the business.

Owning one's own commercial space also enables the business to accumulate wealth in the form of equity in the property, not unlike a homeowner accumulates equity by paying into their mortgage. Some business owners insist that it is wasteful to "throw away" lease payments without acquiring some form of permanent interest in the property.

As mentioned before, the decision to rent or own commercial property is a matter of personal preference and opportunity. Your Sacramento commercial real estate lawyer can help you determine which option is right for your Sacramento business.

New Workplace Break Regulations Take Effect

May 2, 2012,


California Supreme Court mandates employee meal and rest breaks

On April 12, 2012, the California Supreme Court handed down a decision in Brinker Restaurant Corp. v. Superior Court (Hohnbaum), No. S166350 that may affect California business law. Brinker Restaurant Corporation, a subsidiary of Brinker International, Inc. and its related entities, own and operate a number of restaurant chains, including Chili's Grill and Bar, Maggiano's Little Italy, and Romano's Macaroni Grill.

State law requires California employers to provide employees with meal breaks and rest breaks during the workday pursuant to California Labor Code 226.7 and 512, and Industrial Welfare Commission (IWC) Wage Order No. 5-2001. The case originated when a class of restaurant workers filed suit, claiming that their employer, Brinker Restaurant Corp., 1) failed to provide meal breaks or premium wages in lieu of meal breaks, 2) failed to provide rest breaks or premium wages in lieu of rest breaks, 3) required employees to perform work duties off the clock during meal and rest breaks. Additionally, the plaintiffs contended that the employers deliberately altered the employees' time sheets in order to hide and misrepresent work time and break time. Finally, the plaintiffs objected to Brinker's alleged practice of requiring employees to take an early lunch soon after their shift began and then to work 6 to 8+ hours without a meal break thereafter.

coffee mugh (DeaPeaJay).jpgWhat must employers provide now?

The Court's decision represents a dramatic shift in California commercial law and employment rules. The following is a summary of the new provisions:

MEAL BREAKS

At designated meal breaks, the employer MUST relieve the employee of their duty for at least thirty (30) minutes. The employee may use the break time for any purpose he or she desires. The employer is NOT responsible for ensuring that the employee uses the time for a meal, or that the employee does not engage in any work. The meal break must occur after no more than five hours of work. A second meal break must occur after no more than ten hours of work.

REST BREAKS

Employees are entitled to a rest break of ten minutes for every shift of 3.5 to 6 hours in length. Twenty minutes is to be allotted for any shift of 6 to 10 hours in length. For shifts of 10 hours or more, thirty minutes must be allotted for rest breaks. Rest breaks are distinct from meal breaks.

How do I make sure my business complies with these regulations?

In our area, a Sacramento business law attorney can examine your workplace policies and even redraft the policies in accordance with the new law. Your attorney can also ensure that your policies are conspicuously available to your employees. It may be prudent to have your Sacramento business lawyer prepare documents for your employees to sign that acknowledge their understanding of your new business practices.

It is important to note that the law applies to out-of-state businesses that employ workers in the State of California. Out-of-state employers should consider the expertise of local legal professionals to make sure that their California employees enjoy the benefits of this new law and that their business remains in compliance.

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