For many California business owners, there comes a time to consider selling. However, even if you are ready to hand over the reins, your company must also be in good shape. You can trust a California business law attorney for assistance with the planning and details, but check out some keys to ensure you get top value and make the transaction as smooth as possible. 

Organized, Accurate Financial Records

Among the most important factors to success in selling a business is being able to present accurate, streamlined financial records that are in strict compliance with generally accepted accounting principles. The best way to achieve this objective is to build your company’s financial history on a regular, continuous basis over time, rather than trying to create it just as you go to sell. A company with consistent, easily reviewable documents is more attractive to buyers because it minimizes risk – potentially leading to a higher price.

Many Californians are well-aware of the hassles of going through the probate process, which is why they are usually willing to consider estate planning alternatives that allow them to avoid it. One option you may want to learn more about is the transfer on death (TOD) deed, which is available to qualifying property owners. You should rely on a knowledgeable California estate planning attorney to provide advice tailored to your specific circumstances, but a summary of TOD deeds should be useful.

Overview of the Transfer on Death Deed Statute

The TOD deed is covered under California’s Revocable Transfer on Death Deed statute, which became effective in January 2016 and is temporary in nature. Through January 1, 2021, you can transfer residential real estate to a named beneficiary via a TOD deed without the asset going through the probate process. By executing a TOD deed in accordance with the legal requirements, you enjoy all ownership rights and retain title until your death. Upon that date, ownership transfers to your designated beneficiary by operation of law. Plus, you can revoke it at any time if you so choose.

If you are a real estate agent working as an independent contractor for a Sacramento real estate brokerage, you may be generally aware of the advantages of forming a solely owned corporation for your real estate salesBusinessFormation-1-300x230 business. Perhaps your CPA even recommended that you organize your real estate sales business as an S corporation to take advantage of favorable tax treatment. While a CPA is in the best position to advise you on your specific tax matters, you can trust a California business formation lawyer to explain why it’s important for real estate agents to consider business formation.

Payment of Commissions

As a real estate agent licensed by California Bureau of Real Estate (BRE), you are probably aware that it is unlawful to provide real estate-related commissions to an unlicensed person or entity under the California Business and Professions Code. Your first concern with forming a corporation may be that you will run afoul of this prohibition, since your entity is not recognized by BRE and  you hold your license as an individual.  Lawmakers anticipated this conundrum and resolved it, so that you can instruct your broker to pay your commission to a third party – such as your corporation.

Q. My father’s home was in his Trust and the home was sold. The money from the sale was deposited into the Trust account. In cleaning out my father’ home, we found a monthly statement for a home loan but did not know the status of the loan. We learned that there was no Deed of Trust recorded on the home Related imagewhich is why nothing showed up on the title search when the home was sold. We have tried to contact the bank to inquire as to the status of this loan and pay any remaining balance. We left messages for numerous managers at the bank but no one returns our calls.  My father died almost a year ago and we want to settle and close the Trust. What should we do?

A. As the Trustee, you are obligated to plan for payment of your father’s debts and obligations, such as income taxes, gift taxes, credit card debts, and mortgage payments. If an estate tax is due, these debts can be deducted for estate tax purposes. But, as Trustee, you are not legally required to notify your father’s creditors of his death.

Conversely, you are required to notify various state agencies that may have claims such as the State Board of Equalization, Franchise Tax Board, Department of Human Resources Development, Department of Mental Health, Department of Health Care Services and Medi-Cal.

On April 30, 2018, the California Supreme Court sent shock waves through businesses using independent Contractors.  The Court substantially narrowed the existing 30 year old rule for classifying workers as independent contractors under California wage-hour law. In Dynamex Operations West, Inc., the California Supreme Court adopted the “ABC test” which greatly restricts when a worker qualifies as an independent contractor.

Image result for photo misclassification of independent contractor
Under the ABC test, it is presumed that all workers should be classified as employees. The hiring business can show that a worker qualifies as an independent contractor only if the business can show that the worker:

A) is free from the control and direction of the hiring business in connection with the performance of the work, both under the contract for the performance of the work and in fact; and

Kristina M. Reed recently launched the Small Business Legal Clinic in partnership with California Capital Financial Development Corporation and the Women’s Business Center. The Small Business Legal Clinic has been a roaring success with a monthly full house.  Sign-up now to grab your spot for upcoming months.  The Small Business Legal Clinic is open monthly and provides free legal assistance in the following areas:

BUSINESS ORGANIZATION/ CORPORATE LAW: Choice of entity/entity formation advice, corporate filings review and advice (client responsible for all filing fees), general advice on filing requirements, advice on obtaining any necessary licenses or registrations

BUSINESS LAW: General advice

Kristina Reed is launching a small business drop-in legal clinic.  The clinic will be hosted by the Women’s Business Center and California Capital on February 9, 2018 from 9:00 a.m. to 2:00 p.m.  The clinic will provide free 45 minute consultations and legal advice on a drop-in basis to small businesses in the areas of Business Formation, Corporate Law, Business Law, Intellectual Property, Business Contracts, and Leases.

Start the year strong – ensure your business is legally compliant.  California corporation law requires all corporations and limited liability companies to comply with certain requirements to remain legally complaint.  Forgetting a deadline or missing a filing will prevent your company from legally operating.   To ensure your business stays compliant, take steps now by creating a log of all compliance dates and actions that need to be taken.  Your log should include:

  1. Annual Meetings and Minutes: Your By-Laws and California law requires all corporations to hold an annual Shareholders and Board of Directors Meeting.  These meetings should include a discussion on the condition of the company and a ratification of actions taken.  Shareholders are required to annually appoint the Board of Directors and the Board of Directors elect the officers for the next year.  Ensure that the minutes from these meetings are in writing and added to your corporate records.
  2. Update By-Laws or Operating Agreement. Each business should review its By-Laws or Operating Agreement.  Laws sometimes change and business operations evolve with the growth of the business.  Your By-Laws or Operating Agreement should remain compliant with current law and your business operations.

Law Office of Kristina M Reed selected for 2017 Sacramento Small Business Excellence Award

Sacramento,CA – November 30, 2017 — Law Office of Kristina M Reed has been selected for the 2017 Sacramento Small Business Excellence Award in the Lawyers classification by the Sacramento Small Business Excellence Award Program.

Various sources of information were gathered and analyzed to choose the winners in each category. The 2017 Sacramento Small Business Excellence Award Program focuses on quality, not quantity. Winners are determined based on the information gathered both internally by the Sacramento Small Business Excellence Award Program and data provided by third parties.

Filing the initial and the biennial (every two years) Statement of Information recently became much easier for California limited liability companies (LLCs).  California LLCs can now file their Statements of Information online.  When filing a California limited liability company Statement of Information (SOI) on-line, filers can receive a free PDF copy of the filed SOI.