Articles Tagged with “sacramento small business attorney”

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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.

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California’s tax code includes a provision that makes it so a domestic corporation that fails to pay certain taxes can have its corporate rights suspended. If your corporation’s rights are suspended under this provision, it can affect both the corporation’s ability to bring legal actions and to appeal the outcomes of legal actions.

Causes of Action Filed by Suspended Corporations

When a corporation is suspended there is a straightforward way for it to revive its corporate rights. According to the tax code, the corporation can revive its rights by:

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Some small businesses in California are getting an extra year to comply with the requirements of the Affordable Care Act, which is also colloquially known as “Obamacare.” Radio Station 89.3 KPCC is reporting that a bill signed by Governor Brown this week will give the smallest mom and pop businesses in the state an additional year before they are required to comply with the requirements of the Act.

Requirements Under Federal Law

Federal law requires that employer-offered health insurance plans must cover essential health benefits. There are ten specific essential health benefits listed in the act. These are listed on the federal government’s website, HealthCare.gov:

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May 12 through May 16, 2014 is National Small Business Week. This very special week celebrating the entrepreneurs who drive our economy has been recognized by the President of the United States each year since 1963. The week provides an opportunity to recognize the sacrifices of those who take the brave steps to start their own business. This year’s National Small Business Week is particularly exciting, though, because new survey results have been released that show that women are performing exceptionally well as small business owners.

Women are Starting their own Businesses

The San Jose Mercury News reports that women are starting small businesses at what it calls a “torrid pace.” An American Express analysis shows that women are starting 1,288 companies each day in the United States. This is a massive jump from the 602 companies that they started each day in 2011-2012. The total number of women-owned businesses in the United States has risen by 68 percent since 1997. The same survey shows that female small business owners are starting businesses that deal predominantly with educational services, administrative services, are involved in arts and recreation, or that handle waste management.

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On September 21, 2013, California Governor Jerry Brown signed into law the California Revised Uniform Limited Liability Company Act (commonly known as the RULLCA), codified at Cal. Corp. Code §§ 17701.01-17713.13. The law is scheduled to take effect on January 1, 2014. The RULLCA will entirely replace the Beverly-Killea Limited Liability Company Act (referred to for purposes of this article as the “old law”), which has governed California limited liability companies (LLCs) since 1994. An LLC is a hybrid legal entity that has both the characteristics of a corporation and of a partnership. An LLC provides its owners — referred to as “members” — with corporate-like protection against personal liability, but it is treated as a noncorporate business organization for tax purposes.

The RULLCA will apply to all existing LLCs and LLCs formed under the laws of California after January 1, 2014, as well as to all foreign LLCs registered with the California Secretary of State as of January 1, 2014. The law revises certain rules governing the formation and operation of LLCs in the state of California. Below, we will highlight some of the significant changes promulgated by the new law.

While much of RULLCA is similar to existing law, it includes some important changes. First, while the “operating agreement” still serves as the foundational contract between LLC members, under RULLCA, the operating agreement does not need to be in writing. Additionally, unless specifically expressed in the operating agreement, an LLC will, by default, be managed by the members; if an LLC wishes to establish management by a manager or managers, it must be expressly stated in the operating agreement.

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Last week, in a victory for startups and their investors, California Governor Jerry Brown signed into law Assembly Bill No. 1412. The new law temporarily quashes a move by the state’s tax board to levy up to $120 million in back taxes and penalties on entrepreneurs and small business owners.

History

In 2008, the California legislature passed a tax exemption that allowed small-business investors in the state to exclude from their taxable income, 50 percent of their gains from the sale of qualified small-business stock. The exemption was known as the Qualified Small Business Stock exemption. Last year, the California Court of Appeals ruled that the exemption was partially unconstitutional because it “[favored] domestic corporations” and thus was facially discriminatory, in violation of the U.S. Commerce Clause. The appeal’s court ruling gave California’s Franchise Tax Board the authority to collect retroactive taxes assessed on small business owners that took the exemption in tax years 2008-2012. Some estimate that the total amount levied would have been around $120 million. Knowing that investors would be upset about the retroactive tax, California Business Defense organized a coalition of entrepreneurs, attorneys, and lawmakers, in an effort to reverse the Board’s decision to reinstate the tax.

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The issue of patent assertion entities, or patent trolls, continues to be a hot one in the startup community. The Ninth Circuit Court of Appeals defines a patent assertion entity as “a small company [that] enforces patent rights against accused infringers in an attempt to collect licensing fees, but does not manufacture products or supply services based upon the patents in question.” Several weeks ago, on August 28, we discussed a report issued by the Government Accountability Office (GAO), which raised questions about whether patent trolling is really a big problem for startups and small businesses and whether patent trolls are truly the cause of an increase in patent infringement litigation. The report seemed to conclude that other material factors were to blame for the increase in patent infringement litigation. Despite the conclusion of the GAO report, many in the startup community have declared “war” on patent trolls and now the Federal Trade Commission (FTC) has entered the fray.

The Federal Trade Commission Joins the Fray

Two weeks ago, the FTC, whose principal mission is to promote consumer protection and eliminate and prevent anti-competitive business practices, announced that it will use its subpoena power to begin a formal investigation into patent trolls, by seeking information from approximately 25 companies that buy and sell patents, and 15 other companies that manufacture devices and write software and applications. The commission unanimously approved the effort with a vote of 4-0. According to FTC chairwoman, Edith Ramirez, “[p]atents are key to innovation and competition, so it’s important for us to get a better understanding of how the companies operate.” The FTC will delve into the companies’ financial operations, including how much they earn from patent lawsuits and licensing and how the profits are disbursed to investors. The FTC hopes that the subpoenas will allow its regulators to explore the secret workings of troll operations. If the FTC uncovers illegal or questionable practices, it may choose to use its antitrust and anti-competition regulatory powers to pursue the patent assertion entities. We will have to wait and see what the investigation reveals.

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Last week, we reported about an important event for startups: Title II of the Jumpstart Our Business Startups Act or JOBS Act took effect last Monday and it lifted the ban on general solicitation, allowing startups to publicly advertise that they are seeking investments. General solicitation means “to publicly advertise the opening of an investment round in a private company by utilizing mass communication.” As reported by Forbes magazine, “under Title II of the JOBS Act, entrepreneurs will be permitted to publicly advertise that they are fundraising for their businesses, something that was previously illegal for the past 80 years under Rule 506 of Regulation D and Rule 144A of the Securities Act of 1933.” As promised, this week, we will discuss several important steps startups must take to comply with the regulations of Title II if and when they choose to generally solicit their fundraising efforts.

Under Regulation D Rule 506(c), the rule allowing for general solicitation, the first thing you must do if you are a startup choosing to engage in public fundraising or general solicitation is ensure that only accredited investors are permitted to enter the funding round. This requirement differs from private fundraising, which is regulated by Regulation D Rule 506(b), and which allows you to have in your funding round up to 35 non-accredited investors with whom you have had a pre-existing relationship.

So what is an “accredited investor?” According to Regulation D Rule 506(c), an “accredited investor” is one generally having earned $200,000 for the past two years, or $300,000 if married, or having a net worth of $1 million not including a personal residence. Of course, it is not as easy as simply asking a potential investor if they meet this threshold. The JOBS Act requires startups to verify the status of investors and provide official documentation to confirm that each investor meets the “accredited investor” threshold. Because some investors may not feel comfortable providing such personal information (including tax returns, relevant bank statements, brokerage account statements, credit reports etc.) directly to startups, the SEC has allowed third-party services to undertake this necessary due diligence. This service protects a potential investor’s proprietary information and also relieves the startup of the burden of verification. A third-party service can be a registered investment advisor, a broker-dealer, an attorney, or a certified public accountant.

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The Sarbanes-Oxley Act

The Sarbanes-Oxley Act (the “Act”) was enacted on July 30, 2002, in response to several significant corporate and accounting scandals, including Enron. The Act set new or enhanced standards for all U.S. public company boards, management, and accounting firms. Its “long title” is “[a]n Act to protect the accuracy and reliability of corporate disclosures made pursuant to the securities laws, and for other purposes.” Besides requiring top management to individually certify the accuracy of financial information, the Act protects employees of publicly traded companies from retaliation for providing information related to possible acts of fraud against shareholders.

Example of Lawsuit Involving the Sarbanes-Oxley Act

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Contracts are cancelled all of the time. While it is not ideal, it is important know the potential outcomes for a breached real estate contract. Real estate contracts are different from other types of contracts because all pieces of real estate are treated as unique. This means if you were attempting to purchase real estate and the court finds that the seller breached the contract, instead of monetary compensation for the breach you can ask for the contract to be enforced and the sale completed.

Take the case of Troy Shadian, co-owner of Real Estate Analytics, LLC (“REA”). REA attempted to purchased investment property from Theodore Tee Vallas (“Vallas”). Vallas’s father handled aspects of the Vallas properties except for signing contracts. REA negotiated with Vallas’s father and when a deal was formed, Vallas signed the agreement. REA and Vallas agreed to an escrow date but REA asked to move it on two occasions. The first time, the contract was amended to take the new escrow date into account. The second time, the date was only agreed to orally by Vallas’s father. In the time leading up to the third escrow date they regularly met and the father behaved as though the escrow extension was ok. Two weeks before escrow was supposed to close, Vallas’s father contacted everyone involved and cancelled escrow and the entire contract. This led REA to sue Vallas in superior court for specific performance of the real estate contract.

To obtain specific performance after a breach of contract, a plaintiff must generally show: (1) the inadequacy of his legal remedy; (2) an underlying contract that is both reasonable and supported by adequate consideration; (3) the existence of a mutuality of remedies; (4) contractual terms which are sufficiently definite to enable the court to know what it is to enforce; and (5) a substantial similarity of the requested performance to that promised in the contract. Under California law, there is a presumption that a monetary damage award is generally an inadequate remedy for a breach of real estate contract, and therefore courts routinely grant a plaintiff’s request for specific performance. In some cases the presumption is conclusive, but in the case of commercial real estate there is a rare possibility that damages are acceptable. But it is the responsibility of the defendant to prove it.