Tax matters (among others, subject to IRS and state regulation)

Tax ramifications must be contemplated when structuring a business, in acquisitions, mergers, divestitures, and obviously during audits and disputes. Matters concerning income tax, sales tax, real estate tax, capital gains tax, to name a few, are common place. Without careful tax planning (and sometimes even after tax planning) the IRS or a state department of revenue may claim a business failed to pay the actual taxes owed based on a variety of reasons, despite good faith efforts. For example, the IRS may allege that a company or its owners reported losses based on a claimed basis which it believes has not been substantiated. Rules governing basis vary on a variety of factors such as the type of entity your own. In other situations, a state department of revenue may claim a business underpaid sales taxes despite always having used an accountant for its reporting. Such cases can even give way to potential claims against an accountant. In some cases, a department of revenue can claim that business owners failed to report proper taxes based on the idea that a 'common enterprise' exists among a number of their separate business entities. Therefore, both the planning and, if necessary, the audit stage of tax matters require detailed analysis, precision and strategy.

Employment Matters (among others, subject to DOL, IRS and state regulation)

Employment of wage based employees is regulated both on the state and federal level. Company policies concerning which employees can be paid by salary versus those that are paid by wage must be determined and set based on regulations. Policies concerning insurance, employee sick-leave, pregnancy, etc. must also be carefully considered. Policies concerning employee timekeeping and overtime must be determined. Steps must be taken to set policies concerning sexual harassment and discrimination. Positions designated as employees versus independent contractors must be carefully contemplated. Governmental investigations concerning misclassification of wage based employees as independent contractors, minimum wage and overtime compensation issues can often lead to investigation and disputes which must be diligently addressed.     

Trademark Registration & Office Actions (subject to the USPTO and state regulation)

Of the most valuable assets of any business are its trademarks: its name, its logo, or even its trade dress: its product packaging, design, or interior decor. In some instances companies have asserted ownership over something as fundamental as a color in their industry. In order to maximize value and protection over this valuable assets trademarks should be registered with the United States Patent and Trademark Office. At times, during registration, the USPTO may issue an “office action” either denying the trademark or requiring additional documentation concerning the application. Both the application process as well as office actions require close attention and strategic planning. At times, applications can be faced with challenges from other companies urging the USPTO to reject the application. Other times, a third-party may file a complaint with the USPTO claiming that a previously registered trademark was obtained under false pretenses. These also require planned responses.  


Franchising (among others, subject to FTC and state regulation)

Franchising is regulated both by federal and state government agencies. Therefore, a great deal of formalities must be observed and complied with in order to implement such a business model. Under the rules, a great deal of disclosures must be made to the potential franchisee. Failure to observe these regulations can lead to very serious monetary penalties and business problems in the future. When the required amount of care and diligence is shown, franchising may be an excellent way to increase the revenue and value of a business. Some businesses can drastically increase their revenue by changing their business model to offer franchising. If a business has a successful business model and a good brand, other businesses may see good value in paying for the rights to adopt that business model and brand as their own. The franchisor can continue to stay in the same line of business while charging others for the chance to use its own intellectual property. Not only does this provide for multiple other sources of revenue, but also allows the brand to grow in fame and value much quicker than it would without franchising. 

A relevant area of concern is that parties commonly enter into a business relationship without even being aware that their relationship is actually franchise, subject to all the relevant regulations - the “accidental franchise.” Actually, it takes very little to fall into this unplanned situation. This can make the accidental-franchisor the target of government investigation. At times, the accidental franchisee can use the lack of compliance to void the entire relationship and its own liability to the other party. Accidental franchising can be avoided in advance with careful planning and can be remedied with strategic diligence.


Procuring Investment through Equity (among others, subject to SEC, IRS and state regulation)

A business may determine that outside investment is necessary or appropriate to facilitate growth or reduce debt. There may be third-parties who are interested in acquiring equity as well. However, businesses must be careful in selling equity to outsiders as this activity is regulated by both federal and state laws. Correspondence concerning the sale can be tantamount to solicitation which is regulated. Both those interested in buying in and the company itself must be vigilant about making the proper disclosures to avoid potential pitfalls that may easily arise without diligence. 


Hiring Foreign Employees & Procuring Foreign Investment (among others, subject to CIS, DOJ, SEC regulation)

At times a company may need a specialized expert in an industry from overseas. For example, if a company uses or sells specialized technology purchased from a foreign country, an engineer who is well-versed with that technology may greatly benefit the company. In another example, a non-US company with a US subsidiary may decide it needs to send one of its key employees to the US for a number of years of head up a certain aspect of its operations because of the existing internal company know-how of that individual. In other instances, a foreign individual may be ready and willing to contribute significant capital to a US entity, becoming an owner as well as a key employee. A range of visas exist for such situations and the best option will need to be determined. Furthermore, the circumstances of the employment and investment will need to conform to fit the requirements of the selected visa. Please click here to learn more about our immigration related services.

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