Lambros Law Office LLC

Do You Have a Business Succession Plan?

It’s often said that small business is the backbone of our economy. It’s important then to keep companies healthy and operating long after their founders have retired or passed away. Then why have only about 40% of business owners put a business succession plan in place? Ask yourself this question, “Do you have a business succession plan?”

Elements of a business succession plan?

Business succession plans include strategies for continuation of leadership and even ownership roles after an owner or leader has left the company. The details of the plan vary depending on the type of company involved. For example, a family business might groom the younger generation to take over. A large corporation may involve the CEO, board of directors, and shareholders in the planning process.

• Continued management of the company is an issue that may take years to plan. Future leaders may be found within the ranks of the company and trained. In a family owned business, younger generations may start at the bottom rungs and work their way up with an eye toward running the company someday. No matter how it happens, putting good leaders in place is an important part of a business succession plan.
• Sometimes the value of the business comes into play. This is especially true when a business owner or his estate want to cash out or sell their business interest. Owners can simply enter into an agreement about the valuation or can hire an appraisal expert, like a certified public accountant. When a company offers publicly-traded stock, the stock’s market value may be used to determine the value of an owner’s business interest.
• When it comes time to buy out an owner’s interest, companies may not have enough capital on hand. That’s why business owners and leaders typically buy insurance policies that name the company as the beneficiary. When an owner dies, the company uses the insurance payout to buy his or her business interests.

How can I put together a business succession plan?

Analyzing a business and putting legal documents in place is too important to do incorrectly. At the Lambros Law Office, our attorneys use their business law experience to help clients with business questions and concerns. To schedule an appointment, call 401-383-9899. You may also use our convenient Contact Form to let us you know are ready to get started. We assist clients throughout Rhode Island, including Cranston, Providence, and Warwick.

Family Business: Is It Time to Sell?

As Roger looked around his family reunion, he was pleased to see his children, grandchildren, and greatgrandchildren. He wondered about their futures – and the future of the business his family had operated for generations. Would the younger members of the family be able to continue running the family business or is it time to sell?

A Few Reasons to Sell Your Family Business

The decision to sell the family business may be difficult on financial levels, as well as emotional. Considering the following questions might help:

• Family Dynamics – Are family members who work in the business getting along? Do family members actively participate in business operations? Have family members fought over business decisions?
• Business Viability – Is the business capable of making money? Have the products or services offered become obsolete or decreased in value?
• Passion for the Business – Do you still get excited about running the family business? Are you or any other family members still interested in the products or services being offered?

The Outside World and Your Family Business

Other important factors relate more to your business than to your family.

• How’s the Market? Find out if companies like yours are a hot commodity. Are investors interested in buying?
• Is Your Industry Changing? Whether you sell horseshoes or hyperbaric chambers makes a difference. If your product or service is going out of style, then you have to wonder – is it time to sell or can your business expand into more profitable areas?
• Is Timing an Issue? Do you have to sell quickly? If not, maybe you can wait until times are more favorable for selling.

Once you make the final decision to sell, it’s time to get started.

Finalizing the Sale of Your Family Business

Based on the way your company is managed, you may have to get approval from a board of directors or even just from other family members. Talk to your attorney about the company’s structure, articles of incorporation, partnership agreements, or bylaws before putting the company up for sale. During and after the sale, you can use a good adviser to help with negotiations, letters of intent, and contracts.

At the Lambros Law Office, our attorneys can help you navigate the complexity of business transactions. To schedule an appointment, call 401-383-9899. You may also use our convenient Contact Form to let us you know are ready to get started. We assist clients throughout Rhode Island, including Cranston, Providence, and Warwick.

Are You Doing Business in Multiple States?

Dave opened a small company that sold and distributed electronics. The company grew its online presence, and Dave began shipping to customers across the United States. However, he felt he might need to open a warehouse or sales office on the West Coast. State laws may vary greatly, so Dave needs to learn how to go about operating a business in multiple states.

Formation

Companies are formed in one state, a home state. Depending on its type, the new business may have to file name reservations, articles of incorporation, or other documents required by state law.

Dave formed his business as a corporation with Rhode Island as its home state. To open an office in California, for instance, he may either register his company in California or form a new company, also under California law.

Business Operations

There’s some disagreement as to what is considered operating a business. Generally, the following activities may constitute “doing business” in a location:

• Building an office or warehouse,
• Providing services or selling goods, or
• Closing deals and finalizing transactions.

Merely shipping goods through a state is not considered “doing business” in that state.

For example, Dave ships goods by truck to customers in California. He’s definitely doing business in his home state of Rhode Island. He may be considered to be doing business in California. But he is not conducting business in every state through which the truck travels.

Registering a ‘Foreign’ Entity

We often think of the term ‘foreign’ as referring to something that exists outside the United States. However, a company that operates in a state in which it was not formed is considered a foreign entity. 

Many states, if not all, require a company operating as a foreign entity to register as such. For example, Rhode Island Office of the Secretary of State requires companies to file an Application for Certificate of Authority by a Foreign Business Corporation.

Paying Taxes and Other Fees

Business income is generally taxed in the state in which it was earned. So, a state formed in Rhode Island that conducts business in Arizona may pay taxes to Arizona. However, taxes would be based on only the income earned in Arizona.

State sales tax may be paid if the volume of business is significant. Also, some states may require foreign corporations to register or get a state tax number.

Have Questions About Doing Business in Multiple States?

The attorneys at the Lambros Law Office are well-versed in business law. When you consult with us, you reap the benefit of our years of training and experience. Give us a call at 401-383-9899 to set up an appointment. Also, check out the free resources on our website.

Our office is located in Cranston, Rhode Island. However, we assist clients in surrounding communities like Warwick, East Warwick, Coventry, and Johnston.

 

What You Need to Know About Rhode Island Deceptive Trade Practices Law

It may seem that deceptive trade practice laws are geared mainly for consumers. After all, these laws are designed, in part, for that very purpose. However, if you operate a business or sell any kind of product or service, you need to learn about these laws to avoid tripping over them.

The Law

Deceptive trade practice laws fall under Title 6 and include the basics:

• 6-13.1-2. Unlawful acts or practices. Unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce are declared unlawful.

The law also addresses specific industries, including but not limited to:

• Appliances – providing parts and manuals to repairmen and telling consumers that a part is used or rebuilt.
• Piracy of recordings – selling, transferring, distributing media without permission.
• Service contracts – failing to inform prospective customers of fees and charges.

Interpreting state and federal laws then applying them to your business practices can be quite difficult.

Deceptive Trade Practices?

For one thing, this type of law seems a little vague. What if your business doesn’t fall under one of the industries specifically referenced in the law?

In general, the following activities might give rise to a deceptive trade practices claim:

• Representing someone else as provider of goods or services.
• Creating confusion about the source of goods or services
• Claiming used, reconditioned, or secondhand goods are new.
• Offering false or misleading statements to disparage another person’s business or goods.
• Falsely advertising a product or services with no intention of actually providing the product or services.

Penalties for Engaging in Deceptive Trade Practices

The Rhode Island Attorney General may file an action against anyone who violates deceptive trade practices law. The lawsuit may seek a temporary or permanent injunction, payment of restitution, or the appointment of a receiver.

In addition, consumers harmed by who are harmed may sue to recover actual damages or $200, whichever amount is greater. Punitive damages for egregious violations may also be awarded to injured consumers.

Finally, criminal charges may be brought against people engaging in certain deceptive trade practices.

What it Means for Your Business

Misleading customers openly or by withholding information may be prosecuted under deceptive trade practices law. Make sure your business adheres to Rhode Island trade laws, especially through your advertising, contracts, and service agreements.

The attorneys at Lambros Law Offices have the skill and experience to help you analyze your current business practices with an eye toward deceptive trade practice compliance. To schedule an appointment, call us at 401-383-9899 or use our convenient Contact Form. Although located in Cranston, we assist clients throughout Providence and Kent Counties

Employee or Independent Contractor?

Is someone who works for you an employee or independent contractor? Sometimes it is hard to tell, but there are some significant differences between the two. For one thing, the worker classification determines whether the employer will withhold incomes taxes and pay other taxes like Social Security. Reviewing IRS guidelines might help a business owner decide whether that worker is an employee or an independent contractor. The IRS looks at three basic criteria when determining employee status:

Behavioral Control

The amount of control an employer has over a worker’s behavior and actions can make a difference.

• Does the employer provide the worker with training?
• Does the employer give them instructions on how to do their work?

They are probably employees, not independent contractors.

Characteristics of an independent contractor include handling their own training. An independent contractor may have the skill and experience to complete the job without detailed instructions. Take care, though. If the employer can control the worker’s behavior but chooses not to, the worker may still be considered an employee.

Financial Control

How a worker is paid, and who pays for certain expenses, can determine whether a worker is an employee or an independent contractor.

• Has the worker paid for their own equipment and workspace?
• Does the worker pay all business-related expenses?
• Does the worker market their services to other companies?
• Is the worker paid by the job?

If the employer can answer “yes” to these questions, then the worker is likely an independent contract.

Characteristics of an employee include the employer paying for equipment, workspace, and business-related expenses. If a worker is paid hourly or salaried, instead of by the job, the worker is probably an employee.

Type of Relationship

There is always some kind of relationship between the employer and the worker.

• Does the worker receive employee benefits?
• Can the worker quit at any time or be fired at any time?
• Are the worker’s services integral to the company’s core business?

If so, the worker is probably an employee.

Characteristics of an independent contractor’s relationship with an employer include their lack of employer-provided benefits and the fact they signed a contract with the firm.

Avoid Employment Pitfalls.

An employer who is still unsure about worker status should act immediately. Incorrectly classifying a worker can lead to stiff penalties.

At the Lambros Law Office, our attorneys have the skill and experience to answer your business and contract questions. To schedule an appointment, call 401-383-9899. You may also use our convenient Contact Form to let us you know are ready to get started. We assist clients throughout Rhode Island, including Cranston, Providence, and Warwick.

How to Prepare a Business Plan

How could two simple words – business and plan – lead to such a critical process? Writing a business plan requires deep thought, in-depth analysis, and the motivation to ‘get it right.’ Read on to learn how to prepare your business plan.

Types of Business Plan

According to the Small Business Administration, there are two types of business plan:

• Traditional, and
• Lean Startup.

The traditional version of a plan typically contains more detail than a lean startup plan. This plan will take more time to write and require more research. However, it is generally favored by lenders and investors.

The lean startup contains only key elements of your plan. You still have to know and understand your industry and know where your business potentially is headed. However, it is much shorter and takes much less time to write.

Once you are ready to get started, you’ll need to know which sections of a business plan you will need.

Components of Your Business Plan

This really depends on the type of business you plan to start. A chiropractor may use different sections than a combination bookstore coffeehouse. Still, the following sections are fairly common:

• Executive Summary – brief description of your company that summarizes the rest of the plan.
• Company Description – provide some details about the company and any problems your business hopes to resolve. You can be pretty specific here to give readers the big picture.
• Market Analysis – talk about the general outlook for your industry. What is your target market and how do successful competitors succeed? What are the current and future trends?
• Organization and Management – Explain the type of business entity you will be using – sole proprietorship or partnership for example. List who will be in charge and their qualifications. You can include CVs or resumes here or attach them as an appendix to your plan.
• Service or Product Line – what does your company offer to its customers? Dental services? Widgets? Share current information and plans for future expansion of services or products.
• Marketing and Sales – Answer the question, “How will my business attract customers?”
• Funding Request – If your company needs additional capital, here’s where you can ask for it.
• Financial Projections – Where do you want your company to be financially in a year? Five years? Explain your hopes and dreams here, using cold hard numbers. You can even add some graphs and charts.
• Appendix – You may want to include CVs or resumes, legal documents, contracts, credit history, letters of references, and more detail about your products or services.

A well-written business plan may attract investors and lenders. However, it also helps you refine your ideas as you watch your dream become a reality.

Consult with an Experienced Rhode Island Lawyer Before Signing.

Our attorneys have the experience to assist with your business concerns. Call us at 401-383-9899. You may also use our convenient Contact Form to let us you know are ready to get started. We assist clients throughout Rhode Island, including Cranston, Providence, and Warwick.

How to Form a Rhode Island Professional Partnership

When starting a new business, one of the first and arguably most important decisions you make will be your business entity. From sole proprietorship to corporation, each business entity type offers advantages and disadvantages. For example, the steps you’ll take to form a Rhode Island professional partnership are different than those you’ll take to form a limited liability company.

Define a Rhode Island Professional Partnership

A partnership, of course, may happen when two or more people join together to form a business. A professional partnership, or professional services corporation, is used for certain types of professionals, including:

Physicians, dentists, attorneys, professional engineers, architects, CPAs, veterinarians, chiropractors, podiatrists, registered nurses, optometrists, physical therapists, landscape architects, land surveyors, opticians, physician assistants, psychologies, and midwives or nurse-midwives.

Under Rhode Island law, professional services can only be offered by employees who are authorized to practice that partnership’s focus. For example, a professional services corporation for physicians could not use an unlicensed, unqualified person to offer those professional services.

Steps Needed to Form Your Rhode Island Professional Partnership

Proceeding in the right order and doing everything necessary can save you some trouble and legal fees later. The basic steps for starting a Rhode Island professional partnership are:

• Choose a name for your partnership.
• Register your business name with the Rhode Island Secretary of State.
• Do all your paperwork. This include registration forms, applications for licenses and permits, filing a Certificate of Assumed Name, and so on. In addition, it’s strongly advised that you and your partnership have a partnership agreement in place. This document spells out the terms of your partnership, including obligations and responsibilities, how to operate the business, and how to dissolve the business if needed.
• Obtain state and federal IDs, including the Employer Identification Number from the IRS.
• Get organized once the Secretary of State’s office has approved your paperwork.

Starting a New Business?

Another task for the new business owner – get your estate planning in order. Business succession plans are an important yet often overlooked part of running a business.

At the Lambros Law Offices, we do more than hand you a stack of documents and tell you where to sign. We explain everything every step of the way until you have an estate plan that fits.

Call us at 401-383-9899 or check out our website. Though our office is located in Cranston, we assist clients through Rhode Island including Providence, Kent, and Washington Counties.

Licensing and Your New Business

Maybe you have a great idea for a new business. You’ve completed your business plan, arranged for financing and found a good location. But there’s something missing. You need to find out if your new business needs any kind of licensing or permits.

Rhode Island Licensing

The Rhode Island Department of State offers information and advice to business owners through its Business Assistant. Advice is specific based on the type of business you are opening. However, if your business does not fit any of the categories, you can ask the Business Assistant for help.

For example, if you were opening a café in Cranston, you would need to contact a host of government agencies including:

• The City of Cranston city hall about zoning, licenses or permits.
• The Business Application and Registration BAR since you need a permit to sell retail.
• The Rhode Island Department of Revenue Division of Taxation.
• The Rhode Island Department of Administration to register as an authorized vendor.
• The Office of Food Protection for the appropriate license.

This list represents a small fraction of the agencies you will deal with when starting a new business. It’s just a reminder that you need to do your homework and that the requirements vary from industry to industry.

Types of Licenses a New Business Might Need

This all depends on the type of business you are starting, where it’s located, and what type of services you will be offering. Federal, state, and local agencies may be involved. Still, here is a representative list of the types of permits your new business may have to obtain:

• City business licenses and tax permits
• Building permit
• Health permit
• Occupational permit
• Signage permit
• Alarm permit
• Zoning permit
• Alcohol & tobacco permit
• Liquor license
• Sales and use tax permit
• Seller/reseller permit

New Businesses That Need Licenses

Some businesses require very little licensing, while others are highly regulated. The Rhode Island Department of Business Regulation maintains a long list of business subject to regulation that includes:

• Banking: credit unions, check cashing, debt management, banks.
• Securities: broker dealer, exempt charitable organization, investment advisor, time shares.
• Board of Accountancy: certified public accountant, public accountant
• Design Professionals: architect, land surveyor, landscape architect
• Commercial Licensing: real estate appraiser, auto body, athlete, mobile home part, manufacturer, gaming facility
• Liquor Wholesale & Manufacturing: brewery, distillery, liquor agent.
• Insurance: adjusters, insurers, appraisers.

Again, it’s impossible to list all business types here. Your best course of action is to consult with a business attorney to make sure you obtain all the licensing and permits needed to get your business off on the right foot.

Sound Confusing? It Can Be.

The attorneys at the Lambros Law Office are well-versed in business law. When you consult with us, you reap the benefit of our years of training and experience. Give us a call at 401-383-9899 to set up an appointment. Also, check out the free resources on our website.

Our office is located in Cranston, Rhode Island. However, we assist clients in surrounding communities like Warwick, East Warwick, Coventry, and Johnston.

Employee Benefit Plans: What Federal Law Says

In today’s workplace, employers often offer employee benefit plans. Such plans may have a big impact on employee loyalty and retention, and also help companies attract top employees. However, those plans may vary greatly from company to company. No matter what kind of employee benefit plan you offer, federal law applies when such plans are offered.

Are Employers Required to Provide Employee Benefit Plans?

No, under federal law employers are not required to offer benefits to their employees. However, plans that are offered must comply with certain federal laws, including ERISA.

The Employee Retirement Income Security Act of 1974 (ERISA)

This federal law sets out minimum standards for many pension and health plans offered in the private sector. Employers are required to keep plan participants informed about their plan.

Amendments to ERISA include the:

• Consolidated Omnibus Budget Reconciliation Act (COBRA) that allows employees who lose their jobs to continue their health coverage for a time.
• Health Insurance Portability and Accountability Act (HIPAA) that protects employees with pre-existing medical conditions from insurance discrimination.
• Mental Health Parity and Addition Equity Act (MHPAEA) that requires insurers to provide mental health treatment coverage equal to medical/surgical coverage.

Employee benefit law is complex. Fines for employers who fail to comply with federal law are high.

The Fair Labor Standards Act

The federal law that regulates minimum wage, overtime pay eligibility, and child labor is called the Fair Labor Standards Act (FLSA). What does this have to do with employee benefit plans? Federal law does not require employers to provide paid time off like vacations, sick leave, or holidays. That benefit is strictly between the employer and employee.

Offer Employee Benefit Plans? Know the Law

Employers may find themselves in sticky situations when it comes to employee benefit plans. Questions may arise about whether terminated or suspended employees have access to their employee benefits. It’s especially important for employers to know that the employee benefit plans they offer comply with pertinent federal laws.

At the Lambros Law Office, our attorneys can help you navigate the complexity of employment law. To schedule an appointment, call 401-383-9899. You may also use our convenient Contact Form to let us you know are ready to get started. We assist clients throughout Rhode Island, including Cranston, Providence, and Warwick.

Does Your Company Use These Common Contracts?

  

Companies commonly interact with and make agreements with people and other business entities. Those agreements, whether oral or written, may be considered to be contracts. In fact, your company may use some or all of the following contracts without realizing they constitute a contract.

But how will you know if you have a contract?

Contracts in General

A written agreement between two parties may be a contract. Keep in mind, though, that the following elements are crucial to showing that a contract actually has been formed:

• Competent Parties – the parties to the contract have to be capable of making an agreement.
• Subject Matter – the purpose for making the agreement.
• Legal Consideration – a benefit exchanged between the parties.
• Mutuality of Agreement – the parties agree to the formation of the contract.
• Mutuality of Obligation – the parties agree the agreement is mutually binding.

In some jurisdictions, a contract must be in writing. Rhode Island courts may consider an oral contract to be enforceable under some circumstances. Still, it’s best to ‘get it in writing.’

Contracts for General Business Operations

A business may be formed with contracts like:

• Partnership Agreement – lays out the details of a partnership.
• Joint Venture Agreement – spells out the duties and responsibility of parties to a joint venture.

Once a company is operational, other contracts come into play.

Contracts for Sales and Purchases

• Leases – commercial leases can be complicated.
• Bill of Sale – often used to formalize a sale.
• Purchase Order – often used to get a purchase started.
• Non-Disclosure Agreement – restricts the disclosure of proprietary or confidential information.
• Security Agreements and Loans – sets out terms and conditions of financial transactions.

Contracts for Employment Issues

Many business owners hire employees and so may become familiar with the following contracts:

• Employment Contract – spells out the terms of an employee’s work.
• Non-Compete Agreement – restricts an employee from working for a competitor for a certain period after leaving the employer’s service. Also prohibits the employee from using or sharing confidential information with his or her new employer.
• Independent Contractor Agreement – gives the terms of a freelance or independent worker’s employment-related responsibility.

Talk to an Attorney About Your Business Contracts

Entering into a business relationship, whether great or small, is serious business. The attorneys at the Lambros Law Office are well-versed in business law. When you consult with us, you reap the benefit of our years of training and experience. Give us a call at 401-383-9899 to set up an appointment. Also, check out the free resources on our website.

Our office is located in Cranston, Rhode Island. However, we assist clients in surrounding communities like Warwick, East Warwick, Coventry, and Johnston.