It’s a boy!

I’d like to announce the birth of my son-

Blake Matthew Vivo Griffith

June 5, 2010 –  3:35 a.m.
7 lbs., 7 ounces
21.5 inches long

Baby and mom are doing great.  I’ll be in and out of the office next week.  Thank you for all the love, support and messages of encouragement.

LLC OR CORPORATION- SELECTING THE RIGHT BUSINESS STRUCTURE

You have decided to start or maybe purchase a business.  Now what?


One of the first and most important decisions you now face is deciding what form of business entity to own and operate your business venture. There are several options, including-
• a sole proprietorship or general partnership;
• a limited partnership;
• a limited liability company;
• a limited liability partnership;
• an S-corporation; or
• a regular corporation- a C-corporation.

For nearly every business owner reading this article, the choice is fairly simple. Most Indiana businesses should operate either as an S-corporation, regular corporation, or limited liability company. These three entities offer business owners limited asset protection and relative ease of operation. In deciding the best business structure to utilize, each business owner should consider a variety of general factors and also the circumstances unique to the business, its owners, and its opportunities and challenges.

Before forming a new business entity, a good business attorney will spend time with a business owner to discuss and consider factors such as these-

• Will the business consist of an operating entity or a holding company?
• What are the likely tax liabilities arising from the business?
• If an operating entity is chosen, can FICA taxes be minimized?
• How will the business be financed?
• What is the exit strategy?
• What business risks are being avoided?
• Do the owners and managers have the requisite training and vigilance to maintain a more complicated structure?
• What are the costs, benefits and burdens of creating a particular business structure?

As explained above, a business should be operated as a limited liability entity to protect the assets of the owners. That is the central reason to form a business entity.
One of the first and most important decisions you now face is deciding what form of business entity to own and operate your business venture. There are several options, including-
• a sole proprietorship or general partnership;
• a limited partnership;
• a limited liability company;
• a limited liability partnership;
• an S-corporation; or
• a regular corporation- a C-corporation.

For nearly every business owner reading this article, the choice is fairly simple. Most Indiana businesses should operate either as an S-corporation, regular corporation, or limited liability company. These three entities offer business owners limited asset protection and relative ease of operation. In deciding the best business structure to utilize, each business owner should consider a variety of general factors and also the circumstances unique to the business, its owners, and its opportunities and challenges.

Before forming a new business entity, a good business attorney will spend time with a business owner to discuss and consider factors such as these-

• Will the business consist of an operating entity or a holding company?
• What are the likely tax liabilities arising from the business?
• If an operating entity is chosen, can FICA taxes be minimized?
• How will the business be financed?
• What is the exit strategy?
• What business risks are being avoided?
• Do the owners and managers have the requisite training and vigilance to maintain a more complicated structure?
• What are the costs, benefits and burdens of creating a particular business structure?

As explained above, a business should be operated as a limited liability entity to protect the assets of the owners. That is the central reason to form a business entity.


One of the first and most important decisions you now face is deciding what form of business entity to own and operate your business venture.  There are several options, including-

•    a sole proprietorship or general partnership;
•    a limited partnership;
•    a limited liability company;
•    a limited liability partnership;
•    an S-corporation; or
•    a regular corporation-  a C-corporation.

For nearly every business owner reading this article, the choice is fairly simple.  Most Indiana businesses should operate either as an S-corporation, regular corporation, or limited liability company.  These three entities offer business owners limited asset protection and relative ease of operation.  In deciding the best business structure to utilize, each business owner should consider a variety of general factors and also the circumstances unique to the business, its owners, and its opportunities and challenges.

Before forming a new business entity, a good business attorney will spend time with a business owner to discuss and consider factors such as these-

•    Will the business consist of an operating entity or a holding company?
•    What are the likely tax liabilities arising from the business?
•    If an operating entity is chosen, can FICA taxes be minimized?
•    How will the business be financed?
•    What is the exit strategy?
•    What business risks are being avoided?
•    Do the owners and managers have the requisite training and vigilance to maintain a more complicated structure?
•    What are the costs, benefits and burdens of creating a particular business structure?

As explained above, a business should be operated as a limited liability entity to protect the assets of the owners.  That is the central reason to form a business entity.

Sole proprietorships and general partnerships offer no protection to their owners or to the entity itself.  By contrast, limited liability companies, limited partnerships and corporations are limited liability entities which provide significant but limited protection from liabilities arising from the business’ operations.  Generally, what is at risk for an owner is the value of the investment made by the owner in the entity.  Business lawyers refer to this as “inside out protection,” because the liabilities arising inside the entity will not reach the assets of the owner held outside of the entity.

Of course, selecting the right entity is just the first step in this process.  Careful drafting of documents, the proper filing of documents with governmental offices and establishing processes and procedures to follow the so-called “corporate formalities” are equally important steps in limiting the liability risks to the business’ owners.  These topics are addressed in other articles, but the entire process starts with the list of factors relevant to selecting the right entity.

If you are starting a new business or are unsure whether your current entity is properly structured, contact your business attorney to review the issues raised in this article.

Is Your LLC or Corporation Current & Updated?

 

Limited liability entities- such as corporations and limited liability companies- require basic maintenance.  Yet, amazingly, a large percentage of Indiana corporations and Indiana LLC’s are not updated by management or owners.  What they risk by failing to upkeep these entities is nothing less than having a court ignore the “corporate shield” by applying liability directly on the owners of the corporation or LLC.

It is not expensive or hard to maintain an Indiana corporation or Indiana LLC.  The necessary tasks should begin with a visit to your business attorney, CPA and insurance agent.  However, those are just the three most important tasks to complete.  There are several others. 

Here is a short list of important tasks to complete regularly-

  1. Visit yourIndiana business attorney to review the corporate records and status of the business.
  2. Visit your CPA for a review of the financial health of the company.
  3. Visit your insurance agent to contact a full insurance review.
  4. Hold an annual meeting of the owners- members in an LLC and shareholders in a corporation.  Elect LLC-managers or corporate directors at these meetings.
  5. Hold an annual meeting of the directors in a corporation.  Elect officers at this meeting.
  6. Create minutes of all annual meetings.
  7. File biennial reports with the Secretary of State.
  8. Update an assumed business names with appropriate filings with the Secretary of State and county recorder.
  9. Remind officers and key personnel on the appropriate operations of a limited liability entity.
  10. Review all contracts, processes and procedures that might lead to liabilities.
  11. Conduct a risk audit, which should include a physical inspection of your business facilities.

 

Of course, each business has unique needs, but this list generally applies to businesses of all types and sizes.

Avoid Collection Problems- How to Get Paid by Your Clients

Businesses often experience difficulties in collecting monies owed to them by their customers and clients as soon as the business first begins offering its goods and services. Every business has experienced some difficulty in getting paid all it is owed, and many business plans are formed with the presumption that a certain percentage of the business’ accounts receivable will go uncollected. The problem of collecting accounts receivable is not usually the cause of a business’ failure, as more businesses fail from undercapitalization. However, collections problems can prevent a business from growing and will always negatively affect the business’ profitability.

There are things a business can do to minimize its risks that an account receivable will become uncollectible. And as is usually the case, preventing the problem from occurring is far less costly than curing the problem once a client or customer fails or refuses to pay you for your goods and services. Whether your business is the sale of pastries, providing rental housing or the construction of high-rise office buildings, the following suggestions, where applicable, should help you increase your collections and avoid much frustration and anguish in the process. Try following these basic collections rules.

Get It In Writing.
It may sound elementary, but it is so very important that you memorialize your agreements with customers, clients and other businesses. Any change, termination or other modification of an agreement should also be memorialized. For example, in a construction context, a “Change Order” form may often be used. To avoid a variety of legal and tax trappings, all written documents, including your regularly used forms, should be reviewed by your legal counsel and tax advisors.

Get Paid In Advance.
Easier said than done, but your goods and services are not free. You should require substantial deposits and down payments before you begin ordering parts or using materials. And you should require payment-in-full before you begin performing services or relinquish control of your property. Remember that until your customer has paid you for a good, the customer is not entitled to the fruits of your labor. This rule may best be exemplified by the landlord who demands rent to be paid on the first day of every month during which the tenant will occupy the leased premises. In essence, the tenant pays in advance. But when the tenant fails timely to make the rent payment, the tenant is essentially a trespasser and the landlord should immediately begin eviction proceedings.

If You Don’t Get Paid In Advance, Get Security.
Obviously, this rule does not apply to leasing agreements or the simple cash transaction such as the sale of a dozen doughnuts. In larger transactions, particular those involving the sale of moveable personal property and real estate, the seller should demand a security interest in something of value. A mortgage, a recorded land contract, a mechanic’s lien and a lien on personal property are familiar examples of security interests. But many people forget that a business can agree to provide services, such as structural repairs to a house, and in exchange receive a security interest in an entirely different property, such as an office building, delivery truck or car owned by the customer. Or alternatively, that same business could require a security interest in the house, office building, delivery truck and car, or some combination thereof. Having a security interest may also improve your chances of recovery in the event the customer files for bankruptcy protection.

If The Customer is Credit Risky, Demand A Co-Guarantee.
Many businesses extend credit to customers while fearing that the customer is a credit risk. In such circumstances, the customer should be made to provide the signature of a co-guarantor who promises to pay the customer’s debt to you in the event the customer does not. Remember, however, that the co-guarantee is only as good as the co-guarantor is creditworthy.

If Your Contract Does Not Allow For Collection Costs,
You Connot Get Them.
The “American Rule” is that litigants pay their own attorneys’ fees. So, if you must retain an attorney to collect a debt, you will pay the attorneys’ fees and most other collections costs. The exceptions to the American Rule are the existence of a written contract allowing the recovery of attorneys’ fees, a statute allowing such recovery; or the assertion of a frivolous, unreasonable or groundless claim or defense. The easy solution to the American Rule is to include a provision in your contracts allowing YOU to recover your attorneys’ fees, collections and court costs. Your customers should not have the same right to recover against you.

The Check Is Never Truly In The Mail.
The lesson here is to begin legal proceedings as soon as possible and not to delay in collecting your money or retrieving your property. Equally important, you should read your written agreements to determine whether you are required to provide any notices or demands to the customer before commencing a collections action against the customer. The longer you wait, the more likely the customer will be difficult to locate; the customer will have been hidden his/her assets; or your property will have been destroyed, devalued or transferred to third-parties.

As a final suggestion, consult your attorneys as soon as you suspect difficulty in collecting a debt. Often a stern letter from an attorney on a law firm’s letterhead can have a dramatic effect on a delinquent customer. You also should consider consulting your attorneys to review your entire billing and collections processes. Thrasher Buschmann Griffith & Voelkel, P.C. has often assisted businesses whose agreements, leases and other forms were outdated or lacking important provisions which would allow the business to pursue additional remedies against a delinquent customer. If we can help you or your business, please contact this author.

Businesses Must Protect Confidential Data

In an effort to protect the privacy of consumer information and reduce the risk of fraud and identity theft, a federal rule requires businesses and landlords to take certain protective measures to dispose of sensitive information derived from consumer reports.  Any business or individual who uses a “consumer report” for a business purpose is subject to the requirements of this Disposal Rule.  The Rule requires the “proper” disposal of information in consumer reports and records to protect against unauthorized access to or use of the information. The Federal Trade Commission (FTC) has the responsibility to enforce the Disposal Rule.

In a property management context, a consumer report includes tenant credit and other such reports generated by consumer credit reporting agencies (CRA’s), such as tent screening agency.   A consumer report does not include information gathered directly by  business for use by the business.  Below, I have included more information about what constitutes a consumer report.
The FTC has indicated that the standard for the proper disposal of information derived from a consumer report is flexible, and allows organizations and individuals covered by the Rule to determine what measures are reasonable based on the sensitivity of the information, the costs and benefits of different disposal methods, and changes in technology.  Although the Disposal Rule applies to consumer reports and the information derived from consumer reports, the FTC and this author both encourage those who dispose of any records containing a consumer’s personal or financial information to take similar protective measures.  In other words, treat all customer and client information as if they are subject to the Disposal Rule.

Who must comply?

The Disposal Rule applies to individuals, as well as large and small organizations, that use consumer reports.  Among those who must comply with the Rule are:
• Consumer reporting companies
• Lenders
• Insurers
• Employers
• Landlords
• Government agencies
• Mortgage brokers
• Automobile dealers
• Attorneys or private investigators
• Debt collectors
• Individuals who obtain a credit report on prospective nannies, contractors, or tenants
• Entities that maintain information in consumer reports as part of their role as service providers to other organizations covered by the Rule.

What information does the Disposal Rule cover?

The Disposal Rule applies to consumer reports or information derived from consumer reports.  The Fair Credit Reporting Act defines the term consumer report to include information obtained from a consumer reporting company that is used – or expected to be used – in establishing a consumer’s eligibility for credit, employment, or insurance, among other purposes.  Credit reports and credit scores are consumer reports.  So are reports that businesses or individuals receive with information relating to employment background, check writing history, insurance claims, residential or tenant history, or medical history.
What is ‘proper’ disposal?

The Disposal Rule requires disposal practices that are reasonable and appropriate to prevent the unauthorized access to – or use of – information in a consumer report.  For example, reasonable measures for disposing of consumer report information could include establishing and complying with policies to:

• burn, pulverize, or shred papers containing consumer report information so that the information cannot be read or reconstructed;
• destroy or erase electronic files or media containing consumer report information so that the information cannot be read or reconstructed;
• conduct due diligence and hire a document destruction contractor to dispose of material specifically identified as consumer report information consistent with the Rule. Due diligence could include:
o reviewing an independent audit of a disposal company’s operations and/or its compliance with the Rule;
o obtaining information about the disposal company from several references;
o requiring that the disposal company be certified by a recognized trade association;
o reviewing and evaluating the disposal company’s information security policies or procedures.

The FTC says that financial institutions that are subject to both the Disposal Rule and the Gramm-Leach-Bliley (GLB) Safeguards Rule should incorporate practices dealing with the proper disposal of consumer information into the information security program that the Safeguards Rule requires (ftc.gov/privacy/privacyinitiatives/safeguards.html).

The Fair and Accurate Credit Transactions Act, which was enacted in 2003, directed the FTC, the Federal Reserve Board, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Office of Thrift Supervision, the National Credit Union Administration, and the Securities and Exchange Commission to adopt comparable and consistent rules regarding the disposal of sensitive consumer report information.  The FTC’s Disposal Rule became effective June 1, 2005.

Take your business to a new level in 2010

  

Take your business to a new level in 2010 .  Attend this amazing & free class sponsored by Xpedishon Coaching

Xpedishon provides group coaching to solopreneurs and small business owners. Xpedishon was co-founded by Rainmakers CEO Tony Scelzo, Matthew Griffith, Ed Turi, and Jack Klemeyer.  We are looking for 150 individuals who want to grow their business to over $500,000 per year in revenue.  We have a proven system that has helped hundreds of individuals signficantly grow their business. 

  

March 19th , 10:00 – 11:30 am   

Details & Free Registration for the March Xcelleration Event.

  

  • Are you willing to invest 90 minutes of your time to find out how to significantly grow your business in 2010? 
  • Are you done with this slow economy?   Ready for better times?
  • If you are frustrated with the challenges of running your business in this tough economy we would like to invite you to a free workshop to show you how you can double and even triple your business in 2010.  

Matthew Grffiith, Tony Scelzo, Jack Klemeyer, and Ed Turi, the owners of Xpedishon Coaching, will lead an inspiring and dynamic presentation where you will learn- 

  • The three areas that you must focus on to grow your business.
  •  The top limiting beliefs that you must eliminate before you can ever succeed in business.
  • How to structure your business to grow bigger than you ever thought possible.  

People come to Xpedishon, because they are motivated and committed to growing their business despite the challenging economy.  If you are committed to growing your business in 2010, then this free one-hour workshop is for you.   

___________________________________________
  
When: March 19th  
Where: Franklin University, 4th floor, (Allisonville and 82nd)   
Time: 10:00 – 11: 30 am
  
  
__________________________________________
About Xpedishon –

 

Xpedishon is a group coaching process that is known for its ability to quickly help clients get high impact results. Owned by Tony Scelzo, Jack Klemeyer, Ed Turi, and Matthew Griffith.  All are highly experienced coaches and successful entrepreneurs.   

Testimonial:  Hear what Chris Reed has to say about Xpedishon  
 
 
 
 

“Xpedishon was an incredible challenge for me as VP of Business Development for FileEngine. The coaching and accountability caused me to think outside my head and see things coming that I wouldn’t have noticed otherwise. The process helped me to realize that I had an entrepreneurial spirit and I needed to start my own business. The coaching, accountability and the group helped me through so many of the trappings and pitfalls that can bring a new business to its knees. Prior to Xpedishon I wouldn’t have dreamed I could have started my own company and within 120 days be steering a $250,000 a year company! I have been able to achieve my goals and I have grown personally because of this process.”    

  

 

Ten Facts about Mortgage Debt Forgiveness

My friend and mortgage consultant, Mickey Brooks, and I were talking this week about a client who needs to refinance her home.  We got to talking about mortgage debt, tax sales and a variety of topics.  Tax liability that can arise when a mortgage debt is forgiven came up briefly.  Then, it came up in another conversation yesterday.  And then a law partner  sent me the following summary from the IRS.  Clearly, this is an important topic, so I thought I’d share this excerpt from an IRS newsletter-

Ten Facts about Mortgage Debt Forgiveness

If your mortgage debt is partly or entirely forgiven during tax years 2007 through 2012, you may be able to claim special tax relief and exclude the debt forgiven from your income. Here are 10 facts the IRS wants you to know about Mortgage Debt Forgiveness.

  1. Normally, debt forgiveness results in taxable income. However, under the Mortgage Forgiveness Debt Relief Act of 2007, you may be able to exclude up to $2 million of debt forgiven on your principal residence.
  2. The limit is $1 million for a married person filing a separate return.
  3. You may exclude debt reduced through mortgage restructuring, as well as mortgage debt forgiven in a foreclosure.
  4. To qualify, the debt must have been used to buy, build or substantially improve your principal residence and be secured by that residence.
  5. Refinanced debt proceeds used for the purpose of substantially improving your principal residence also qualify for the exclusion.
  6. Proceeds of refinanced debt used for other purposes – for example, to pay off credit card debt – do not qualify for the exclusion.
  7. If you qualify, claim the special exclusion by filling out Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness, and attach it to your federal income tax return for the tax year in which the qualified debt was forgiven.
  8. Debt forgiven on second homes, rental property, business property, credit cards or car loans does not qualify for the tax relief provision. In some cases, however, other tax relief provisions – such as insolvency – may be applicable. IRS Form 982 provides more details about these provisions.
  9. If your debt is reduced or eliminated you normally will receive a year-end statement, Form 1099-C, Cancellation of Debt, from your lender. By law, this form must show the amount of debt forgiven and the fair market value of any property foreclosed.
  10. Examine the Form 1099-C carefully. Notify the lender immediately if any of the information shown is incorrect. You should pay particular attention to the amount of debt forgiven in Box 2 as well as the value listed for your home in Box 7.

For more information about the Mortgage Forgiveness Debt Relief Act of 2007, visit IRS.gov. A good resource is IRS Publication 4681, Canceled Debts, Foreclosures, Repossessions and Abandonments. Taxpayers may obtain a copy of this publication and Form 982 either by downloading them from IRS.gov or by calling 800-TAX-FORM (800-829-3676).

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Setting Up An Indiana LLC

 

Question:   “We formed an LLC a few years ago, but haven’t done anything with it.  We do own properties and a business, but nothing is titled in the name of the LLC.  There are several family members involved and our tax returns are a mess.  Any advice on what we should be doing?”

 

Matt’s Answer:   “Yes, I advise you to gather all your deeds, financial records and company records, and sit down with your business or real estate attorney, your CPA and your insurance agent.  I have reviewed your company records, and can see that you’ve done essentially no planning.  We need to develop a plan for you.  You need an asset protection plan that includes some training and education on how to operate your LLC.  You need to get better insurance on your properties, your business and the LLC members.  You need to fix your company record book, which includes the drafting and completion of an Operating Agreement.  And, that Operating Agreement should contain buy-sell provisions to address what I call the “Big D’s-” death, disability, marital divorce, dissolution of the entity, and disinterest by one or more members.  You also need to fix certain accounting and tax irregularities, which flow from your failure to devise a plan.

Your meeting with your attorney should last one hour to two hours, and should include training and instruction on how to operate this business.  Yes, it is a business.  “Real Estate Investing” is a misnomer.  It should be called “Real Estate Management” or “Real Estate Business.”  You should apply basic business principles to your real estate business.   Although I cannot explain in great detail here everything you need to do to correct the shortcomings of your operation, I can assure you that it is a fairly routine matter for an experienced real estate and business attorney.  This is not difficult to correct, but you need to consult with professionals and implement a plan.  Do not believe everything you’ve read in a book, on the Internet or in a seminar manual.  And do not expect your CPA or insurance agent to fix your legal matters, as each of these three professionals has his or her own expertise and field of licensed competency.  Go see all three- an attorney, a CPA and an insurance agent- and get your house in order as soon as possible.  Within thirty days, you should have your real estate business matters in order.”

Fully Virtual Law Office Is Launched in Indiana

 

Indianapolis, IN: March 1, 2009 – Tiffany U. Vivo, an Indianapolis attorney and Managing Partner of Vivo Law Offices, LLC announced today the launch of Indiana’s first fully virtual law office (VLO) in Indiana. The VLO’s address is www.IndianaVirtualLaw.com.

 

A virtual law office (VLO) is a web-based law practice that enables clients and lawyers to communicate through encrypted messages from any web access point at times convenient for the client and typically at reduced costs. A VLO is a licensed law office that uses the web to facilitate attorney-client communications and the safe exchange of data and documents with a licensed attorney.

“By eliminating expensive law offices, large staffs and other unnecessary overhead, our VLO can deliver cost-effective legal services from Indiana-licensed attorneys at lower costs,” explained Vivo. Increasingly, consumers are turning to the Internet for solutions to legal, medical, home improvement, car repair and other problems. “A VLO is not right for every client, but VLO’s do offer many clients access to a knowledgeable and experienced attorney, and good legal documents at a fraction of the cost,” Ms. Vivo further explained.

The other huge advantage of a virtual law office is convenience. A virtual law office can be accessed by a client anytime from anywhere the Internet is available. “There is no doubt that clients expect more convenience. Many clients do not want to drive in downtown traffic, find parking and then fight crowds and elevators just to see their lawyer,” noted Matthew Griffith, an Indianapolis attorney who often meets clients away from his downtown office. “Coffee shops are my office away from the office,” Griffith added.

“It is important that any law virtual firm office strictly adhere to the Indiana Rules of Professional Conduct and the Best Practice Guidelines for Legal Information Web Site Providers written by the E-Lawyering Task Force of the American Bar Association’s Law Practice Management Section and the ABA Standing Committee On the Delivery of Legal Services,” said Ms. Vivo.

About Tiffany U Vivo, Attorney: Tiffany U. Vivo is an Indiana attorney. At her physical law office, she practices immigration and family law.