Category Archives: General

Can Your Business Avoid a Pearl Harbor?

Pearl Harbor Day is approaching.  The Japanese Imperial Navy burned that day into US history with the sneak attack the naval yards and airfield in Pearl Harbor, Hawaii.  Historians have written volumes about the warning signs the US had leading up to the attack.  The Japanese planes may have flown into the teeth of a prepared defense on December 7, 1941 had the US paid more attention.

You and your business should take action to avoid a surprise attack.  Here are potential areas of concern.

  1. Financial Controls. Do you have adequate financial controls and oversight over those who have access to the business bank accounts and credit cards?  Do have or need employee dishonesty insurance coverage?  A standard liability policy may not cover theft or embezzlement by your employees.  All it takes is one dishonest employee to do significant damage.  The better your controls are, the more likely you will deter wrongdoing or detect a problem earlier.
  1. Confidential Data. Confidential data comes in many forms, be it your trade secrets, your employee’s or customer’s private data (social security numbers, medical records, etc.), or bank account or credit card information.  There are federal and state laws covering much of the data on when/how you need to protect the data, and how to act if you have a data breach.  What do you have in place?  Ignoring the issue can cost far more than paying after the damage is done.
  1. Customer Contracts. Do you use contracts with your customers?  It does not matter they are one-page documents, the text on the back of an invoice, or multi-page tomes.  It makes sense to review them on a regular basis for updating, check for compliance with any applicable state and federal laws, and so forth.
  1. Employee Contracts or Policies. “I don’t need no stinking contracts with my employees” you may say.  Maybe – maybe not.  Do you give employees the company credit/debit card?  Do you allow employees to use their personal smartphones or other devices to access company data or email or cloud accounts?  Do you have trade secrets to protect?  Can you use a non-compete?  Do you have a sexual harassment policy?  It is better to get these in place before the proverbial horse gets out of the barn.
  1. The Corporate Book. I am referring to the bylaws, operating agreement, partnership agreement, and so on.  How well are they working out?  Have you deviated from them and need to return?  Do you need to revise them? Keeping these in order will help if you have a dispute with your other owners or have an audit.

These are but some of the areas where preparation can do wonders for a business.  Take the time to reduce the risk of your business suffering a Pearl Harbor that could sink your business.  Please contact us to assist you in this process.

New Year – New Tax Laws – New Headache?

The year 2018 saw the implementation of the Tax Cuts and Job Act (“TCJA”).  There are a myriad of changes to the federal tax code – just ask your CPA.  One question to ask is whether it makes sense tax-wise to keep or change how your business is taxed.  Your CPA and lawyer can help with that decision.

The CPA’s Role Your CPA should guide you on how the TCJA affect your business, and whether any changes need to be made.  The changes could include a change in tax status.  You may have elected to have your business taxed as an S-Corp, for example.  Maybe it makes sense to keep that, or maybe it makes sense to change its status to a C-Corp.  Be careful when making the decision based on what a colleague did or what someone wrote online.  What may work well for Jack’s business may be a disaster for Jill’s business. 

Keep in mind that there are short deadlines if you want the change to be retroactive to January 1, 2018.  Have more than one owner?  You may need everyone’s signature to effect a change.  Delay may not be your friend.

The Lawyer’s Role:  Need to make a change?  Changing entity status or tax status, or both?  Your lawyer can help guide you on what obligations you have to involve any co-owners, how to properly give notice, and how to take and record a vote.  Ignoring that may invite an angry letter and/or a lawsuit by a co-owner, for instance.  There could be other legal ramifications based on what agreements your company has in place.  Do your due diligence – avoid being penny wise but pound foolish, as the old saying goes.  

Starting a New Entity? The same general advice applies.  Speak with your CPA about the tax advantages/disadvantages of your choice of entity and tax status.  Speak with your lawyer about the legal aspects.  

How About DIY? Many states make it easy to do the bare bones to create an entity.  Some states make it just as easy to file to change an entity, such as converting an LLC to a corporation.  There is more that the DIY-er should consider.  What obligations do you have with your choice of entity?  Should you have a partnership agreement, shareholder agreement, bylaws, operating agreement, buy/sell agreement, subscription agreements, and so on?  Which one is the right fit for the entity?  What should you have or not have in those documents?  Done well, those documents can memorialize what everyone agreed to, provide guidance if there is a dispute between the owners, and maybe help if you get audited by the tax authorities.  Done poorly, you risk a harder and more expensive mess that helps your lawyer buy a brand new luxury car.

There are those who can handle all this themselves quite easily.  For the rest, get the right help at the right time.  Your peace of mind and pocketbook will thank you.

Happy 18th! Time to Make Adult Decisions!

Your child reaching 18 years old is a milestone.  Legally, your little one now is an adult with adult rights and responsibilities.  Here some of the ways the situation has changed.

“Our Son Does Not Want That” v. “ But He Told Me He Did if This Happened”

No parent should have a child become incapacitated through illness or injury, and be faced with making crucial health care decisions for your child.  Your child becoming an adult adds a layer of complication.  Georgia has an Advanced Health Care Directive that allows an adult to state what he or she wants for medical care in that situation, and designate who will make the decisions.  Other states use a living will, health care power of attorney, or a combination of the two.  Your now-adult child executing a clear and legally enforceable directive as to what your child would wants, plus who your child wants making the decisions, is a wise move.  This will reduce the risk of a legal fight that can cause more pain and suffering for all involved.

“Access Denied”

Your now-adult child has rights under HIPAA and other privacy laws that will restrict your access to your child’s medical records.  The child can give anyone permission to access his or her medical records – typically through a written consent or release.  The consent can be added to an Advanced Health Care Directive or in a separate document.

“Hands off My Money”

You child turning 18 means you will encounter resistance if you try to get information about his or her bank accounts, credit card accounts, and so on.  Your child’s right of privacy comes at a cost if your child cannot takes care of his or her affairs, be it because of illness, injury, or other reasons.  A power of attorney can be useful if the child wants to entrust someone to handle his or her financial affairs in those situations.  Your child making an adult decision like that can reduce the risk of having to rely on a judge’s decision. 

“But I am the Parent – Doesn’t that Count?”

It is risky to rely on a doctor, banker, and so forth to automatically defer to you as the parent of your now-adult child.  Lacking a power of attorney, directive, or written consent could put in you in the position of having to get a court order if your child is unable to give consent, when you need to have that consent.  It is easier on everyone to have that done in advance.

Whether your child will make a health care directive, sign a power of attorney, do a will, or any other adult decision is up to your child and your child alone.  Being an adult means having to make these decisions.  Have a talk with your child about this part of adulthood.  Suggest that your child speak with an attorney on how to get done what the child wants.  Hopefully, the paperwork gathers dust from non-use, but it will be there just in case.

This post provides general information only.  This post is not intended to create an attorney-client relationship or to be legal advice about your situation.  A blog article is not a substitute for legal advice that fits your situation.  Laws change and your situation may be different.  You should consult with a licensed attorney for legal advice specific to your circumstances.

© 2017 Matthew D. Macy

Success at CCEA!

Jeff Cohen and Jefferson Allen of Cohen Cooper Estep & Allen, LLC, were interviewed by WSB Atlanta about their client, a tax preparer.  Messrs. Cohen and Allen obtained a successful result for the client.   You can see the broadcast here.  Below the line is a press release by Jeff Cohen about this story, printed here with permission.

In early March, the Georgia Department of Revenue (DOR) tried and failed to shut down a family-owned tax return preparation business that prepares thousands of tax returns for Georgians every year. Despite the fact that B&B Accounting & Tax Service, Inc. and its owner, Ruth Barr, have been in business for over 40 years, the Department of Revenue used a very small sampling of tax returns to come to their own conclusion that B&B was intentionally understating the tax liability of thousands of Georgians. Ruling upon the DOR’s application for a Temporary Restraining Order, the Fulton County Superior Court disagreed.

Tax Attorney Jeffrey Cohen, of the law firm Cohen, Cooper, Estep & Allen, LLC, was critical of the lack of evidence presented by the DOR. Cohen contended that the scant number of tax returns presented in court by the DOR misrepresented the facts. If the DOR had been awarded its Temporary Restraining Order, it would have forced Ms. Barr and her employees out of business. Mr. Cohen, who represents taxpayers and return preparers before both the State and the Internal Revenue Service, had not previously heard of the DOR ever attempting to shut down a legitimate tax preparer. His partner, Jefferson Allen, argued to the Court that the State required a substantial amount of evidence to prove its case, and that it failed. The Court agreed with B&B that the evidence presented by the State was inadmissible and unsubstantiated hearsay.

Soon after the Court’s ruling, the Department of Revenue dismissed the case against Ms. Barr and B&B.

Dazed and Confused

Twenty-eight states and Washington, D.C. legalized marijuana to varying degrees under their respective laws.  As you have heard, though, marijuana remains illegal under federal law. The marijuana sector boomed when the Obama Administration decided to place a low priority on enforcing the federal marijuana laws vis-a-vis marijuana activities under state law.

The federal government still has a hammer in the federal drug laws that could shatter the marijuana industry.  The Trump Administration made statements recently that it may use that hammer on part of that industry.  We will see what happens.

The possible shift in how the federal government handles marijuana highlights that anyone looking to get into, or stay in, the marijuana business must be ready.  The breadth of the federal drug and racketeering laws means that those doing business with or assisting those in the marijuana business could be at risk.  Landlords, suppliers, financiers, and professionals, to name a few, should assess their risks if federal law enforcement changes its priorities.  Ignorance rarely, if ever, works as a defense.

The standard advice stands – go into any business with your eyes open.  Know the regulations and the risks.  Speak with your lawyer, CPA, insurance agent, and others to get the advice you need.  Call us and see how we can help you.

This post provides general information only.  This post is not intended to create an attorney-client relationship or to be legal advice about your situation.  A blog post is not a substitute for legal advice that fits your situation.  Laws change and your situation may be different.  You should consult with a licensed attorney for legal advice specific to your circumstances.

© 2017 Matthew D. Macy