HoganWillig

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Taking Stock of Your Business

Author: Robin Friedman


January 21st, 2015

Slow business cycles provide a unique opportunity for companies to evaluate important and often overlooked aspects of their operation.  In short, this “down” time offers business owners and executives a chance to get their affairs in order.

Employment policies, such as vacation and leave policies, whether or not contained in a company employee handbook, should be reviewed and updated periodically.  Employment termination policies should be looked at carefully if staff reductions are planned.  Obtaining releases from terminated employees, in exchange for severance packages, may help to avoid litigation.  Non-compete and non-disclosure provisions should be in place to deter departing employees from taking valuable company property when they leave.

Customer and supplier contracts, work orders, invoice forms, and other documents used in the ordinary course of business should be should be looked at and, if necessary, updated and improved.  If these documents have not been reviewed by an attorney, now would be a good time to do so. If you are experiencing increased difficulty in getting paid from customers, you need to look at ways to improve collection.

Another area of operation which is overlooked during busy times is internal security, especially for your computer, office equipment, files, records and the like.  One way to protect your important data and records is to restrict employee access.  You may have concerns about employees’ personal use of the internet and the company computer during business hours.  Of course, it is essential that good back-up systems are in place.  Devices to prevent the theft and/or destruction of valuable information should be installed.

Corporate books, which usually contain original incorporation documents, stock certificates and the like, should be looked at and updated.  Often, companies move but fail to change their incorporation documents to reflect this.  If the business is owned by more than one individual, a shareholder, partnership or operating agreement should be in place to protect the owners’ interests upon the death, disability or retirement of a shareholder or partner.  Minutes of shareholder and board of directors meetings should be kept.  At a minimum, major corporate actions should be recorded in writing.

Again, slow business cycles can provide a unique opportunity to review and modify some important aspects of your business.  The changes made will likely prove valuable in avoiding litigation, theft and collection problems.

Winter Weather Accidents

Author: Robin Friedman


January 21st, 2015

Western New York is known for its severe winter weather, and this year has certainly brought its fair share of cold weather and winter storms.  Winter weather often creates slippery conditions that can significantly increase the risk of injury due to slip and falls or motor vehicle accidents. In addition to these risks, cold weather and snow or ice can also have a negative impact on the structural integrity of roads and sidewalks.

When moisture and salt gets into the pavement, it can cause large holes and cracks many of us know as “potholes.” Victims of car accidents caused by poor road maintenance may be able to recover for their losses by bringing a personal injury claim.

This year has been particularly bad for potholes on our local roads; with more weather on the way, we can only assume the issue will get worse before it gets better.  Generally speaking, public entities are responsible for the maintenance of roadways, which makes suing after an accident caused by poor road design or maintenance more complicated than accidents only involving private parties.

After an accident, victims should try and document as much information about the way the accident occurred as possible.  If feasible, take pictures of any dangerous condition that you believe may have contributed to the accident.  Finally, be sure to seek medical attention after an accident to make sure any injuries you sustained are properly diagnosed and treated.

If you have been involved in an accident that occurred during winter driving conditions and you were injured, you may be entitle to bring a claim.  Call the legal team at HoganWillig and let us evaluate your case.

STAR Real Property Tax Exemptions

Author: Linda Grear


January 17th, 2015

People often have questions regarding the STAR real property tax exemption.  The STAR exemption entitles anyone who owns a primary residence to a reduction in the amount they pay for School Tax (STAR = School Tax Relief).  There are two types of exemptions.  The Basic STAR exemption is available to anyone owning a primary residence, as long the annual combined income of all owners is less than $500,000 per year.  If you are a first time homeowner, you can register using a RP-425 form, which you can get from your local (village, town, city) property tax assessor or the application may be downloaded online from the following address:  http://www.tax.ny.gov/forms/orpts/star.htm.

The Enhanced STAR exemption is available to senior citizens.  The exemption is available to any homeowner 65 years of age or older, so long as the home is his/ her primary residence, and if the total annual income for all the owners is below $83,300.  Income means federal “adjusted gross income” minus the “taxable amount” of total distributions from Individual Retirement Accounts (IRAs).

In years past, the homeowner only had to register once and the exemption was automatically renewed.  In 2014 and for years after, the New York State legislation requires anyone who was previously registered to re-register for the STAR exemption.  The State found that many taxpayers, either purposely or by mistake, were taking exemptions on more than one property.  Again, everyone meeting the income requirement is entitled to one STAR exemption, but it must be for their primary residence.  Rental properties, summer homes, are not eligible for the STAR exemption.

To confirm your registration, you may contact the New York State Department of Taxation and Finance online or by phone (518) 457-2036.

Divorce, property division can impart powerful lessons

Author: Robin Friedman


January 14th, 2015

Any large-scale life event brings with it a chance to learn a range of lessons.  In fact, a great deal of our knowledge and understanding comes from having gone through difficult experiences.  We learn from good choices that we make, as well as from decisions we would like to forget.  Divorce and property division are no exception, and savvy spouses will take advantage of the opportunity to learn and grow from the experience of moving beyond an untenable marriage.

The division of marital property is one of the most difficult aspects of any divorce.  This can be especially true for spouses who played a minor role in managing the family’s financial matters.  It can be intimidating to delve deeply into the assessment of family income, assets and debt.  However, doing so can lead to a far greater understanding of what one’s financial future will look like moving forward.

Many parents worry that they will not be able to provide their children with the same level of support and attention after a divorce has taken place.  By focusing on the property division portion of a divorce, it is possible to gain a clear estimation of what one’s budget will be in the months and years to come.  If that budget seems insufficient to meet the needs of the divided family, adjustments can be made during the property division process.

Most parents find that they are more than able to provide the love and care that their children need, even after divorce has altered the family structure.  The property division process can ease many of the fears that accompany a divorce, as it gives spouses the chance to fully understand their available resources and the need to create a budget for future expenses.  Often, financial education is one of the most powerful lessons that can come with the end of a marriage.

You can begin to put your difficult legal matters behind you by scheduling a consultation with one of our experienced Family Law attorneys.  We can be reached at  636-7600-we welcome your call.

Estate Tax Planning – 2015

Author: Linda Grear


January 12th, 2015

As 2014 comes to an end, it is a good time to assess your estate plan. For many, estate planning is something they realize they should do, but they keep postponing. With the dawn of a new year, it is time to consider management and protection of assets during lifetime and controlling distribution following death so you may leave a legacy for your loved ones.

Effective estate planning may reduce estate taxes, which will benefit you and your family financially. In the face of ever-changing tax laws, there is growing concern about how to best protect assets and secure them for future generations.

Anticipating your potential estate tax liability is a great place to start planning. The current estate exemption equivalent for New York State residents is $2,062,500. The first $2 Million of assets are exempt from NYS estate tax and any amounts over $2 Million will be subject to NYS estate tax. The New York State Estate Tax Exemption will be increasing to $3,125,000.00 for decedents dying after April 1, 2015.

For the year 2014, the Federal estate tax exemption will be $5,430,000.00 for decedents dying after January 1, 2015. Any assets over that threshold will be subject to Federal estate taxes.

Estate taxes are due within nine months after the date of death. Therefore, advance planning is key to addressing tax liability.

Below is a brief overview of the various estate planning techniques that may shield assets from future estate tax liability.

Last Will and Testament with Disclaimer (credit shelter trust) provisions: This technique provides a married couple the opportunity to utilize estate tax exemptions of each spouse while giving the surviving spouse the opportunity to elect how much he/she shall receive from the deceased spouse’s estate. Any assets disclaimed or renounced by the surviving spouse are held in trust for the benefit of the surviving spouse. The trust assets are distributed to the ultimate beneficiaries only upon the death of the surviving spouse. The use of a Disclaimer Will may result in significant estate tax savings.

Annual Gift Tax Exclusion: One of the simplest ways to reduce the size of your estate would be to begin making annual gift tax exclusion gifts. An annual exclusion from gift taxes applies to each person to whom you make a gift. In 2015, you will be able to gift up to $14,000 each to any number of individuals without those gifts being taxable.

Benefits:

  1. Allows you an opportunity to reduce the size of your taxable estate.
  2. No gift tax returns are required if the gifts are $14,000 or less each year.
  3. You can make these gifts each year, thereby dramatically reducing the size of your estate.
  4. Receipt of the gift is not taxable to the recipient (unless the item gifted was a tax-deferred asset).

Payment of Tuition and Medical Expenses: Tuition payments made directly to a medical or educational institution are not taxable gifts. The payment must be made directly to the medical or educational institution providing the services. Please note that the exclusion covers tuition payments but not books, supplies, board and dorm fees.

Benefits:

  1. Allows you an opportunity to reduce the size of your taxable estate.
  2. Allows you an opportunity to make additional gifts over and above the annual gift tax exclusion.
  3. This unlimited exclusion can be used for all levels of education.
  4. This exclusion is permitted for tuition expenses of full-time or part-time students.

Irrevocable Life Insurance Trust: A life insurance trust is a vehicle by which the grantor gifts money to the trust and the trust, in turn, buys a life insurance policy on the life of the grantor. When the grantor dies, the life insurance proceeds are paid to the trust and distributed to the beneficiaries designated within the trust. This is a good wealth replacement tool to offset projected estate taxes to be paid.

Benefits:

  1. Provides a liquid pool of funds to pay estate taxes, which are due within nine months of date of death.
  2. The value of the life insurance policy is not included in the grantor’s
    estate because it was not owned by the grantor.

These are just of few of the available estate planning techniques. In estate planning, timing is critical for the proper protection of your assets to ensure security for future generations and starting sooner rather than later is most important. If you have any questions about the above material, or wish to speak to an attorney, please contact HoganWillig at (716)636-7600. HoganWillig is located at 2410 North Forest Road in Amherst, New York 14068, with additional offices in Buffalo, Lancaster, and Lockport.

Choosing a Fiscal Year for Your Business

Author: Robin Friedman


December 31st, 2014

All businesses are required to pay taxes and keep accounting records year by year.  You automatically choose your tax year when you file the first tax return for your business.  After that, you have to get the IRS permission to change.

The majority of small businesses use the calendar year as their tax year—that is, their tax year begins January 1 and ends on December 31.  However, your tax year does not necessarily have to end on December 31.  When a business’s tax year ends on the last day of any month other than December, it is said to have a “fiscal year”.

Ordinarily, sole proprietors, partnerships, limited liability companies, S corporations, and personal service corporations are required to use the calendar year as their tax year. However, there are exceptions that permit some small businesses to use a fiscal year instead.  To do so, the business must get permission from the IRS.  The IRS doesn’t like small businesses to use a fiscal year instead of a calendar year, but it will grant permission if a business has a good reason to do so.

One good reason to use a fiscal year is that your business is seasonal.  For example, if you earn most of your income in the spring and incur most of your expenses in the fall, a tax year ending in July or August might be better than a calendar tax year ending in December, because the income and expenses on each tax return will be more closely related.

To get permission, you must file IRS Form 1128, Application to Adopt, Change, or Retain a Tax Year.  You may have to pay a fee.

Larger businesses organized as regular C corporations have more leeway in choosing their tax year than most others.  They often choose to use a fiscal year instead of a calendar year as their tax year.  For example, the fiscal year for many C corporations ends in March, June or September.  Such corporations typically chose to use fiscal years for accounting convenience.

Commercial Lease Basics

Author: Diane Tiveron


December 28th, 2014

For those that own their own businesses, it is likely that the business will need to enter into a commercial lease at some time during the life of the business.

It is important to have a good understanding of what the issues are at the heart of any commercial relationship.  Here is a partial list of some of the more pressing issues to consider:

How is the rent determined?
A commercial lease should clearly define the rental rate.  This can be done through a standard charge with an annual rate increase that is clearly defined (annual rate increases should be defined by a flat amount).  In some retail leases a tenant is responsible for paying some percentage of the tenant’s sales per year.  It is important to know if this is being required.

What is included in CAM?
Many have heard of the term “Triple Net Commercial Lease”.  This implies that the tenant is paying for all its costs including, common area maintenance, real estate taxes, utilities, etc.  Common area maintenance or “CAM” includes things like the cost of snow removal, security, building maintenance, management fees, landscaping, etc.  The simplest method for determining a tenant’s share of CAM is to divide the number of square feet of the tenant’s space by the total number of rentable square feet in the office building or shopping center.  Sometimes commercial landlords try to manipulate this amount so that the tenant will be paying the highest cost possible.  It is important that this be reviewed carefully.

When something breaks does the business have to fix it?
A well drafted commercial lease will clearly define who is responsible for repairs, the building, the parking lot, the core building systems (plumbing, electric, HVAC, etc.).  There is a difference between who pays for the repairs and who is responsible for making sure that the repairs are made in the first place.

Does the business require build out and, if so, who pays for it?
Again, most commercial lease will require that there be some modification or alteration to the existing premises and this is known as “Build Out”.  A business tenant should always set forth in detail what build out is to be performed, how it will be paid for (how much of an allowance will the landlord provide), and how long will it take for the improvements to be made.

What space is the business leasing?
It is important to make sure that the appropriate amount of space is being rented.  This can be done by measurements (it should be verified) and any business should make sure that the premises described in the lease match the premises that the business is expecting to receive.  A business should also make sure that there are sufficient parking spaces if needed and sign rights in order to allow the business to advertise its location.

The foregoing are just a short list of some of the things that should be considered.  Most commercial leases deal with many other issues including the length of the lease, the tenant’s ability to extend or renew, the ability to assign and what constitutes default.  These are all extremely important issues that should be reviewed carefully and understood before entering into a commercial lease since it is normally a long-term commitment of time and money.

HoganWillig

We Practice Law for Your Peace of Mind