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Why Your Restaurant Needs An Attorney

Author: Hogan Willig

June 25th, 2015

Whether you are just opening your doors, or have a well-established restaurant, you can agree that the legal and regulatory requirements of running your business are a big part of day-to-day operations. Making sure you are complying with these regulations is a critical factor in the success of your restaurant operation. This article aims to address restaurant-specific laws and obligations and what you, as a business owner, need to be aware of in order to build and grow your business.

One of the first questions an attorney can help you answer is what kind of legal structure you should form. There are a number of options available, such as forming a Limited Liability Company (LLC) or a Corporation. Each has its own benefits to business owners and choosing heavily depends on the kinds of protection that is best for your structure. An attorney will also help you to apply for the various permits a food service business will need to legally operate. Applying for a liquor license or food safety permits, for example, can be a time consuming and frustrating process without the expert knowledge of an attorney.

In the unfortunate event that an accident of some nature happens at your establishment, an attorney will be crucial to helping you litigate and resolve the situation in a way that is least detrimental to the business. Restaurants can be vulnerable on many levels to injuries and lawsuits. Your legal counsel will help you navigate through the complex insurance system and help you consider and obtain the best insurances to protect you and your business.

Labor laws are another aspect of business ownership where the guidance of an attorney can be critical. The various laws governed by the Department of Labor including minimum wage, tips, overtime, difference between full and part-time employees, and employing minors. A misstep in this area can land your business on the wrong end of a lawsuit or with extensive fines.

Restaurant owners and management should be sure to hire a lawyer from the ground level, if possible. This will ensure that large mistakes that may be made without effective legal counsel won’t become costly to fix in the future. The situations in which an attorney can represent you and your business are endless. To learn more about what HoganWillig can do for your business, give us a call today at 716-636-7600.

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.

Which Choice of Business Entity is Best for You?

Author: Diane Tiveron

December 22nd, 2014

There are essentially four types of entity choices for businesses: sole proprietorship, partnership, limited liability company (LLC), and corporation.

There are advantages and disadvantages to each.

The sole proprietorship simply means that there is one owner.  An owner may file an assumed name or business certificate allowing them to do business as “Joe’s Hot Dogs” or “Sally’s Car Rental” but essentially the business is identified and intertwined with the individual.  All of the income belongs to the individual and if the business incurs a debt it becomes the personal debt of the owner.

The corporate format allows an individual or a number of individuals to form an entity which has a separate legal identity and separate tax identity.  This form of doing business provides a liability shield and is important for individuals who have a significant amount of personal assets that would be vulnerable to business difficulties or lawsuits.

A sole proprietorship provides complete flexibility.  Since it is the individual that is at the core of the business, that individual can make decisions and focus on whatever he or she would like in an instant.  However, this complete flexibility comes with a cost.  If the business incurs debt or if it gets sued then this becomes the personal obligation of the individual owner and that person’s assets may be available to deal with these issues.

LLC’s are, for purposes of this discussion, essentially the same as corporations.  They provide limited liability and ease of ownership for a number of individuals.  Both the LLC and the corporation, depending on the circumstances, can engage in elections which allow for the income or loss of the particular business to be reported on an individual’s personal tax return.  This provides the benefit of lower tax rates.

A partnership is used by more than one individual but is not often recommended.  The reasoning is that, on a very basic level, an individual in a partnership is responsible for the actions of the other partners.  This makes the partnership format the least desirable.

You should always speak with someone (an attorney or an accountant) before developing the particular entity to operate your business.  These discussions can help you understand what is best for your particular needs.

Employer Shared Responsibility Provision in the Affordable Care Act

December 17th, 2014

Under the Affordable Care Act, federal government, state government, insurers, employers and individuals are all given roles to improve the availability, quality and affordability of health insurance coverage in the United States.  Applicable Large Employers (ALEs) must adhere to the employer shared responsibility provision, known as the “employer mandate.”  Small businesses that have fewer than 50 workers are exempt from the employer responsibility provisions. As of January 1, 2015, employers with 100 or more full-time employees are ALEs and must offer minimum essential coverage to those employees and their dependants to age 26, or pay a penalty tax.  Beginning in January of 2016, the employee requirement is reduced to 50.  In addition, the coverage offered must be affordable and provide minimum value of coverage to full-time employees and their dependants to age 26.  Employers must offer the coverage to 70% of their full-time employees in 2015 and 95% in 2016 and beyond.

A full-time employee is an individual employed 30 or more hours per week on average.  Employers will determine yearly whether they will be considered an ALE by using the values from the prior year.  For example, an ALE determination for 2015 is based on 2014 employee numbers.  Coverage must be offered to employees and their dependants, and there is no requirement for spouses of employees to be offered coverage.

Minimum Essential Coverage

Minimum essential coverage is defined as most employer-sponsored coverage, including self-insured plans, or health coverage provided by the government.  Coverage that only provides limited benefits is not minimum essential coverage.  For example, Medicaid providing only family planning services, or coverage consisting solely of excepted benefits like worker’s compensation, is not minimum essential coverage.


The coverage is considered affordable when the employee’s share of the premium for the employer provided coverage for a single plan is less than 9.5% of that employee’s annual household income.  Because employers will not know their employees’ household incomes, three affordability safe harbors can be used to determine affordability.  If the employer meets the requirements of any of the following three safe harbors, the offer of coverage is considered affordable.

  1. Form W-2 wages – share of premium is less than 9.5% of employee’s W-2 wages
  2. Rate of pay – share of premium is less than 9.5% of employee’s monthly wages (lowest hourly rate multiplied by 130 hours per month)
  3. Federal poverty line – share of premium is less than 9.5% of the Federal Poverty Level for a single individual

Minimum Value

The coverage provides minimum value if it pays at least 60 percent of the total allowed cost of health care benefits provided to eligible plan participants.  The Department of Health and Human Services and the IRS created a minimum value calculator to determine minimum value.  An employer could also engage an actuary to determine this value.


There are two prongs to the penalties associated with not complying with the employer mandate.

  • In 2015 if the employer fails to offer coverage to 70% (95% in 2016 and going forward) of their full-time employees and their dependants, and at least one full-time employee obtains Exchange coverage and receives a subsidy, the penalty is equal:
    1. $2,000 x the number of full-time employees minus 80 (minus 30 in 2016 and going forward).
  • In 2015, if the employer fails to offer compliant coverage to 70% (95% in 2016 and going forward) of their full-time employees and their dependants, and at least one full-time employee obtains Exchange coverage and receives a subsidy the penalty equals the lesser of:
    1. $3,000 x the number of full-time employees receiving coverage from the Exchange and receiving a subsidy, or
    2. $2,000 x the number of full-time employees minus 80 (minus 30 in 2016 and going forward).


Beginning in 2016, ALEs are required to file information returns with the IRS and give statements to employees to report information about offers of health coverage for calendar year 2015.

If you have any questions about the above material please contact HoganWillig, Attorneys at Law at (716) 636-7600 or visit www.hoganwillig.com.  HoganWillig’s main office is located at 2410 North Forest Road in Amherst, New York with additional offices in Lockport, Lancaster and Buffalo.

Happy New Year! Begin 2015 With These Small Business Legal Resolutions

Author: Hogan Willig

December 9th, 2014

It is that time of the year again-when we reflect on the year that was and look forward to new beginnings.  We also resolve to be better people: help others, exercise more, eat better, stress less, save more are all popular.  But what about your business?

Focus on the big picture–Many small business owners focus all their attention on the day to day operations of the business and neglect the bigger picture.  It is important to set aside time every so often and plan for the future. Have a plan, create a growth strategy, implement a social marketing campaign.  Focusing some of your attention on the future will help you better prepare your business.  Because that distant day will be here before you know it.

File all your legal documents–If you are like many small business owners you have great intentions of filing legal documents. If you have been thinking of trade marking your name or logo make 2015 the year to do it.  Did you form an LLC in New York but never completed the publication requirement? Do so now.  Are you a sole proprietor? Now is the time for you to formalize your business entity.

Review your business insurance policies—If your policy is more than two years old now is a good time to review it.  Ensure the policy adequately covers your current needs.  Has the business expanded to another location? Did you introduce a new product? Did you hire new employees? Keeping your policy up to date with your business will ensure that you are protected should you need to use the policy.

Warmest thoughts and best wishes for a happy, healthy and prosperous New Year!!!

Start Protecting your Business in the Early Stages of Planning

Author: Hogan Willig

September 22nd, 2014

In order to position oneself to reach the highest level of success and benefits available from starting your own business, it is important to begin with a solid foundation. Starting up a business is not something that can be done overnight: months, sometimes years of planning must take place before an adequate model is in place. The majority of business owners will pronounce their support for involving a lawyer during these crucial planning stages. The result could save you hassles and money later on. There are various different legal issues you can plan for before you get your business off and running.

One of the most important business decisions an owner will make initially is whether or not to incorporate or form a limited liability company (LLC). It is important to realize that if your business is not in one of these two structures, you will be subject to personal liability for the debts of your business. With a corporation or LLC, your losses are protected to be limited to the amount of your investment in the business, rather than your personal losses exceeding the investment. If you decide that a partnership is a more suitable business plan, you will be in need of a partnership agreement. This document will cover the rights and responsibilities of the parties involved, as well as address in advance, the countless scenarios that may arise.

Many businesses arise due to the creation of a product or idea. If this is the case for your business, it may be imperative that you get a patent to protect any inventions or new processes that your business will use. Without these useful licensing documents, your competitors are likely to replicate and benefit from your idea. It may also be the case that a business owner will want to trademark the name of their business or product. Corporate and Business Law lawyers are well versed in these processes and can make sure your business is legally protected from harm.

Lastly, most businesses are not a one-man-show; they require the time and dedication of numerous employees. The terms of employment for workers are an important aspect of a business plan that should not be overlooked. Internal and external relationships the business will formulate will undoubtedly create the need for many contracts to protect the owner and business from confidentiality breaches and other definite risks. The bigger the impact of the contract is, the more vital it becomes that a lawyer participate in its formation and negotiation.

At HoganWillig, our corporate and business law team knows that business owners and entrepreneurs operating in New York State face a multitude of legal issues. Our goal is to provide practical, useful advice that proves to you the value of engaging corporate legal counsel. We provide a wide variety of legal services to our business clients, from formation to dissolution and everything in between.


We Practice Law for Your Peace of Mind