EQUINOX Business Law Group - Seattle Bellevue

Business Page User Names on Facebook

June 28, 2009

Facebook is allowing usernames for business pages with more than 100 fans tonight starting at 9pm PT. Be sure to get your username to make it easy to point visitors and friends to your page! Please also foward the Equinox Business Law Group fan page to friends who are business owners or interested in entrepreneurship!

How to Protect Cash by Managing Receivables

June 22, 2009

In this economy, many businesses are struggling with collecting on receivables. Clients are paying much more slowly than before and some are closing shop and not able to pay at all. Many business owners have never faced a situation where business is okay but cash is extremely tight. The question arises, how does a business get more cash in the door? Here are a few ideas to help collect current receivables but, more importantly, protect the business from the cycle continuing.

1) Stay on top of overdue receivables. Be persistent in your collections efforts. The squeaky wheel is often the wheel that gets paid.

2) If you have penalty and interest clauses in your contract for late payment, use them. This, again, goes to the squeaky wheel metaphor. If you're the one charging the additional fees and pursuing collections, you might very well be paid sooner. If you do not have penalty and interest provisions in your contract, get them in there. You will spend numerous hours hunting down this cash and should be compensated for the effort. Make sure the provisions are reasonable and comply with usury laws. Generally, 12% per annum interest is considered reasonable and appropriate.

3) Collect cash up front where possible. There's no better way to get paid than to get the money first. Many customers don't like this model and it can be difficult in this economy where cash is tight for everyone, but for your own protection, nothing beats cash up front.

4) Get credit cards and/or personal guarantees. Guarantee the payment by requiring a credit card on file that is automatically charged upon completion of the work, 5 days following invoice, or if the balance is overdue. In addition, get personal guarantees from the owners to pay the invoices. Cash strapped businesses are failing but the owners are often not. In small businesses, this is an acceptable and appropriate way to protect your business.

5) Understand what protections you can get by securing your rights. In certain business areas, your business has the right to file liens against property or deliverables you have provided. Alternatively, if you're dealing in physical property, you can require the property be collateral for payment, making you a "secured" creditor and able to use that collateral to obtain payment on the debt.

It is important to understand your business legal rights but also to have clear processes and procedures to address outstanding balances. Even when business is good, if cash is not coming in the door, the business will struggle. With credit tighter than ever for businesses, getting that cash is critical to success.

Are Annual Meetings Required for LLCs and Corporations?

June 19, 2009

This morning I discussed with a client whether her LLC is required to have annual meetings. This topic can be a bit confusing as an LLC is a "hybrid" entity with some characteristics of a partnership and some characteristics of a corporation.

A corporation is required under Washington State law to hold an annual meeting of the Shareholders and an annual meeting of the Board of Directors. Additional "Special Meetings" may be required under particular circumstances as outlined in the corporation's Shareholder Agreement and/or Bylaws. The primary purpose of the annual meeting of the Shareholders is to elect the Board of Directors and vote on other matters requiring Shareholder approval. The annual meeting of the Board of Directors serves to appoint the Officers of the corporation and vote on other matters such as executive compensation and key business transactions. These meetings should be formally held in accordance with the corporation's Bylaws and documented for reference in the Corporate Minute Book.

The business structure of an LLC does not conform to the Shareholder - Board of Directors - Officer model that a corporation has. An LLC has "Members" which are analogous to Shareholders and "Managers" which are analogous to Officers. Under the Washington LLC statute, an LLC is not required to hold an annual meeting of the Members. The Members may choose to hold an annual meeting and require such a meeting in the LLC Operating Agreement. The annual meeting is, without question, a best practice and the Members should hold a meeting at least annually and document the actions taken in the meeting. It demonstrates to third parties such as auditors or litigants that the company has a procedure for governing itself and for decisionmaking. Of critical importance is the documentation of decisions made, either with or without a formal meeting, that require unanimous approval of the Members. If the Operating Agreement or the statute requires that unanimous approval is required for certain actions, be absolutely certain that you document that a vote was taken and unanimous consent was granted. These documents should be stored in a Corporate Minute Book or LLC Record Book along with the formation documents, investment documents, and financial documents of the company.

Regardless of the size of your business, these requirements apply to you. As a corporation, you must hold these meetings. For an LLC, if you require an annual meeting, you must actually have it. I know many business owners who use this time to not only document the necessary legal aspects of the business but also to really think about the necessary decisions of the company. If you're the only owner and feel awkward having a meeting on your own, invite a trusted advisor to help you and keep you on track.

Shareholder Buyout Agreements Keep Your Business Growing

June 16, 2009

Ownership relationships in business change over time. Business owners must plan for separation of the owners, even when they think it will never happen. Just like in marriage, we don't enter into these relationships expecting them to end badly. But as we know, relationships change and life throws us curve balls sometimes. Separations can occur due not only to differences in business perspectives but also personal decisions, death, or disability.

A plan for separation of business owners is often called a "Buy/Sell Agreement" but often the transfer provisions are incorporated into the Shareholders' Agreement, Operating Agreement or Partnership of the company. The separation agreement should include the price, process, and funding of the buyout in each possible scenario.

Buyout events. The agreement should reference the buyout process for withdrawal, bankruptcy, death, disability, disagreement, and retirement. Each of these scenarios may result in a different price, term of payment or funding source. For example, an agreement may not offer any payment for an owner that elects to walk away after 6 months while it might have a full appraisal of the company if that owner dies after committing 20 years to the business.

Price. A provision requiring a valuation and outside appraisal may not be the most appropriate way to price a business. Often the owners can agree annually on what they believe the price is, saving the company the time and money associated with an outside valuation in a difficult time. The important element of this type of provision is to ensure that the owners actually conduct the annual in-house appraisal or that the agreement provides for a backup process if the owners fail to do so.

Process. The buyout process should be outlined in the agreement. Often the company has the first right to buy back the interest of the departing owner(s) with the other owners having a right to purchase the interest if the company elects not to do so. Payment terms should also be outlined -- lump sum or a promissory note to be paid over time.

Funding. As a business grows, the owners must consider how a buyout will be funded. If the owners determine that the company has a value of $5M, they must consider how the company or the individual owners will buy the interest of a departing owner under the terms of the agreement. This is where life, disability, and key-person insurance come into play. If these policies are in place and one of the owners dies or becomes permanently disabled, the company can not only repurchase the interst but also has the funds to fill that position, allowing the company to continue operations.

This kind of buyout planning can save the business significant time and money to continue a company's growth rather than bogging it down in resolving legal issues that could have easily been avoided!

Register Your Business User Name on Facebook

June 11, 2009

On Friday, June 12, 2009 at 9:01 pm, Facebook will begin allowing users to choose a unique user name to make it easier for users to direct people to their profiles. Facebook, though, has limited business's ability to register a profile name to businesses that have pages with more than 1,100 fans. Brands that are newer to Facebook (which are many) or smaller brands that have less of a Facebook following will not be able to protect the user name connected to their brand. An exception granted by Facebook is for businesses that have registered trademarks. If you have a registered trademark for the name, you may complete a form and Facebook will reserve that name so others cannot use it. For those businesses with Facebook pages that do not have registered trademarks, Facebook will allow them to choose their user names on June 28.

Follow Equinox Business Law Group on Social Media Sites

June 10, 2009

My graphic designer, Hannah Wygal of Monster Design, recently commented that rebranding used to simply require the purchase of new letterhead and business cards. I've spent the last two weeks working to communicate the Equinox Business Law Group message through traditional print media but also creating a consistent presence across web tools as well. I think the key, though, is to have a consistent message across social media and other web tools and to leverage each for how it can work best for the business. Each tool offers a different view of the our law practice for different users. Here's my perspective on how these work for our business law practice:

LinkedIn is focused more on me as a professional and what insights I can offer my network and groups to help them grow their businesses.

Facebook tends to be a more personal tool for me but allows a professional page where we, as a firm, can communicate events and information about the law, law practice and best business practices to an audience of friends, clients, and referral sources. For me, Facebook has an opportunity to reach people through old, well-grounded personal relationships that LinkedIn does not. Facebook also has a more robust interaction than other tools.

Twitter is a great tool for content. I truly enjoy finding content of interest to my followers and posting it. Twitter encourages me to seek valuable articles and information to share with my fellow tweeters. Twitter also offers me an immense amount of fodder for my own postings, radio shows, articles -- where I can provide a perspective and insights to complement others' opinions.

Trial and error will be the path for awhile to see what reaches people most effectively. I am excited to engage with you on one or more of these platforms -- please look us up and provide feedback!

Connect with Michelle on LinkedIn

Become a Fan of Equinox Business Law Group on Facebook

Twitter @michelbomberger

I'm looking forward to connecting with you to help you grow your business!

Official Launch: Equinox Business Law Group

June 01, 2009

We are thrilled to officially introduce to you our new brand Equinox Business Law Group. As many of you are aware, at Small Business Legal Services, we’ve been working diligently on a rebranding effort that more clearly reflects our mission and services. We selected the word “Equinox” as it resonates clearly with our core values and what both we and our clients strive for each day – balance: Balancing opportunity with risk, prevention with cost, and work with life.

Our mission, to provide entrepreneurs and business owners with strategic business and legal counsel to make informed business decisions in a proactive, risk-preventative manner, enabling them to grow their businesses with the confidence that they are building value for their futures and protecting against risk and liability, continues. As part of the rebranding, though, we have implemented programs such as the Legal Needs Assessment, Annual Check In and General Counsel Services that better enable us to achieve this mission by working more closely with our clients to plan for and implement practical legal solutions to build value for the future.

To provide more insight to you on how to grow value into your business now, we are beginning a new program entitled “Balancing Business and Law.” Each month, we will highlight a particular business concept and offer a newsletter, guest blog postings, and a seminar jointly offered with experts on the topic. We look forward to your suggestions and seeing you more often as you learn about topics of interest for your business. July will be our first month of “Balancing Business and Law” and will focus on the strategic issue of “Building Value Into Your Business.”

We are excited about the new brand and invite you to visit our updated website www.equinoxbusinesslaw.com and share with us your comments. You will continue to see more changes over time. Also, become a fan of us on Facebook. We hope to use Facebook more for discussions, event planning and other “social” activities.