Business Counselor Articles
When you buy or sell business assets, your focus should not only be on obtaining the purchase price which you seek, but also on how the purchase price is allocated among the assets that are being transferred. Because IRS rules require that the buyer and seller use the same allocation, the allocation should be negotiated and documented in writing as part of the sales contract.
Revised Article 9 requires secured lenders to file financing statements in the “exact legal name” of the debtor. This is a “birth certificate” standard and requires that secured lenders use the “exact legal name” given on the debtor’s birth certificate in order to identify the debtor.
Do you have adequate insurance protection for your business assets? Most owners are aware of coverage amounts and deductibles. Unfortunately, the “devilish details” make a huge difference in the actual amount paid on a claim.
The large volume and increased portability of electronically stored information presents unique challenges to records management. "Electronically stored information" (which can include writings, drawings, graphs, charts, photographs, sound recordings, images, and other data or data compilations) is generated, used, and stored by most businesses on a daily basis. Electronically stored information ("ESI") is easily created, duplicated, transmitted and stored, and is often not routinely (or completely) eliminated from a company's system.
In Miller v Allstate Insurance Company, the Michigan Court of Appeals recently held that a corporation performing physical therapy treatments was improperly incorporated under the Business Corporation Act and should have been formed under the Professional Services Corporation Act. This decision draws into question what type of businesses must be formed under the Professional Services Corporation Act.
Most students who receive federal student loans are unaware that there is no statute of limitations on enforcement actions to collect student loans. This includes collection by offset, lawsuit, or enforcement of student loan judgments. As such, the federal government can attempt to collect on student loans at any point in time that the loan remains outstanding. The U.S. Department of Education has recently begun to diligently review its old records and pursue collection actions against borrowers who received student loans many years ago.
Business owners go to great effort to develop solid business plans to assure the continuing success of their businesses. As a result, it is surprising how few adequately plan for how their business and other assets will be distributed upon their death. Perhaps it is a fear of one’s own mortality or simply the fact that other tasks have a more definite deadline so that estate planning is put off. Nevertheless, ignoring estate planning is a common failure among business owners and the failure to plan not only may cost their heirs a great amount of money, it also may destroy their business.
The vast majority of businesses own and use trademarks, but do nothing to protect them. A company’s trademarks (words, symbols or other devices which identify or distinguish the products and services of one business from the products and services of other businesses) are important assets because they generate goodwill. Distinctive business names, logos, symbols, slogans, and domain names can all be protectable trademarks where they are used to identify or distinguish goods or services from other sources. The owner of a trademark has the right to stop the use of the same or similar marks if those other uses create a “likelihood of confusion” among the customers of the businesses.
The recent tax legislation response to Hurricane Katrina, called the Katrina Emergency Tax Relief Act of 2005, has a nice tax bonus for persons interested in making substantial charitable donations by December 31, 2005. Charitable donations are generally subject to limits on the amount deductible on the donor’s income tax return. The deduction limits which generally apply are 50% of the donor’s adjusted gross income for cash contributions and 30% of the donor’s adjusted gross income for contributions of property. Unused excess deductions can be carried forward for five years. An additional limitation disallows part of the deduction for higher income individuals.
It often does not occur to parents that when their children turn age 18, they are no longer minors under Michigan law. Once a child reaches 18, he or she has legal independence of parents and the ability to enter into contracts and execute other documents including estate planning documents. Although most 18 year olds have not yet accumulated substantial assets, they should execute certain estate planning documents.
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