One of the first and most important decisions you now face is deciding what form of business entity to own and operate your business venture. There are several options, including-
• a sole proprietorship or general partnership;
• a limited partnership;
• a limited liability company;
• a limited liability partnership;
• an S-corporation; or
• a regular corporation- a C-corporation.

For nearly every business owner reading this article, the choice is fairly simple. Most Indiana businesses should operate either as an S-corporation, regular corporation, or limited liability company. These three entities offer business owners limited asset protection and relative ease of operation. In deciding the best business structure to utilize, each business owner should consider a variety of general factors and also the circumstances unique to the business, its owners, and its opportunities and challenges.

Before forming a new business entity, a good business attorney will spend time with a business owner to discuss and consider factors such as these-

• Will the business consist of an operating entity or a holding company?
• What are the likely tax liabilities arising from the business?
• If an operating entity is chosen, can FICA taxes be minimized?
• How will the business be financed?
• What is the exit strategy?
• What business risks are being avoided?
• Do the owners and managers have the requisite training and vigilance to maintain a more complicated structure?
• What are the costs, benefits and burdens of creating a particular business structure?

As explained above, a business should be operated as a limited liability entity to protect the assets of the owners. That is the central reason to form a business entity.
One of the first and most important decisions you now face is deciding what form of business entity to own and operate your business venture. There are several options, including-
• a sole proprietorship or general partnership;
• a limited partnership;
• a limited liability company;
• a limited liability partnership;
• an S-corporation; or
• a regular corporation- a C-corporation.

For nearly every business owner reading this article, the choice is fairly simple. Most Indiana businesses should operate either as an S-corporation, regular corporation, or limited liability company. These three entities offer business owners limited asset protection and relative ease of operation. In deciding the best business structure to utilize, each business owner should consider a variety of general factors and also the circumstances unique to the business, its owners, and its opportunities and challenges.

Before forming a new business entity, a good business attorney will spend time with a business owner to discuss and consider factors such as these-

• Will the business consist of an operating entity or a holding company?
• What are the likely tax liabilities arising from the business?
• If an operating entity is chosen, can FICA taxes be minimized?
• How will the business be financed?
• What is the exit strategy?
• What business risks are being avoided?
• Do the owners and managers have the requisite training and vigilance to maintain a more complicated structure?
• What are the costs, benefits and burdens of creating a particular business structure?

As explained above, a business should be operated as a limited liability entity to protect the assets of the owners. That is the central reason to form a business entity.

One of the first and most important decisions you now face is deciding what form of business entity to own and operate your business venture.  There are several options, including-

•    a sole proprietorship or general partnership;
•    a limited partnership;
•    a limited liability company;
•    a limited liability partnership;
•    an S-corporation; or
•    a regular corporation-  a C-corporation.

For nearly every business owner reading this article, the choice is fairly simple.  Most Indiana businesses should operate either as an S-corporation, regular corporation, or limited liability company.  These three entities offer business owners limited asset protection and relative ease of operation.  In deciding the best business structure to utilize, each business owner should consider a variety of general factors and also the circumstances unique to the business, its owners, and its opportunities and challenges.

Before forming a new business entity, a good business attorney will spend time with a business owner to discuss and consider factors such as these-

•    Will the business consist of an operating entity or a holding company?
•    What are the likely tax liabilities arising from the business?
•    If an operating entity is chosen, can FICA taxes be minimized?
•    How will the business be financed?
•    What is the exit strategy?
•    What business risks are being avoided?
•    Do the owners and managers have the requisite training and vigilance to maintain a more complicated structure?
•    What are the costs, benefits and burdens of creating a particular business structure?

As explained above, a business should be operated as a limited liability entity to protect the assets of the owners.  That is the central reason to form a business entity.

Sole proprietorships and general partnerships offer no protection to their owners or to the entity itself.  By contrast, limited liability companies, limited partnerships and corporations are limited liability entities which provide significant but limited protection from liabilities arising from the business’ operations.  Generally, what is at risk for an owner is the value of the investment made by the owner in the entity.  Business lawyers refer to this as “inside out protection,” because the liabilities arising inside the entity will not reach the assets of the owner held outside of the entity.

Of course, selecting the right entity is just the first step in this process.  Careful drafting of documents, the proper filing of documents with governmental offices and establishing processes and procedures to follow the so-called “corporate formalities” are equally important steps in limiting the liability risks to the business’ owners.  These topics are addressed in other articles, but the entire process starts with the list of factors relevant to selecting the right entity.

If you are starting a new business or are unsure whether your current entity is properly structured, contact your business attorney to review the issues raised in this article.

Posted on | May 1, 2010 | No Comments

I started the Griffith Law Group to serve the needs of solopreneurs, entrepreneurs, small to medium sized business, and business owners.  We also help real estate investors, builders, building trades, property managers and other real estate professionals.   

We encourage you to sign up for our electronic newsletter, through which we share important business news and information about changes in the law that might impact your business or real estate interests.  Learn more at www.IndyBizLaw.com.

Matthew A. Griffith, Attorney

Matt@IndyBizLaw.com

Announcing the formation of my new law firm. . .

Posted on | April 9, 2010 | 1 Comment

After 18 years of practice with a downtown Indianapolis law firm, I am pleased to announce that I am launching the Griffith Law Group- my own law firm dedicated to serving the needs of solopreneurs, entrepreneurs, small to medium sized business, and business owners.  I will also continue my work representing real estate investors, builders, building trades, property managers and other real estate professionals.  Initially, our new offices will be located in the first Small Business Development Center developed by Rainmakers Marketing Group, Inc.

Starting on May 1, 2010, my new contact information will be:

Griffith Law Group

7208 N. Dobson Street

Indianapolis, IN  46268

317-663-0650

Matt@IndyBizLaw.com

The Griffith Law Group will offer legal services in a very different, results-oriented style.  Our emphasis is on educating clients and empowering them to make good business decisions that are cost-effective and consistent with their personal, financial and professional goals.  To learn more about how our approach to the practice of business and real estate law is different, please visit our website:

  www.IndyBizLaw.com

We also encourage you to sign up for our electronic newsletter, through which we share important business news and information about changes in the law that might impact your business or real estate interests.

As always, please feel free to contact us with any questions or concerns about your business, real estate or other legal needs.  We look forward to serving you.  

Matthew A. Griffith, Esq.

Businesses Must Protect Confidential Data

Posted on | March 17, 2010 | No Comments

In an effort to protect the privacy of consumer information and reduce the risk of fraud and identity theft, a federal rule requires businesses and landlords to take certain protective measures to dispose of sensitive information derived from consumer reports.  Any business or individual who uses a “consumer report” for a business purpose is subject to the requirements of this Disposal Rule.  The Rule requires the “proper” disposal of information in consumer reports and records to protect against unauthorized access to or use of the information. The Federal Trade Commission (FTC) has the responsibility to enforce the Disposal Rule.

In a property management context, a consumer report includes tenant credit and other such reports generated by consumer credit reporting agencies (CRA’s), such as tent screening agency.   A consumer report does not include information gathered directly by  business for use by the business.  Below, I have included more information about what constitutes a consumer report.
The FTC has indicated that the standard for the proper disposal of information derived from a consumer report is flexible, and allows organizations and individuals covered by the Rule to determine what measures are reasonable based on the sensitivity of the information, the costs and benefits of different disposal methods, and changes in technology.  Although the Disposal Rule applies to consumer reports and the information derived from consumer reports, the FTC and this author both encourage those who dispose of any records containing a consumer’s personal or financial information to take similar protective measures.  In other words, treat all customer and client information as if they are subject to the Disposal Rule.

Who must comply?

The Disposal Rule applies to individuals, as well as large and small organizations, that use consumer reports.  Among those who must comply with the Rule are:
• Consumer reporting companies
• Lenders
• Insurers
• Employers
• Landlords
• Government agencies
• Mortgage brokers
• Automobile dealers
• Attorneys or private investigators
• Debt collectors
• Individuals who obtain a credit report on prospective nannies, contractors, or tenants
• Entities that maintain information in consumer reports as part of their role as service providers to other organizations covered by the Rule.

What information does the Disposal Rule cover?

The Disposal Rule applies to consumer reports or information derived from consumer reports.  The Fair Credit Reporting Act defines the term consumer report to include information obtained from a consumer reporting company that is used – or expected to be used – in establishing a consumer’s eligibility for credit, employment, or insurance, among other purposes.  Credit reports and credit scores are consumer reports.  So are reports that businesses or individuals receive with information relating to employment background, check writing history, insurance claims, residential or tenant history, or medical history.
What is ‘proper’ disposal?

The Disposal Rule requires disposal practices that are reasonable and appropriate to prevent the unauthorized access to – or use of – information in a consumer report.  For example, reasonable measures for disposing of consumer report information could include establishing and complying with policies to:

• burn, pulverize, or shred papers containing consumer report information so that the information cannot be read or reconstructed;
• destroy or erase electronic files or media containing consumer report information so that the information cannot be read or reconstructed;
• conduct due diligence and hire a document destruction contractor to dispose of material specifically identified as consumer report information consistent with the Rule. Due diligence could include:
o reviewing an independent audit of a disposal company’s operations and/or its compliance with the Rule;
o obtaining information about the disposal company from several references;
o requiring that the disposal company be certified by a recognized trade association;
o reviewing and evaluating the disposal company’s information security policies or procedures.

The FTC says that financial institutions that are subject to both the Disposal Rule and the Gramm-Leach-Bliley (GLB) Safeguards Rule should incorporate practices dealing with the proper disposal of consumer information into the information security program that the Safeguards Rule requires (ftc.gov/privacy/privacyinitiatives/safeguards.html).

The Fair and Accurate Credit Transactions Act, which was enacted in 2003, directed the FTC, the Federal Reserve Board, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Office of Thrift Supervision, the National Credit Union Administration, and the Securities and Exchange Commission to adopt comparable and consistent rules regarding the disposal of sensitive consumer report information.  The FTC’s Disposal Rule became effective June 1, 2005.

Warning! Don’t Buy Legal Forms Online

Posted on | March 13, 2010 | No Comments

Unless you know that a website is operate by an Indiana lawyer, you should never buy legal forms for an Indiana transaction or need online.  For example, only an Indiana small business attorney understands Indiana business law and Indiana legal forms well enough to offer virtual law services for business clients.  Sites like Legal Zoom sell forms to anyone anywhere, regardless of state law requirements, traditions and customs.

Here’s another article about the dangers of buying legal forms from websites that are not owned and operated by lawyers licensed in your state-  http://indianavirtuallaw.com/news/avoid-legal-forms-companies

Take your business to a new level in 2010

Posted on | March 11, 2010 | No Comments

Take your business to a new level in 2010 .  Attend this amazing & free class sponsored by Xpedishon Coaching. 

Xpedishon provides group coaching to solopreneurs and small business owners. Xpedishon was co-founded by Rainmakers CEO Tony Scelzo, Matthew Griffith, Ed Turi, and Jack Klemeyer.  We are looking for 150 individuals who want to grow their business to over $500,000 per year in revenue.  We have a proven system that has helped hundreds of individuals signficantly grow their business. 

March 19th , 10:00 – 11:30 am   

Details & Free Registration for the March Xcelleration Event.

• Are you willing to invest 90 minutes of your time to find out how to significantly grow your business in 2010? 
• Are you done with this slow economy?   Ready for better times?
• If you are frustrated with the challenges of running your business in this tough economy we would like to invite you to a free workshop to show you how you can double and even triple your business in 2010.  

Matthew Grffiith, Tony Scelzo, Jack Klemeyer, and Ed Turi, the owners of Xpedishon Coaching, will lead an inspiring and dynamic presentation where you will learn- 

• The three areas that you must focus on to grow your business.
•  The top limiting beliefs that you must eliminate before you can ever succeed in business.
• How to structure your business to grow bigger than you ever thought possible.  

People come to Xpedishon, because they are motivated and committed to growing their business despite the challenging economy.  If you are committed to growing your business in 2010, then this free one-hour workshop is for you.   

Setting Up An Indiana LLC

Posted on | March 7, 2010 | No Comments

Question:   “We formed an LLC a few years ago, but haven’t done anything with it.  We do own properties and a business, but nothing is titled in the name of the LLC.  There are several family members involved and our tax returns are a mess.  Any advice on what we should be doing?”

Matt’s Answer:   “Yes, I advise you to gather all your deeds, financial records and company records, and sit down with your business or real estate attorney, your CPA and your insurance agent.  I have reviewed your company records, and can see that you’ve done essentially no planning.  We need to develop a plan for you.  You need an asset protection plan that includes some training and education on how to operate your LLC.  You need to get better insurance on your properties, your business and the LLC members.  You need to fix your company record book, which includes the drafting and completion of an Operating Agreement.  And, that Operating Agreement should contain buy-sell provisions to address what I call the “Big D’s-” death, disability, marital divorce, dissolution of the entity, and disinterest by one or more members.  You also need to fix certain accounting and tax irregularities, which flow from your failure to devise a plan.

Your meeting with your attorney should last one hour to two hours, and should include training and instruction on how to operate this business.  Yes, it is a business.  “Real Estate Investing” is a misnomer.  It should be called “Real Estate Management” or “Real Estate Business.”  You should apply basic business principles to your real estate business.   Although I cannot explain in great detail here everything you need to do to correct the shortcomings of your operation, I can assure you that it is a fairly routine matter for an experienced real estate and business attorney.  This is not difficult to correct, but you need to consult with professionals and implement a plan.  Do not believe everything you’ve read in a book, on the Internet or in a seminar manual.  And do not expect your CPA or insurance agent to fix your legal matters, as each of these three professionals has his or her own expertise and field of licensed competency.  Go see all three- an attorney, a CPA and an insurance agent- and get your house in order as soon as possible.  Within thirty days, you should have your real estate business matters in order.”

Fully Virtual Law Office Is Launched in Indiana

Posted on | March 1, 2010 | No Comments

Indianapolis, IN: March 1, 2009 – Tiffany U. Vivo, an Indianapolis attorney and Managing Partner of Vivo Law Offices, LLC announced today the launch of Indiana’s first fully virtual law office (VLO) in Indiana.  The VLO’s address is www.IndianaVirtualLaw.com.

A virtual law office (VLO) is a web-based law practice that enables clients and lawyers to communicate through encrypted messages from any web access point at times convenient for the client and typically at reduced costs.  A VLO is not a website operated by non-lawyers selling legal documents, such as Legal Zoom.  Rather, a VLO is a licensed law office that uses the web to facilitate attorney-client communications and the safe exchange of data and documents with a licensed attorney.

“By eliminating expensive law offices, large staffs and other unnecessary overhead, our VLO can deliver cost-effective legal services from Indiana-licensed attorneys at lower costs,” explained Vivo.  Increasingly, consumers are turning to the Internet for solutions to legal, medical, home improvement, car repair and other problems. “A VLO is not right for every client, but VLO’s do offer many clients access to a knowledgeable and experienced attorney, and good legal documents at a fraction of the cost,” Ms. Vivo further explained.

The other huge advantage of a virtual law office is convenience.  A virtual law office can be accessed by a client anytime from anywhere the Internet is available.   “There is no doubt that clients expect more convenience.  Many clients do not want to drive in downtown traffic, find parking and then fight crowds and elevators just to see their lawyer,” noted Matthew Griffith, an Indianapolis attorney who often meets clients away from his downtown office.  “Coffee shops are my office away from the office,” Griffith added.

“It is important that any law virtual firm office strictly adhere to the Indiana Rules of Professional Conduct and the Best Practice Guidelines for Legal Information Web Site Providers written by the E-Lawyering Task Force of the American Bar Association’s Law Practice Management Section and the ABA Standing Committee On the Delivery of Legal Services,” said Ms. Vivo.
About Tiffany U Vivo, Attorney:    Tiffany U. Vivo is an Indiana attorney.  At her physical law office, she practices immigration and family law.

Business goals & limiting liability

Posted on | January 28, 2010 | 3 Comments

Chances are that your lawyer has never encouraged you to establish business goals as a legal strategy.  In this blog, I hope to convince you that goal setting is a great way to reduce your chances of getting sued or having other legal troubles.  Of course, setting goals is only part of the battle.  What’s a goal worth, if you never take the next step: Implementing a plan to meet those goals?  But, let’s start here- Goal Setting.

I think business goals are best defined as components of your “Vision.”  What is it you are trying to create, build, rebuild or restructure?  What will your company look like in 12, 25, 60 months from now?  For example, I am involved in helping to launch a virtual law service- www.IndianaVirtualLaw.com.  IndianaVirtualLaw has a vision of its intended future.  It is becoming the best, online law firm providing a wide range of legal forms, documents and other “unbundled services” with no fewer than 80 regular clients and 200 annual clients within 12 months.  IndianaVirtualLaw intends to be an automated, forms-driven service that is almost entirely online to serve a specific market segment.

I could describe the vision for IndianaVirtualLaw in more detail, but you get the idea.  The more specifically I can defined the vision of any company, the more likely I will be able to create a plan to reach that goal- realize the vision.

Once you have a well-defined vision, you can determine the steps required to move your company from where you are today to where you need to be to realize the vision.  And this is the stuff of business planning.

With a well-defined vision and business plan, you can chart your conduct, define operations, establish employee roles, etc.  You can create operations manuals, policies, procedures, etc.  And in those operational tools, you can identify risks and create ways to keep customers happy, safe and out of the courtroom suing you.  Remember that HAPPY CUSTOMERS WON’T SUE YOU.   

Your company will also be able to manage cash flow better.  That reduces disputes with vendors over payments, because you won’t be late on payments.

If cash flow is good, you can avoid doing business with less desirable customers and clients, especially slow-paying customers and clients.  Thereby, you can avoid having to hire attorneys or collection agencies to collect your accounts receivable.

If your company is functioning well, you can afford to retain professional advisors, like lawyers, CPA’s, insurance advisors, business coaches, etc.  And, this enables you to implement preventative measures that reduce liability risks, rather than the more costly way of reacting to problems.

Etc., etc., etc. 

The advantages of setting goals and implementing business plans are enormous.  So, I think it is critical that business attorneys understand business to help their clients with goal setting and planning as part of the client’s asset protection plan.