No Longer Spouses, But Still Partners

Posted on July 29, 2013 by in Blog

Workplace romances are never advisable, but sometimes co-workers and business partners fall in love and get married. Unfortunately, they also sometimes fall out of love and get divorced. What happens next?

For some couples, the end of the marriage parallels the end of their working relationship—and possibly the end of the business itself. There are a number of options in such cases. The couple can sell the business and split the proceeds as part of the divorce settlement, or one partner can buy out the interest of the ex-spouse. Or they can try to split the business, with each taking half. Speak with an experienced business lawyer about the pros and cons of these options for your situation.

However, some former spouses do figure out a way to maintain their business partnership after the divorce. The personal relationship may have hit a dead-end, but the investment involved in building and growing a successful company can make it hard to walk away—and unless the business is wildly successful, with plenty of prospective buyers waiting in the wings, it is feasible that neither party can afford to walk away.

Overcoming the Challenges

There are challenges in every business partnership, and ex-spouses can adopt some basic business strategies to cultivate and maintain a healthy working relationship:

  • Sign a partners agreement. Be clear about your separate and joint responsibilities, and matters of liability. Make a contingency plan outlining how assets will be divided in case either partner decides to leave.
  • If necessary, divide up responsibilities or tasks you once did together so you each have more autonomy.
  • Establish a board of directors. Trustworthy business people may have valuable perspectives about the direction and goals of your company.
  • Keep the company finances transparent. Money is often one of the most difficult issues in a divorce. Get help if necessary to streamline your accounting processes.
  • Be professional around other staff members and employees. It is not fair to put employees in a position where they feel pressured to take sides or respond to inappropriate complaints about their other boss. A toxic work environment is never good for business.

Thinking Outside the Box

Even with the best intentions, a divorced couple may keep falling back into their old patterns at the workplace. If you still think that the business is viable and worth the effort to make a go of it, get professional help. A good marriage therapist is trained to help couples understand the point of view of the other person and gain insight into their dynamics, and this can be valuable information post-divorce, as well.

Most entrepreneurs have a knack for thinking outside the box. Maybe you and your ex- can alternate day and night shifts for a few months. Build a partition between your desks. It might take a while before you move from being unhappy exes to friendly partners – but it just might be worth it.

If you or your company would like a free consultation on these or any issues, please contact me at mmurrah@outsourcegc.com

Gun Laws for Business Owners

Posted on July 22, 2013 by in Blog

Despite the decreases in gun crime over the last twenty years, (see here) high-profile shootings and the debate over “gun control” continue to occupy headlines. Business owners in Texas should familiarize themselves with gun laws and keep abreast of developments.

1. Parking Lot Storage: The Texas Labor Code generally restricts employers from prohibiting licensed and/or lawful employees from access to, storage of, or transporting firearms or ammunition in a locked, privately owned motor vehicle in a parking lot, parking garage, or other parking area the employer provides for employees. (Tex. Lab. Code § 52.061)

Important Exceptions to the general prohibition are included though.

(a) Section 52.061 does not:

(1) authorize a person who holds a license to carry a concealed handgun to possess a firearm or ammunition on any property where the possession of a firearm or ammunition is prohibited by state or federal law;

(2) Apply to:

(A) a vehicle owned or leased by a public or private employer and used by an employee in the course and scope of the employee ’s employment, unless the employee is required to transport or store a firearm in the official. discharge of the employee’s duties;

(B) a school district;

(C) an open-enrollment charter school;

(D) a private school;

(E) property owned or controlled by a person, other than the employer, that is subject to a valid, unexpired oil, gas, or other mineral lease that contains a provision prohibiting the possession of firearms on the property; or

(F) property owned or leased by a chemical manufacturer or oil and gas refiner with an air authorization under Chapter 382, Health and Safety Code, and on which the primary business conducted is the manufacture, use, storage, or transportation of hazardous, combustible, or explosive materials, except in regard to an employee who holds a license to carry a concealed handgun under Subchapter H, Chapter 411, Government Code, and who stores a firearm or ammunition the employee is authorized by law to possess in a locked, privately owned motor vehicle in a parking lot, parking garage, or other parking area the employer provides for employees that is outside of a secured and restricted area:

(i) that contains the physical plant;

(ii) that is not open to the public; and

(iii) the ingress into which is constantly monitored by security personnel

(b) Section 52.061 does not prohibit employer from prohibiting an employee who holds a concealed-handgun license or who otherwise lawfully possesses a firearm, from possessing a firearm the employee is otherwise authorized by law to possess on the premises of the employer's business

Also, the law does not prevent or otherwise limit the right of a public or private employer to prohibit persons who are licensed under this subchapter from carrying a concealed handgun on the premises of the business.

Note: This is not the complete law on Parking Lot Storage. See the Texas Labor Code for the complete law (Tex. Lab. Code §§ 52.061 – 52.064).

2. Recent legislative changes:The 83rd Legislature took up several pieces of legislation related to gun ownership, including changes to carrying concealed on private or public university parking lots, the requirements of Concealed Handgun Licensing classes, and requirement for hotels and motels to provide advance notice if they prohibit firearms. A full run-down of the legislation passed can be found here.

Mr. Murrah is a life member of the National Rifle Association, member of the Texas Rifle Association and Gun Owners of America, and the holder of a Texas concealed handgun license.

If you or your company have any questions about your company’s policies regarding employee gun ownership, please contact me at mmurrah@outsourcegc.com

Overview: Buy-Sell Agreements and Your Small Business

Posted on July 16, 2013 by in Blog

If you co-own a business, you need a buy-sell agreement. Also called a buyout agreement, this document is essentially the business world’s equivalent of a prenup. An effective buy-sell agreement helps prevent conflict between the company’s owners, while also preserving the company’s closely held status. Any business with more than one owner should address this issue upfront, before problems arise.

With a proper buy-sell agreement, all business owners are protected in the event one of the owners wishes to leave the company. The buy-sell agreement establishes clear procedures that must be followed if an owner retires, sells his or her shares, divorces his or her spouse, becomes disabled, or dies. The agreement will establish the price and terms of a buyout, ensuring the company continues in the absence of the departing owner.

A properly drafted buy-sell agreement takes into consideration exactly what the owners wish to happen if one owner departs, whether voluntarily or involuntarily. Do the owners want to permit a new, unknown partner, should the departing owner wish to sell to an uninvolved third party? What happens if an owner’s spouse is involved in the business and that owner gets a divorce or passes away? How are interests valued when a triggering event occurs?

In crafting your buy-sell agreement, consider the following issues:

Triggering Events: What events trigger the provisions of the agreement? These normally include death, disability, bankruptcy, divorce and retirement.

Business Valuation: How will the value of shares being transferred be determined? Owners may determine the value of shares annually, by agreement, appraisal or formula. The agreement may require that the appraisal be performed by a business valuation expert at the time of the triggering event. Some agreements may also include a “shotgun provision” in which one party proposes a price, giving the other party the obligation to accept or counter with a new offer.

Funding: – How will the departing owner be paid? Many business owners will obtain insurance coverage, including life, disability, or business continuation insurance on the life or disability of the other owners. With respect to life insurance, the agreement may provide that the company redeem the departing owner’s shares (“redemption”). Alternatively, each of the owners may purchase life insurance on the lives of the other owners to provide the liquidity needed to purchase the departing owner’s shares (“cross purchase agreement”). The agreement may also authorize the company to use it’s cash reserves to buy-out the departing owners.

If you or your company would like a free consultation on these or any issues, please contact me at mmurrah@outsourcegc.com

Family Business: Preserving Your Legacy for Generations to Come

Posted on July 8, 2013 by in Blog

Your family-owned business is not just one of your most significant assets, it is also your legacy. Both must be protected by implementing a transition plan to arrange for transfer to your children or other loved ones upon your retirement or death.

More than 70 percent of family businesses do not survive the transition to the next generation. Ensuring your family does not fall victim to the same fate requires a unique combination of proper estate and tax planning, business acumen and common-sense communication with those closest to you. Below are some steps you can take today to make sure your family business continues from generation to generation.

  • Meet with an estate planning attorney to develop a comprehensive plan that includes a will and/or living trust. Your estate plan should account for issues related to both the transfer of your assets, including the family business and estate taxes.
  • Communicate with all family members about their wishes concerning the business. Enlist their involvement in establishing a business succession plan to transfer ownership and control to the younger generation. Include in-laws or other non-blood relatives in these discussions. They offer a fresh perspective and may have talents and skills that will help the company.
  • Make sure your succession plan includes:  preserving and enhancing “institutional memory”, who will own the company, advisors who can aid the transition team and ensure continuity, who will oversee day-to-day operations, provisions for heirs who are not directly involved in the business, tax saving strategies, education and training of family members who will take over the company and key employees.
  • Discuss your estate plan and business succession plan with your family members and key employees. Make sure everyone shares the same basic understanding.
  • Plan for liquidity. Establish measures to ensure the business has enough cash flow to pay taxes or buy out a deceased owner’s share of the company. Estate taxes are based on the full value of your estate. If your estate is asset-rich and cash-poor, your heirs may be forced to liquidate assets in order to cover the taxes, thus removing your “family” from the business.
  • Implement a family employment plan to establish policies and procedures regarding when and how family members will be hired, who will supervise them, and how compensation will be determined.
  • Have a buy-sell agreement in place to govern the future sale or transfer of shares of stock held by employees or family members.
  • Add independent professionals to your board of directors.

You’ve worked very hard over your lifetime to build your family-owned enterprise. However, you should resist the temptation to retain total control of your business well into your golden years. There comes a time to retire and focus your priorities on ensuring a smooth transition that preserves your legacy – and your investment – for generations to come.

If you or your company would like a free consultation on these or any issues, please contact me at mmurrah@outsourcegc.com

83rd Texas Legislative Session – New Laws

Posted on July 1, 2013 by in Blog

As the 83rd Texas Legislative Session has come to a close (pending the discrete issues found in the special session called by Governor Perry), there is new legislation that will directly impact Texas businesses (particularly industrial companies).  The following is a synopsis of selected legislation.

Franchise Tax Relief

This is the first major franchise tax relief since its enactment seven years ago. House Bill 500 provides for tax rate reductions, continues the small business exemption, allows deductions for certain-flow through funds, addresses issues with cost of goods sold for two industries, and simplifies reporting requirements.

House Bill 500 temporarily lowers the franchise tax rate for 2014 to .975% (from 1%). Some qualifying retailers and wholesales may use .4875%

The Small Business Exemption enables taxpayers’ whose total revenue is less than $1 million to not pay franchise tax.  

For more information, see here.

Research and Development

House Bill 800 is geared towards keeping Texas on the frontline for research and development projects thus leading to sizeable capital investments and high-wage job creation. This bill allows taxpayers to qualify for either a tax exemption on purchases used in research and development or a tax credit under the franchise tax. This bill creates an exemption for purchases of depreciable tangible property directly by a taxpayer conducting qualified research. The bill also allows for a franchise tax credit for qualified research and development expenses in Texas.

For more information see here.

E-mail Privacy Bill

This bill gives Texans more privacy and security in their email from the state, however, it does not protect against federal investigations. Previous Texas law allowed state, county, and local cops access to email servers such as Gmail and Yahoo without a judge’s order requiring probable cause. Texas is the first state to enact a law regarding email privacy.  

For more information see these two articles on CourtHouse News Service  and Arstechnica 

PACE Bill

Senate Bill 385 allows the state to develop plans for commercial and industrial property assessed clean energy programs (PACE). The first pilot PACE program was in effect in 2008. In the past, the PACE program was focused on residential energy-related programs, however, because Texas is a significant hub of industrial activity, legislators thought it best to focused PACE on commercial and industrial projects.

PACE provides a basic and flexible framework that will allows local governments to collaborate with nonprofit organizations and businesses to set up PACE programs. This bill has the potential to create more jobs as well as decrease water shortages and brownouts.  

For more information see this article from CleanTechnica. 

If you or your company would like a free consultation on these or any issues, please contact me at mmurrah@outsourcegc.com

New UCC Forms Required

Posted on by in Blog

Texas has adopted new UCC  filing  forms.  The new forms are effective today (July 1, 2013) with a thirty-day grace period.  Old forms are accepted until August 1, 2013.  Thereafter, only  the new forms will be accepted by the Texas Secretary of State.  The new forms are available at the Texas Secretary of State website

If you or your company would like a free consultation on these or any issues, please contact me at mmurrah@outsourcegc.com