_ Small Business Owners should be aware of the current Estate Tax Credits for 2012 and changes that take effect in 2013. These will have a drastic impact on succession planning for Ohio small businesses.
Federal Estate Tax Currently, the Federal Estate Tax credit is equivalent to $5,120,000.00 per person (any dollar under $5,120,000.00 passes free of Federal Estate Tax. Married couples are able to transfer their unused Federal Estate Tax credit to the surviving spouse that provides the equivalent of a $10,240,000.00 per couple credit (also known as “Portability”). Unless the President and Congress can agree on an extension of the current law, the Federal Estate Tax credit will be reduced, beginning in 2013, to $1,000,000.00 per person, without Portability, at a rate of 55%. Ohio Estate Tax In 2012, the Ohio Estate tax rate is 6% of every dollar between $338,333.33 and $500,000.00. For every dollar above $500,000.00, the tax rate is 7%. This calculation does not include life insurance proceeds. Effective in 2013, the Ohio Estate tax has been repealed. This will be a substantial savings for residents of Ohio. Before transferring your residence to another state, it is important to check that state’s law regarding Estate Taxes.
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Vendors’ licenses are required for taxable sales. So what are taxable sales?
Every company sells goods, services or a combination of both. Some of these sales are subject to sales tax and other transactions are not. A business owner should be certain about sales tax, because a mistake could be devastating. There are different types of vendor licenses in the State of Ohio.
The decision on sales tax and the amount to be collected should be evaluated with your certified public accountant or tax adviser. _ An individual, start-up business, or established company may have an idea or concept that is unique but not otherwise protectable by a patent. This can include a business model, formulas, recipes, processes, product concepts, marketing plans, unique sources for supplies, assembly processes, or customer lists (collectively referred to as “trade secrets”).
The protection of your trade secrets is essential to maintaining a competitive advantage. How can a start-up business protect its Trade Secrets? As the name suggests, the subject of a trade secret must remain secret and there must be adequate measures to protect the secrecy. That means it must not be public knowledge or of general knowledge in the trade or industry. If the secret is disclosed through authorized means or there are not adequate measures to guard the secrecy competitors can take advantage of the trade secret. But if there is an unauthorized disclosure and use of a trade secret, there are strict criminal and civil penalties. (Note: If you are an employee, it is important not to disclose a trade secret, here is a summary of the criminal risk) What are adequate measures for protecting a Trade Secret? While there are no fixed rules as to what are “adequate” measures, there are best practices that must always be followed: 1. Never disclose confidential information, to anyone who has not signed a nondisclosure agreement or without a confidential relationship. 2. Have password protection on all software that contains Trade secrets and limit an employee or contractor’s ability to place the trade secrets on a personal computer. 3. Maintain a policy that all business records must be returned after separation with an employee or contractor. 4. Never disclose any aspect of the trade secret publicly. The best practice to ensure your trade secrets are protected is to conduct an annual audit. Through this process, you can identify your trade secrets, determine the steps that can be taken to protect their secrecy, update your company passwords, and test your security measures. _ Yes, generally there are two categories a Power of Attorney will fall into: A Power of Attorney for Financial Decisions and Health Care Power of Attorney.
A Power of Attorney for Financial Decisions can be as broad or as limited as you prefer, even limited to a particular date or purpose. This power can become effective immediately after signing or only become effective if you are disabled/incompetent. For small business owners, it is especially important to have a Power of Attorney reserved for a trusted co-owner or family member. A Healthcare Power of Attorney grants authority to make medical decisions if you are in a coma or become mentally incapacitated. Within the Medical Power will be specific guidance as to what your wishes were before becoming incompetent. Without these protective measure, there could be a devastating lapse in time where the business cannot operate should something happen to you. _ At some point, every employer will have to terminate an employee. To avoid claims that the termination was based on discrimination or was without just cause there is a clear procedure that should be followed to avoid future, unnecessary costs and attorney’s fees.
How do you limit potential discrimination claims? You can discharge an employee at any time for any reason, except for prohibited reasons. Generally, those prohibited reasons are: Religion, Gender (including pregnancy), Age, Race, Political beliefs, National origin, Disability, Retaliation for an otherwise legal act such as: asserting overtime rights, reporting that the employer is breaking the law (“Whistle Blowing”), or making a worker’s compensation claim There is no way to see inside of an employer’s mind to determine why he or she fired an employee, the evaluation is by actions and the result of those actions. To ensure your true reasons for firing an employee are clear, it is important to document all reprimands and maintain an Employee Handbook. Before a bank will loan you money to purchase a piece of real estate (also known as real property) the bank will require a title search for all current liens upon the land. If, however, a bank in not involved in the purchase (it is a cash purchase) you will want to conduct your own title search through a title company.
If you do not conduct your own title search, and there are liens on the property, you as the new owner would have to pay or satisfy those liens before selling the land or obtaining a loan. This encumbrance can be avoided by using a qualified title company and by purchasing your own title insurance. _ Purchasing Real Estate and leasing the property to tenants warrants the formation of an Ohio LLC or Corporation just like any other company.
Creating a separate legal entity limits potential liability to the assets of the company; rather than the company assets plus your personal assets. In some cases, businesses and customers can develop different expectations about of the cost for goods or services. This can be the product of a simple misunderstanding about the terms and conditions.
The best way to avoid this type of dispute, is to do not allow any money to change hands or work to begin before there is a written agreement, signed by both parties. Within the agreement, make sure there is a clear cost for all services, potential variables on delivery, date of completion, and an objective statement for what services will be provided. Most disputes are based on a misunderstanding on what work was going to be done and what the cost would be. For example, if the company is providing roofing services, the agreement should specify what type of shingle would be provided. If the contract just says "roof replacement," your shingle expectation may be different from the customer's expectation. This protects both sides and sets a verifiable expectation of services. As with all Agreements, the best practice is to have the terms reviewed with legal counsel. Small businesses typically have one primary person who is authorized to sign checks, call in payroll, or execute agreements. If this person is also the business owner and he or she is ever incapacitated or incompetent it may be impossible for the business to operate. With everyday the business is stagnant, it losses customers, employees, and value.
That is why every business owner needs to have a Power of Attorney in place. Giving this Power to a trusted family member or employee will ensure that if you are alive, but unable to transact business, the business itself will continue to operate. Yes. A registered Trademark can be assigned or transferred; subject to some restrictions on Intent-to-Use applications. Assignments must be recorded with the United States Patent and Trademark office.
If a business is sold, in full, the Trademark will be transferred along with the company. If, however, the sale is an asset purchase agreement, an assignment will be necessary; this type of asset will typically be referred to as intangible property or Goodwill. |
Elliott Stapleton Attorney with CMRS Law
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