As both an Orange County estate planning attorney and a California business planning attorney, I see the results every day of failure to plan.  Most people have the best of intentions to plan for the future, but it is human nature to put off thinking about our deaths.  However, failing to plan for a successful business succession could result in the death of your business, affecting customers, employees and your own family.

Here are three common lethal errors in business succession planning:

Building the wrong bench – many business owners structure a management team based on what their business is today, rather than what customers will need tomorrow.  This can be the wrong move in a rapidly changing business environment, when the next generation of management needs to be able to fulfill the needs of future customers.

Making it a competition – one of the quickest ways to create a destructive work environment is to play “jump ball” with managers on who will ascend to company leadership.  Business owners who want to leave behind a healthy company should focus on building a strong team that can support the eventual successor.

Planning based on fear – most of us like to think we are irreplaceable, and worry what will happen when we are gone.  Your focus in business succession planning should be on customers, employees and your family so you can create a succession strategy that will serve them best.

For more information on California business succession planning, contact our Orange County business planning law firm.

Financial advisors are reporting that an increasing number of baby boomers are using retirement savings to start new businesses.  In fact, experts say that of the 600,000 new businesses started each year, nearly 10 percent are funded by 401(k)s and IRAs in what is known as a rollover business startup.

Many boomers are using retirement savings because of the lack of available private capital for funding startups, particularly for those who may have no track record of running a business.  Rolling retirement savings over into a new business can be tricky, however, and requires that the new company have a retirement plan that complies with federal rules for such a transaction.

An Orange County business planning attorney can help you ensure your new business meets these rules, as well as provide valuable assistance in helping you make other decisions about your new California business:

Business plan. Your top priority should be to develop a comprehensive business plan that will spell out what products or services you will be offering, market analysis, pricing, financing, location and financial projections.

Business structure. You have several choices in deciding on the right business structure for your start-up, including sole proprietor, partnership, limited liability company (LLC) or corporation.  This is when a consultation with a California business planning attorney is necessary, especially if you have personal assets you wish to shield from any potential business liabilities.

Business name.  A California business planning attorney can also be helpful once you have chosen a name for your business.  You should register your name as a DBA in the county where your business is based.  You will likely want to trademark your name as well.

Business permits and tax documents. You may need to acquire a city business license (different cities have different rates and some are more favorable than others), a federal and state employer identification number, and a number of other documents.  If you plan to lease a location, you should have your attorney review your commercial lease agreement.

Business insurance. Depending on what kind of business you plan to operate, you may need to secure liability insurance for your business.

For more information on starting a new business in California, contact our Orange County business planning law firm.

One of the main reasons that business owners form limited liability companies (LLCs) is to protect their personal assets from any business claims.   That protection is referred to as a liability shield.

However, if the proper steps are not taken to protect the liability shield of an LLC, a court may “pierce the veil” of the LLC and hold members personally liable for any claims.  Here are steps that LLC managers and members can take to protect their LLC liability shield:

Do Not Use the LLC for Serious Misconduct. The courts may pierce a LLC’s veil if members or managers use it to commit fraud or other serious misconduct.

Refer to the LLC in All Communications.  Members should expressly refer to the LLC in all dealings with third parties so it is understood they are dealing with the LLC, not with the LLC’s members in their individual capacities.

Keep Finances Separate.  To keep the LLC legally separate, all financial accounts for the LLC should be separate and apart from those of the individual members.

Keep the LLC Adequately Capitalized.  Some courts may pierce the veil if the LLC lacks adequate capitalization.

Follow the Rules.  Although LLCs do not have the same formal requirements as corporations, there are some rules that must be followed to protect LLC status.

Our California asset protection and estate planning law firm has been a trusted source for estate planning, asset protection and business transactions for more than 35 years.  Contact us today for asset protection and estate planning strategies to meet your unique needs.

With businesses shedding jobs faster than ever, many former employees are often left wondering if they have grounds for a wrongful termination suit.  California businesses should be informed about wrongful termination to ensure they are protected against a lawsuit.

Under California law, there are several ways that an employee can be wrongfully terminated:

Discrimination – employees cannot be terminated or otherwise discriminated against because of age, race, sex, religion or disability.

Insufficient Cause – this can be a gray area, but if an employee is terminated because they lost their temper at work and it is an isolated incident (i.e., not something they did every week), they could have grounds for a wrongful termination suit.

Whistleblowing – it is against the law for an employer to fire or retaliate in any fashion against an employee who has provided information to legal authorities about illegal behavior in the workplace.

Constructive Dismissal – this applies if employees feel they have been pressured to resign, their work environment was made so unpleasant that they could no longer do their job, if their wages have been reduced or they have suffered a demotion without cause.

Contact our Newport Beach business planning law firm for more information on California labor laws and regulations.

Last month, the America Invents Act was signed into law, which is the most comprehensive reform of the U.S. patent system in the past six decades.

The AIA enjoyed widespread partisan support, and is intended to unclog both the patent and the court system by putting measures in place to make it quicker to both obtain and validate a patent.

Many times, patent litigation is used as a weapon in corporate commerce – the AIA creates a system for challenging the validity of a patent that is anticipated to be much quicker and cheaper than going to court.

In addition, the U.S. patent system will undergo changes to bring it into line with other systems around the world, so American business can more easily protect its patents worldwide.  Under the AIA, the first inventor to file a patent application is the one who may receive the patent.

The AIA also makes it more difficult to legally challenge the sale of products with expired patent numbers.  The Act now limits standing to those who can prove actual harm for an out-of-date patent.

A benefit for inventors is that the Act now allows patent owners to protect their patents by providing additional documentation when patents are challenged on the basis of alleged inequitable conduct.

The various provisions of the AIA have differing effective dates; the U.S. Patent Office has a helpful chart you can access here to discover when each provision of the Act becomes effective.

Our Orange County business planning law firm takes protecting your business very seriously.  We can help you structure your company and operations policies to ensure your business intellectual property is fully protected.  Contact us for more information.

The IRS has announced a new Voluntary Worker Classification Settlement Program that will reward employers who voluntarily reclassify workers by imposing a minimal past payroll tax obligation.

As part of the IRS’ “Fresh Start” initiative, the Voluntary Classification Settlement Program (VCSP) allows employers to get into compliance by making a minimal payment covering past payroll tax obligations – generally 10 percent of that which could be assessed if the employer waited for an IRS audit, according to a Forbes.com post.

The IRS said that the VCSP is available to any business, government entity or tax-exempt organization “that currently erroneously treat their workers or a class or group of workers as nonemployees or independent contractors, and now want to correctly treat these workers as employees.”

Employers must apply for the program and the eligibility requirements include:

• Consistent treatment of workers in the past as non-employees,
• Have filed all required Forms 1099 for the workers for the previous three years
• Not currently under audit by the IRS
• Not currently under audit by the Department of Labor or a state agency concerning the classification of these workers

If eligible, employers must file Form 8952, Application for Voluntary Classification Settlement Program, at least 60 days before they want to begin treating the workers as employees.

In addition to a reduced past payroll tax payment, the IRS said that no interest or penalties will be assessed, and that employers will not be audited on payroll taxes related to the affected workers for prior years.

If you are a California business owner, our Orange County asset protection law firm can help you protect yourself and your business from legal judgments and claims.

The National Labor Relations Board has ruled that employers cannot fire employees for using Facebook or other social media networks to complain about their jobs, according to a Forbes.com story.

The case involved a Buffalo, N.Y. non-profit that fired five employees for using Facebook to make disparaging remarks about a co-worker’s complaint regarding her workload.  The co-worker sent the messages to a supervisor, who fired the workers for violating the company’s social media policy banning online harassment of co-workers.

The NLRB ruled that the Facebook discussion fell within the confines of protected conversation regarding working conditions.  The judge said that the employees’ Facebook comments were considered “protected concerted activity” under the National Labor Relations Act.

This is the second NLRB case involving Facebook posts that resulted in employee termination; earlier this year, a court settled another complaint citing the same right in a Connecticut case after an employee made negative comments about her boss on Facebook.

Social media has not only changed the landscape of our personal lives, but our work lives as well.  If you are a California employer, your policies must reflect current state and federal employment law.

If you are a California small business owner, our Orange County business law firm can help you protect yourself and your business from legal judgments and claims.

A recent article at ModernMedicine.com encourages doctors to treat their financial planning like they would when a patient comes to them with a problem outside their area of specialization:  refer to an expert.

The dangers of self-diagnosis in healthcare can be just as hazardous when it comes to protecting your assets and creating your estate plan.  The article encourages doctors to perform a routine check-up on their financial planning by asking themselves these questions:

Do you have an estate planning attorney who has explained the 2010 tax law changes and suggested strategies to transfer up to $10 million during your lifetime to heirs without losing control of the assets?

Has your estate planner discussed with you the opportunity for multigenerational planning that will help you protect assets from lawsuits or divorce?

Does your accountant explain tax law changes to you and suggest ways for you to save on taxes?

Does your estate plan take into consideration investment strategies that provide a hedge against a collapsed housing market, increased tax rates, interest rates and inflation?

Have you been made aware of insurance products that can provide for long-term care or disability in the event you are no longer able to practice medicine?

The article suggests that if you have answered “no” to any of these questions, then you are settling for inadequate financial healthcare, and that could cost you millions.

This advice doesn’t just apply to physicians, but to anyone interested in protecting assets, not only for themselves but for future generations.

Our Orange County asset protection law firm can guide you through asset protection and estate planning strategies to meet your unique needs.  Contact us today.

Yesterday, a federal judge in San Francisco overturned a $1.3 billion award to Oracle that it won in its landmark intellectual property lawsuit against SAP AG last November, calling the award “grossly excessive.”

According to an Associated Press article, U.S. District Court Judge Phyllis Hamilton said the size of the award “was contrary to the weight of the evidence.”  Oracle has the choice of accepting a lower award of $272 million, which was based on an earlier estimate from an Oracle expert on the profit Oracle lost and SAP gained, or proceed to a new trial.

In its suit, Oracle accused SAP AG subsidiary TomorrowNow of stealing software and customer support documentation and using the information to try to lure Oracle customers away from the company.  SAP admitted that the now-defunct subsidiary committed the theft, but argued that it should only have to pay $40 million for the accounts that TomorrowNow was successful in luring away.

Oracle said that it plans to fight for the $1.3 billion it was awarded by a jury verdict last November after the three-week trial.

California asset protection can safeguard your personal and business assets – but if you don’t have an asset protection plan in place, creating one after the fact will do you no good. Our Orange County business planning law firm can guide you through asset protection planning to meet your unique needs as a business owner.