"*" indicates required fields
We're committed to your privacy. For more information, check out our Privacy Policy.
Find answers to the most popular questions based on how MacGregor Lyon can help you
Mergers & Acquisitions
To prepare your business for sale, start by developing a comprehensive exit plan. Ensure your financial records are accurate and up-to-date, streamline operations, and address any legal issues. Conduct a business valuation to understand its worth, and work with a business attorney and tax professional to optimize the process.
Increase your business's value by improving operational efficiency, enhancing customer relationships, and investing in employee development. Diversify your product or service offerings and strengthen your market position. Regularly update financial statements and demonstrate consistent revenue growth to attract potential buyers.
Key factors include understanding the current market conditions, identifying potential buyers, and determining the best time to sell. Evaluate the financial health of your business, ensure all legal documents are in order, and consider the tax implications of the sale. Working with a business attorney can help navigate these complexities.
Identify potential buyers through industry contacts, business brokers, and online marketplaces. Look for strategic buyers who can benefit from your business’s strengths or competitors seeking expansion. Networking within your industry and leveraging professional relationships can also help find interested parties.
Common pitfalls include inadequate due diligence, overvaluing the business, and cultural mismatches between merging companies. Failing to plan for post-transaction integration and overlooking legal and regulatory requirements can also lead to issues. Engaging experienced legal and financial advisors can mitigate these risks.
Business Structures
Although the term, “S-Corp” or “S-Corporation” is actually a tax classification and not a type of entity, small business corporations are often referred to as an S-Corp and indicate that the corporation has elected pass-through taxation. This means that all corporate income, losses, deductions, and credits pass through to shareholders for federal tax purposes. Shareholders report the income and losses on their personal tax returns, avoiding double taxation. In addition, LLCs may also elect to be taxed as S-Corps, which allows for the ease and flexibility of an LLC with the same tax benefits, i.e., less self-employment taxes.
Benefits include pass-through taxation, limited liability protection, and potential savings on self-employment taxes. Drawbacks include stricter operational requirements, such as limits on the number and type of shareholders, and, in the case of a corporation, the necessity to adhere to corporate formalities and record-keeping.
An LLC provides more operational flexibility and fewer formalities than a corporation. LLCs can choose how they are taxed (as a sole proprietorship, partnership, S-Corp or C-corporation). In contrast, a corporation has specific requirements for structure and taxation and must elect S-Corp tax status to get the tax advantages of reducing self-employment taxes.
Advantages include limited liability protection, operational flexibility, fewer compliance requirements, and the ability to choose how the entity is taxed. LLCs also provide credibility and can be easier to manage than corporations, making them a popular choice for small businesses.
Consider converting when your LLC's net income is substantial enough that the tax savings from paying yourself a reasonable salary and distributions outweigh the additional administrative burden. Consulting with a tax professional can help determine if this conversion is beneficial for your specific situation.
Incorporation
Incorporating out of state can lead to dual registration fees and potential legal complications. It's generally more beneficial to incorporate in the state where your business primarily operates, as this simplifies compliance and reduces costs.
Steps include choosing a business name, filing articles of incorporation, creating corporate bylaws, appointing directors, issuing stock, and obtaining necessary permits and licenses. Consulting with a business attorney can ensure all legal requirements are met.
Incorporating offers limited liability protection, potential tax advantages, enhanced credibility, and easier access to capital. It also establishes the business as a separate legal entity, which can help attract investors and facilitate growth.
Commercial Leases
Ensure the lease explicitly defines the permitted use of the space to avoid restrictions that could hinder your business operations. Specify any special requirements, such as for restaurants or retail stores, to ensure the landlord's approval.
Common Area Maintenance (CAM) and operating expenses are usually shared among tenants based on their leased space's proportion. Verify that these expenses are reasonable and negotiate a cap on annual increases to manage costs effectively.
Commercial leases typically require general liability and worker’s compensation insurance. Ensure you can obtain the necessary coverage and clarify who is responsible for insuring specific aspects of the property.
Tenants are generally responsible for interior repairs and utility costs. Review the lease to understand your obligations, especially for major equipment maintenance and replacement near the lease's end.
Most leases require landlord consent for assignment or subletting. Negotiate terms to ensure the landlord's consent is not unreasonably withheld and understand any specific restrictions or conditions.
Default remedies may include eviction without court action or accelerated rent payments. Ensure you have the right to contest evictions in court to protect your business from sudden disruptions.
Some leases allow landlords to relocate tenants to comparable spaces. Verify that any new space meets your needs and negotiate for the landlord to cover moving expenses to minimize disruption to your business.
Employment Law and Classification
Determine worker classification based on IRS and state guidelines, which consider the degree of control over work, the financial arrangement, and the nature of the relationship. Use Form SS-8 to get an official IRS determination if the classification is unclear.
Misclassification can lead to significant fines, back taxes, and penalties. It can also result in lawsuits, liability for unpaid benefits, and damage to your business's reputation.
Key factors include behavioral control (how work is performed), financial control (how the worker is paid and expenses are handled), and the type of relationship (written contracts and employee benefits). These factors help determine the appropriate classification.
Exempt employees typically include those in executive, administrative, and professional roles who meet specific criteria under the Fair Labor Standards Act (FLSA). They must earn a salary of at least $844 per week ($1128 per week starting January 1, 2025) and perform certain types of job duties.
Intellectual Property
A trademark is a symbol, word, or phrase that distinguishes your goods or services from others. Protect it by using it consistently in commerce and considering registration with the USPTO for nationwide protection and legal enforcement.
To register a trademark, conduct a search to ensure it’s unique, then file an application with the USPTO. The process involves submitting a description of the trademark, the goods or services it represents, and paying the required fees.
Benefits include exclusive nationwide rights to use the trademark, legal presumption of ownership, and the ability to bring legal action against infringers. Registration also enhances brand credibility and value.
Commercial Dispute Resolution
Common methods include negotiation, mediation, arbitration, and litigation. Negotiation involves direct discussions between parties to reach a settlement. Mediation uses a neutral third party to facilitate a resolution. Arbitration involves a binding decision by an arbitrator, while litigation is resolved in court.
In mediation, a neutral mediator helps the parties communicate and negotiate to reach a voluntary, mutually acceptable resolution. It is less formal, more flexible, and typically faster and less expensive than litigation.
Arbitration offers a binding resolution through a neutral arbitrator. It is generally faster and more cost-effective than litigation, maintains confidentiality, and allows parties to select an arbitrator with specific expertise relevant to the dispute.
Liability and Risk Management
Liability and risk management involves identifying, assessing, and mitigating potential risks that could lead to legal liability or financial loss. It aims to protect the business's assets, reputation, and overall financial health.
Identify risks by conducting a thorough risk assessment, analyzing your business operations, reviewing industry trends, and considering past incidents. Use tools like SWOT analysis to pinpoint strengths, weaknesses, opportunities, and threats.
Common strategies include transferring risk through insurance, implementing safety protocols, diversifying investments, maintaining compliance with regulations, and regularly reviewing and updating risk management plans. These strategies help mitigate potential financial and operational impacts.
Succession Planning
Succession planning is the process of identifying and developing internal people with the potential to fill key business leadership positions in the company. It ensures business continuity, prepares for future challenges, and retains valuable knowledge and skills within the organization.
To create a succession plan, identify key positions and potential successors, assess their skills and development needs, create a development plan, and regularly review and update the plan. Involve stakeholders and align the plan with your business goals.
Common challenges include identifying suitable successors, managing stakeholder expectations, addressing potential conflicts, and ensuring the plan is adaptable to changing business conditions. Transparent communication and a well-defined process can help mitigate these challenges.
