Stupid Technology Mistakes

In a recent Lawyer’s Weekly edition the editors published eight technology mistakes as reported by Sharon D. Nelson and John W. Simek with Sensei Enterprises, Inc. Here they are in bullet form:

1. Not using a screensaver;

2. Never turning off your computer; Nelson and Simek noted that turning off your computer once a day clears processes that didn’t terminate and applications that got tangled;

3. Always using eight character passwords. Nelson and Simek noted that anyone with any IT sophistication could crack an eight character password. However cracking a 12 character password would take 17 years;

4. Storing passwords on monitors, under keyboards or anywhere else that can be located. Passwords even 12 character ones should be easy to remember;

5. Installing illegal software in violation of copyright laws;

6. Not backing up your data and if you do back-up your data not doing a test restore;

7. Not having a PIN for your smart phone;

8. Depending too much on Outlook’s auto complete function.

For more information about these technology tips see www. lawyersweekly.com or contact Sensei Enterprises, Inc., in Fairfax, Virginia.

For more information about how our team of lawyers and other professionals can help protect and grow your business contact me.

Torus Law, PLC
JC Cancelleri

Email JC
Phone: 804-548-4810

Owner Liable for his company’s debt, part two

In my last post I discussed some of the trends related to LLCs and corporations. I noted that in 2010 LLC’s were the preferred entity choice over corporations by a more than two to one margin. One of the differences between LLC’s and corporations are the consequences that could result from failing to follow certain formalities.

In a recent case a local judge allowed a creditor to pierce a corporation’s veil and sue the corporation’s lone shareholder. The judge allowed the suit against the shareholder noting that annual meetings were not held, separate books were not maintained and the corporation was grossly under capitalized.The creditor obtained a $137,454.00 judgment against the shareholder.

While corporations have to adhere to numerous formalities, LLC formalities are fewer and the consequence of not following them is less significant than failing to follow corporate formalities. And while having fewer formalities should not be the only reason to chose an LLC over a corporation it can be an important consideration depending on one’s personality.

If you’re considering starting a business call us to discuss which entity would better serve you. If you have a business that’s incorporated you should take some time to review if you’re meeting the formalities that apply to corporations.

Torus Law, Dream, Plan, Plan, Protect

Torus Law, PLC
JC Cancelleri

Email JC
Phone: 804-548-4810

Owner Liable for his Company’s Debts

This is a two part series on the increasing popularity of using a limited liability company (LLC) to organize a business versus incorporating. In a recent continuing legal education seminar on LLC’s, presenters Allan Donn and Brian Farmer noted that in 2010 approximately 13,500 corporations were formed in Virginia. By contrast some 34,500 LLC’s were formed. This fact confirms the continuing trend to use LLC’s as the preferred business entity. One of the reasons LLC’s were formed last year by a more than two to one margin was the ease of forming an LLC and the fact that ignoring formalities maybe less consequential under and LLC than under an S or C corporation.

There are several corporate formalities that one has to perform to maintain the protection that corporations provide against individual liability. Among these requirements is the need to hold an annual meeting and the need to have separate books if you have separate corporations.

A recent Richmond case ACE Electric Co. Inc., v. Advance Technologies Inc., illustrates the consequences of ignoring the corporate requirements. My next post will briefly discuss what happened and will also discuss some additional differences between forming a corporation and an LLC.

Are taxes dischargeable under the bankruptcy code?

The answer is it depends. Some taxes like trust fund taxes are not dischargeable. Other taxes like income taxes may be depending on various factors.

There are five factors that must be satisfied to discharge income taxes:
1) the return date for the tax must be more than three years old. For example, the return file date for 2007 taxes was April 15, 2008. To satisfy this condition a bankruptcy petition would have to be filed after April 15, 2011.
2) The return has to be filed more than two years ago; and
3) Any assessment must have occurred more than 240 days before the filing of the bankruptcy petition; and
4) The tax return must not be fraudulent; and
5) The taxpayer must not have been guilty if a willful attempt to defeat or evade the tax.

If all five conditions are satisfied then the income tax would appear to be dischargeable. For example, if you were self-employed in 2007 but didn’t pay any income taxes for that year, if you meet all five conditions as stated above you should be able to discharge those taxes by filing a chapter 7. Of course you first have to be eligible to file a chapter 7. If you are eligible filing a chapter 7 could significantly reduce your tax burden.

To learn more about Torus Law and our commitment to help you grow your business through a process of Planning, Building and Protecting please contact me.

Torus Law, PLC
JC Cancelleri

Email JC
Phone: 804-548-4810

 

Negotiate with Creditors or File for Bankruptcy?

A prospective client contacted me and disclosed that they had over 50K in credit card debt. After explaining the bankruptcy process she said she would try to negotiate settlements with her creditors. While I applauded her efforts I also told her that the irony of negotiating settlements with creditors is that the creditor will likely issue her a 1099 for the amount written off, which she would eventually have to pay taxes on.

For example, if I owed 20K and negotiated a 10K settlement the creditor will send me a 1099 for the 10K that it wrote off.  Because the IRS treats write offs as income I am going to have to pay taxes on the 10K the creditor wrote off.  Consequently before negotiating a settlement with any creditor ask your tax adviser what effects it will have on your taxes.  On the other hand consumer debts discharged through the bankruptcy process are not considered income and will not affect your taxes.

For more information about workouts, negotiating with creditors and the bankruptcy process please feel free to contact me. An adviser can help you make informed and often better long-term decisions.

Contact Info

Torus Law, PLC
JC Cancelleri

Email JC
Phone: 804-548-4810

Local Dental Firm Pays $46,000 in Employment Law Fines – Part 2

Are you next?

Part Two

Last week I posted a partial summary of an interview I did with Mindy Flanigan, PHR, a Human Resource Specialist with more than twenty years of experience.  In this article I discuss two of the strategic ways that Mindy brings value to businesses.

One way that Mindy strengthens businesses is by helping them minimize employments law risks.  As noted in my previous post there are numerous federal and state employment laws that businesses have to comply and contend with. As a human resource specialist Mindy helps businesses navigate the mind field of employment laws. For example, last week I referred a businessman to Mindy who called me wanting to know if his company could fire an employee who took an extended medical leave. The company had less than 10 employees.  Although the Family and Medical Leave Act may not apply due to the company’s size, the issue is still a thorny one because other equal employment opportunity laws may need to be considered.  Other  laws that could be implicated by other situations include the Fair Labor Standards Act, the American’s with Disabilities Act (ADA) and the Civil Rights Act of 1964.

Another way that Mindy strengthens businesses is by helping them maximize employee performance, which helps to reduce employment costs. It’s no secret that it can cost thousands of dollars to replace an employee who was transferred or fired due to a mismatch between the employee’s skills and the job’s demands. Mindy’s objective is to help employers hire the best people resulting in a productive work environment. Mindy recently placed a director of land surveying with an employer who after nine months still raves about the placement.

Helping businesses minimize employment risks and maximize employee performance are two of the strategic ways that Mindy helps businesses become more profitable. To learn more about Mindy’s services visit her web site at www.inspiringhr.com. or feel free to call me with your questions.

To learn more about Torus Law and our commitment to help you grow your business through a process of Planning, Building and Protecting please call me.

Torus Law, PLC
JC Cancelleri

Email JC
Phone: 804-548-4810