Business Lawyers Minneapolis: Preparing for Initial Consultation I

Preparing for the initial consultation with your Minneapolis business lawyer usually involves at least two steps. First, gathering the information you need to supply to your business attorney. Second, preparing the questions you want to ask your business lawyer. This essay deals with the first part of the preparation.

It is important to understand that your Minneapolis business lawyer will initially have to rely almost exclusively on the information that you supply to him. Moreover, failure to supply the necessary information during initial consultation may lead to significant delays in your case and increase your legal expenses. This is why it is very important to come prepared to the initial interview.

The first step is to ask your Minneapolis business lawyer about what you should bring with you. While Minneapolis business lawyers commonly recommend that you should bring all documents that are related to your case, I usually list specific documents which are customary in a given business situation.

“Everything related to the case” usually includes all documents, statements, e-mails, letters, corporate business documents, et cetera. Sometimes, this would mean divulging sensitive financial and personal information. You should not feel uncomfortable in doing so, because a lawyer will guard all of this information. Client confidentiality is the cornerstone of Sherayzen Law Office’s practice. We jealously guard all client information that a client supplied to us in confidence.

The second step is for you to review what documents you actually have against the list of the documents requested by your attorney. It is possible that you may lack some documents. The purpose of this step is to identity the missing information.

The third step is to try to obtain the missing information before meeting with your business attorney. If this is not possible, then let your attorney know during the consultation what information you are missing and whether you will be able to find it after the meeting.

Once you go through these three steps, the first part of the your preparation for the initial business consultation is finished. I will discuss the second part of your preparation in the next article.

Remember, Sherayzen Law Office can help you with your business issues, whether they are concerned your business license, administrative appeals, litigation, business organization or business planning.

Contact Sherayzen Law Office NOW to discuss your business case with an experienced business attorney!

Minnesota Contract Litigation Lawyers | Truth in Repairs Act Highlights

Minnesota’s “Truth in Repairs Act” (Minn. Stat. §325F.56 through §325F.65) spells out the rights and obligations of repair shops and their customers for repairs costing more than $100 and less than $7,500.

Here are some basic highlights of your rights as a customer:

a). You have the right to receive a written estimate for repair work, if you request one.

b). Generally, once you receive this estimate, the repair shop may not charge more than ten percent above the estimated cost. If the customer is told about an additional charge before the estimate is issued, however, a shop may impose an additional charge for disassembly, diagnosis and reassembly of the item in order to make the estimate.

c). The shop is required to provide you with an invoice if the repairs cost more than $50, and/or the work is done under a manufacturer’s warranty, service contract or an insurance policy. Special statutory requirements apply with respect to what the invoice should contain.

d). The shop cannot perform any unnecessary or unauthorized repairs. If, after repairs are begun, a shop determines that additional work needs to be done, the shop may exceed the price of the written estimate, but only after it has informed you and provided you with a revised estimate. In this case, if you authorize the additional work, the shop may not charge more than ten percent above the revised estimate.

e). Prior to commencement of the repairs, you have the right to ask for and receive replaced parts, unless those parts are under warranty or other restrictions. In that case, they must be returned by the shop to the manufacturer, distributor or other person. You may pay an additional charge for retrieving parts because the shop usually can sell them. Even if you are not allowed to keep the old parts, you should have an opportunity to examine them for up to five days after the repair.

f). A shop may impose a towing, minimum, or other service charge for making a call at a place other than the shop. However, upon the request of the customer, the shop shall inform the customer before making a service call that a service charge will be imposed and the basis on which the charge will be calculated.

It is very important to keep proper written records. If a dispute arises between you and the repair shop, these records are likely to be an indispensable proof of what the parties agreed to and what provision, if any, of the agreement was violated.

If you have any questions with respect to the Minnesota’s “Truth in Repair Act”, contact an experienced Minnesota contract litigation lawyer at Sherayzen Law Office.

Business Lawyer: Essential Characteristics of Closely Held Corporations

Most small business lawyers in St. Paul deal with closely held corporations. In order to understand this form of business entity, it is useful to explore the essential characteristics shared by the predominant majority of closely held corporations. The purpose of this article is to provide a general overview of the four most common characteristics of a closely held corporation.

1. No Public Ownership of Stock

This characteristic is present in almost every closely held corporation. Lack of “public ownership of stock” usually means that the stock of a closely held corporation has never been sold in a public offering (as this term is used in connection with Securities and Exchange Act of 1933 and similar state statutes). It may also mean that the stock of a closely held corporation is not listed on any stock exchanges or otherwise regularly traded. The corollary of this characteristic is that it is often very difficult to determine the value of a closely held corporation’s stock.

2. Closely Controlled by Few Shareholders

It is very common for a closely held corporation to be controlled by one individual, a single family, or a small group of shareholders. This characteristic also holds true even where a large percentage (yet less than controlling share) of a corporation’s stock is owned by a public shareholder, while the controlling number of shares is in the hands of an individual or a private group of shareholders. In such atypical cases, closely held corporations are often being singled out for special tax treatment. The converse of this reality is that the present of a public shareholder may reduce substantially many of the tax problems (for example, in the are of the tax on accumulated earnings).

3. Management by Owners

In a closely held corporation, the shareholders and the operating executives are often the same individuals. Moreover, in many cases, the stock held by these individuals is not merely an investment, but rather the principal source of income.

4. Restricted Ownership

Closely held corporations are also often “closed” corporations. This means it is often difficult for an outsider to obtain stock in a closely held corporation, and it is difficult for a current shareholder to sell stock except to other shareholders or the corporation itself. Very often, this situation arises intentionally as part of the legal structure of the corporation as defined by the Shareholder agreements.

Conclusion

As one see, usually a closely held corporation is generally a corporation that is owned, controlled and managed by a few private shareholders; the stock of such corporation is neither traded frequently nor listed on any of stock exchanges. These are obviously only the most common characteristics. There plenty of variations which may also be classified as “closely held corporations”, but even these variations usually share most of these common characteristics.

Reduce Your Self Employment Tax with a New Health Insurance Deduction

Due to the enactment of the Small Business Jobs Act of 2010, self-employed taxpayers who pay their own health insurance costs can now reduce their net earnings from self-employment by these costs. Previously, the self-employed health insurance deduction was allowed only for income tax purposes. For tax year 2010, however, self-employed taxpayers can also reduce their net earnings from self employment subject to self-employment taxes on Schedule SE by the amount of self-employed health insurance deduction claimed on line 29 on Form 1040.

Taxpayers can claim the self-employed health insurance deduction if the insurance plan is established under their business and if any of the following are true:

a) They were self-employed and had a net profit for the year,
b) They used one of the optional methods to figure net earnings from self-employment on Schedule SE, or
c) They received wages from an S corporation in which the taxpayer was a more-than-2-percent shareholder.

Contact a Sherayzen Law Office Minneapolis tax lawyer who can help you properly plan your tax strategy to take advantage of the Internal Revenue Code.

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Minnesota LLC Formation V: Member Control Agreement

Member Control Agreement can be the most important governance document in the process of the LLC Formation because it may provide the LLC members with maximum governance flexibility, including overruling some provisions of the Minnesota Limited Liability Company Act.

In fact, a Member Control Agreement may completely reorganize the governance structure of an LLC away form the Act’s default corporate model.  Instead, the members of the LLC may choose to adopt a partnership-like governance model which may greatly facilitate the conduct of business, especially where there are few LLC members.

One of the least-known aspects of a Member Control Agreement is that a person, who is neither a member nor a party to a contribution agreement, may nevertheless be a party to a Member Control Agreement.  This provision may provide a new level of flexibility by incorporating in the Agreement persons who may have financial rights under the Agreement even though they do not possess the usual membership rights (such as voting).

Typically, a Member Control Agreement can regulate a wide range of ownership and management issues, including: transfer of membership interest; contributions of capital, property or services during and after the formation of an LLC, management and governance structure of an LLC, tax elections, distributions of cash and other assets, allocation of profit and loss, establishment and maintenance of bank accounts, books and records; access to books and records, valuation of membership interests, employment of members, dissolution and winding up of the LLC, et cetera. A Member Control Agreement may even re-determine the rights of dissenting members as provided in Minn. Stat. §322B.383 and Minn. Stat. §322B.386. Even this non-exclusive list of issues already emphasizes the significance of the Member Control Agreement to the operation of the LLC.

Precisely due to this significance, special requirements are imposed by the Act on the execution of a Member Control Agreement. In order to be valid, a Member Control Agreement must scrupulously follow the requirements of Minn. Stat. §322B.37.  Even then, the Agreement can only be enforced “by persons who are parties to it and is binding upon and enforceable against only those persons and other persons having knowledge of the existence of the member control agreement.” Minn. Stat. §322B.37, Subd. 3(a). Finally, special recordkeeping requirements are demanded by the Act, including filing of the Member Control Agreement with the required records of an LLC.  The records themselves must note that the members’ interests are governed by a Member Control Agreement.

Thus, a Member Control Agreement may provide a great business opportunity by allowing maximum flexibility in the governance structure of an LLC.  This opportunity, however, must be handled with care and knowledge of a legal professional; otherwise, it may turn into a litigation nightmare.  Therefore, you should retain a Minnesota business lawyer to advise you and ultimately draft the Agreement.

Sherayzen Law Office is an experienced business law firm with one of its primary concentrations in advising and creating business governance documents.  We can advise you with respect to whether you need a Member Control Agreement, help you negotiate the necessary provision, draft the Agreement, make sure it is properly executed, and establish the right recordkeeping procedures to comply with Minn. Stat. §322B.37.