Brian's Blog

Starfield’s SBA Articles — Resource of the Week

business and legal resources

The Pennsylvania-based law firm Starfield & Smith does a lot of SBA loan closings around the country. They share their knowledge and experience in articles posted on their website. In this post I describe a few of the articles on loan topics to give you a flavor of what’s available. But you should check out the Starfield archives.

Best Practices: Technical Corrections to SOP 50 10 5(F). This piece is representative of Starfield’s articles that keep readers abreast of developments in SBA loan rules. The article highlights important changes and contains a link to the updated SOP.

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Tax Clearance Basics

seller's taxes are a punch in the face

When you buy a business, you should make sure that the seller is caught up on paying state taxes. If you don’t, you might find yourself stuck with the bill after closing. Worse yet, you might find that your shiny new business is encumbered by a tax lien.

In every state I’m aware of, the law allows state taxing authorities to assess the buyer of a business for unpaid taxes of the seller — even if the transaction is structured as an asset sale. Tax obligations follow the business assets, even if the purchase agreement says that the buyer isn’t taking on those liabilities.

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NRAI Filing Charts — Resource of the Week

small business resources

I wrote recently about why business buyers should perform lien searches as part of their due diligence process. This week’s featured resource is a series of charts published by third-party search company National Registered Agents, Inc. These charts summarize information relating to filing requirements for each of the 50 states in one handy place.

For example, the incorporation chart summarizes the corporation law in each state about such matters as cumulative voting, preemptive rights, general purpose clauses, required forms, and fees. NRAI has similar charts for limited liability companies and limited partnerships.

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Why You Should Do Lien Searches Before You Buy a Business

Lien Search

When you’re buying a business, you should make sure that the business’s assets aren’t encumbered by liens. As I mentioned in Don’t Let the Seller’s Liens and Taxes Stalk You, even if you structure a business acquisition as an asset sale, the seller’s liens are your problem.

A lien is a legal right or interest that a creditor has in another’s property. If you’re buying a business whose assets are encumbered by a lien, someone else will have an interest in your property. If that someone is the seller’s creditor, that’s bad news for you if the lien is still intact after closing.

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LinkedIn — Resource of the Week

LinkedIn

LinkedIn is the social media platform for professionals. A lot of people use the service to connect with business contacts, keep in touch, and research prospects. But this post is about utilizing LinkedIn’s social media features, especially the news feed.

As with social media platforms such as Facebook, LinkedIn (for the most part) requires a reciprocal connection between users. Unlike Twitter, where people can follow you without your permission, LinkedIn requires you to accept an invitation to connect before a potential connection can see your LinkedIn activity.

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Your LLC Won’t Protect You From Yourself

LLC liability protection

Everyone knows that business owners should form a limited liability company or a corporation. But just having a company isn’t enough to protect you from your business’s liabilities.

You’re responsible for your own actions when you harm someone else, even when you’re working for your corporation or LLC. So if you harm someone, they can sue you as an individual and go after your personal assets. Your business might still be liable under a concept known as vicarious liability, but you’ll be liable, also.

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Docracy — Resource of the Week

Docracy

Do you need access to form contracts? Have you checked out Docracy?

What are you waiting for?

Docracy is an online resource for crowd-sourced contract templates. I’ve used documents that I found on Docracy in my own law practice, and I’ve also contributed to the cause by uploading a couple of my own contracts for others to use. The quality of documents that have been uploaded to Docracy ranges from good to not so great, but I’ve found it to be a great resource.

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Why You Should Review Your Important Contracts Before You Sell Your Business

caution

A company’s key contracts represent a valuable business asset. Thus, it’s crucial that the contracts remain in force as a business changes hands from the seller to the buyer when the business is sold.

As I’ve written elsewhere on this blog, the sale of a small business is usually structured as either an equity sale or an asset sale. In an equity sale, the buyer purchases the equity from the owner(s) of the company being sold (commonly referred to as the target company) — stock in the case of a corporation and membership interests in the case of a limited liability company. The business is transferred to the new owners, corporate or limited liability company entity and all, and the target becomes a wholly-owned subsidiary of the buyer. There is no change in the status of the target entity itself, and its contracts, assets, and liabilities remain with the entity.

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Hootsuite — Resource of the Week

Hootsuite home page

Do you run your business’s social media operation by yourself? So do I. Folks like us need quality tools to help us out.

Hootsuite is a social media management application. It can serve as your control panel for consuming content from — and interacting with — a number of different social media applications such as Twitter and LinkedIn (my two favorites). Through Hootsuite you can access all your social media accounts from one place to save you from having to log into each one separately.

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