Drafting an operating/partnership/shareholder agreement seems to be my most important but least utilized service. For whatever reason, business owners are very reluctant to spend the money on a well-drafted operating agreement tailored to their needs when they can download one for free. If you are a regular visitor to my site, you have read the horror stories about companies that settle for generic operating agreements or others that simply go without.
A couple of weeks ago I spent over an hour with two business partners trying to nail down the specifics for their operating agreement. One remarked, “wow, I had no idea so much went into these agreements.” I explained that so many things can go wrong when you’re in business with another person. The operating agreement’s
Continue reading Operating Agreement Checklist
I’m Gina Bongiovi. I’m a lawyer who works with startups and small businesses. Whether you’re in the startup phase or whether you just have an idea rolling around in your head you might want to turn in to a business one day, you need to know how to start a business in Las Vegas. If you’ve done any research, you have found out that the process is pretty complicated and involves a whole bunch of steps; you have to go to a bunch of different agencies, you have to figure out a name, you have to figure out what entity you want to be, you have to figure out what sort of tax permit you need from the state, how you want the IRS to
Continue reading How to Start a Business in Las Vegas – Video Series
If you’re the majority owner of your business and are a minority, woman, veteran, or any combination of the three, you should consider getting certified.
Major companies like big casinos, public utilities, publicly traded companies, and those who deal with government contracts have set-asides in their budgets that they are REQUIRED to spend with minority, woman, or veteran owned businesses. Now, if you are a minority and own at least 51% of your business, you could certainly approach the supplier diversity departments of these major companies with your brochure and say, “hey, I’m a minority/woman/veteran and own this business. BUY FROM ME.” However, certification companies have popped up that actually make you prove the ownership and then reward you with a seal or logo or some widely-recognized medallion that
Continue reading Minority, Woman, and Veteran Owned Businesses
Here’s what happens when you get your operating agreement from a legal forms company.
I just finished helping a client negotiate a buyout. In English, that means he and his partner stopped longer seeing eye to eye on how to run the business so the partner offered to buy my client’s shares in the company.
We spent a month negotiating and getting nowhere when the partner’s attorney proposed adding someone new to the company without my client’s permission. This type of thing normally doesn’t fly without at least a majority vote. Of course, these guys were 50/50 partners and were already hostile, so agreeing on something was not going to happen. I asked for a copy of the company’s operating agreement, which they had bought from a
Continue reading Small Business Horror Story #7: Pre-Packaged Operating Agreements
Hiring employees costs money, not only in the amount you’re paying them but also in taxes, fees, and time spent filling out the paperwork for the relevant government agencies. Because of those headaches, it’s incredibly tempting to begin hiring workers as independent contractors. If you are misclassifying your workers, you risk an audit by the IRS and your state unemployment agencies. I’ve already discussed the factors considered by the IRS, but after helping a client through an audit by Nevada’s DETR (Department of Employment, Training and Rehabilitation), I thought I’d discuss their factors.
The employer must prove the following three conditions exist. If you fail one, you fail them all and the person in question is an employee:
1. The person has been and
Continue reading Are You Misclassifying Your Workers?
“Oh, we don’t really need a partnership agreement; we’re great friends.”
“We’ve been best friends since childhood, so we know how to resolve arguments.”
“He mah bess frenn.”
These are words that strike fear and anxiety into a corporate lawyer’s heart. Granted, our perception may be slightly skewed given that we always see what happens when things go horribly wrong. Still, if you want to maintain the friendship, putting together some sort of partnership agreement is the best way to do so.
A business partnership is a lot like a marriage. Therefore, a partnership breakup is a lot like a divorce. An operating/shareholder/partnership* agreement is like a prenuptial agreement but it’s not nearly as awkward to discuss.
For so many reasons, it is imperative to put one of these owners’
Continue reading Going into Business with a Friend?
A few weeks back I was a coach for Startup Weekend. Basically it works like this: a bunch of entrepreneurs get together Friday night and each has a chance to pitch his or her idea. The group as a whole narrows the field to about a dozen ideas and the people whose ideas were not chosen redistribute themselves among teams. Then the teams work tirelessly over the next 52 hours to develop the idea into a working prototype which they then pitch, as a group, to a panel of judges. The judges can include venture capitalists, consultants, and angel investors. The team that won last year just garnered about $750,000 in funding. So this is a big deal.
Over the course of the weekend, the same
Continue reading Who Owns a Group Project?
Are you a sole proprietor who wants to incorporate because your buzzkill lawyer friends have scared the bejeezus out of you with horror stories of getting your personal finances wiped out after a lawsuit that really involves your business? Good. That’s one of those skills we learn in law school and hone while practicing and seeing what happens when things go horribly, terribly wrong.
Anyway, so you’re ready to incorporate, but you have been operating properly as a sole proprietor. You have licenses, a tax permit, etc. How do you change into an LLC or corporation?
In Nevada, there is no way to simply change from operating as a sole proprietor to an LLC or corporation. To operate as an entity, you are required to file Articles of Organization or
Continue reading Changing Sole Proprietor to LLC or Corporation
December 6, 2012 The Nevada Secretary of State just today issued a press release warning businesses about crowdfunding. Simply stated, crowdfunding describes the method by which an organization can raise money from a pool of contributors, each of whom pony up a small amount of dough, often through crowdfunding sites on the internet. Small businesses are excited about this idea because current securities* laws make it incredibly difficult for small businesses to raise money because they require a whole host of legal documents that really only lawyers can prepare. Not just any lawyer, either. You really need a securities lawyer to handle this type of thing and, because their malpractice insurance premiums are so high for this area of law, the work doesn’t come cheap. Small
Continue reading No Crowdfunding, Not Yet
I often get calls from people wanting to incorporate in Nevada because they’ve been told that Nevada allows anonymity for business owners, usually through what’s called a nominee service.
Because this is a HUGE risk for businesses, I need to clear this up.
Nevada does not provide anonymity for business owners. When you form an entity, you are required to disclose the names of the manager or members if an LLC or officers if a corporation. This information is published on the Nevada Secretary of State’s website.
Some companies will provide what’s called “nominee service” where the company lists itself as the manager/member/officer to provide the actual business owners with privacy. Notably, no law firm that I can find will provide this service.
Appointing a nominee is
Continue reading Nominee Service and Anonymous Owners