How To Choose Your Business Address

I’m Gina Bonjovi, and I’m a lawyer who works with start-ups and small businesses. In this video series, I’m walking you through the steps on how to start a small business in Las Vegas. We already covered naming your business so if you missed that video it’s on the link below the like button. Now we’re going to talk about how to choose your business address.

This seems like a silly issue, but it can actually have some ramifications.

You want to keep in mind the business address you register with the secretary of state is public record. If you’re doing anything that you might have people who don’t really like you very much, you might not want to use your home address. You can use a P.O. Box for the secretary of state site which is where you would register your LLC or your corporation. That’s fine.

However, once you get to the point where you are registering for your local business license with the city of Las Vegas or Park County or North Las Vegas some of those jurisdictions will not license businesses that list a P.O. Box. You actually have to have a physical address instead. The county sometimes will license businesses at a P.O. Box, sometimes not. It depends on the business category. You either want to double check that before you determine what your business address is going to be or just choose something that has a physical address. You don’t necessarily have to have a physical office. We have other solutions here in town that are less expensive, especially for start-up businesses.

What I really like to promote to my clients is virtual offices or executive suites. Instead of having, I tell my clients that having a physical office is kind of like inviting people to a wedding because you have your base rent. You have your cans, which are the sort of shared expenses, liked your homeowners dues. You need to insure your business. All of the equipment in your business. You have to put computers in there. You have to have utilities, internet, phone, blah, blah, blah, hiring a receptionist to be there when you’re not there. The expenses of having a physical office go from your base rent with all of these add-ons.

In the alternative, you can do something like one step down, which is an executive suite, where you have a physical office, but you share reception services and things like that. Or you can go one step even less expensive, which is a virtual office, which is a physical building that allows you to hang your license. Sometimes you can use their reception services. They will have physical offices in there that you can grow into, and that’s the point. That’s what I really like about virtual offices, especially for start-ups, because you have the ability to hang your license somewhere with minimal overhead. Then you can grow into the services they provide. You start with $75 or $100 a month to hang your license. You get a physical address so you’re clear with all the jurisdictions to get your local licenses. Then once you grow, you can start using their reception services.

You can start using their secretaries. You can start using their transcription services.

Once you get all that handled, then you can start growing into a physical office. The other good thing about a virtual office is that through this entire growth process, you don’t ever have to change your address. You don’t have to pay the filing fees with the secretary of state to update your address, or the city, or the county. You also don’t have to change any of your marketing collateral. That’s one of the benefits that I see of a virtual office. Make sure that you choose a good physical address for your business. Pay attention to the jurisdiction and explore the possibility of a virtual office. Thank you for watching. If you like this video, please click the like button, and stay tuned for the next episode.

How To Start A Business In Las Vegas
How To Name Your Business

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I’m Gina Bongiovi. I’m a lawyer who works with startups and small businesses. In this video, I’m going to discuss how you choose a name for your business. While it may seem like a very easy thing to do, that you just choose your name, it’s actually not. You have to take a lot of things into consideration when you’re first naming your business, and a lot of those decisions depend on information that you probably don’t have, like your exit strategy. Even though it sounds a little strange to be talking about your exit strategy when you’re trying to start your business, it’s really important.

For example, if you plan on eventually taking your business national, you probably don’t want to have Las Vegas, Clark County, or Nevada in your name, because you want to be able to expand. Also, if you plan on selling your business down the road, you probably don’t want to use your name in the business, like Joe’s Mobile Detailing, or something like that. You want to not only keep your exit strategy in mind and make sure your name doesn’t restrict you from growing your business, but you also want to make sure, and this is very important, that nobody already has your name.

You can check on the US Patent and Trademark Office website, which is at http://USPTO.gov, and you can search for trademarks. You want to do a couple of different searches and different variations, because the Trademark Office won’t issue a trademark if the name you are using is confusingly similar to another name that’s already registered. You want to do some pretty liberal searches at the Trademark Office, but don’t stop there. You also want to Google your name and make sure there are no other businesses that are doing business under your name in the same market for the same category as what you are doing.

I have a couple of horror stories about this. I have one client who sunk a whole bunch of money into a product; he did labels, he did bottling, he did the whole thing. He got his product into Costco, which for a small family- owned business in Las Vegas, was a great deal. When he got his business into Costco, there was another company that had a very similar name for the exact same product that was already in the market, and was a ‘Goliath’ in a David and Goliath situation. My client, after receiving a cease and desist letter from the Goliath, had to make a decision of whether to try to fight, which they didn’t really have the resources to do, or to change the name of their company, which they had already sunk about $50,000 into naming the company, labeling it, graphic design, and all that kind of stuff. This is why this is an important decision to make in the beginning.

When you’re talking about trademarking and you want to file your trademark application, you have a choice of whether you want to protect the name or the name and the logo. If you really like your logo and you want it to standalone without really having to have the name, like the Nike ‘swoosh’, then you want to do a logo design. If you just do a name design, it gives you some flexibility on changing your logo down the road. If you do your name, you also have to choose a category that you want to protect the name in. You don’t just get to protect your name for all purposes under the sun.

A good example of this is Monster: You have Monster Cable, you have Monster Energy, you have Monster the job search. Every one of those companies is allowed to use the name Monster, but they’re all for different categories. You want to make sure that somebody isn’t using your name or something similar to it for the same category. Then once you figure all that out, then you can start your business.

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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 purpose is to lay down some ground rules for managing the company and for resolving disputes so you don’t end up battling it out in court.  Some states have default statutes that companies can rely on when they don’t have an operating agreement.  Nevada isn’t one of those states.  If you are in a dispute with your business partner and you don’t have an operating agreement, you must resolve it yourselves or let a judge decide.  It’s called “judicial dissolution” and it is expensive and a huge distraction from your business.

Putting an operating agreement in place when you start your business is an investment worth making.  Here are some things you should consider:

LLC Operating Agreement Checklist

The American Bar Association has published a 120-page long operating agreement checklist. The following checklist is therefore not completely comprehensive but addresses most of the concerns my clients face.

1. GENERAL INFORMATION

   1. Name of LLC

   2. LLC Purpose

   3. Principal Place of Business

   4. Name and Address of Registered Agent

   5. Name of Tax Matters Partner

   6. Manager Managed or Member Managed?

   7. Tax Treatment?

      1. __Disregarded entity

      2. __Partnership

      3. __Subchapter S Corporation

      4. __Subchapter C Corporation

2. MANAGEMENT

   1. Member-Managed or Manager-Managed LLC?

   2. If Manager Managed…

      1. Must the Managers also be Members of the LLC? ___ Yes ___ No [usually no]

      2. Are Managers to be elected? ___ Yes ___ No [usually no]

         1. If yes, by what vote? __unanimous __75% __2/3rds __majority __other:

      3. Are the Managers to be paid? How so?

      4. Names of Members or Managers

         Name:			Name:
         Member or Manager?			Member or Manager?
         Address:			Address:
         Capital Contribution:			Capital Contribution:
         Member or Manager?			Member or Manager?
         % Interest in LLC			% Interest in LLC
         Voting Rights			Voting Rights
         Roles and Responsibilities			Roles and Responsibilities
         Name:			Name:
         Member or Manager?			Member or Manager?
         Address:			Address:
         Capital Contribution:			Capital Contribution:
         % Interest in LLC			% Interest in LLC
         Voting Rights			Voting Rights
         Roles and Responsibilities			Roles and Responsibilities

   3. Do you wish to provide for different “classes” of Members __Y __N
      1. Who can vote and who cannot vote?

   4. Amendments of the Operating Agreement which directly change the financial share of each Member will require unanimous consent. Do you wish to provide for other types of amendments with less than unanimous consent? __Y __N If so, what consent: __75% __2/3rds __other:

   5. A decision to dissolve the LLC is to be made by the following vote: __unanimous __75% __2/3rds __majority __other:

   6. With regard to whether a Member may engage in competing business activities:

      __the Operating Agreement is to be silent on the subject;

      __Members are expressly to have the right to engage in competing businesses;

      __each Member is to covenant not to compete while a Member and for period after membership in the LLC ceases – enter time period and geographical area:

3. CAPITAL CONTRIBUTIONS

   1. Are additional contributions required of all Members?

   2. Are additional capital calls permitted? __Y __N

      1. Who can make the capital call?

      2. Must there be a specific instance or circumstance or process?

      3. If a call is made, members must contribute __equally __pro rata

         1. Within _______ days/weeks/months or

         2. Within the time period specified in the call notice

   3. What happens if a member does not meet expected contributions?

      1. Potential consequences:__Reduction in share of profits, __Reduction in share of profits and reallocation of capital, __Preferential distributions to other members, __Loan from company at %, __Loan from non-defaulting member (and interest rate), __Personal liability on the part of member, __Opportunities for other members to make up and defaulting member is diluted, __Suspension of management authority or voting rights, __Right to purchase defaulting member’s interest in the LLC, __Forfeiture of defaulting member’s interest in the LLC, __Automatic diversion of distributions to make up deficit (lien like)

   4. Is there a mechanism for “cashing out” a member?

   5. How do you value the contribution of the member up to the point of withdrawal?

   6. Can the member stay a member even if he/she is no longer actively managing the business or delivering consulting services?

4. ADMISSION OF NEW MEMBERS

   1. May new Members be admitted to the LLC with LESS THAN unanimous consent? ___ Yes ___ No [usually no]

      If yes, what consent: __75% in interest __2/3rds in interest __majority in interest __other:

   2. If a Member desires to voluntarily withdraw, must the Member first get the consent of some or all of the other Members? ___ Yes ___ No

      If yes: __unanimous consent __75% in interest __2/3rds in interest __majority in interest __other:

   3. Are the names and addresses of all of the Members to be recited in the Articles of Organization of the LLC? ___ Yes ___ No

   4. Is the Operating Agreement to provide for assignment of allocations and distributions to:

      __relatives of a Member without consent;

      __another Member without consent;

      __to any person with the following consent:

      __no consent required

      __unanimous (all Members) __75% __2/3rds __majority __other:

5. DECISION-MAKING

   1. In general, decisions reserved to the Members are to be made by what vote: __majority __2/3rds __75% __unanimous __other:

   2. In addition to generally authorizing the Managers to handle daily operations of the LLC, is the Operating Agreement to expressly give the Managers broad and detailed powers? __Y __N

   3. How will salary and earnings distributions be made?

6. TERMINATION OF MEMBER

   1. Voluntary Transfer

      1. What happens if a Member wants to leave the company?

__Prohibited

__ Permitted but assignee is not admitted as a member without the consent of _____% of the other members

__Permitted only with consent of ____% of the other members

1. Is company given right of first refusal?

2. How long following notice from leaving member must company decide whether to purchase the member’s interest?

3. Can the Member sell his/her interest __ to anyone __only to existing members?

4. Are the other Members to agree, in advance, to buyout the interest of a Member who dies or becomes totally disabled (or retires)? [usually no] __Y __N

   1. If yes, check one of the following:

      1. __buyout on death

      2. __buyout on disability

      3. __buyout on retirement

      4. __insurance for death or disability is to be maintained by the Members to pay the purchase price

5. Interest transfers to spouse/next of kin?

6. Company can purchase interest at fair market value?

7. Life insurance funded buyout provision?

1. Involuntary Transfer

   1. __Gross negligence

   2. __Bankruptcy

   3. __Disability; if so, definition of disability:

      1. __Guardian/conservator appointed by court

      2. __Primary care physician or designee determines inability to manage business affairs

      3. __Member has not performed business functions for ____ days

      4. __No performance of duties for Company in ____ days

      5. __Agent pursuant to power of attorney notices Company of disability

   4. __Willful misconduct

   5. __Conviction of a crime

   6. __Conviction of a crime against the Company

   7. __Violation of the operating agreement:

      1. __Any violation

      2. __Material violation

      3. __Repeated violation

      4. __Violation of particular provisions:

      5. __Other:

   8. Who determines?

      1. __All of the members

      2. __% of the members

      3. __All of the members other than the member being removed

      4. __Other:

2. How is the purchase price determined?

   1. Company CPA valuation?

   2. Multiples of earnings based on most recent tax returns?

   3. Independent valuation?

1. REMOVAL OF MANAGER
   1. Removal only for cause? __Y __N
      1. __Gross negligence
      2. __Bankruptcy
      3. __Disability; if so, definition of disability:
         1. __Guardian/conservator appointed by court
         2. __Primary care physician or designee determines inability to manage business affairs
         3. __Member has not performed business functions for ____ days
         4. __No performance of duties for Company in ____ days
         5. __Agent pursuant to power of attorney notices Company of disability
      4. __Willful misconduct
      5. __Conviction of a crime
      6. __Conviction of a crime against the Company
      7. __Violation of the operating agreement:
         1. __Any violation
         2. __Material violation
         3. __Repeated violation
         4. __Violation of particular provisions:
         5. __Other:
   2. Who determines?
      1. __All of the members
      2. __% of the members
      3. __All of the members other than the member being removed
      4. __% of the members other than the member being removed
      5. __Other:
2. DISSOLUTION OF COMPANY

   1. How is left-over cash distributed?

   2. How and by whom are liabilities paid?

   3. How are non-cash assets disposed of?

3. GOVERNING FORMALITIES

   1. If the LLC is to be managed by Managers who are not Members, is the Operating Agreement to provide for annual meetings of the Members? __Y __N

   2. Are disputes to be resolved by arbitration? __Y __N

   3. If Manager-Managed, is the Manager required to provide: __monthly reports __quarterly reports __both

   4. Who retains possession of the corporate book?

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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 tax you. There are a whole bunch of things.

In this video series, I am going to walk you through the process of running a business in Las Vegas, from naming your business to opening your doors. If you’re interested, subscribe by clicking the link below or visit http://bongiovilaw.com

See this video on YouTube: http://www.youtube.com/watch?v=Sbu26eaX0Xg
Subscribe to my Video Channel: Bongiovi Law TV

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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 says you’ve been vetted by one of these companies.  This little medallion makes it easy for someone in purchasing in one of these big corporations to sift through a pile of proposals to find the ones that are from certified businesses.

Sometimes the certifications are simple, like the Service Disabled Veteran Owned Business certification.  That one took me only a few minutes to complete.  You’ll need your DD 214 and disability letter.

The minority owned business certification can be handled by several agencies, depending on the minority you identify with.  For ethnic minorities, the Minority Supplier Development Council is the place to start.  In Nevada, it’s the Nevada Minority Supplier Development Council.  Their name is a mouthful, but their online application is pretty easy to navigate.

If you identify as LGBT, the National Gay and Lesbian Chamber of Commerce offers certification.

The woman owned business certification is probably the toughest one to get.  I’ve heard the application process is so intense because, during the construction boom, many male-owned general contractors would simply promote their stay at home wives to 51% owners to get more business.  This was unfair to those companies legitimately operating as woman owned businesses in that industry, so the requirements became more stringent.  Two of the more recognizable certification companies are the Women’s Business Enterprise National Council (WBENC) and the National Woman Business Owners Corporation.  The Small Business Administration (SBA) also certifies through their Women Owned Small Business Program Certification.

Getting certified can be a pain in the arse, but after my clients start getting contracts with big clients they’d never otherwise been able to meet, they say it’s well worth the trouble.

And to answer a very good question, certifications are not state-specific.  You can get certified no matter where you are in the US.  Most of the agencies I listed are national.

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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 legal forms company.

A properly drafted operating agreement includes some restriction on how a new owner would be added to the company.  Most operating agreements provide that a new member can’t be added without unanimous consent of the existing members.  When I reviewed the operating agreement, I wanted to see something, ANYTHING, restricting the other partner from unilaterally adding someone to the company and further complicating already-complicated negotiations.

What did I find?  Nothing.  I found nothing.

Well, that isn’t exactly true.  I found no restriction on adding new members.  What I did find was an assignment clause, allowing either partner to assign part or all of his interest in the company to someone else anytime he wants.  That’s even WORSE than having no restriction.

Flabbergasted, I read the rest of the agreement, which was 25 pages but had no real substance.  Every section had generic language like “the members shall decide how to allocate profits and losses,” “the members shall decide how to add new members,” “the members shall decide how to dissolve the company.”  Well, no s*** Sherlock.  Of COURSE the members will decide those things.  We didn’t need an operating agreement to tell us that.  An operating agreement is supposed to provide guidance when the members DON’T agree, like NOW.

This is yet another reason why you should always have an operating agreement that’s been drafted by a lawyer.  It may be expensive, but it’s even more expensive not to.

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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 will continue to be free from control or direction over the performance of the services, both under his contract of service and in fact; AND

The more control you exert over the worker, the more likely that worker is an employee rather than an independent contractor.  Usually, if you, as the employer, dictate the end result but not the performance to reach the end result, you can pass this requirement.  The second part of the requirement means that having an independent contractor agreement is not enough.  If I followed the worker around all day I’d have to see that they are actually free from the employer’s direction or control over the performance.

2.  The service is either outside the usual course of the business for which the service is performed or that the service is performed outside of all the places of business of the enterprise for which the service is performed; AND

A good illustration of this requirement is a bakery that hires someone to design their website.  Because website design is outside the usual course of business for a bakery, that website designer would be an independent contractor.  Also, if the worker performs the work outside your place of business, it helps make the argument that the worker is an independent contractor.

3.  The service is performed in the course of an independently established trade, occupation, profession or business in which the person is customarily engaged, of the same nature as that involved in the contract of service.

If your worker has a full-time job doing the same types of work he or she is doing for you, it helps build the case for classifying them as an independent contractor.  This requirement is why you sometimes hear that it’s best if your independent contractors form their own LLCs or corporations and get their own business licenses.  This is only one of three requirements, so it might help, but it isn’t enough on its own.

If you’re reading this, chances are you’re ready to grow and expand your business – congratulations!  Having recently helped a client through a DETR audit, I can safely say it’s far better to follow the rules from the beginning than risk an audit and having to pay back taxes and penalties for misclassifying workers.  Remember, the burden of proving the worker is an independent contractor falls on the employer and a contract covering the requirements isn’t enough.

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“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’ agreements in place to avoid the loss of a friendship over business.

* These agreements all share the same objective – to outline the roles and responsibilities of the owners, to dictate dispute resolution, etc.  They just have different terms depending on the type of entity involved.  Operating agreements are used with LLCs; Shareholder agreements are used with corporations; Partnership agreements are used with, well, partnerships.

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Over the course of the weekend, the same question kept coming up.  Who owns the work?  One person might have had the original idea, but shouldn’t the person working through the night to write the code have some right to the finished product?

The answer is relatively simple, but with complex consequences.  In a setting like this, where a number of people contribute to a single work, where the end result depends on each contribution, and the contributors haven’t signed any contract, it’s considered by US copyright law to be a “joint work.”  In joint works, the contributors share ownership of all copyrights.  Okay, lawyerspeak.  What does that mean?

Each contributor has an equal right to register and enforce a copyright for the work, and each contributor has an equal right to commercially exploit the copyright or license the right to exploit it to someone else.  In other words, each contributor has the right to do with the product as he or she wishes.  HOWEVER, if that one person brings the product to market and makes a ton of money, each contributor is entitled to his or her equal share of the proceeds.

I spoke with several groups with members who had no desire to continue with the project.  In that case, I recommend getting that lack of desire in writing.

As a lawyer, I’m enough of a buzzkill during Startup Weekend as it is, so I wouldn’t want to discourage the type of intense collaboration that takes place over those hours.  But, if your idea has legs and you intend to eventually bring it to market, you might want to consider the ramifications of a joint work.

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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 Incorporation with the Secretary of State as if you’re starting from scratch.  Keep in mind, though, that if you have an account with the Nevada Department of Transportation or local business licenses, you’ll need to change those over to the entity once it’s formed.

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