Things To Remember When Starting A New Business

Last Updated on Tuesday, 27 October 2020 06:40 Written by Chris Griswold Tuesday, 27 October 2020 06:40

I get quite a few phone calls from people starting new businesses, especially now, amid a lot of changes and new opportunities that we’re seeing.  From the questions I normally receive, I wanted to share a few of these good ideas with everyone (and for the benefit of everyone).  This is good stuff for everybody to know… (don’t forget to click on my link above to also see my short video on this material).

Things To Remember When Starting A New Business

  • Get a line of credit established before you quit your day job and start your own business (not afterwards when you probably won’t qualify),
  • If you don’t have a written agreement with your business partner, then the law deems you both to have formed a general partnership (and hence each of you are liable for the other’s acts/omissions and debts incurred),
  • If you enter into a business contract (e.g., an advertising contract with the yellow pages for a full-spread ad, to the tune of $30,000) and haven’t yet formed a corporation or an LLC, you’ll be deemed a “promoter” in the eyes of the law, and, as such, you will be personally liable for the debt,
  • If you form an LLC, another LLC, corporation, business trust, etc… can be members of such LLC.  However, if you form a corporation, then only natural persons (i.e., individually named persons) can be shareholders (not other entities like an LLC can use),
  • Carry professional and/or general liability insurance on your business.  Your personal, homeowner’s insurance (and any umbrella upon same) will only cover your personal activities and liabilities, not your professional and business liabilities.  So, obtain such policies (and their corresponding umbrellas) in the name of your business, lest you not be covered for business and/or professional claims,
  • Get an accountant involved early on.  Why? People think that being in business is just about earning money and paying taxes; however, it can be more complicated than that….  Filing taxes is an ongoing process when you factor in both federal and State wage withholding reports for employees, unemployment tax withholdings, franchise/business activity tax, and quarterly estimated taxes.  These requirements can occur before you file your annual return.  Even if you do not plan to hire any employees, you should still be aware of the IRS “reasonable compensation rule” which says that you’ve got to pay yourself personal income in an amount at least equal to 30% of the gross amount your business produces.  Salary pays federal tax, state tax, and FICA tax….  Most of today’s LLC and Sub-S Corp’s will flow net profit/loss to your personal tax return (schedule K) and will require an additional annual Corporate Tax Return to be filed for your business.  The net profit will then be subject to Federal and State tax at your income bracket, and
  • Once you’ve found a qualified attorney to help you properly form your business entity, you need to open up an operating account (i.e., a bank account) in the name of your business.  When you make money from operations, you deposit it into your operating account.  When you pay yourself your personal payroll, you draw against such operating account and deposit it into your personal bank account (Note: you don’t commingle the funds from one account with another).

What My Clients Are Saying

“I would certainly like to commend Chris for his efforts is a recent transaction and for keeping communications with distant legal departments of large companies informed and involved as regarding the negotiations.  Chris Griswold has been a real asset in bringing together people and has the ability to center the focus on the transaction and that is really needed in today’s commercial real estate market.  Even though we may be experienced and seasoned veterans of commercial real estate, it’s good to have qualified, energetic, and capable legal support ready to move the process along at the faster rate we need today.  My thanks to Chris in this most recent transaction.”
Irmon Gray / Broker / NAI Sullivan Group / Oklahoma City, Oklahoma

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Remember These Things During Recovery

Last Updated on Tuesday, 27 October 2020 06:37 Written by Chris Griswold Tuesday, 15 September 2020 03:18

During this period of “rebuilding” for everyone, there are a couple of things to be mindful of…, things I’ve seen almost cause trouble already.  Prohibited and Exclusive Uses, mostly in leasing situations, but also in some sales (in the form of deed restrictions).  This is good stuff for everybody to know… (don’t forget to click on my links below to also see my short video on this material).

Remember These Things During Recovery

Exclusive & Prohibited Uses.  These are things that, while ordinarily found in other, existing, co-tenancy leasing situations, can come back and haunt either a broker or an owner while desperately trying to back-fill empty space.  These leases are usually old, dusty and forgotten – but still very valid for other surviving co-tenants within a project.

Big Picture:  Look at them, go find them, read them – you’ll be glad you did.

           They’ll usually be written poorly, probably be over-reaching, and you need to carefully navigate around them with your prospective tenant (or purchaser).  Ideally, if there’s trouble, you want to make sure the incoming tenant (or owner) agrees to amend their normal operating routine, their menu, their signage (or whatever) to not infringe upon whatever the existing exclusive and/or prohibited use section contains.  Depending on the circumstances, certain legal language and strategies will need to be employed to further protect the parties (more on that below).

Either way, they all have teeth, whether or not they’re recorded in the relevant county records.  And, they’ll surely be enforced by the party who has the benefit of such protection – especially right now, while things are harder for most…  And if you overlook them, it’s difficult to unscramble the egg, making things worse and damages will begin to grow too quickly.  If in doubt, you can follow this thought process….

First, you can get an opinion on whether the language is an issue (a great starting place) from qualified counsel.

Secondly, with that opinion, you have to make the decision on whether or not to approach the existing co-tenant or co-owner (within the project) about admitting the new tenant/owner or waiving their right to object.  This second component is problematic.  If they say “yes,” then you’re ok.  However, if they say “no,” then you’ve already been told “no,” so proceeding with the prospect is already dead in the water.

So, before doing step 2, first talk long and hard with the prospect, the center’s landlord (or owner) and a qualified attorney who can examine the documents – then get a consensus on what needs to be done before proceeding.  Especially right now, this topic is something too easy to trip and stumble upon.  Have a great month everyone.

What My Clients Are Saying

“I have used and recommended Chris Griswold for years on commercial real estate legal matters but when my mother passed away, I knew I had to call Chris. I’ve heard horror stories in the past of probates lasting well beyond a year, but Chris moved quickly in the probate process and was able to complete the process in less than four months.”
Allan Meadors, Director, Cushman & Wakefield | Commercial Oklahoma.

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Thought Process – Legal Considerations Going Forward After COVID / Disclosures on COVID Impacted Properties?

Last Updated on Thursday, 9 July 2020 12:03 Written by Chris Griswold Thursday, 9 July 2020 12:03

Message From Chris….

What about after we return to normal life/work after this pandemic, what happens when you go to buy, sell, rent or lease real property that may have been impacted by COVID-19?  Will some of the fears we have stick, or will we be a forgetful society?  Hard to tell….  While it’s not my intent (nor possible) to get into the weeds on everything, I do want to help shed some practical light on some things for folks, some things that might possibly develop….  Who knows?  But this is good stuff for everybody to know… (don’t forget to click on my links below to also see my short video on this material).

Thought Process – Legal Considerations Going Forward After COVID / Disclosures on COVID Impacted Properties?

            Question #1 What if I contracted COVID and I later want to sell my home?

Answer:  On the disclosures for the residential sale of property, there is an obligation to disclose certain events, under certain circumstances, that “psychologically impact” a property, if the possibility of the occurrence of such events is important to the prospective buyer/tenant of such property and such buyer/tenant delivers written notice to the licensee/broker assisting the owner in such transaction.  So what?  It may later be decided that COVID warrants becoming an event that causes a property to be psychologically impacted – as things possibly play out in our legal system.

Question #2Same question as above, but it now involves the sale of a commercial property that housed either a seller or a tenant who contracted COVID, what then?

Answer:  Although commercial property differs from residential property, such framework could later be extended to commercial situations by the Courts.  Accordingly, if the buyer or prospective tenant provides written notice to the licensee/broker involved in assisting the owner in such transaction, such issue should be handled the same way as any psychologically impacted property analysis.

Question #3What is the psychologically impacted property analysis?

            AnswerThe licensee/broker involved in assisting the owner in such transaction must receive a written notice from the buyer or prospective tenant, then the licensee/broker assisting the owner will approach the owner to inquire and obtain information about the issue.  With the consent of such owner, the licensee/broker will report back to such buyer or prospective tenant about such findings.  If the owner doesn’t consent or agree to provide such information to such buyer or prospective tenant, then the licensee/broker involved in assisting the owner shall inform such buyer or prospective tenant of the owner’s refusal to provide information on the issue.

What My Clients Are Saying

“Chris Griswold is an attorney that will find reasonable solutions in an economical manner to fit my clients’ best interests. My growth of knowledge of the legal system and use thereof for my clients can be contributed in a large part because of Chris Griswold’s personal willingness to educate and strengthen my knowledge on the laws. Good results from a good law practitioner like Chris are always best and hard to find it seems.”
John W. Meek, RPA / Owner, First Commercial Management, Inc. / Oklahoma City, Oklahoma

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