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We discuss the importance of keeping good business records and how to create good business records, including meeting minutes.

In today’s post, we’ll discuss why it’s important to maintain good business records, what records you should preserve, and how to produce meeting minutes.

What Are “Good Business Records”?

A “good business record” is clear documentation that captures important information at the time the information is created or exchanged (and a “generally better than nothing business record” is one created later to document something that happened in the past). Examples of important information that a business should document are agreements made between business partners, decisions made by the company, and information collected from customers. One of the simplest forms of a good business record is “minutes” created at or directly after a meeting documenting the discussion and decisions from the meeting.

Why Should You Maintain…

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Keeping good business records

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In this post we discuss a bill in Congress (HALOS Act) that would make it easier for startups to raise funds at pitch events.

Presentations made at startup demo days on college campuses and at accelerator pitch events routinely mention the details of a company’s effort to raise capital through the private sale of securities. This practice, however, raises concerns over whether these presentations amount to a ‘general solicitation’ for a company’s securities under Regulation D of the Securities Act. The definition of a general solicitation could include any advertisement, article, or other communication, including any meeting where the attendees were invited by a general advertisement that present the opportunity to participate in a company’s securities offering. If an early stage company makes a general solicitation, then it may be precluded from using certain valuable exemptions from registering their security offering with the SEC.

Companies…

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Space Needle Halo

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This post discusses attorney-client privilege and what you need to know about the concept to protect yourself and your business in a future legal dispute.

What is the attorney-client privilege generally?

The attorney-client privilege is the legal right that protects communications between a person and her attorney from compelled disclosure in a legal action. Attorney-client privilege is most often invoked when a person is asked to provide details of communications in a court proceeding or regulatory hearing, and it is codified in Washington as a rule of evidence. In a hearing, if a party otherwise entitled to the information asks for details or copies of communications and the communications are subject to attorney-client privilege, then the person being asked to disclose the information can withhold certain parts of those communications by claiming the attorney-client privilege. 

Why do we have the attorney-client privilege?

The attorney-client privilege exists because it…

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Attorney-client privilege quiet please

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We continue the Understanding Your Commercial Lease series by discussing how commercial leases treat taxes and what tenants can do to improve tax treatment.

Taxes are another important consideration when working towards understanding your commercial lease. The tax provisions of your lease will detail what taxes are required to be paid by the tenant and what taxes are required to be paid by the landlord. The tax provisions will also detail how and when all taxes must be paid. To understand the true costs of your lease, you must understand what taxes you are required to pay and who takes on the risk that tax rates rise or additional taxes are levied.

What taxes will you be required to pay under your commercial lease?

The taxes you are required to pay are generally described in the definition of “Taxes” in the lease. How the definition will be written…

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commercial-lease-taxes-2

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In this post we discuss the commercial lease letter of intent and why it is important to fully consider even if it is non-binding.

In an earlier post in our understanding your commercial lease series, we discussed the value of hiring a broker and briefly discussed letters of intent. We’ve have had many questions about letters of intent recently, so I am taking a quick detour to address this topic in more detail. I hope this post helps to shed light on what a letter of intent is and why it is an important part of understanding your commercial lease.

What is a commercial lease letter of intent?

A letter of intent (LOI) is a document that includes the important terms of the commercial real estate leasing deal and consolidates those terms in writing prior to the commercial lease being prepared. The letter of intent is designed to…

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Commercial lease letter of intent

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Today, we are continuing our series on Employee Equity Explained by discussing stock options.

Today, we are continuing our series on Employee Equity Explained by discussing stock options specifically.

Stock options are contracts that allow an employee to buy shares (this is called “exercising” the option) at a fixed price. Options are different than receiving stock because an option is exactly as it sounds; it’s an option to buy stock upon certain conditions being met, such as vesting (discussed below).

There are two standard types of stock options: Incentive Stock Options (“ISOs”) and Nonstatutory Stock Options (“NSOs”).

ISOs provide the recipient with certain tax benefits but they can only be provided to employees of the company, not independent contractors or non-employee board members. Additionally, only $100,000 in ISOs can be exercisable in any given year. NSOs on…

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Stock Options

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Today’s post dives specifically into the definition of “accredited investor” as defined in Rule 501 of Regulation D of the Securities Act of 1933

The definition of accredited investor is a topic we’ve touched on briefly in several posts throughout the years, but today’s post dives specifically into the definition of “accredited investor” as defined in Rule 501 of Regulation D of the Securities Act of 1933. We’ll also point out why it’s important for you to understand who is considered an accredited investor.

Definition under Rule 501

The SEC states that the definition of accredited investor is “intended to encompass those persons whose financial sophistication and ability to sustain the risk of loss of investment or ability to fend for themselves render the protections of the Securities Act’s registration process unnecessary.” The definition of accredited investor under Rule 501 includes several types of individuals and…

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Accredited Investors

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In today's blog post, we'll discuss the non-waivable provisions of the Washington Limited Liability Company Act in more detail.

Significant changes to the Washington Limited Liability Company Act went into effect on January 1 of this year. As I wrote in a previous blog post on the Washington Limited Liability Company Act changes, the changes were intended to make the law easier to understand and give members more flexibility in how they want to manage and operate an LLC. Under the old act, the non-waivable provisions were scattered throughout the act. Under the new act, the non-waivable provisions are all listed in one place for convenience— in Section 25.15.018 of the RCWs. In this blog post, we’ll discuss the non-waivable provisions in more detail.

The LLC Act allows members of an LLC flexibility in outlining through the LLC Operating Agreement how…

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Issuing employee equity in a startup, or any business, is a great way to compensate and incentivize employees.

Issuing equity to employees in a startup, or any business, is a great way to compensate and incentivize employees. However, employers and employees are often confused about the various types of equity compensation available and the pros and cons of each type of employee equity. In this series of blog posts on employee equity, we will continue our discussion of employee equity compensation plans by detailing the various types of equity that employers can grant and lay out the reasons for choosing one over the other.

When someone receives “equity” in a company, this means that they are receiving stock or future rights to stock in the company. By owning stock in a company, that person will then become a shareholder,…

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Employee Equity

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This post discusses Section 4(a)(7) of the Securities Act of 1933 and its impact in potentially making the resale of private stock easier.

Congress recently passed a new securities law exemption (Section 4(a)(7) of the Securities Act of 1933) that eases the limitations and restrictions surrounding the resale of private stock.  Prior to the new law, there were several regulatory hurdles that made the resale of private stock in a company difficult. As we’ve highlighted in prior posts, securities regulations require any sale of stock to be registered with the SEC (a time-consuming, expensive process), unless the sale is “exempt”—which means that the sale falls within one of the exemptions provided for in the securities regulations. (Check out one of our prior posts on securities exemptions and Rule 144 for more background on the regulations specifically surrounding selling stock in private companies as they applied…

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New Law Reduces Hurdles to Resale of Private Stock