Commercial Real Estate

Understanding Your Commercial Lease: Taxes

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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Corporate Finance & Securities

Employee Equity Explained: 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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Business Startup

LLC Basics: Appealing Characteristics of LLCs

Over the last 20+ years, LLCs have become one of the most popular types of business entity. Entrepreneurs find LLCs appealing because they offer limited liability, pass-through taxation, flexibility in management and operations, and have relatively simple statutory requirements. We’ve highlighted the “LLC basics” in today’s post.

Limited Liability Protection

Like corporations and other limited liability entities, limited liability companies offer owners (also referred to as “members”) protection against personal liability. If the owner of a sole proprietorship or general partnership gets sued, then their personal assets  are at risk. But if the owner of an LLC gets sued, the business assets would be at risk, but their personal assets will generally not be subject to the lawsuit.

Pass-Through Taxation

The federal government does not...

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Business Startup

Can LLC Members Pay Themselves a Salary?

As we’ve discussed in previous posts, the limited liability company (LLC) entity offers a ton of flexibility when organizing the management and economic structure of the company. Because of this flexibility, the LLC has quickly become the most popular entity to form when seeking limited liability protection for new businesses. One question that often crops up is, “Can I pay myself a salary as the owner of a LLC?”

Can LLC Members Pay Themselves a Salary?

The short answer is: It depends on how the LLC is taxed.

LLC Taxed as a Partnership

For tax purposes, a LLC is by default a pass-through entity—i.e. any money that comes into the business will “pass-through” to the individual members of the company regardless of whether they receive...

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Business Startup

Recent WA Case Highlights Importance of Compliance with State Taxes; Even When Conducting Limited Business in the State

A recent court of appeals case highlighted what happens if you don’t pay your business and occupation tax (B&O tax) to the state of Washington. In Space Age Fuels v. State of Washington, Space Age argued that the dormant commerce clause prohibits Washington from taxing its activities because they lack a substantial nexus with Washington. The dormant commerce clause is implied under Article I of the United States Constitution and prohibits a state from passing legislation that improperly burdens or discriminates against interstate commerce. The court of appeals disagreed with Space Age and affirmed the lower court’s ruling denying a refund of the paid B&O tax. If you do any business in WA, it may make sense (after this case)...

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Mergers & Acquisitions

Due Diligence | Part 3 | Financial Issues

In last week’s post we discussed the legal issues surrounding due diligence. This week we continue our Purchase and Sale of a Business series and due diligence series by discussing some essential financial issues to consider during the due diligence phase of purchasing a business.

Avoid a Headache; Know the Financials In and Out The last thing you want to do is purchase a company with disorganized books and a lack of financial records. Not only will you spend time and money sorting out the books and reconciling the financial records, you’ll also likely inherit “surprise debt” or other financial liabilities. By taking the time to review the company’s books and learn more about its financial condition, you’ll avoid a headache or two...

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Business Startup

iVLG News Roundup Week 28: Trademarks; Management; Taxation; Online Privacy; etc.

Trademarks

Hershey’s Granted Trademark for Bar Configuration The US Patent and Trademark Office’s (USPTO) Trademark Trial and Appeal Board granted Hershey’s trademark application for the design and shape of its chocolate bar. The Examining Attorney for the USPTO had refused registration on two grounds: (1) Hershey’s proposed mark was a functional configuration of the goods; and (2) it was a non distinctive configuration that had not acquired distinctiveness as required under Trademark Act Section 2(f), 15 U.S.C. § 1052(f). The Trademark Trial and Appeal Board overruled the examining attorney, finding that the configuration was not functional, and that it was sufficiently distinctive.

Hershey’s Trademark Application Hershey’s description of its mark: “The mark is a configuration of a candy bar that consists of twelve (12) equally-sized recessed rectangular...

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