Protection Afforded By A Corporation

Aside from liability resulting from ones personal acts or from personal signature, the owner of a corporation may have liability if the corporation has not been properly maintained. This liability is called “piercing the corporate veil.” The theory is that if the owner treats the corporation as a mere extension of the owner, as the owner’s “alter ego,” the courts will not treat the corporation as a separate person. In other words, the owner must at all times treat the corporation as a separate legal person. If the owner operates the corporation as if it were a mere extension of himself, the corporate veil may be pierced.

The sole shareholder of a corporation can still easily
maintain this legal separation by following a few simple procedures.  
First, never pay personal bills directly from the corporate funds or the corporate bank account. A corporate check should always be written to the owner for the owner’s compensation and then personal bills should be paid from the owner’s own account. The payment of personal bills from corporate bank accounts is the first thing that a creditor looks for when trying to pierce the corporate veil.

It is okay to reimburse the owner or reimburse credit cards for proper corporate expenditures or directly pay the owner’s debts for and to the extent of proper corporate expenditures. It is not okay to pay the owner’s residence mortgage, credit card debts for personal expenses, and so on. Of course, it is vitally important that the corporation has a separate bank account and maintains separate accounting records. The accounting records should be records only of corporate income and expenditures. The form of the accounting records is not extremely important, but ideally the owner should have corporate accounting software or proper paper journals (cash journal, general journal and so on).

It is also extremely important to maintain the formalities of corporate record keeping. Every state requires at least an annual shareholders meeting, financial information to be presented to shareholders, regular directors meetings, and so on. It is important that the corporation has issued shares of stock to the shareholders and that there be proper records for subscriptions to the stock, authorizations to sell the stock and so on. There needs to be regular meeting minutes of the shareholders’ meetings and the directors’ meetings. By statute, a corporation is owned by shareholders who elect a board of directors. The directors appoint officers, but the directors are responsible for the day to day operations of the business by their supervision of the officers. In a single owner corporation, this does not make much sense, but that is the way it is. It is important to document the meetings and all actions taken at the meetings.  

Even doing all the recommended things may not be enough to protect you from personal liability on corporate contracts. The lesson is that nothing in the law is as certain as we would like. 

Protect Yourself From Being Sued

Protect Yourself From Unnecessary Headaches & Potential Suit

Why open yourself to personal liability when you can be protected by conducting business under a corporation.  

Corporations enjoy many advantages over business partnerships and sole proprietorship. But there are also disadvantages. Below you will find a cursory explaination of these advantages and disadvantages.  

ADVANTAGES: 

Stockholders are not liable for corporate debts. This is the most important advantage of a corporation. In a sole proprietorship and partnership, the owners are personally liable for the debts of the business. If the assets of the sole proprietorship or partnership cannot satisfy the debt, creditors can go after each owner’s personal assets. On the other hand, if a corporation runs out of funds, its owners are usually not responsible. 

Under certain circumstances, however, an individual stockholder may be liable for corporate debts. This is sometimes known to as “piercing the corporate veil”.  These include:

1.   If a stockholder personally guarantees a debt.

2.   If personal funds are intermingled with funds of the corporation.

3.   If a corporation fails to have director and shareholder meetings.

4.   If the corporation has minimal capitalization or minimal insurance.

5.   If the corporation fails to pay state taxes or otherwise violates state tax law.

6.   If a fraud is perpetrated.

Continuous life. The life of a corporation, unlike that of a business partnerships and sole proprietorship, does not expire upon the death of its stockholders directors or officers.   

Easier to raise money. A corporation has many avenues to raise capital. It can sell shares of stock, and it can create new types of stock, with different voting or profit characteristics. Plus, investors will rest assured that they will not be personally liable for corporate debts.

Ease of transfer. Ownership interests in a corporation may be sold to third parties without disturbing the continued operation of the business. The business of a sole proprietorship or partnership, on the other hand, cannot be sold whole; instead, each of its assets, licenses and permits must be individually transferred, and new bank accounts and tax identification numbers are required.

DISADVANTAGES:

Higher cost. In certain situations, corporations cost more to set up and run than a sole proprietorship or partnership. For example, there are the initial formation fees, filing fees and annual state fees. These costs are partially offset by lower insurance costs.

Formal organization and corporate formalities. A corporation can only be created by filing legal documents with the state. In addition, a corporation must adhere to technical formalities. These include holding director and shareholder meetings, recording minutes, having the board of directors approve major business transactions and corporate record-keeping. If these formalities are not kept, the stockholders risk losing their personal liability protection. While keeping corporate formalities is not difficult, it can be time-consuming. On the other hand, a sole proprietorship or partnership can commence and operate without any formal organizing or operating procedures – not even a handwritten agreement.

Disclaimer:  The author of this posting is licensed to practice law in the State of New York. This posting is intended as general information only, and is not provided as legal advice in connection with any specific case, and does not create an attorney-client relationship.

How To Get Out Of A Traffic Ticket

One minute you’re cruising down the highway and the next minute you’re pulled over by a police cruiser.  Since you are innocent until proven guilty, here are 9 steps as to how you may be able to beat that ticket.

1)  When pulled over and asked if you know why you were pulled over, say “no”.

2)  When the officer explains to you exactly what you were doing wrong, politely respond “I don’t believe that was the case.”  * Do not admit anything. You are not obligated to do so.

3)  Thank the officer for the ticket, go home and read the ticket thoroughly. Take note of the exact title of violation.

4)   Mail the court pleading/ticket stating “NOT GUILTY” and request a supporting written deposition from the officer.

* At this point, a lot of people write a letter to the district attorney asking for a reduction or dismissal of the violation.

It is unlikely that you will secure a case dismissal from writing a letter to the district attorney. It may be in your best interest to simply go for a reduction. But, if you want to try to get it dismissed, which involves a small hearing called a “bench trial”, then continue reading.

5)    If the officer fails to provide the court with a supporting deposition, your case will be dismissed. If, however, the officer does in fact provide a supporting deposition, there’s still plenty of hope.

6) Request the officer’s notes on your ticket. According to Nolo.com, “Make a specific written request for thedisclosure of all notes or documents relevant to the case and send it to the court you have been summoned to appear.

7) Look up the exact law you violated. This information should be on your ticket. Read each item included in that law to see if you did indeed violate all of the conditions or just some. If you can prove that you did not violate even just one part of that specific law, your case will be dismissed

8) When you receive the officer’s notes, look for weaknesses, inconsistencies or provable falsehoods. Write brief notesfor rebuttals to the officer’s notes, a description of the conditions where the supposed violation took place, and you’re description of the event. You are allowed to supplement the testimony you give, where you’ll be referencing the notes you prepared, with diagrams and photos of the location of the violation/conditions.

9) Show up to your court date a little early with your notes, looking spiffy, and being prepared to state your case. If the officer doesn’t show up to be “examined”, the prosecutor can not make a case and will most likely recommend that your case be dismissed! However, if the officer is there, it is common for them to only state their case from the notes they wrote on the accident. If you’ve prepared your notes against his, supported by diagrams and photos, and you respectfully show that there is some doubt pertaining your guilt, the judge will dismiss your case.

Execute, Trust & Guard Your Will

Executor, Guardian & Trustee Of  A Will 
 
To insure that your estate distributes according to the terms of your Will, you must appoint an Executor or Trustee. Executors & Trustees are typically not beneficiaries to your possession and their administration, therefore, is unbiased.  These individuals administer and value your estate and distribute your assets according to the instructions you detail in your Will.
Role of an Executor
As required by law, the Executor guides your Will through probate, gathers the estate’s assets, safeguards estate property, fulfills all valid claims against the estate and distributes the estate property to beneficiaries. The Executor can employ professional help to assist with these tasks, especially those that require financial experties. keep in mind that since the Executor can use the estate’s assets to pay the professional for their services, the distribution available for beneficiaries may be reduced. 
Role of a Trustee
Leaving your estate to a Trust limits the Executor’s role to passing on the assets to the Trustee. The Trustee manages and distrubutes funds and assets of the trust. In addition to duties such as collecting assets and paying claims against the estate, Trustee must consult regularly with the beneficiaries on various issues such as investments and withdrawls. The Trustee is responsible for “resonable and prudent” management of the trust funds, and the beneficiaries have the power to sue the Trustee for any mismanagement.
Role of a Guardian
If your children are young, you’ve probably thought about who would raise them if for some reason you or your spouse could’nt. It’s not an easy thing to consider, but with a simple arrangement of a Guardian in your Will, you can feel sure that, in the extremely unlikely event you can’t raise your children, they will be well cared for. 

REMOVING YOUR NAME FROM YOUR MORTGAGE

Removing Your Name From A Mortgage

Your lender is unlikely to remove your name from the loan voluntarily. Mortgage contracts are written to make it difficult or impossible for the parties to change the terms or conditions. Why? The mortgage originator estimated the risk for the loan based on, in the case of a joint mortgage, both borrowers’ credit scores, incomes, and debt-to-income ratios. With only one person responsible for the loan, the lender is in a riskier position.

If you owe more on the home than it is worth, it’s even less likely the lender would remove your name from the note, as the lack of equity increases the probability that you and your co-borrower will default on the mortgage. Even though your co-borrower may have every intention of keeping the loan current, the lender will want as many people as possible liable for the loan so that it has a higher chance of collecting on any deficiency balance that results in case of default and foreclosure. 

So what should you do? Shop around for a loan.  While your current lender may not be willing to refinance your loan, you may be able to find another bank willing to lend you the funds needed to refinance. Finding a loan in today’s market can be difficult. However, contact several lenders to find out what options, if any, they offer. But know that it is unlikely you will find a lender willing to lend you more than the home is worth. Because you are upside-down on your current mortgage, you may need a large down payment available in order to obtain a refinance loan. In addition, you will need to compare the terms of your current loan with those of any refinance offered to make sure that the new terms are competitive with those of your previous loan.

There are other options to remove liability for a co-signed or joint loan such as, filing for bankruptcy, selling the property in question, which will extinguish the loan liability, unless there is a deficiency balance, for which you may be able to get the bank’s permission to do a “short sale”, or allowing a “strategic default”.  

BUYING A HOUSE IN A SHORT SALE FOR FORECLOSURE

Buying a house in a Short Sale or Foreclosure

With hundreds of thousands of homes in foreclosure or on short sale lists, there’s never been a better time to score a sweet deal. But discount-priced foreclosures and short sales can come with a raft of expensive problems.

There’s a flood of properties on the market with lots of motivated sellers, says Jim Randel, real estate investor and author of “The Skinny on the Housing Crisis.”  “The only people who are selling in a declining market are those who have to sell,” he says. But although they have to sell, you don’t have to buy. Know what you’re getting into before you buy a short sale or foreclosure property and be mindful of these five common mistakes:

1. Ignoring property problems

 Most foreclosure property owners didn’t want to leave their house and because of that they’ll often take that frustration out on the property, says J. Scott Steinhorn, a real estate investor, with experience in foreclosures and short sales. Steinhorn has seen foreclosure properties where the previous owners clearly took a sledgehammer to the nice hardwood floors, the tiled showers and the cabinets, just to be spiteful.

Empty foreclosure properties may suffer from issues that arise from neglect — leaks, mold, termites, thieves, squatters and filth — because the property sat vacant for weeks, months or years before purchase. In addition, while short sellers are motivated to sell and repair their credit, they could have skimped on essential maintenance of the roof, furnace, air conditioner and hot water heater.

2. Skipping the home inspection

Clear your calendar and make time to tag along on your home inspection. This is the time where the house is open for all criticism and inquiries. Ask your questions of the Home Inspector, whatever they may be. Ask for repair estimates when an inspector notes a problem, or do some research online later that night.

Some buyers are even doing an inspection before making an offer. While most inspections are done after the initial offer, with the sale contingent upon mutual agreement of the parties, a pre-offer inspection allows house shoppers to walk away and find a better buy.

You may wish to call in specialized inspectors to look for expensive problems such as termites, mold or structural damage and get a full report and repair recommendations . Remember mold gets more expensive to remediate the longer you wait, and it can severely impact your health and the property’s re-salability.

3. Ignoring legal and insurance information

Because bank-owned properties often sell “as is” without disclosure, buyers need to do a little extra research on the home’s status.  If the property is in a flood zone, you may pay thousands yearly in additional insurance costs, and you may find it difficult to resell the property, especially after Hurricane Sandy.

4. Leaving too little time 

Short Sale and foreclosure home buyers need to be aware that the sale won’t necessarily close as quickly as it would for a traditional home. The short seller’s lender must grant approval of either foreclosure terms or a short sale price which is less than the short seller owes.

“Banks are taking huge losses so they are going to do their best to get their money back, get the most amount of money or go after the seller to try to recoup something,” DeSimone says. “They aren’t just going to let the house go.”

5. Falling hard for a bad home  

Don’t assume you’re getting a great deal in today’s real estate market. Consider the house’s condition, inspection and price and ask yourself these common questions:

a.  What if the home’s value drops another 20 percent, will you still feel satisfied with your purchase?

b.  How much money will you have to pour into the property to make it habitable? If the problems are too costly, you might pass on this home purchase.

c.  If you were to buy this property, could you afford to rent it out for as much as, or less than, your mortgage payment? 

Sometimes home buyers love a house so much that they close their eyes to patent problems. In short, this may be the right time for you to buy a home, especially if you know what you’re getting into.

WAYS TO GET MORE CLIENTS FOR YOUR BUSINESS

1.  Be sure to talk to at least three people every day about your business and what you do:   You can’t just sit behind your computer every day and expect people to call or magically find you and invest their money in your products or services. Too many entrepreneurs rely on the HAP Method of attracting clients (Hope And Pray). Posting fiendishly on social media sites may get you a few clients, but it’s not going to sustain a six figure business.  You must get dressed and get out of the house! If you can commit to talking to at least three different people about your business everyday, you’ll be amazed at the change you’ll see in your clients, your stress level, and your income.

2.  Get out from behind your computer. Know where your target market is hanging out and go where they are:  Talking to three people a day about your business is great, but only one of those can be electronic communication! You need to do your research, find out where your ideal clients go to network, learn, and grow their businesses – and you need to go there too!

3.   Be ever present on your social networks, join in the conversation, and provide value and help:   Lurkers don’t get clients, don’t build reputations, don’t get remembered, and don’t get referred new business.   Social media is a long-term marketing strategy with a long lead generation cycle. Typically people will follow you on Twitter, or be friends with you on Facebook for months or even years before they finally decide to hire you or buy from you. That’s why you need to be ever-present on the social networks you can commit to. Be there with great, valuable, helpful content, answer questions, assist others, join in conversations, be engaged. Sporadic, infrequent posting dilutes the trust your network has in you.

4:   The fortune is in the follow up. It’s where the magic that turns connections into clients happens:    Failure to follow up is one of the most common ways that entrepreneurs and business owners sabotage their own success by simply not collecting the money on the table. Millions of dollars are lost by businesses around the world every year simply because they get busy and they fail to follow up with leads from networking events, conferences, social media, email, voicemail, referrals, and more. If you want or need to make more money, fix your follow up and you’ll see an increase in your bottom line.
5.    Ask for referrals and be very clear about who would be a perfect fit for your services, products, and programs:    Your happy customers and satisfied clients want to give you referrals!  They want to help their friends and contacts who are struggling to find the same success they had … but sometimes they may think you don’t need their referrals, or they aren’t sure how to refer people to you, or they aren’t sure who would be best to refer to you. Help them out. Share with them your ideal client profile, and ask them if they know anyone who fits that description and who would benefit from working with you.