Articles Posted in Corporations

Paycheck-Protection-Program-300x156The U.S. Business Administration (“SBA”) has implemented the Paycheck Protection Program, which provides $349 billion in administered loan and loan forgiveness relief to small businesses in financial need.  Small businesses with less than 500 employees are eligible to participate in the program, in addition to sole proprietors, independent contractors and self-employed individuals.  The Paycheck Protection Program offers loans up to $10 million for business expenses including payroll, rent, mortgage interest, utilities, and certain group health plan fees.  Business that elect to participate in the program are not required to provide collateral or show that their financial hardship is related to the COVID-19 crisis.  The Paycheck Protection Program offers a 6-month grace period in which lenders are obligated to defer loan payments.  Further, business that use their loan on payroll, rent, mortgage interest, or utilities in the 8-week span after the loan is funded can be forgiven up to the full amount of the loan.  This forgiven amount is considered taxable income.  The Paycheck Protection Program will expire on June 30, 2020.

Call an Experienced San Jose Business Lawyer Today  

To schedule your consultation with one of our San Jose business attorneys, call Structure Law Group, LLP today at 408-441-7500 or contact us online.

 

AdobeStock_330935716-300x169Due to the COVID-19 pandemic, many non-essential businesses have been shut down, resulting in an unprecedented economic downfall for many employers.  In efforts to provide relief for employers, the government has passed the CARES Act, which will allow employers to save costs by deferring their Social Security payroll tax (6.2%) payments.  This deferral period applies to employee wages accrued between March 27, 2020 and December 31, 2020.  Once the deferral period has passed, the employer will be obligated to pay the “deferred amounts” to the U.S. Treasury in two installments.  The first half of the deferred amount of payroll taxes will be due on December 31, 2021, while the remaining half will be due on December 31, 2022.  The CARES Act also applies to all employers regardless of their sizes, including individuals who are self-employed.  The only exception is employers who have already received Small Business Act loans that are forgiven under the Cares Act.  These employers do not qualify for the payroll tax deferral.

Call Us Today to Schedule a Consultation with a Silicon Valley Business Attorney

Contact Structure Law Group at (408) 441-7500. Our experienced Silicon Valley business lawyers know how to prevent business disputes and proactively address other business issues.

AdobeStock_332772649-300x200In response to the COVID-19 pandemic, the U.S. Small Business Administration (“SBA”) has agreed to disburse Emergency Economic Injury Grants of up to $10,000 to companies experiencing financial struggles.  Small business owners that apply for an Economic Injury Disaster Loan are eligible to receive the grants, which do not need to be repaid.

The SBA’s Economic Injury Disaster Loan provides small businesses with working capital loans of up to $2 million that provide crucial economic support to businesses dealing with loss of revenue due to COVID-19.

Companies that apply for an Economic Injury Disaster Loan will be provided immediate economic relief by the $10,000 economic injury grant.  Sole proprietors, landlords, vendors and self-employed contractors are all considered small businesses eligible to apply for the disaster loan.

debt-collecting-300x201Effective business owners know that all assets and liabilities must be properly managed. Debts owed to a business are assets, and if these debts are not repaid, the asset is mismanaged. A business debt collection attorney can help your business realize the full value of your debt assets. Call Structure Law Group at (408) 441-7500. Our experienced Silicon Valley business lawyers can help your business explore all options for collecting debt and execute the strategies that are right for you.

Debt Recovery Strategies

Experian recently released a list of their recommended debt collection strategies. They include:

AdobeStock_89081213-300x200You had the idea but not the finances, so you approached a venture capitalist. She invested $100,000 in exchange for a 25% equity stake in your new corporation. You were still the majority shareholder, so her equity share never affected day-to-day operations. As your company began to grow, you partnered with like-minded individuals, merged corporations, incorporated new ideas, and continued to sell equity to fund your ventures. Your cap table gets more complex each year, and one day you realize you’re no longer the majority shareholder. In fact, your partners are working with the 25% stakeholder to squeeze you out.

Founder fights commonly occur as companies grow. The more successful your corporation, the more people want a piece of it. Founder breakups are the most common reason start-up companies fail and should be addressed early by an experienced business litigation attorney at Structure Law Group, LLP.

Most Common Reason for Founder Breakups 

AdobeStock_279822215-1024x683LLCs are a popular business entity that can provide comprehensive legal protection. Unfortunately, business owners who do not properly form or operate their LLCs can still be personally liable for the debts and liabilities of the business. Call Structure Law Group at 408-441-7500 to schedule a consultation with one of our experienced lawyers. We have helped many business owners throughout California protect their assets and rights through solution-oriented counsel and representation.

What is an LLC?

A limited liability company (LLC) is a type of business entity. When formed and operated properly, an LLC can protect business owners from liability, and shield their assets from being used to satisfy the debts of the business. This is because the LLC is a separate legal being from the individuals who own it. As a result, creditors can only access assets in the LLC’s name to satisfy the debts of the LLC. The owner’s personal assets are not available to business creditors.

change-300x200Many of the world’s most successful businesses began as garage-based partnerships. A family selling grandma’s cakes from its home in 2010 may have a national following by 2015. Unless you’re already a national corporation, most California-based businesses begin as partnerships or sole proprietorship’s.

There’s a purpose behind every business entity offered by the State of California. Partnerships can be limited, as they often fail to offer the same level of legal protection as corporate entities. If you’ve outgrown your partnership and are looking to incorporate or form a business in California, the renowned business entity attorneys at Structure Law Group can help. We’ll review your business plan and advise you on all stages of entity selection and formation, including choosing a corporate entity that is suited to your business.  We will also help prepare and file your conversion paperwork, if needed. To schedule your free consultation with a California business attorney, call us today at 408-441-7500 or contact us online.

The Difference Between Partnerships and Corporations

AdobeStock_273884130-300x200“Piercing the corporate veil” is a legal colloquialism used to describe the removal of corporate entity protection to hold shareholders or directors personally liable for corporate debts and liabilities. Limited corporate liability in California, whether through a limited liability company, limited liability partnership, or corporation, is the foundation of the corporate form. Closed corporations are the most susceptible to veil piercing, but corporate protections are difficult to remove absent illegality or serious corporate misconduct.

The Presumption of Limited Liability

Anytime damages are sought directly from a corporate subsidiary, parent company, shareholder, or director, California presumes corporate protection. The plaintiff must overcome this presumption based on the facts of each case. This can be done in two ways:

Trade-Secrets-300x169The federal Defend Trade Secrets Act (“DTSA”), which is mirrored by the Uniform Trade Secrets Act (“UTSA”) adopted by most states, provides employers with legal recourse after the misappropriation of their trade secrets. Whether employer trade secrets, defined as information that derives economic value by not being generally known, are illegally accessed by hackers or stolen by employees, there is no legal recourse for the theft under the DTSA if the trade secrets weren’t adequately protected. It is a necessary element of a claim for damages under the DTSA and related state legislation that an employer took reasonable precautions to protect its trade secrets. What constitutes “reasonable precautions,” however, is dependent on the facts and circumstances of each case.

Protecting Confidential Information & Trade Secrets from Employees

Not all confidential information qualifies as a trade secret. Accordingly, business practitioners recommend protecting confidential employer information from employee misuse through stringent employment contracts and confidentiality agreements. Its recommended employers insert the following clauses into their employment agreements:

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A market standoff agreement – also known as a lock-up agreement – is a legal contract which prevents company insiders from selling their shares in the company on the stock market for a certain period of time following an initial public offering (IPO). In most cases, the specified period of waiting time (i.e., the term of the market standoff) is typically 180 days. However, in some cases, the term can be anywhere from 90 days to one year.

The primary purpose of a market standoff agreement is to give the market time to “absorb” or “catch up” to the sale of recent new stock shares which are issued as part of the IPO. Otherwise, if company insiders or other individuals who hold stock in the company begin to sell their shares immediately, the stock’s value will more than likely decline quickly.

In most cases where company stock is issued to company employees, there is a standard clause in the written agreement which allows for insider sales to be locked during the IPO period. For more information about whether you or your company need a market standoff agreement, you should contact the corporate attorneys at Structure Law Group as soon as possible.

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