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Santa Cruz Business and Commercial Law Blog

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Many potential, new or veteran business owners have to deal with a variety of legal issues. From figuring out what type of business entity best fits a business to correctly filing certain paperwork, our law firm has the experience and knowledge in a wide range of legal issues.

When entrepreneurs come to our firm for assistance with starting up a new business, our lawyers begin by examining their aspirations and objectives. By thoroughly researching their company's prospective liability and offering them an assessment of their preferred tax treatment, we can then advise which business entity they should choose. In addition to S corporations, limited liability companies or partnerships, we might be able to help you find a business entity that is suitable to your needs.

The importance of an effective business plan

Many California residents dream of opening a business of their own, and having an effective business plan is often the first step taken towards achieving that goal. Writing a business plan gives entrepreneurs the opportunity to honestly assess their strengths and weaknesses, and it also allows them to formulate a marketing strategy based upon a thorough understanding of the market. A business plan will also likely be required by financial institutions before approving a loan or line of credit.

When considering a loan application for a startup company, banks are primarily concerned with capital reserves and cash flow. Loan officers will scrutinize the income that the new business is likely to generate as well as the assets and liabilities of the principals. Business plans based on lofty projections are unlikely to be received warmly, but those based on conservative forecasts and hard data will often help to pave the way to an approval.

The pros and cons of simple joint venture agreements

When California residents are engaged in doing business, they have many options to choose from when it comes to the structure of a company. One of these options is known as a simple joint venture agreement. Joint venture agreements set up alliances between two parties in order to carry out a short-term project and outline important details such as profit sharing, responsibilities and performance expectations.

Unlike partnerships, joint ventures last for a finite amount of time. The average joint venture is usually dissolved after a period of five to seven years, and about 80 percent of these ventures end with one partner selling their share of the firm to the other party. For federal tax purposes, joint ventures are treated the same way as partnerships.

How the IRS treats C corporations, S corporations and LLCs

It is recommended that business owners in California take a comprehensive view when formulating a tax strategy, and they are encouraged to select an accounting method that does the best job of delaying the reporting of income while accelerating deductions. However, entrepreneurs are cautioned that becoming too focused on reducing taxes can lead to decisions being made that place the long-term success of the business in jeopardy.

Entrepreneurs face some of their most important tax decisions during the business formation and planning stage. C corporations, S corporations and limited liability companies are treated differently by the IRS, and each has its benefits and disadvantages.

Calfornia estate planning for novices

Understanding the estate planning process can help make the transfer of property, money and intangibles to the people you designate after death. In addition, it allows the family more time to grieve with less stress. If done properly, estate planning can also help avoid or reduce estate taxes and other potential legal problems.

The first step in estate planning is usually to draft a will. This document helps ensure that the people designated receive what the estate holder wishes. A thorough will may include property and access to bank and investment accounts. The information in the will should always agree with the information on the accounts to ensure a smooth transition and avoid probate problems.

A look at issues specific to parents when drafting an estate plan

Santa Cruz parents may be interested in some information on crafting their estate plan. When children are involved, more care must be taken to ensure that the estate plan deals with issues specific to their needs.

When parents begin thinking about estate planning, there are certain important aspects of the plan that will help to protect their children in the future. The first is typically naming a guardian for minor children. This guardian should be consulted first in order to make sure they accept the responsibilities that come with the role. The will may also name backup guardians, should the first choice be unable to accept, and it can also name a separate guardian to handle the child's financial affairs.

The requirement to retrofit plumbing fixtures in Santa Cruz

According to Santa Cruz municipal code, at the time of sale, all existing industrial, commercial and residential buildings must be retrofitted with high-efficiency plumbing fixtures. Furthermore, the seller is the one who is responsible for ensuring that the structure has been retrofitted, and they must obtain a water conservation certificate prior to the sale of the property. An individual may be granted an exception to the retrofit requirement if the water director finds that a structure's drainage system is configured in a way that is incompatible with high-efficiency plumbing fixtures.

Prior to the title transfer, the seller's agent or the seller must provide the prospective buyer with a written statement that outlines the retrofit requirement. The statement can be included as a separate document, an addendum to the real estate transfer disclosure statement or included in the deposit receipt for the real estate transaction. In addition, the statement of retrofit requirements and a signed copy of the water conservation certificate should be included with the transfer documentation.

The process of estate administration

Individuals in California who are estate planning may have some questions about the whole process of estate administration. There are three components to estate administration, and those components are collecting and appraising assets, managing tax and debt, and distributing assets.

A will may go through probate, but there are several steps before this happens. Someone must make funeral arrangements, and it is necessary to get copies of the death certificate, important documents and passwords. Individuals who arrange for documents such as these to be readily accessible after their death can make this part of the job much easier for their loved ones.

How building code violations are handled in Santa Cruz

The Building Official is responsible for investigating and enforcing zoning, environmental and building code violations. In most cases, they will undertake an investigation in response to a citizen complaint about improper land use or other code violations. Following an investigation, a landowner may receive violation notices or warnings if they are warranted. These initial actions might be followed by additional legal actions, such as civil penalties, fines or recordation.

The most common type of code violation is the conversion of a structure not intended for habitation into a dwelling unit. For example, an individual might convert a barn into a studio apartment without getting the proper permits. The first step of the enforcement process is generally the filing of a complaint. Next, a letter is sent to the property owner, informing them of the complaint.

Determining equity division for a new business

When Californians are planning to open a business, many times, people choose to open it along with another person. One of the key decisions that will need to be made when more than one person will be opening a business is how the equity in the business will be divided between them.

When two people are contributing equally towards the business in terms of time and investment, it may make sense for the equity to be divided on a 50/50 basis. In the event that one person is responsible for the business idea on his or her own, an unequal split of interest may be appropriate.

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