Articles Posted in Small Businesses

iStock_000010997373XSmall-300x300We previously discussed whether nonprofit organizations and for-profit businesses can use unpaid interns without violating the Fair Labor Standards Act (or FLSA).  We also discussed allegations of violations of the FLSA related to unpaid interns in the fashion industry.

Earlier this year, the Department of Labor revised its policy, known as Fact Sheet #71, for determining whether businesses may use unpaid interns. The old 2010 policy used a six-factor test, with the presence of all six factors required in order businesses to use unpaid interns without violating the FLSA. The new 2018 policy considers the following seven factors to determine whether the business or the intern is the primary beneficiary of the internship.

  1. The extent to which the intern and the employer clearly understand that there is no expectation of compensation. Any promise of compensation, express or implied, suggests that the intern is an employee—and vice versa.

iStock-623124952-200x300If you’re not aware that Congress is working on a major revision to federal tax law, you’ve not been paying much attention to the news.  The House of Representatives passed its version of the Tax Cuts and Jobs Act, then the Senate passed a similar, but not identical, bill.  The bill went to conference committee to work out the differences between the House and Senate versions of the bill, and last week the conference committee issued its report. It currently appears that the conference committee’s recommendations will be approved and become law.

If you have the patience and desire to read the committee report, I suggest you skip to the Joint Explanatory Statement of the Committee of Conference that begins page 191 of the report (which is page 205 of the PDF file) .  The pages preceding that set forth language to be inserted into the Senate version of the bill, but not the full text of the final bill.  On the other hand, you’re looking for a more concise summary of some of the changes that will affect individuals and small businesses, I refer you to a side-by-side comparison of the current law and the law as it is expected to pass, written by Paul Bogdanoff of Bogdanoff Dages & Co. PC, a CPA and my friend of many years.

While the new law does not take effect until the 2018 tax year, some of its provisions may affect decisions you make in 2017.  For example, the increase in the standard deduction (from $6,350 to $1200 for a single person, and from $12,700 to $24,000 for a married couple filing jointly) means that many people who are accustomed to itemizing deductions will no longer do so.  As a result, those people will no longer receive a tax benefit from charitable contributions or other itemized deductions.  Individuals in that category may want to accelerate charitable contributions and other deductible expenditures that are planned for 2018 by making them before the end  of 2017.

wrigley-field-stadium-in-chicagoI’ve written before about the need for the owners of small businesses to have at least three professionals:  a business lawyer, a tax accountant, and an insurance broker. Because it has been a while, and because the advice is so important, I decided to write about it again. Thinking about a group of three professionals led me to consider analogies to other groups of three people.

The first thing that came to mind was the traditional English nursery rhyme:

Rub a dub dub,

At Smith Rayl Law Office, LLC, we know that many small business owners are looking for affordable resources, information, and strategies to help expand their businesses and reach new customers.

This week, the Martindale Brightwood Community Development Corporation, in partnership with the U.S. Small Business Administration and the Community Resurrection Partnership, is hosting a FREE Business Opportunity Fair.

This event is a great chance to learn about opportunities to grow your small business and how to market your products and services to customers.

If you are not already familiar with series LLCs or with the new Indiana series LLC statute that takes effect on January 1, 2017, you may want to read the articles at Part I, Part II, Part III, Part IV, and Part V.

In the first of these articles, I compared a series LLC to a parent LLC with subsidiary LLCs, and I stated that one difference between the two concepts is that a master LLC does not own its series in the same sense that a parent company owns its subsidiaries. Instead, the interest that makes up each series is held by persons who may or may not also hold interest in the master LLC or in other series. Although I believe that is commonly the way series LLCs are set up, I think it may be possible to set up a series LLC so that the master LLC does, in fact, hold part or all of the interest in its series. Let’s look at four possible structures, using the example of a real estate developer than develops and owns three apartment buildings.

Structure #1

[The previous articles on this topic are here:  Part I, Part II, Part III, Part IV.]

Now that we’ve discussed the formal public filings necessary to set up a master LLC and series, we’ll turn out attention to the content of operating agreements.

As mentioned in the last post, every master LLC must have an operating agreement, and prudence dictates that it be in writing, even though the statute does not, at least not expressly.  As a starting point, the operating agreement for a master LLC should have all the same elements as an operating agreement for a traditional LLC.

The first article on series LLCs contained some basic concepts and terminology.  The second and third ones addressed the fundamental questions of whether a series is a separate entity (answer:  yes, but it lacks some of the attributes of a separate entity) and of what defines or constitutes a series (answer, at least as contemplated by the Indiana statute:  a portion of the interest in the master LLC designated as the series). We’ll return later to some other metaphysical questions, but this article discusses the more mundane issue, how does one set up a series LLC in Indiana?

Organizing the Master LLC

As with a traditional LLC, a master limited liability company is formed by filing articles of organization[1] with the Indiana Secretary of State. Ind. Code § 23‑18.1‑3‑1 and § 23‑18.1‑6‑1.  An existing LLC can be converted to a master LLC with appropriate amendments to its articles of organization, but the amendment requires unanimous consent of the members, regardless of any provision of the operating agreement permitting the articles of organization to be amended with less than unanimous consent. Ind. Code § 23‑18.1‑3‑2.  It appears that it is permitted, but not necessary, for the articles of organization to include the names of the series that may be designated.  See Ind. Code § 23‑18.1‑6‑7, discussed below.

[Please read Part I and Part II before reading this article.]

The second of this group of articles on series limited liability companies addressed the question of whether a series is an entity under Indiana law and concluded that the best answer is probably, yes, even though it lacks some of the attributes that one would ordinarily expect of an entity.  But exactly what is it that makes up a series?

The definition of “series”