by eclewis | May 6, 2012 | Business News
When deciding whether to be an LLC taxed as a partnership/disregarded entity, an LLC taxed as a s-corporation or a corporation taxed as a s-corporation, many times people think about the liability protection, the formalities required such as yearly meetings, and the rights given to members verses shareholders. In addition, for tax purposes, people weigh the advantages of being taxed as a partnership/disregarded entity verses being able to take dividends as an s-corporation.
However, one area that many times does not come up in discussion is the costs of being an s-corporation in regards to filings. As an LLC taxed as a partnership/disregarded entity (if you do not have employees), then the taxes are usually fairly simple with the member/s of the LLC paying estimated tax payments quarterly (although this can vary).
Once a decision has been made to elect s-corporation status (whether for an LLC or to set up a corporation to be treated as such), tax filings get more complicated. As an s-corporation, all members/shareholders of the company that perform work are now considered employees. Therefore, the IRS will require that the company file Form 941s quarterly and withhold employment taxes either quarterly, or worse, monthly or weekly. The IRS will also expect estimated tax payments from owners who also are taking dividends in addition to wages. In Colorado, you will probably be required to set up a wage withholding account to withhold Colorado taxes. You will also have to pay unemployment insurance on wages paid to owners and file information about this quarterly. You may also have to pay occupational privilege taxes quarterly rather than yearly.
While it may not seem a lot, many times single owner companies find that the costs (whether in time spent by the owner or actual cost incurred from a payroll company) of operating as a s-corporation outweigh (either monetarily or frustration-wise) the savings the owner is seeing on his/her taxes from the s-corporation.
Prior to deciding whether you want to become a s-corporation, schedule an appointment with your CPA or me, your Denver small business lawyer, today at 720-258-6647.
by eclewis | Mar 29, 2012 | Business News
If you are thinking about renting space, here are five things you want to discuss with your business attorney:
- If you are thinking about renting space, discuss when your attorney should get involved. If you do not have an attorney and you are considering space, now is time to get one. Your attorney will let you know when it is appropriate for him or her to get involved. For instance, I usually want to know that my clients are looking for space but get involved more towards the end once they have found a space they are interested in. Typically, especially if they are working with a tenant representative, my clients find the space, and do preliminary talks with landlords. I get involved when the negotiating the lease is taking place and review the lease once it is written. Find out when your attorney wants to get involved – and are you comfortable with the level of involvement.
- If you are thinking about renting space, ask if your attorney knows any good tenant representatives. This is one of the reasons that I prefer my clients speak to me when they are first looking for space. Many times, they do not know the market prices, where to look, or even how to find what is available. Having worked with tenant representatives, I can make sure they are hooked up with someone that can find them the perfect space for a good price.
- If you have found the perfect space, have your lease reviewed. Even if you think you have found the perfect space, there may be clauses in your lease that make that perfect space a lemon. Does the landlord want you to replace the furnace if it goes out and it is 100 years old? Does the lease call for you making $100,000.00 in tenant improvements but you only have the rights to the space for 3 years? An attorney can help see if there are areas that need to be changed.
- If you are moving into a bigger space because you are hiring employees, ask if you need employment documents. Many times the reason someone is looking for a new place is because the business is expanding. If this is the case for you, you may need agreements for anyone that you are looking to hire. Ask your attorney if this applies to you.
- If you think you are paying too much for your space, ask your attorney if she thinks you can negotiate a lower amount. If you are in a lease currently and think you are paying too much, speak with you attorney to see if there is a way to negotiate the price of your lease. There *may* be ways to lower your monthly rent (although there may not).
As always, if you have any questions about renting space, please contact me, your Denver business attorney at 720-258-6647.
by eclewis | Mar 22, 2012 | Business News
Five Reasons To Have Your Lease Reviewed By A Lawyer
When you first start looking at a commercial lease, you may think it is not that much different that a lease that you signed when renting your first apartment when you were younger. However, a commercial lease usually varies greatly in that much more of the financial burden during the term of the lease is on the commercial tenant than a residential tenant. Here are five reasons you want to have your lease reviewed by a qualified business attorney:
- A business lawyer will review your lease to make sure the terms are in your favor. When you sign a standard lease for an apartment, the term is typically only a year and most repairs are done by the landlord. However, a commercial lease is completely different. In many cases, the lease term is at least five years and will typically include, if you are smart, the right to renew the term for up to 20 or more years. Without review, landlords will typically try to have the tenant pay for all repairs – in some cases even things that last longer than the life of the lease including roofs, sewer lines, and foundations. Even if you are using a tenant representative, a business attorney will review all the terms and offer legal advice about what changes should be made to ensure your interests are protected.
- A small business attorney will let you know which terms you really should negotiate and which terms are less necessary to negotiate. As a small business attorney, I have reviewed numerous leases. Having reviewed leases for a living, I can let you know what areas of the lease are a must for negotiating and which areas you can live with.
- Having a small business lawyer makes you seem more professional. Just like many areas in life, when you are a business owner, many things come down to perception. It makes landlords take you more seriously because if you are willing to invest the time and money to hire an attorney to help you with your lease, you are more likely to take your business seriously.
- A small business attorney will make sure the terms are correct. In addition to making sure the terms are in your favor, a small business attorney will help make sure that everything is correct. Although it may seem like a small thing, making sure the dates are correct and the lease terms are written correctly.
- A business attorney can help you with additional documents and permits needed. In addition to signing a lease, many times businesses need additional documents to open a business including licenses, permits, and forms. An attorney can help you navigate all the documents and permits that you will need to operate in the space you find.
As always, if you have any questions about renting space, please contact me, your Denver business attorney at 720-258-6647.
by eclewis | Mar 15, 2012 | Business News
Many times, as a business attorney I get asked if I know much about leasing space. While like many business lawyers, I can review a lease, like most other business lawyers, I don’t really keep track of the current market prices for each neighborhood in the Denver metro area. However, as a good business attorney, I know who does. Here are some things to consider if you are deciding whether to use a tenant representative or not.
- Do you have time to research the best place for your business? Good tenant representatives will be able to advise you on areas of town where your business can succeed. Because they keep track of real estate for a living, they will know where restaurants are successful, where retail shops flourish, and where shops consistently die.
- Do you know the current rental prices? Good tenant representatives know the current market prices for square footage on spaces throughout the area. They will be able to tell you if a space is going for too high or too low. While you can always research this on your own, it may take more time than you have to do so.
- Can you negotiate with landlords? Some people are born negotiators; some are not. If you are not, then having someone negotiate for you can save you money and headache. Tenant representatives are use to negotiating for space and know what can and cannot be changed easily.
- Are you seeking a very specific type of space? If you are seeking office sharing arrangements, space in a specific type of environment (i.e. renting a booth at a salon), a tenant representative may not be best. However, if you are seeking retail space, restaurant space, or office space, a tenant representative may be able to help.
- Do you want to save time when your attorney reviews your lease? In some cases, having a tenant representative can save time when your attorney reviews your lease. Although a tenant representative cannot provide legal advice, a tenant representative, may be able to spot problems during the initial negotiations.
As always, if you have any questions about renting space, please contact me, your Denver business attorney at 720-258-6647.
by eclewis | Mar 8, 2012 | Business News
The old adage was real estate was always a safe bet. As the markets have shown over the past few years, that isn’t always true. However, if you are looking for commercial space, you may want to consider whether it is better to buy or rent. Here are some things to be thinking about when you make this decision:
- Are you going to be in the same place for a long time? If you foresee yourself being in the same building for a long time, buying a space may make more sense than renting it. However, if you are unsure of how long you are going to be someplace, what size your company is going to grow to, or if the location you have chosen is going to be permanent, then renting may be best.
- Can you get financing? Are you a good credit candidate? If you have poor credit and/or low income, you may not be able to get financing. Without financing, you will have to rent. In addition, you need to be thinking about a down payment. For a commercial loan, you may need up to 40% or more down payment for a commercial space.
- Are you still growing? If you see a lot of growth in your company in the next few years, it may be better to lease until you know how big your company is going to be – especially if you are a service industry that needs desk space for employees. However, if you are a restaurant or other industry that can multiply into more than one space, then growth may require another building so buying may be good.
- Can you sublease? If you find the perfect space but it is too large for now, can you sublease the unused space until you need it? If so, buying may give you the security of owning a space and added income from a sublease.
- Do you have a good business plan? If you are looking to finance, most lenders will require a business plan to show why you should get a loan for commercial space. If you don’t have one, contact me today for references to individuals who can help you with one!
As always, if you have any questions about renting space, please contact me, your Denver business attorney at 720-258-6647.
by eclewis | Mar 1, 2012 | Business News
There are times when businesses tend to seek space – either when they first start out if operating out of the owner’s house just won’t work (think retail, restaurants, and even professionals such attorneys, CPAs, and doctors) or when their current space doesn’t meet their needs (think that home office just doesn’t fit the owner and her new employee, the company’s clients have moved, or the company is downsizing and it just doesn’t fit it current situation). Here are five thing to consider when your business seeks new space:
- Do you really need new space? This may seem like a silly question, but sometimes people get into what their business “should” look like rather than what it “does” look like. Although it would be great to be in the newest, best space, unless you will have the income to justify it, new space may be a luxury you cannot afford.
- Are you going to have to break one lease to get a new one? If you are currently in a lease, it may be expensive to break that lease in order to get new space. Are there ways that you can use the space you have until your lease is up? Can employees telecommute? Can you open up a second location giving you enough space between the two?
- What section of town do you want to be in? Some businesses can be successful anywhere. However, many businesses need to be a specific location to be successful. For example, putting a surf shop in a ski resort may result in very few sales. Knowing where your clients are will help you decide where you need to be. Even if you are a service industry that goes to clients’ locations, you should still consider where they are as mileage can be a huge expense!
- Are there any tax breaks available if you move to certain places? Once you have narrowed down the places that your clients are in, you want to research if there are tax breaks for moving into one section of town verses another. Many times a tenant representative or your accountant can help you figure out where locations with tax breaks are.
- Are you going to be taxed more in different cities or subject to more regulations in one verses another? In many cases, tax rates are not going to be a deciding factor in where you move your business. However, depending on your business type, it may be easier to get licensed in one place rather than another (a reason why you see more “sin” businesses in unincorporated counties rather than cities around the metro area) or tax rates may be less (a reason that Furniture Row asks if you would like to pick up from them rather than have furniture delivered). If you sell big ticket items (such as furniture or electronics), having a lower sales tax rate can be a selling point.
As always, if you have any questions about renting space, please contact me, your Denver business attorney at 720-258-6647.
