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A Crash Course on the Corporate Transparency Act

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By: Doug Bend and Matthew Schumacher Wondering what this Corporate Transparency Act stuff is all about? Well then look no further than “A Crash Course on the Corporate Transparency Act,” featuring Doug and Matthew from team BLG, hosted by The Attorney Action Club and The San Francisco Lawyer’s Network as part of their ongoing Zoom… Read More

By: Doug Bend and Matthew Schumacher

Wondering what this Corporate Transparency Act stuff is all about? Well then look no further than “A Crash Course on the Corporate Transparency Act,” featuring Doug and Matthew from team BLG, hosted by The Attorney Action Club and The San Francisco Lawyer’s Network as part of their ongoing Zoom Series! Check out the full presentation here. Be sure to also check out the rest of the series by following this link.

Disclaimer: This article discusses general legal issues and developments. Such materials are for informational purposes only and may not reflect the most current law in your jurisdiction. These informational materials are not intended, and should not be taken, as legal advice on any particular set of facts or circumstances. No reader should act or refrain from acting on the basis of any information presented herein without seeking the advice of counsel in the relevant jurisdiction.  Bend Law Group, PC expressly disclaims all liability in respect of any actions taken or not taken based on any contents of this article.

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California Employers Are Required to Develop a Workplace Violence Prevention Plan by July 1, 2024

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By: Daniel Do-Khanh Senate Bill 553 (SB 553) requires virtually all California employers to adopt and implement a workplace violence prevention plan (WVPP) no later than July 1, 2024. Impacted Employers All California employers must comply with SB 553, with some limited exceptions.  For example, places of employment with fewer than ten employees which are… Read More

By: Daniel Do-Khanh

Senate Bill 553 (SB 553) requires virtually all California employers to adopt and implement a workplace violence prevention plan (WVPP) no later than July 1, 2024.

Impacted Employers

All California employers must comply with SB 553, with some limited exceptions.  For example, places of employment with fewer than ten employees which are not accessible to the public are exempt.  There is also an exemption for employees telecommuting from a location of their own choosing that is not under the employer’s control. Additionally, healthcare facilities covered by Section 3342 of Title 8 of the California Code of Regulations are exempt from SB 553 compliance.

Key Components of the WVPP

The WVPP must include:

  • Names or job titles of individuals responsible for the plan;
  • Procedures to obtain the active involvement of employees in developing and implementing the plan, including hazard identification and evaluation, training, and incident reporting;
  • Methods to coordinate implementation of the plan with other employers such as staffing agencies;
  • Procedures for the employer to accept and respond to reports of workplace violence and to prohibit retaliation;
  • Procedures to ensure compliance with the plan;
  • Procedures to communicate with employees regarding workplace violence matters, including how employees can report violent incidents, threats, or other workplace violence concerns, and how employee concerns will be investigated;
  • Procedures to respond to actual or potential workplace violence emergencies;
  • Training procedures;
  • Procedures to identify, evaluate, and correct workplace violence hazards, including periodic inspections;
  • Procedures for post incident response and investigation; and
  • Procedures to review the effectiveness of the plan itself, including potential revisions.

Training Requirements

SB 553 requires employers to provide employees with initial training when the plan is first established and continue to conduct annual trainings thereafter.  The training needs to cover how employees access the plan, how to report workplace violence hazards and incidents, corrective measures that are implemented, how to seek assistance to prevent or respond to violence, and information about the violent incident log.

Recordkeeping Requirements

Employers are required to record every workplace violence incident in a violent incident log and follow WVPP specific recording, retention, and access requirements.

Model WVPP

Cal/OSHA has published a Model WVPP – (https://www.dir.ca.gov/dosh/puborder.asp) – designed to assist employers in drafting their own plans. Employers are not required to use Cal/OSHA’s model but may adopt it as a template.

If you have any questions or would like our help drafting a customized WVPP for your business, please contact us at info@BendLawOffice.com.

Disclaimer: This article discusses general legal issues and developments. Such materials are for informational purposes only and may not reflect the most current law in your jurisdiction. These informational materials are not intended, and should not be taken, as legal advice on any particular set of facts or circumstances. No reader should act or refrain from acting on the basis of any information presented herein without seeking the advice of counsel in the relevant jurisdiction.  Bend Law Group, PC expressly disclaims all liability in respect of any actions taken or not taken based on any contents of this article.

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Can You Use The Full Legal Name Of Another California Corporation That Has Been Dissolved?

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Several times a year a client will ask if we can form a corporation in California that has the same name as a corporation that has already been dissolved. Typically, the California Secretary of State’s Office will not accept a filing to form a new corporation if there is already a corporation with that same… Read More

Several times a year a client will ask if we can form a corporation in California that has the same name as a corporation that has already been dissolved.

Typically, the California Secretary of State’s Office will not accept a filing to form a new corporation if there is already a corporation with that same name registered with its office.

However, if a corporation has been dissolved it opens the availability of that name again with the California Secretary of State’s Office.

And so the good news is the California Secretary of State’s Office will accept a filing to form a new corporation even if it has the exact same name as a corporation that was previously dissolved.

The bad news is instead of submitting a form online and getting the a federal employer identification number (EIN) in only a few minutes, you would need to submit IRS Form SS-4 to obtain the EIN.

That is important for three reasons. First, you need the EIN to open a business checking account for the corporation. Second, the IRS often takes six to eight weeks to process the SS-4. And so instead of being able to open the business checking account right away after the corporation has been formed, you will not be able to do so for up to eight weeks. Lastly, you need the EIN for other government filings such as many city business license applications and to obtain a seller’s permit. Put another way, the EIN is one of the first dominos that will need to fall before you can fully complete the formation of your corporation.

If you do not want to have to wait six to eight weeks to open the business checking account, another option is to switch out one of the words in the full legal name of the corporation or add one more word to the full legal name. You can then file a Fictitious Business Name Statement with your County Clerk’s Office for the company to also do business as the name that you would like to use.

For example, if the legal entity for our law firm (Bend Law Group, PC) was dissolved you could register a new corporation with the California Secretary of State’s Office with that same name but you would then have to wait up to eight weeks to get the EIN and open the business checking account. Instead, you could have the full legal name of the corporation be Bend Business Law, PC. You could then file a Fictitious Business Name Statement for the corporation to also do business as Bend Law Group without holding up the opening of the business checking account.

Of course, you should think twice before using the same name as a corporation that has already been dissolved. The prior corporation could have debts and liabilities that creditors could try to come after your corporation for as it would be easy to confuse your corporation for the dissolved corporation with the same name.

For example, we had a client who was sued because of this type of mistaken name identification. We filed a motion with the court explaining the mix up and the suit was dismissed, but not before it caused our client to incur additional time and money expenses that it would not have had to incur if it had instead chosen a more distinct name.

In addition, you should check to see if there is already a federal trademark on the name of the corporation.

Lastly, if you are forming a corporation in a different state you should consult with an attorney in your jurisdiction as it might different requirements for when you can use the name of a corporation that has been dissolved.

Disclaimer: This article discusses general legal issues and developments. Such materials are for informational purposes only and may not reflect the most current law in your jurisdiction. These informational materials are not intended, and should not be taken, as legal advice on any particular set of facts or circumstances. No reader should act or refrain from acting on the basis of any information presented herein without seeking the advice of counsel in the relevant jurisdiction.  Bend Law Group, PC expressly disclaims all liability in respect of any actions taken or not taken based on any contents of this article.

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Do I Have to Sign This? Spousal Consent Forms

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By: Alyssa Ziegenhorn When forming a new business, it’s important to make sure the ownership interest in the business is clear. Whether you are forming a C-corp, an S-corp, or an LLC, ownership of some kind is going to be distributed between the founders. We’ve discussed the importance of signing a stock purchase agreement; the… Read More

By: Alyssa Ziegenhorn

When forming a new business, it’s important to make sure the ownership interest in the business is clear. Whether you are forming a C-corp, an S-corp, or an LLC, ownership of some kind is going to be distributed between the founders. We’ve discussed the importance of signing a stock purchase agreement; the same goes for an Operating Agreement in an LLC which outlines the membership interest percentage of each member.

If you are receiving shares of a corporation or a membership interest in an LLC, you may see a “spousal consent form” with your spouse’s name and some form of acknowledgement such as:

 “I, [Spouse’s Name], spouse of [Participant’s Name] (“Participant”), have read and hereby approve the foregoing Agreement.  In consideration of the Company’s granting my spouse the right to acquire the Shares as set forth in the Agreement, I hereby agree to be bound irrevocably by the Agreement and further agree that any community property or other such interest that I may have in the Shares shall hereby be similarly bound by the Agreement.  I hereby appoint my spouse as my attorney-in-fact with respect to any amendment or exercise or waiver of any rights under the Agreement.”

This is because California is what’s known as a community property state. That means all the assets that are acquired by either spouse during their marriage belongs to both spouses equally. So, if you receive shares, your spouse technically has a 50% ownership interest in those shares.

Does this mean your spouse is a shareholder of the company, or a member of your LLC? Not exactly. They are not the named recipient of the shares or membership interest, so they don’t have all the rights and privileges that come along with them. For example, the right to vote on company decisions such as electing the Board of Directors or to approve decisions for the LLC. They do, however, have certain rights that attach to community property, and this can cause issues for the company.

One rule of community property is that a spouse cannot gift, sell, or give away community property without the consent of the other spouse. This may be an issue if, for example, a founder’s stock purchase agreement is subject to vesting. What happens if they leave the company and some shares of stock are unvested? Those shares are, according to the terms of the agreement, supposed to return to the company. But what about the ownership interest of the non-founder spouse, who never signed that stock agreement? Technically, the founder spouse can’t “give” that stock back to the company without their consent, but the company has the right to automatically repurchase the stock. To avoid this type of conflict, it’s imperative that all spouses sign the spousal consent waiver at the time the shares are purchased or received.

Another example is electing to have your LLC or C-corporation taxed as an S-corporation. The S-corp election requires all “owners” of membership interest or shares to consent via signature on Form 2553. This includes the spouses of LLC members or corporate shareholders. If you don’t include signatures from all spouses, the IRS can revoke your S-corp status.

These principles apply equally to stock grants to employees, advisors, consultants, and investors, or new members to your LLC who join after formation. You should always include the spousal consent waiver in any grant of shares or membership interest to residents of a community property state. It is important to note that the spousal consent form doesn’t affect the ownership rights of the second spouse. They still retain their usual community property rights in the assets. The consent form simply allows the company and the receiving spouse to treat all the equity as subject to the agreed-upon terms of the stock agreement or LLC operating agreement.

Disclaimer: This article discusses general legal issues and developments. Such materials are for informational purposes only and may not reflect the most current law in your jurisdiction. These informational materials are not intended, and should not be taken, as legal advice on any particular set of facts or circumstances. No reader should act or refrain from acting on the basis of any information presented herein without seeking the advice of counsel in the relevant jurisdiction.  Bend Law Group, PC expressly disclaims all liability in respect of any actions taken or not taken based on any contents of this article.

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Beyond Bills: Leveraging Accounting, Finance & Insurance for Growth in 2024

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Doug partnered with Pilot.com and Founder Shield on a webinar on Beyond Bills: Leveraging Accounting, Finance & Insurance for Growth in 2024.  You can learn about his journey building Bend Law Group & insights on how to grow a successful professional service company here. Disclaimer: This article discusses general legal issues and developments. Such materials are for informational purposes only and may… Read More

Doug partnered with Pilot.com and Founder Shield on a webinar on Beyond Bills: Leveraging Accounting, Finance & Insurance for Growth in 2024.  You can learn about his journey building Bend Law Group & insights on how to grow a successful professional service company here.

Disclaimer: This article discusses general legal issues and developments. Such materials are for informational purposes only and may not reflect the most current law in your jurisdiction. These informational materials are not intended, and should not be taken, as legal advice on any particular set of facts or circumstances. No reader should act or refrain from acting on the basis of any information presented herein without seeking the advice of counsel in the relevant jurisdiction.  Bend Law Group, PC expressly disclaims all liability in respect of any actions taken or not taken based on any contents of this article.

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How To Form A Subsidiary In The United States

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This article was first published by the Young Entrepreneur Council. By: Doug Bend International companies that are looking to expand into the U.S. market often form a U.S. subsidiary. By doing so, they help isolate any liability that might arise in the U.S. to the subsidiary to protect the parent company. There are seven steps… Read More

This article was first published by the Young Entrepreneur Council.

By: Doug Bend

International companies that are looking to expand into the U.S. market often form a U.S. subsidiary. By doing so, they help isolate any liability that might arise in the U.S. to the subsidiary to protect the parent company. There are seven steps to forming the subsidiary:

1.  Certificate of Incorporation

More than half of all Fortune 500 companies and most U.S. subsidiaries are formed in Delaware because it is the preference of investors.

You first will need to file a Certificate of Incorporation with the Delaware Secretary of State’s Office.

If you do not have a U.S. mailing address, you could use a mail forwarding service. For example, some of our clients use Alliance starts which starts at $50 per month.

2. Federal Employer Identification Number (EIN)

Next, you will need to obtain a Federal Employer Identification Number (EIN) from the IRS for the subsidiary.

If you have a U.S. tax identification number, you can obtain the EIN online here.

If you do not have a U.S. tax identification number, you will need to file IRS Form SS-4.

3. Bylaws, Indemnification Agreements and A Board Consent

You should also prepare bylaws, indemnification agreements for the officers and directors of the subsidiary and an initial Board consent approving the issuance of shares to the parent company.

4. City Business License

You most likely will also need to obtain a city business license for the subsidiary.

5. Registering Any DBAs

Depending on where the subsidiary is headquartered you may need to register the additional names that the subsidiary will be operating under besides for its full legal name.

For example, if the subsidiary is headquartered in California you will file a Fictitious Business Name Statement with the county clerk’s office. Once Fictitious Business Name has been approved by the county clerk’s office, you will need to have it published in a legally adjudicated newspaper.

6. Bureau of Economic Analysis

You are also required to file a report with the Bureau of Economic Analysis.The initial report must be filed no later than 45 days after the date of the investment transaction.

Which form you file will depend on how much money you are investing in the subsidiary. For example, if the total cost of expansion is less than $3m, then Form BE–13 Claim for Exemption can be filed.The BE-13 can be filed online here.

7. Additional Government Filings

There may be additional government filings. For example, if the subsidiary is headquartered in California and has employees, you will need to register it with the California Employment Development Department (EDD) so you can run payroll. If it is selling goods, you will also need to obtain a seller’s permit from the California Department of Tax and Fee Administration.

You should consult with your attorney as your jurisdiction might have different requirements, but this checklist is a good starting point for forming a U.S. subsidiary.

Disclaimer: This article discusses general legal issues and developments. Such materials are for informational purposes only and may not reflect the most current law in your jurisdiction. These informational materials are not intended, and should not be taken, as legal advice on any particular set of facts or circumstances. No reader should act or refrain from acting on the basis of any information presented herein without seeking the advice of counsel in the relevant jurisdiction.  Bend Law Group, PC expressly disclaims all liability in respect of any actions taken or not taken based on any contents of this article.

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The Corporate Transparency Act: A Guide For Small-Business Owners

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This article was originally published on Forbes. By: Doug Bend The road to onerous corporate compliance is paved with good intentions. I believe there is no better example than the Corporate Transparency Act (CTA), which took effect on January 1, 2024. The goal of the CTA is to combat money laundering by requiring business entities… Read More

This article was originally published on Forbes.

By: Doug Bend

The road to onerous corporate compliance is paved with good intentions. I believe there is no better example than the Corporate Transparency Act (CTA), which took effect on January 1, 2024. The goal of the CTA is to combat money laundering by requiring business entities to report their beneficial owners. However, there are strict deadlines and steep penalties for noncompliance, so owners must understand the CTA and how it might affect their businesses.

Explaining The Corporate Transparency Act

Under the CTA, certain businesses are required to submit a Beneficial Ownership Information report to the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN). The report must include the names of each beneficial owner who either owns at least 25% of the business or exercises “substantial control,” according to FinCEN’s FAQ page about the act.

“Substantial control” can be direct or indirect, such as serving as a senior officer; having authority over the hiring and removal of senior officers or the majority of the board; having substantial influence over important decisions or “any other form of substantial control over the reporting company,” FinCEN’s FAQ page also said. You are required to disclose each beneficial owner’s name, date of birth and address and upload an image of either their driver’s license or passport.

Businesses formed after January 1, 2024, are required to file their first report within 90 days of creation or registration. Those formed before January 1, 2024, will have until January 1, 2025. Additionally, you are required to file an updated report within 30 days of any change in your company’s beneficial ownership information, according to FinCEN.

If you would like to file the report for your business entity, I suggest first obtaining a FinCEN ID for the report. You can obtain one here and file the report here.

Exemptions

There are 23 types of entities that are exempt. I recommend reviewing FinCEN’s Small Entity Compliance Guide checklist to see whether your company qualifies for any of these exemptions.

Fraudulent Solicitations

FinCEN has put out an alert to be careful of “fraudulent attempts to solicit information from individuals and entities who may be subject to [CTA] reporting requirements.” Be particularly cautious of e-mails with the subject line “Important Compliance Notice” and that ask you “to click on a URL or to scan a QR code.”

Penalties

If a report is not timely filed, FinCEN can impose civil penalties of $500 per day per entity, a $10,000 criminal penalty per entity and imprisonment for up to two years. To say the least, the consequences of not being in compliance are enormous.

An Ounce Of Prevention Is Worth A Pound Of Cure

Many small-business owners will likely either spend several hours navigating the details of these requirements each year or choose to hire an attorney to make sure each report is properly submitted. For owners who already have too much on their plates, this might feel like one more headache with very stiff penalties for noncompliance.

To make navigating changing compliance requirements more manageable and stay informed of regulatory changes, business owners can consider working with a reputable business attorney and a CPA. Have an annual check-in meeting with your business attorney to discuss any regulatory changes and to make sure you are completing the legal requirements for your business. I believe it is a good idea to meet with your CPA at least twice a year: once in the fall before the books have closed for the year and again early the next year to discuss your corporate tax return.

Disclaimer: This article discusses general legal issues and developments. Such materials are for informational purposes only and may not reflect the most current law in your jurisdiction. These informational materials are not intended, and should not be taken, as legal advice on any particular set of facts or circumstances. No reader should act or refrain from acting on the basis of any information presented herein without seeking the advice of counsel in the relevant jurisdiction. Bend Law Group, PC, expressly disclaims all liability in respect of any actions taken or not taken based on any contents of this article.

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