FOR IMMEDIATE RELEASE

24 April 2013 – Albuquerque, NM

L4SB, a leading high-tech law firm focusing on the needs of small business, is proud to announce that it now accepts Bitcoin for the payment of small business legal services. “Our decision to accept Bitcoin for the payment of legal services meets two important objectives for the firm: First, we want to accept as many forms of payment as possible, to make it as easy as possible, for the small business to engage us for legal services. Second, we are an Internet savvy, high-tech law firm and law practice, and accepting and honoring Bitcoin adds credibility to that claim,” says Laurence S. Donahue, attorney and founder of L4SB.

For those who don’t know or haven’t heard of Bitcoin, it is a decentralized virtual currency without a centralized banking system, owner, manager or controlling mechanism. It was invented by an anonymous hacker, and the currency itself exists solely as ones-and-zeros within computer algorithms, memories and digital wallets. Read What is bitcoin? An idiot’s guide to the virtual currency by Metro in the UK.

Accepting and transacting in virtual currency is not for the faint-of-heart, which perhaps represents its single greatest barrier to widespread adoption. A second barrier to widespread use of the Bitcoin is that it’s hard to find an article discussing Bitcoin that doesn’t including red-flag words such as “hacker,” “theft,” “launder,” and “bubble.” The value of the Bitcoin, in early 2013, has fluctuated greatly due to a number of economic factors, and now the US Government is taking notice and applying US Money Laundering rules to merchants and exchanges dealing in Bitcoin.

L4SB believes that digital currency is in its infancy, and without a doubt, represents the future of commerce. Because it’s new — and still represents only a drop in the bucket of the world economy — we will see upswings, downswings, and rapid changes in commerce and financial laws, as our centralized systems adjust. In the mean time, L4SB is happy to participate in this new and exciting medium of financial exchange!

Law 4 Small Business (L4SB). A little law now can save a lot later.

Avoid the Trap of Neglecting Important Functions of Your Small Business

Unfortunately, this means many of my clients are often neglecting other important aspects of running a business: accounts payable, legal, financial planning, taxes and even — if you can believe it — accounts receivable and marketing.

As a New Mexico small business attorney, I do my best to help instruct my clients on how and when to engage the services of an attorney, and I really work at being sensitive to the financial plight of my clients. For instance, paying me to review a vendor contract for $200 worth of services doesn’t make sense. However, signing a 5-year lease or a key partnership contract really does require a business attorney to make sure you’re not getting the short-end of the stick or just missing important clauses, terms and conditions.

This is why I have a flat-rate contract review service, that only costs $25/page (minimum 4 pages). For a very small, predictable fee, you can have an experienced small business attorney, with years of experience in business contracts, review your contract and help make sure you aren’t getting your small business into trouble with hidden problems or worse.

In my mind, this is a no-brainer, although I can completely understand why small business owners are scared of engaging an attorney. I can respect and understand the concern with managing legal expenses, and avoiding paying high legal bills.

Ignoring the Internet can Put You Out of Business

Small business owners must not ignore the InternetWhat I cannot understand, however, is how small business owners and entrepreneurs overlook the Internet and marketing when running their business. I don’t care how busy you are, or how intimated the Internet makes you feel. There is simply no excuse not to hire an intern, college student or affordable “Internet marketing representative” to help make sure that (1) that your “online presence” is well represented, and (2) you are getting traffic to your website.

Last week, I had a restaurant owner call me — looking for an attorney to sue UrbanSpoon — because that restauranteur recently found out that UrbanSpoon had listed their restaurant as closed for years. Because of this, this restaurant owner felt their business has declined to such an extent, that they were going to close their doors — and she wanted blood. She wanted to sue UrbanSpoon. Unfortunately for her, as much as I would like to take her money, she just doesn’t have a case for a number of reasons. I told her, instead of spending a dollar on business legal services, I said to place a small ad in the local college newspaper (the Daily Lobo here in Albuquerque, NM) and look for a college intern that can help with their Internet presence. Aside from UrbanSpoon, they should be looking at Google Local, Yelp, CitySearch, Yahoo and others. They should be soliciting reviews and ratings. They should make sure their website reflects their business, and that their “online presence” properly represents their restaurant.

Unfortunately for this restauranteur, it was advice received too late. She was closing her doors. It is a tragedy, although I made it clear that suing UrbanSpoon was a fruitless exercise.

As a small business owner, you either need to spend the time making sure your “online presence” is what you want and need it to be, or you need to hire someone to do it. There is simply no excuse not to do this, and if you’re not, you have no idea what is being said about your small business, or what the online directories and ratings use to reference your business. I see everything from wrong phone numbers, to wrong addresses, and in more severe cases, closed notices or negative ratings and reviews that cause seriously negative marketing issues for my clients.

Manage your “Online” Presence

Whether you like it or not, the Internet represents two significant factors to you and your business (and I don’t care what business you are in). First, almost all of your potential customers and clients use the Internet to perform research on your small business, whether to simply find out your phone number or hours of operation, or to compare and contrast your small company to your competitors. Second, many very popular websites are devoted to having some amount of information about your business.

Therefore, you want to make sure that potential customers and clients see and obtain information that is (1) accurate, and (2) flattering (or at least promotes your company in a positive way).

This means either you, and if you don’t have the time, someone you have hired to do the following (at an absolute minimum):

• Make sure your website has accurate information (i.e. phone number, address, products or services)
• Your business is properly listed and referenced in the general listings (i.e. Google, Bing, Yahoo, CitySearch, Yelp, etc)
• Your business is properly listed and referenced in industry-specific listings or references (i.e. As an attorney, I need to make sure I’m listed in Avvo, RocketLawyer, MartinDale Hubble, and others)
• If customers are rating or reviewing your business, make sure you directly address any negative reviews. Take control of the narrative for your business

Get Traffic to Your Website

Once you have taken control of your “online presence,” so at least your website does a somewhat decent job of representing who you are, what your business does, and how to buy your products or services, then please spend just a bit of effort trying to get traffic to your website.

Interestingly enough, the efforts you did above in managing your online presence, will have a positive impact in getting new customers and clients to your website. However, you need to do more.

When I first started Law 4 Small Business, I created a new website from scratch. I thought of a clever loss-leader (i.e. the flat-rate contract review) to pull in new clients. I made sure L4SB was properly listed in all the relevant search engines, directory services and other places. If L4SB wasn’t listed (and it wasn’t listed in most, because it was brand new), I made sure it became listed.

Once all that work was completed, one of the best, quickest and cost-effective ways of quickly obtaining new clients and seeing more visitors to my website was sending out a press release. I used eReleases.com, who boast that they are the most effective press release service. The results of my press release were simply outstanding! My website traffic shot up. I had new clients from across North America call me. And, I actually had a reporter from the New Mexico Business Weekly call me for an interview. All because of my one press release.

Law 4 Small Business (L4SB). A little law now can save a lot later.

Poor decisions will impact Zynga revenues, value and successThe Wall Street Journal had a great article this November 10th, 2011, entitled Zynga Leans On Some Workers to Surrender Pre-IPO Shares (subscription required), which sheds light on how incorporating the wrong way could create problems down the road (if you don’t have a subscription to the Wall Street Journal, C|NET has a good overview of the Wall Street Journal article, entitled Zynga to employees: Give back our stock or you’ll be fired).

Zynga shows us how NOT to form (or run) a company.

The wrong tactics can spell disaster

Three immediate problems make themselves apparent, when one reads the articles regarding Zynga’s attempt to consolidate equity. First, is the bad press. No one wants to have their company name plastered on the pages of the Wall Street Journal in such a manner. Second, imagine the poison injected into the corporate environment after such an attempt. And third (and most importantly), the corporate executives at Zynga have basically lied to their employees, by originally asking them to accept lower pay in return for equity, with the promise of a hefty payday in the future. Zynga executives have shown their employees (and now the world) they cannot be trusted and they possess little to no integrity.

Who wants to do business with such a company? All of this, because of poor planning in their formation stage.

Like setting course on the high seas, it’s critical to point your company in the right direction from day oneHow did this come to pass, and what could Zynga have done to prevent such a disaster? The answer lies in properly forming their company, and picking the right tactics to meet their strategic objectives. For example, forming a company for an eventual initial public offering (IPO) requires very different tactics, than forming a lifestyle company with the intent of recurring revenue for the rest of your life.

Just think about those two extremes for a moment, and how you might structure the formations differently. If you want to create a company with the hopes of an IPO, you need to form the company with both common and preferred shares (or units) for investors. You need to include a decent-sized stock option pool, so you can incentivize your best employees. If you believe you will grow fast and large, you need to dole out your stock options sparingly (so you avoid what happened to Zynga). You give corporate pitches to investors and employees that make clear your growth strategies and exit plans.

Forming an IPO requires different tactics, from forming a lifestyle companyIf you want to create a lifestyle company, your formation is completely different from a company intending to IPO. You don’t need (and probably don’t want) to share equity with others, so no stock option pool. You will not be seeking investment from angel investors or venture capitalists, so no preferred shares (or units). You won’t hire employees with the promise of soon-to-be-riches with a robust IPO. You won’t be giving corporate pitches to anyone.

Hire the right help, right from the start

Bite the bullet, and hire a good business attorneyWhen forming your company, funds are low and you must make difficult decisions on where to spend your precious few dollars to get your company off the ground. Despite that, don’t forget to seek the advice of a good CPA and a good business attorney or business lawyer. Anyone can download formation documents off the Internet, or pay a small fee to create a LLC through nolo.com or legalzoom.com, however these and similar organizations are not law firms nor consultants. They cannot give you the precise advice you need, to point your company in the right direction from day one, to help ensure you don’t suffer the same fate as Zynga. Hiring the right business lawyer is less expensive than you think, and it will definitely save you money down the road.

Law 4 Small Business (L4SB). A little law now can save a lot later.

In many ways, the process to dissolve a LLC is very similar to what I described in the previous blog article. What’s different, are the particulars required to actually get the New Mexico Public Regulation Commission (NM PRC) to agree to the dissolution.

Therefore, the steps for dissolving a LLC is the same as what is outlined in the previous blog article, except the following:

• Substitute the word “Operating Agreement” where ever you see “ByLaws”, and
• Step 2 and Step 3 are different.

Read the previous article, then substitute the following Step 2 and Step 3 for dissolving a limited liability company.

STEP 2: File initial documents and cease operations

1. Download, read and follow the Dissolution template from the NM PRC
2. Cease business activities, except to take the proper steps to liquidate its affairs and distribute its assets, as per your Operating Agreement
3. Properly fill out and send IRS Form 966, Corporate Dissolution or Liquidation, within 30 days

That’s it for Step 2, which is considerably easier for a limited liability company, than it is for a C-Corp or S-Corp.

Step 3: Submit Articles of Dissolution to the NM PRC

Now, fill out the Articles of Dissolution, as indicated in the Dissolution template you downloaded from the NM PRC.

1. Make copies of everything, and send the following to the NM PRC:
• Articles of Dissolution, with a duplicate copy (available from the Dissolutions article at the NM PRC);
• $25 filing fee, paid by check in the name of “NMPRC”.

That’s it for Step 3. It’s easier and cheaper to dissolve a LLC in New Mexico!

Now, go back to the previous article to complete the remaining steps

You still need to consider the tax issues, liability issues and other requirements to fully and properly dissolve your LLC. Also, note that the assumptions in the previous article are the same here. This assumes no debt, no liabilities, etc. Finally, you should consult with a competent business attorney or business lawyer in your jurisdiction for guidance on all the steps and procedures necessary to properly dissolve your LLC.

Law 4 Small Business (L4SB). A little law now can save a lot later. Albuquerque business lawyers and Chicago business lawyers helping small businesses owners and entrepreneurs with business formations, dissolutions, mergers and acquisitions, and transactions; of their limited liability companies (LLC’s), C-Corps, S-Corps and Partnerships.

There is a wealth of information on the Internet on how to form a company, but very little good information on how to dissolve a company. Given the number of requests I receive to dissolve a company, I thought it would be best to outline the appropriate steps. Remember that these steps are not comprehensive, may not apply to your specific situation, and are not to be considered an adequate substitute for consultation with a competent business attorney or business lawyer.

These steps describe how to dissolve a C-Corporation or S-Corporation. Next week, I will publish an article on how to dissolve a limited liability company (LLC), which is significantly easier and less costly than dissolving a corporation.

Please note the following potential problems with the steps I’m about to share with you:

• They were written in October, 2011, and are subject to change. Don’t blindly follow these steps. Research each step accordingly.
• They assume you are a closely-held S-Corp or C-Corp. If you are trying to dissolve a Limited Liability Company (LLC), these steps do NOT apply to you. If you have other shareholders, partners or owners, your steps could be different. Consult with a competent business attorney in your state.
• These steps are intended for companies located and registered within the State of New Mexico. If you are in a different state, the steps to dissolve your company will be different.
• These steps assume your business does not owe any debt, and there are no liens, mortgages, notes or other debts or liabilities owed to others or third parties. This also means these steps assume you are not in bankruptcy, and are conducting a purely voluntary dissolution. If you owe debts or other monies, or need to declare bankruptcy for the business, you MUST consult with a competent corporate bankruptcy attorney.
• These steps assume the company has commenced operations and/or issued shares. If this is NOT the case, see the following form at the NM PRC, Dissolutions by Incorporator.

STEP 1: Understand your intentions, and the assumptions in these steps

If your company or business owes money, it may not be legally dissolved without paying its debts or without a court-order, or following a more rigorous process (depending on who you owe money to, and under what circumstances). A court-order usually involves a bankruptcy proceeding, and you should retain the appropriate corporate bankruptcy attorney to assist you. Be aware … don’t walk away from your debts without dissolving properly. If your company has any assets to speak of, and you improperly dispose of those assets, you could be guilty of commingling funds and/or fraud. If this happens, your debtors could potentially go after you personally and seek to make you personally liable for your company’s debts.

These steps assume you are voluntarily dissolving your company, and it owes no debts to any third-party. In order to do this, you must consult with the bylaws for your company, and follow the steps outlined in those bylaws for voluntary dissolution. Usually, the bylaws will indicate how to plan for and vote on dissolution, as well as the legal and proper way to distribute any remaining assets. If your bylaws are silent on voluntary dissolution, or you don’t actually have bylaws, then you should seriously consider consulting the advice of a New Mexico business lawyer to make sure you’re following the law properly.

This first step, then, is to follow your bylaws (or New Mexico law) to:

1. Call a meeting and vote on voluntary dissolution
2. Authorize the company, or its officer(s), to dissolve the company
3. Provide notice, as appropriate or required, on the dissolution activities of the business

Your company will generally elect one of two methods to dissolve: By Written Consent of the Shareholders or Statement of Intent to Dissolve by Act of the Corporation. The first is easiest, if you have all shareholders available to sign and authorize the dissolution. The second is necessary, if some shareholders are unavailable to authorize (or you have at least one shareholder objecting). You will need to make sure you conduct the proper board meeting and/or shareholder meeting, obtain the appropriate number of votes, etc, to create a formal act to dissolve from the corporation (again, all dictated by your bylaws).

The NM PRC has a pretty helpful and useful form to help, with instructions. It is simply called Dissolutions.

STEP 2: File initial documents and cease operations

1. Sign and notarize a Written Consent of the Shareholders to Dissolve. A sample MS Word document is located here (you will need to edit it properly).
2. Send to the NM Public Regulation Commission (NM PRC) the following:
• Written Consent of the Shareholders to Dissolve (edited sample located above);
• Statement of Intent to Dissolve by Written Consent of Shareholders (available from the Dissolutions article at the NM PRC);
• Duplicate copies of both documents above; and
• $50 filing fee, in a check in the name of “NMPRC”.
3. Cease business activities, except to take the proper steps to liquidate its affairs and distribute its assets, as per your bylaws
4. Properly fill out and send IRS Form 966, Corporate Dissolution or Liquidation, within 30 days
5. Properly fill out and send the following forms to the New Mexico Taxation and Revenue Department:
• ACD-31096, Tax Clearance Request. This is a request for the Certificate of No Tax Due, which the NM Taxation & Rev Department will send to you.
• ACD-31075, Business Tax Registration Update. It’s also a bit confusing to fill out, and the instructions aren’t much help. Sorry.
6. Properly fill out and send the following form to the New Mexico Department of Labor:
• Tax Clearance Request form, which is a request for the Certificate of Compliance, which will be sent to you by the NM Dept. of Labor.
7. Properly fill out and send the following form to the NM PRC (in a separate envelope from the above mailing):
• Letter of Clearance (available from the Dissolutions article at the NM PRC)

Step 3: Submit Articles of Dissolution, once you receive all the supporting documentation

Now, you must wait until you receive documents back from the NM PRC, NM Taxation and Revenue Department, and the NM Department of Labor. Once you receive all the required documents back, you must then send it all to the NM PRC.

1. Make copies of everything, and send the following to the NM PRC:
• Articles of Dissolution, with a duplicate copy (available from the Dissolutions article at the NM PRC);
• Certificate of No Tax Due (received from Taxation and Revenue Dept);
• Certificate of Compliance (received from Department of Labor);
• Letter of Clearance (received from the NMPRC); and
• $50 filing fee, paid by check in the name of “NMPRC”.

Step 4: Submit Final Taxes

Make sure you consult with your tax adviser, or CPA, as appropriate. Timing is important. You MUST file taxes, even if you cease operations, for the year you dissolve your business. This means you must file regular and normal corporate taxes the year following your dissolution, for the previous tax year. For example, let’s assume your tax year is the calendar year. If you dissolve on December 31st, you must file your corporate taxes by April 15th the following year. If you instead dissolve January 5th, you must file taxes two more times: The upcoming April 15th for the previous tax year, and the April 15th the following year, for the 5 days of operations this year. If you want to dissolve your company, perhaps you should make it one of your Top-10 Goals to complete before the 2012 New Year!

1. Consult with your tax adviser or CPA, as appropriate
2. File final tax returns, and make sure your accountant knows to indicate “Final Return” in the appropriate place on ALL tax forms, as well as any K-1′s
• Include IRS Form 8594 (instructions) and IRS Form 4797 (instructions), as appropriate
3. Close your business account with the IRS. Write to them at: Internal Revenue Service, Cincinnati, Ohio 45999 and state the reason you wish to close your account. If you have a copy of the EIN Assignment Notice that was issued when your EIN was assigned, include that when you write. Otherwise, be sure to include the complete legal name of the entity, the EIN, and the former business address.

Law 4 Small Business (L4SB). A little law now can save a lot later. Albuquerque business lawyers and Chicago business lawyers helping small businesses owners and entrepreneurs with business formations, dissolutions, mergers and acquisitions, and transactions.

Select photos and images carefully

Do you have a website? Can you prove you have the right license to the images on your website?The right images and photographs not only impact your brand, image and identity, the can potentially expose your business to serious lawsuits.

If you’re like me, you probably did (or will) hire someone else to create your website. Either way, you probably don’t have your own graphics, images and photos and therefore will either rely on your www designer or website developer to find the right photos and images for your website, or you will spend the time yourself seeking the right images and photos for your company from other websites.

No matter whether you do your website yourself or hire a contractor to build your website, and no matter whether you rely on someone else to find images and photos, or you find the images and photos yourself, you are at significant risk of copyright infringement if the photos and images you use are not your own.

Even if you buy your photos and images, do you have a valid and proper license?

Just because you haven’t received a complaint in years, doesn’t mean you’re off the hook.In fact, some of the big image and photo suppliers on the Internet, such as Getty Images, have sophisticated image processing software that monitors most websites on the Internet, comparing images on the websites it finds to the images they sell. If they find their images (and they are good at finding their images, even ones that have been altered), they cross-check their sales of the license with the domain name where they find the image located. If their records of the license purchased doesn’t match the domain name, you receive a cease and desist notice with a demand for payment. If you ignore the letter, they will forward on the matter to their attorneys, who increase the financial demands and will sue if your response isn’t proper or timely.

For example, I have seen letters demanding $1,500 for an image that would have otherwise cost $150, and when the matter is escalated to an attorney, the attorney increases the financial demand to $4,500.

To be sued for copyright infringement, your knowledge of infringing activity is irrelevant

You can be guilty of copyright infringement, even if you don’t know you’ve infringed.Copyright law is a “strict liability” offense, which means that you do not have to have knowledge that you’re infringing the copyrights of someone else. All that is required to be sued for copyright infringement, is to use the works of another without their permission or without obtaining the right license. Therefore, what scenarios could you find yourself in trouble?

• You (or your contractor) “borrow” an image or photo from another website, either by directly copying it or linking to it.
• You (or your contractor) grabs a “free image or photograph” from a website offering such images or photos, but it turns out they don’t have the right license themselves.
• You (or your contractor) actually purchases the rights to an image or photo, but you don’t purchase the right license or you don’t save your receipt to show proof of your license.
• Your contractor says they own the image, but it turns out they didn’t purchase the right license to utilize for you.
• You (or your contractor) actually purchases the rights to an image or photo for your website, but you decide to use that image on a different website instead, and you either haven’t purchased the right license to do this or you haven’t saved your receipt to show proof of the right license.
• You (or your marketing agency, contractor or advertiser) reuses an image or photo your company originally purchased for use on the website, for a print advertisement or for placement on your actual product to be mass-produced.

Copyright law is almost setup to make most businesses fail

You can be guilty of copyright infringement, even if you hire someone else to build your website.It turns out, that most businesses can fall into any of the traps above, because of human nature. First, most employees don’t fully understand copyright law, and just assume whomever they hire (or wherever they go on the web) knows more about these issues than they do. Second, most people don’t fully understand the requirements of the license attached to the image or photo they purchase, if they even read the license. Third, most humans treat a purchase as a purchase (i.e. “I bought this microwave, therefore I own it and can do what I want with it.”), but copyright law doesn’t work that way. Just because you have photos and images sitting in a special folder called “purchased images,” doesn’t mean you can use those photos and images any way you want — and don’t forget that each photo and image in that folder probably have different rights and licenses attached. Forth, most stock photo companies don’t make their licensing easy to understand, track, manage; and worst of all, they will change their licensing over time.

You need to treat photo and image acquisition seriously

In an ideal world, (1) you should provide your own photos and images. When that’s not possible, (2) you should first try to commission your own work. If that’s not possible, then (3) buy the right stock photography from a reputable provider, such as Getty Images. Finally, and only as a last resort, (4) allow a third-party contractor to do it.

(1) Providing your own images and photos is the ideal option

Because your own photographs and images are your yours, no one can take away your right to them. US Copyright law works to protect you. Besides, when you provide your own photographs and images, you’re providing your own unique touch to your company’s brand and identity.

(2) Commission photos, images and clip art if you can

Not treating this seriously? Plaintiffs’ attorneys will love you!If you can’t provide the graphics you desire by yourself, then the next best option is to commission what you need from someone you hire. The best option is an employee, because US Copyright Law provides that the works and expressions of employees (in the course of their employment) are owned by their employer.

If you do not have an employee that can provide the images and photographs you need, then you can hire a contractor to do so. Beware, however, that US Copyright Law can work against you. If you hire a contractor, you want to put that contractor under a contract, that says any and all works they produce that is “protectable under US Copyright Law shall be deemed a work made for hire,” and that the contractor assigns all right, interest and title in any works produced to your company. If you fail to put your contractor under such a contract, you may be able to use what your contractor provides you, but they will ultimately own it. This means they can resell it and even restrict you from using the very photos and images you paid them to produce, if your scope of use was outside what was originally commissioned.

This is an excellent time to remind you to hire a competent business lawyer or business attorney to either provide a standard independent contractor agreement for your business, or to review any contracts given to you by your potential contractors. (Law 4 Small Business provides a cost-effective flat-rate contract review service, if you need a contract reviewed in a hurry.)

Regardless of whether you utilize an employee or contractor to commission your photos or images, remember that they are human and humans make mistakes. Therefore, make sure whomever you commission is under contract to NOT use the works of another – you’ve hired them to produce the images or photos themselves, right?

(3) Buy images and photos only from reputable stock photography companies

The promise of “free photos” or “free stock art” can be enticing, but carries potential risks. You must be very certain the vendors are legitimate, and that the photos and images they offer are not infringing the works of another.

If you do obtain an image or photo from a source you suspect isn’t 110% legitimate, be careful of your use of the image or photo. Don’t incorporate it into your product, for example. If you receive a cease and desist letter, make sure you can quickly replace that image or photo with something else without much expense.

Keep track of your licenses, and as a corporate policy, always keep them with each image!Regardless of the source you purchase your stock photography or images, make sure you (1) purchase the right license, and (2) you keep a copy of the license with the picture at all times. When considering what license to purchase, consider how important the image is to your overall brand and identity. Will you perhaps desire to use the image in print ads and/or commercials? Will you want to incorporate the image into your product? Will you want to resell the image? Do you want to use the photograph, to the exclusion of everyone else? These factors will determine the type of license, with the price increasing as the rights you wish to obtain increase.

(4) Only as a last resort, allow your contractor or third-party vendor to obtain photos and images for your business

This is, unfortunately, the most common route for most small businesses. They hire a web designer or web developer to build their website, and “how to build a website” includes providing “stock photography,” relying completely on the web builder’s scrupulous behavior and financial wherewithal to not violate US Copyright laws.

Some small business owners hire their nieces or nephews to build their website, and some are enterprising enough to “outsource” their web development needs to offshore contractors. The problems with both approaches, is these “contractors” know very little of US Copyright law, and will not be available to back you up if and when you receive a Cease and Desist letter or threat of a lawsuit.

Ask yourself, “If I’m sued, how would I want to be prepared?”Many contractors will tell you “It’s okay, I have a bunch of stock photography I purchased and work from.” The problem with that statement is, they aren’t copyright lawyers, and don’t fully understand the license they purchased (if they in fact purchased a license). Furthermore, just because they purchased a license, doesn’t mean that license will transfer to you. Finally, if and when there is an issue, will they be available to provide you with proof of a proper license? Do they have the resources – financially and legally – to defend you if need be?

Therefore, when hiring a contractor or third-party vendor to do you website, follow these guidelines:

• Make the contractor sign a contract for the job, indicating they will only use photos and images properly licensed to YOU, not to them, and that they “agree to indemnify you, and hold you harmless, for any action brought about by a third-party alleging copyright infringement for any work provided by the contractor.”
• Require the contractor to have an insurance policy of sufficient size to properly indemnify you for any copyright infringement lawsuits. Make sure you have a copy of the policy, and it shall always remain in place.
• Give the contractor a lecture on (i) the importance of not violating US Copyright law, and (ii) clearly explain what type of license you will require.
• Make sure the contractor understands that before you will pay them, that they must guarantee and assure you that any and all images used, purchased or incorporated into the website (or other works provided to you) will (i) be first approved by you, (ii) be purchased in your name, (iii) be obtained with the right license, and (iv) will include a valid copy of the license is provided with each photo or image.
• Require your contractor give you a list of all images and photos used, and for each and every photo or image, indicate where purchased, the raw image itself (i.e. a copy not incorporated into the work or website), the license, and “quick overview” explaining the limitations of the license; as part of his or her final deliverable to you.

It is indeed unfortunate that so much effort need go into what most business leaders consider a “means to an end.” That is, the desired result is a great looking website, and the right photos and images are a means to that end. However, without doing this the right way, you may find yourself where thousands of other business leaders are finding themselves: Fighting off a potentially costly copyright infringement lawsuit.

Lately, it seems plaintiffs’ attorneys are demanding damages, not just that you stop any infringing use.I speak from experience: Some of the copyright attorneys representing copyright holders are out for blood. They aren’t just trying to stop the infringing use. They are seeking damages. Don’t let you or your business fall victim to such practices, by being sloppy in how you acquire your stock images or photographs. Do the right thing, and be careful.

Law 4 Small Business (L4SB). A little law now can save a lot later. Albuquerque business lawyers and Chicago business lawyers helping small businesses protect their intellectual property, trademarks and copyrights, and position themselves properly to avoid infringement lawsuits.

However, astute business owners and entrepreneurs will use this time to properly plan, and execute, for the 2012 New Year. Why? For many small businesses, their fiscal year (FY) ends on the calendar year, and therefore, preparing ahead of time for the new year gives such forward-looking business owners an opportunity to start the 2012 New Year off right. It also gives such forward-looking individuals an opportunity to end the previous FY properly.

Don’t wait until the 2012 New Year. Plan now and execute, so your plans are in place on January 1, 2012.Now is the time to finish your research, prepare a list of 2012 business goals, and end 2011 on the right foot. While not everything in this list will apply to you, some of the items can surely help you to define your goals, resolutions and close your 2011 FY properly.

1. Talk to your CPA. Three reasons: Proper categorization of 2011 expenses, year end profit distribution, and new tax rules for 2012. Only your CPA can help you identify tax-saving tips that apply uniquely to you and your business. Talk about them now, before the year ends, to make sure you, your financials and your business are positioned properly to take advantage of any tax-savings opportunities. Don’t have a good CPA to talk to? Contact us, and we’ll be happy to refer you to an outstanding CPA.
2. Corporate entity change. While many businesses are fine as they are, if you are a sole proprietorship and want to incorporate (Read: Not Incorporating is Risky Business), or you are a limited liability company (LLC) and desire to change to a C-corp (for example), now is the time to do it, so your corporate change can take effect on January 1st, 2012, thereby saving you the necessity of keeping two sets of books for your changeover year and filing two sets of taxes. Give yourself plenty of time (at least a full month), to create the right corporate documents, obtain approval and support from your partners, and create the right paperwork and filings.
3. Create a proforma and/or budget. Assuming you have financials for your business, use your 2011 monthly financials to create a month-by-month forecast for your revenue and expenses for 2012. Be realistic, given what you think you can earn from revenues, and what you can spend. And, if you don’t have monthly financials, find someone to help you generate them for you for 2011, so you can go into 2012 with a strong and accurate budget. If you don’t have monthly financials, you’re not managing your business effectively on a month-to-month basis, and you cannot do any form of budgeting. If you have financials, you can measure your cash-flow, revenues and expenses, which will allow you to fine-tune your business on a monthly basis to ensure cost-minimizing, revenue-maximization and that you can handle the occasional “bumps-in-the-road.”
4. Time to switch accounting methods? Are you using a cash or accrual method of accounting? In general, you cannot switch in the middle of your FY, so now is the time to do it. Most small businesses operate on cash-basis accounting, but may reach a point where they are required switch to accrual accounting. Some businesses using cash-basis accounting have a difficult time managing their profits and losses, and would benefit by switching their accounting methods. Of course, this is an excellent topic to bring up with your CPA. Read more on this topic
5. Review your detailed expenses. When is the last time you reviewed every dollar leaving your bank account? Are you really taking advantage of the bottle-water service? Do you really need that monthly “Internet service charge?” Is that $200/month subscription to some news service really being used? Zealously cut unknown expenses, and make it a goal to not carry these expenses into the 2012 New Year.
6. Review your vendor contracts. Put a schedule or calendar together of ALL your vendor contracts, containing the dates of when they expire or are up for renewal. Give yourself alerts for at least 45-days prior to the renewal dates, so you have time to renegotiate or cancel your vendor contracts as needed. You will be surprised how much you can save by renegotiating your vendor agreements when it comes time for renewal. If you don’t have all your vendor contracts in one place to review, spend the time to get organized.
7. Save thousands of dollars in 2012, by carefully reviewing your 2011 expenses.Review your telecom and/or Internet service provide invoices. When you combine the fact that most businesses over-buy their telecom, cell phone and Internet service, with the fact that the same services decrease in price year after year, you have a perfect storm of overspending for most American businesses. This may cause you to pull out your hair, but if you spend a good day examining your telecom (i.e. voice, data and cellular) invoices, you can potentially find significant savings. Are you really using all the circuits you are being charged? Are you really needing all the bandwidth you pay for? Are you still paying for cell phone service for employees no longer employed? Are you still paying for a POTTS line for your fax service, even though you have an Internet-based fax service? For some businesses, it pays to hire a dedicated person to manage these vendors and the invoices. For all other businesses, it pays to at least review your invoices once a year, to make sure it aligns properly with your needs. There is a more indepth article on this topic located here.
8. Conduct a intellectual property (IP) audit and review. IP is an important aspect of your business, and it helps define your goods and/or services against all others. For many companies, their IP becomes their most valuable asset. If you haven’t perfected your IP, now is a perfect time to do so. Finish an audit before the end of the 2011, and make it a New Year’s Resolution to formalize any IP available for your business. For a brief overview of IP, read our L4SB Service Page on IP. One word of caution: Don’t do this yourself. Hire a law firm or business lawyer that understands your business, and is experienced in all forms of IP.
9. Conduct a contract template audit and review. Do you have standard contracts for your standard relationships? If not, you should make another 2012 New Year’s Resolution to do so. Do you hire contractors? If so, you need a standard contractor agreement. Do you hire employees? If so, you need a standard employment agreement. Same thing for customers or clients. By having standard contracts, you are assured you are applying the same standard, treatments and requirements on everyone, making it easier for you to administer and ensuring you are adequately protecting your intellectual property, security and liability.
10. Use SMART Goals in 2012. SMART Goals are: Specific, Measurable, Attainable, Relevant and Time-bound. Read more about SMART Goals. Use the other goals above to help you establish your SMART Goals, and work towards achieving them. An example of a goal is “reduce expenses in 2012,” which isn’t very specific. Instead, turn it into a SMART Goal, such as “reduce IT expenses an average of at least 10% each month in 2012.” Defining SMART Goals is much harder than just defining goals, but once you do it, you have a much greater likelihood of success in achieving your SMART Goal, and adding value to your business.

Whether your company is consumer-facing, or a business-to-business business, now is the time to work on the things necessary to leave your 2011 FY, and enter the 2012 New Year on the right foot. We at L4SB wish you the best of luck to you and your business, and we hope you achieve all your SMART Goals in 2012!

Law 4 Small Business (L4SB). A little law now can save a lot later. The home of the flat-rate contract review, and your source for experienced and affordable business lawyers.

Business Attorneys as your New Mexico Registered AgentFor example, suppose you want to form a LLC, and you have an office in Texas, and want to have territories in New Mexico and Arizona? You would register your LLC in Texas as a domestic limited liability company, and you would register your LLC in New Mexico and Arizona as foreign limited liability companies. In all states, you would need to designate a registered agent with your company registration. If you’re located in Texas, you can use yourself as your own registered agent. But, because all states require a physical address in the state of registration, you could not use yourself as a registered agent in New Mexico or Arizona, unless you had a real, physical address in those states. In this example, you would hire a New Mexico Registered Agent, like Law 4 Small Business, to act as your registered agent in New Mexico. You would do the same for Arizona.

Business Attorneys Make Great New Mexico Registered Agents

Consider using Law 4 Small Business (L4SB) as your New Mexico Registered Agent for any corporate filings in New Mexico. L4SB is a law firm, with real business lawyers and attorneys who review your filing and give you the peace-of-mind that your registrations are complete and filled out correctly. The benefits include:

• Greater anonymity and protection by using a business attorney as your New Mexico Registered Agent
• Peace-of-mind that a real business lawyer has reviewed your filing(s)
• Speed and accuracy
• For no additional cost, L4SB will scan-in and email any notices sent to your company at the Registered Agent’s address (up to 4/month)

L4SB charges a flat-rate price of $100 per filing per year, not including the filing fees charged by the NM Public Relations Commissions (NM PRC). There are extra fees associated with re-mailing or FedEx’ing legal notices (although scanned and email, up to 4/month, are free).

L4SB can also help you fill out the right filing, and answer your questions, all for a small additional fee.

Contact us for more information or how to utilize L4SB as your Registered Agent.

Law 4 Small Business (L4SB). A little law now can save a lot later. The home of the flat-rate contract review, and your source for experienced and affordable business lawyers.

It was just a few short months ago, when Sony faced a security breach that opened the eyes of people around the world. Their PlayStation Network (PSN) and their paid-for music-streaming service, Qriocity, had been hacked sometime between April 16 and April 19, 2011. It didn’t take Sony long to figure out they’d been hacked, and immediately shut everything down on April 20, 2011. At the time, over 55 million PlayStation 3 consoles (PS3) and PlayStation Portables (PSP) were affected by this shutdown. This shutdown (and the poor explanation by Sony of what caused the shutdown), caused panic by many Sony customers, because it was determined that approximately 77 million records of user data was compromised (i.e. stolen) by the hackers. In this case, 77 million records containing some combination of people’s usernames, passwords, credit card information, security answers, purchase history and addresses. In all, over 2.2 million credit card numbers were allegedly stolen. The hackers used this stolen information to hack into other popular websites, using personal details stolen from Sony, to obtain access to other accounts (think Ebay, PayPal, Google Mail, etc). People were outraged. The dust has yet to settle. Sony did encrypt credit card information, but not well enough to prevent theft, and Sony did nothing to protect non-credit-card information.

Now that it has been a few months since Sony PlayStation Network has come back online (hopefully, a lot more secure), it benefits us to look at the issues and see how it can be a lesson to all businesses who conduct some form of transaction on the Internet, or otherwise store personal information of their customers.

What Sony faced

“It is also possible that your profile data, including purchase history and billing address, and your PlayStation Network/Qriocity password security answers may have been obtained,” Sony announced to the world on its blog.Sony failed on multiple fronts. They allowed the personal information of their users (i.e. customers) to get stolen. They also failed to warn their customers, and delayed an announcement for days. The attack happened sometime between the 16th and the 19 of April, and Sony claims they didn’t discover the theft until the 19th, and then decided to shutdown their network on the 20th. It wasn’t until the 26th, that they informed the public with a public statement, indicating that “user account information was compromised in connection with an illegal and unauthorized intrusion into our network” and that they will try to have the system running within the week. It wasn’t until May 2nd, that they told the public how many credit cards and user data records had been stolen.

It didn’t take long for the attorneys to respond. By April 27th, the first lawsuit was filed against Sony. The lawsuit claimed Sony failed to take industry standard efforts to protect its network and personal information, including the failure to encrypt its data and having adequate firewalls. The lawsuit also claimed that Sony failed to adequately and promptly warn users of the breach. The lawsuit also claimed that Sony didn’t follow the Payment Card Industry security standard (i.e. PCI and SDP), which requires that companies do not store components of cardholder data, and treat the rest of the cardholder data with certain standards. As of this blog article, Sony faces many other lawsuits and threats from UK, US, Canada, Australia, and China.

The costs to Sony

Sony had to fork out a significant financial sum to fix the problems, and deal with damage control. At last report, this fiasco alone was ending up at around $171M out of Sony’s pocket, not including the costs associated with defending against (and possibly paying judgements) on the lawsuits brought against them.  This sum includes the costs of a generous apology package, in which Sony offered a “welcome back” program that gave its users free games, a month of free PlayStation Plus, 100 virtual items on PlayStation Home, “On Us” movie rentals, and for current Music Unlimited Premium members, 30-days no charge use. Sony also offered a 12-month free identity protection program for anyone affected by the data theft. It was a nice gesture of Sony, but it didn’t stop their stock from plummeting 10% in the first week of the outage, and as of this Blog article, Sony’s stock is over 33% down from its high in the March-April timeframe.

Who did this to Sony?

“We’re not quitting because we’re afraid of law enforcement. The press are getting bored of us, and we’re getting bored of us.” a member of Lulzsec said in an interview to The Associated Press.In the UK, a 19-year-old male was arrested, who claimed to have connections with the perpetrators behind the Sony attack. This 19-year-old is also suspected to be part of the computer hacking group, Lulzsec. Lulz Security, or Lulzsec, is responsible for many high profile attacks, including taking the CIA website offline, compromising user accounts for Sony Pictures, and posting a fake story on the Public Broadcasting System’s (PBS) website. Lulzsec has also been releasing personal data off random or targeted websites, in an effort to force these websites to enhance their security. For example, they released secure details about some of Arizona’s law enforcement, in an apparent protest against that State’s anti-immigration reform. Re-read that underlined text you just read. It doesn’t create much of an emotional response, does it? However, take a look at the actual data (note: We have changed the information, to protect the officers):

1) Steven G. Kissya  #3011, Highway Patrol Division, skissya@azdps.gov, password: corina, 1234 S. Warrior Drive, Safford, Az 85546

   wife: Stephanie Kissya (stephaniek@mtgram.com), cell: 928-123-4567, home: 928-123-4567

2) Steven Lomelipia #4847, Slomelipia@azdps.gov, password: hl85648, 1234 W. Sunrise Drive, Nogales, Arizona 85621, cell: 520-123-4567

3) Larry D Turnstun #91326, ldturnstun@azdps.gov, password: amostex, 12345 E Woodstock, FLAGSTAFF, AZ 86004-0000, home: (928) 123-4567

These “records” above are claimed to be representative of MILLIONS of records. What is the chance they have your account information, too? Seeing this information, at least for me, really invokes an emotional response. With nothing more than the careless or inadequate security precautions taken by my online vendors (i.e. Sony), I potentially open myself (and my businesses) to attack.

Lulzsec did announce their intention to retire, when they released a “50 Days of Lulz” statement to the public, saying that Lulzsec was made up of six people and that their website is to be shut down and their hacking efforts were to retire. Too bad, then, when they returned on July 18th, 2011, with attacks on British newspaper websites, The Times and The Sun. And, even if Lulzsec did retire, there are other hacker groups and individuals out there doing the same thing. For example, google the group “Anonymous.”

The lessons for all of us

As individuals, no matter how careful we are, if we use online services, we shall be (or probably already are) compromised. We can make it difficult for these hackers, by taking at least the following precautions:

• Use a different password for EVERY website, while still attempting to make the password hard to guess (i.e. no dictionary words, random character mix).
• Change your passwords frequently. Once a month is ideal, and change them now, since you haven’t done it in awhile. Don’t forget to change the passwords needed to read email.
• Only provide the most minimal amount of information necessary to get a transaction done. Name. Address. CC info. Don’t do business with businesses who require more information.
• Make sure, when giving information to a website, that it is a secure transaction (i.e. SSL security). Depending on your browser, there will be a way to tell. Google this, and become familiar with it.
• NEVER email sensitive information, ever. Read this article, entitled “Cleverly Misspelled Web Domains Behind Huge Email Theft” to understand why.
• In fact, start encrypting all your email. Google “pgp email encryption” for more information.
• NEVER, ever, download and install software from anyone — unless it is a well-known and trusted source (i.e. Apple, Microsoft, Oracle, Symantec, Norton, etc). And no, your family member, coworker or friend isn’t a trusted source either. They know less about computers than you do.
• Keep your software on your computer up-to-date. If it’s running slow, you’re probably already hacked. Take your computer into your local computer store, get it wiped, and start over.
• Obtain regular credit reports, and check your credit religiously.

As businesses, we can learn from Sony’s misfortune. First, whether you want to or not, you need to invest well in (1) security and (2) security professionals. You cannot simply rely on the out-of-the-box security you get when you utilize that “one-size-fits-all” software you’re using for your customers. For example, websites and shopping carts. You need to keep this stuff up-to-date, and make sure you have the latest “patches” to prevent security problems from creeping into your offering.

Second, you really do need to think about “industry best practices.” That includes PCI and SDP standards when accepting credit cards. Make sure your vendors are PCI/SDP compliant. Do not leave sensitive information around, unprotected. Disgruntled employees are your greatest danger, so make sure you only give access to sensitive customer information on “a need to know basis” only, and make sure you do background checks on key employees or those employees who will have access to sensitive customer information. Also, don’t just put one person in charge. Make sure there is another person who is in charge of finding problems, to hold the other accountable.

Third, make sure you have an appropriate “Terms of Service” and “Privacy Notice” associated with your business, and stick with it. When a problem does occur — and it will, rest assured — make sure you disclose early and often to your customers, so they in turn may take steps to mitigate their damages. Write a good Terms of Service, then stick with it. Make sure you have the right policies and procedures to support your Terms of Service, and always make sure you are prepared for the worst.

Law 4 Small Business (L4SB). A little law now can save a lot later.

Turns out, there is much to be careful about, when signing up as an equity partner to a pre-existing company, whether it’s a partnership, LLC or S-Corporation. These concerns are also shared by shareholders, members or partners leaving a company (either through retirement or for other reasons).

What you need to look out for before you sign

Do you know exactly what you’re getting into when you join a new partnership?Congrats! You’ve been invited to become a member of an LLC, shareholder in a S-Corp, or partner in a partnership. This is prestigious, and you have much to be grateful for. However, be aware that as a partner or owner of a tightly held corporation, you immediately share the burdens, risks and liabilities of that company. Are you getting in over your head? Have all the risks been fully disclosed to you? Are you prepared to share in the liabilities?

Some questions you need to answer for yourself, BEFORE becoming an equity partner in any company, no matter how prestigious, successful, new or old the company is, are the following:

• Are there any outstanding judgments, lawsuits or liens on the company or the threat of such events to the company?
• Is the Operating Agreement or By-Laws fair and balanced, or are their inequities between partners or class of partners?
• Are the financials audited and/or is there adequate transparency to understand and evaluate the financial condition and health of the company?
• Is there an appropriate system of checks-and-balances, and operational segregation, to prevent “commingling of funds” between one or more partners and the company?
• Is the value of the company adequately protected against double-dealing, or disinterested or uninvolved partners?
• If you’re contributing capital (i.e. buying equity), is your money protected? Is the value for your money fair?
• Are you aware of the tax implications for yourself personally?

Each one of bullets above are ripe for an entire book, and therefore one blog article cannot go into sufficient depth to cover everything. I’ll go into more detail in subsequent blog articles. In the mean time, however, consider just some of the issues.

Judgments, lawsuits or liens

When you sign up to a new company, you are essentially becoming a part of that company. The value you place in that ownership is immediately at risk, when you sign up, if there are judgments, potential lawsuits or other risks facing the company. Worse, your personal wealth and assets are at risk, if the company is not managed well such that a plaintiff can “pierce-the-corporate-veil” and go after the personal assets of the shareholders, members or partners of a company. You need to make sure the company has fully disclosed these risks to you, or has agreed to indemnify and hold you harmless against such risks.

Operating Agreement or By-laws

Often, I see companies founded by individual entrepreneurs who have been slow to let go of the reigns and extend true ownership and power to their partners. As a consequence, the operating agreement or by-laws are written heavily in favor of one or two individuals, posing unfair risks to the other partners. Sure, this may be fine and dandy in the short-term, because everyone gets along and trusts the main partner. What happens, however, when the main partner dies or becomes incapacitated? Or, the main partner wants to sell the company and the remaining partners do not?

Make sure your new company is protected in case of a death or incapacity of an owner.In a death or incapacitation situation, the operating agreement or by-laws are crucial. Will the family become your new partner, or worse, your new boss? Does the company have the right of first refusal, to buy up the main partner’s equity? Can the company afford to do so? It is my strong recommendation that the operating agreement, or by-laws, are written such that the company has the right of first refusal to purchase the equity from a deceased or incapacitated member, shareholder or partner. This gives the company (i.e. through a vote of the surviving partners) the ability to maintain control of the company, and increase everyone’s share in the company pro rata. Keyman, or Key Person, life insurance is one method to ensure the company has the cash available to purchase the shares, units or ownership percentage from the estate of the deceased’s membership or ownership in the company. Keyman life insurance is a form of life insurance, that a company can take out against each partner, so that the company can use the proceeds to buy out the estate should a member become deceased or incapacitated.

Don’t be too eager to sign up with a company as its newest shareholder or member, and don’t let them tell you it’s a “take it or leave it” proposition. Everything is negotiable, and remember, the worse case happens more times than you might think. If it didn’t, people wouldn’t need lawyers.

Tax implications

The tax implications are often overlooked, and present some serious issues for the new shareholder, member or partner. If you buy into a company, for the exact value it is worth, you have NO tax implications at first. However, if the value of the equity you receive is greater than what you pay for it, you DO have tax implications. In the simplest example, if you’re simply given equity without paying for it, you are receiving value. This is taxable, and it’s ordinary income at that. Just because it’s equity in a company, doesn’t mean it’s taxed as capital gains. You only pay capital gains on equity, when it increases in value and a triggering event occurs (i.e. you cash out). So, think about what this means: If you’re given equity in a company, that is worth $250,000, it is as though the company paid you $250,000 in that tax year. This means you will be responsible for paying the ordinary taxes on $250,000 worth of income, even though you received no cash. This is your risk: Will that $250,000 in equity really payoff for you, or are you paying taxes on money you will never see?

Vesting

The next biggest tax issue most people overlook, is one of vesting. In the same scenario above, what happens if that $250,000 in equity given to you vests over time? This is what the IRS calls “at risk,” and of course, the IRS has a rule on it. It’s called Rule 83. In particular, what every partner, shareholder or member needs to know, is Rule 83(b). If your equity is “at risk,” such that it can be taken from you (i.e. it doesn’t vest fully, because you may leave at some point; or you own all of it, but the company retains the right to buy some portion of it back from you for whatever reason), then the IRS makes you factor in the ordinary income of your equity as it vests — at the time it vests.

Taking IRS Rule 83 into account can save you a lot of money when it comes to paying taxes.What does this mean? Well, suppose you’re given enough shares equivalent to $250,000 that vests monthly over two years. To keep this example simple, we’ll say each share is worth $1. At the end of year one, 1/2 of your grant has vested and therefore in the beginning, you’re expecting to pay ordinary taxes on $125,000 of income. However, suppose the fair market value of the shares have doubled in that year? Without filing an 83(b) exemption with the IRS (within 30 days of your grant), the IRS requires you pay the ordinary taxes for the equity you receive, at the time of grant, at their fair market value. This means, at the end of the first year, you are now paying the taxes on stock worth $2/share, not $1/share. It’s as though your stock grant has increased, although it has not. You are now paying a lot more taxes because the value of your shares has increased.

Filing an 83(b) exemption with the IRS within thirty (30) days of your grant of equity, however, gives you the option of paying your taxes at the fair market value at the time of grant, not the fair market value at the time of each vest (i.e. keeps the taxes on ordinary income at $250,000). The gamble is, will the value of your stock go up, or go down, over the vesting period?

Consult an expert before you sign

Each situation is very fact specific and complicated. It behooves you to consult with an accountant, tax adviser or CPA, before you accept equity and/or sign on the dotted-line.

Law 4 Small Business (L4SB). A little law now can save a lot later.