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A Legal Refresher for Independent Practitioners

By Lauren Leetun, APR posted 07-19-2017 05:42 AM

  
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Heard of piercing the corporate veil? If you haven’t, your business may not be as legally secure as you think. Our very own Executive Committee member Kyle Niederpruem organized an event hosted by the Indy Independent Practitioners Alliance featuring Kroger Gardis & Regas, LLP to talk about legal issues for both solo practitioners and smaller PR consulting firms. As an FYI, it is always recommended that you check your own state and local ordinances for legal requirements that may affect your specific business – but attorneys Steve Runyan and Ted Nolting provided some good general guidelines to consider.

MINORITY CONTRACT STATUS

If you’ve ever considered seeking W/MBE status in your state, you probably already know that most resources vary from state to state. A good place to start, though, is http://www.mwbe.com/cert/certification.htm. The requirements for qualification also vary depending upon your location, so it’s best to do a little digging into your own state agency that manages certifications. Some states require that all documentation be provided in hard copy and that you must be present for an in-person and on-site interview. Some states also require that new business owners prove their “prospect for success.” Timelines for the process, approvals, and reapplication also vary by state.

CORPORATE LIABILITY

If you’re muddling corporate and personal business – stop. You need to separate your accounts and make sure only business income and payments come from your business account. If assets are co-mingled, then it’s possible that any litigation could result in making your personal assets vulnerable. You should also have current liability insurance for your business – no matter if you’re organized as an LLC, sole proprietor, S Corp. or C Corp. Another overlooked protection for most smaller businesses is filing an assumed business name document with the appropriate state authority. And even if you’re the sole shareholder of your business, you should have minutes and annual meetings recorded and in your corporate file.

HOME OFFICE

If you work from home, many advisors – both financial and legal – will tell you not to bother with a deduction for a working home office (unless you truly have a separate area of your home often with a separate entrance or parking for clients). Many feel it’s a potential red flag for a tax audit. But if you do claim it annually, just be clear about the deduction and make sure you follow the same format from year to year.

BIDDING ON LARGER CONTRACTS WITH COLLEAGUES

If you have expertise in one area, say video production, but another colleague knows how to build websites – you may want to join forces to bid on a larger professional services contract. If you do, pull together a joint venture agreement. The agreement will set out the rights and obligations of each party and confirm separation of the entities.

RECORDS AND UPDATES

There’s no particular reason to update corporate bylaws annually unless you have ownership changes. Contracts offered to clients should probably be updated every two or three years to check with the laws in your respective state and where you are incorporated. Much like a periodic review with your insurance, a review of contracts and corporate governing documents with counsel can ensure changes in the legal landscape are addressed. LLCs in Indiana are not required to have an operating agreement, but it’s good to have it in place for your business to plan for future growth even if you’re a small business. Establish a retention policy for client documents (as well as your own) and stick to the schedule.

VALUE OF YOUR BUSINESS

If you plan to sell your business down the road, you’ll need to know your fair market value. With professional services, this can be a challenge as often your fair market value is based on your reputation and your relationships (or client roster). One thing to know before you make that assessment is where you stand with all of your contracts – or they fixed terms or do all have flexible outs? Always better to have fixed terms at valuation time as the income can be predicted. Confidentiality and non-disclosure are fairly common now, so understand what is built into your client contracts.

As always, you can find a lot of information online – but it’s always wise to consult with an attorney in your area to check on any business matter you may be overlooking that is specific to changes in state law or local ordinances. An annual legal refresher is probably a good idea and won’t break the bank.

Special thanks to Ted W. Nolting at Kroger Gardis & Regas, LLP for providing his insights to the practitioners who attended the Indy event. For any specific questions related to the content within this blog, please feel free to contact him at tnolting@kgrlaw.com.



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