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Henderson Franklin’s legal team returns to Sanibel Harbour Resort & Spa on Friday, February 25, 2022 with a new twist. The main room will offer the firm’s most popular workshop, HR Law & Solutions.

New for 2022, attendees will have the option to attend breakout sessions focusing on niche corporate matters and contracts, family businesses, startups and how to make informed real estate decisions. Click here to download the brochure.

Topics and speakers

General Session #1, Lingering Effects of COVID on Florida Employers, presented by Scott Atwood, Esq.

From business shutdowns and PPP loans to vaccinations, COVID has presented unique challenges to Florida businesses. Henderson Franklin’s employment group chair Scott Atwood will address the multi-faceted employment issues that employers may face, including: current obligations over masks and mandatory vaccinations; how to deal with possible long-term disability claims and leave issues arising from COVID; increased union activity; and the pros and cons of a remote/hybrid workforce.

General Session #2, Saving a Buck can Cost you a Million. Update on Recent Employment Cases and Mistakes that Employers Keep Making, presented by Scott Atwood, Esq. and Robert Shearman, Esq.

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Continue Reading Registration is Open: Southwest Florida Legal Summit

new businessWhat if I were to tell you, you could be both an LLC and an S-corporation and still be considered one single business entity?

An S-corporation is not a state law entity designation, similar to a Florida corporation or a Florida limited liability company. However, an S-corporation is merely a federal income tax classification made on a specific Internal Revenue Service form (Form 2553). Thus, one can form a Florida limited liability company (“LLC”) and elect to be an S-corporation for federal income tax purposes with the Internal Revenue Service (“IRS”).

Who is eligible to make the election?

Generally, the entity wishing to make the election needs to be a domestic corporation or an LLC. However, certain types of businesses are ineligible to make the election, such as insurance companies or financial institutions. In addition, the entity must have eligible shareholders, meaning the owners of the entity must meet specific requirements of the Tax Code.

Who can be an eligible shareholder?

shareholderAn eligible shareholder can be an individual (other than non-resident alien), estates, certain trusts, certain qualified retirement trusts, or charitable organizations. More specifically:

  • So long as the individual is not a non-resident alien, individuals are eligible S-corporation shareholders. Individuals may co-own an S-corporation with other individuals, such as husband and wife, as joint tenants by the entirety.
  • If an individual shareholder declares bankruptcy, the bankruptcy estate is a permissible S-corporation shareholder. If an individual shareholder passes away, their estate is an eligible S-corporation shareholder, as well.
  • Testamentary Trusts. These trusts become effective upon the death of a shareholder and hence become eligible to be an S-corporation shareholder.
  • Voting Trusts. Shareholders may create these trusts to temporarily transfer their shares to the trustee to combine their voting power. Voting trusts are eligible to be S-corporation shareholders.
  • Qualified Subchapter S Trust (“QSST”). A QSST is an eligible S-Corporation shareholder if it meets specific rigid requirements.
  • Small Business Trust (“ESBT”). An ESBT is a trust for beneficiaries that are all eligible s-corporation shareholders that acquired their trust interest by lifetime gifts or upon the death of an owner. These are more flexible trusts than the QSST described above.

Coming back to the opening question of an LLC or an S-corporation, so long as the individuals forming the LLC are eligible shareholders described above, the LLC can make the election treated as an S-corporation.

When to make the election?

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Continue Reading Should I start my new business as an LLC or S-Corporation?

401KEmployers who sponsor retirement plans for their employees must periodically restate the plans for changes in applicable laws to maintain the plans’ favorable tax status. The Internal Revenue Service generally requires that plans be restated on a six-year cycle, the last of which concluded in 2016.

The current cycle is the third since the six-year cyclical program of plan restatements was implemented. Cycle 3 restatements of pre-approved defined contribution plans, including most 401(k) and profit sharing plans, must be adopted by no later than July 31, 2022.

The Appeal of Pre-Approved Retirement Plans

Pre-approved plans are retirement plans offered by a document provider (such as a financial institution or benefits practitioner) for adoption by employers. The plan document typically includes a variety of elective provisions from which an employer may choose and effectively customize the plan to best serve the needs of the organization and its employees.

Before making the plan document available for adoption by employers, the document provider will have obtained IRS approval of the plan as meeting the requirements applicable to tax-qualified retirement plans under the Internal Revenue Code.…

Continue Reading The retirement plan for your employees may need a fresh look – soon

Launching your own business is a huge decision, one not to take lightly. From developing your product or service and getting funding to taking measures to protect your business, entrepreneurs must do their homework. As a business and tax attorney, one question I often hear is:

What is the best way to set up a new business?”

While the answer varies depending on the goals of each client, an LLC is often chosen.

What is an LLC?

An LLC, or limited liability company, is a U.S. business structure that combines the simplicity, flexibility, and tax advantages of a partnership with the personal liability protection of a corporation. The owners of LLCs are called members. An LLC can have one or many members. Members can be individuals or other businesses, and there is no limit to the number of members an LLC can have. With an LLC structure, members’ personal assets are protected from the LLC’s creditors. LLCs are more cost effective and simpler to form than a corporation. This, in addition to the discussion below, has led to LLCs becoming the ‘go-to’ business structure to form.

Who should form an LLC?

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Continue Reading What is an LLC and why do I need one?

trade secretWhen many entrepreneurs think of trade secrets, they think of high-tech companies or large manufacturers. For example, software architecture and source code are generally protected using trade secrets. Another example of businesses that have many trade secrets is legacy manufacturers which need to protect how products are made, what products are made out of, etc. Famous examples of trade secrets from these industries range from Google’s® search algorithms to KFC’s® “11 secret herbs and spices.”

But all businesses – even the most “simple” – have trade secrets. At the very least, all businesses have customer lists, vendor lists, profitability/pricing information, etc. – with many businesses having much more. The best way to evaluate whether certain information might be a trade secret is to think about real-world business consequences. I often ask my clients,

If one of your best employees left for a competitor and took certain business information with them, would that be upsetting?”

If the answer is “yes,” then that information needs to be evaluated for potential trade secret protection. That can run the gamut from customer lists to the “secret sauce” that makes a business successful.

Whether your business is large or small, below are five important tools that can be used to protect trade secrets.

Legal Tools to Maintain Secrecy

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Continue Reading 5 Tools Small Businesses Can Use to Protect Their Trade Secrets

Wine GlassesOn May 13, 2021, Florida Governor Ron DeSantis signed into law Senate Bill 148, which allows restaurants or other alcohol beverage vendors to sell alcoholic drinks to-go.  No, this does not mean that Florida is an open container state; possession of an open alcoholic container in Florida is still illegal under Florida Statutes, section 316.1936 and 856.011. However, customers who want to order take-out from their favorite restaurant can now also bring home their favorite cocktail, providing the restaurant meets certain requirements.

The alcoholic drinks to-go initially started through one of DeSantis’s emergency orders as a way for struggling restaurants during the COVID-19 pandemic to increase their sales. “Alcoholic drinks to-go became an important source of revenue for restaurants that were trying to survive during the pandemic,” DeSantis noted. Throughout the pandemic, restaurants were some of Florida’s businesses that were most affected. Florida Representative Josie Tomkow stated, however, that the new law

allows for restaurants to continue to offer alcohol-to-go as an option. This pro-consumer, business-friendly bill will help support our restaurant industry and its tens of thousands of employees.”

Requirements

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Continue Reading I’ll Take it To-Go: New Florida Law Makes To-Go Alcohol Sales Permanent Effective July 1

You’re a business manager, or maybe even a business owner. You work hard: your work day rarely runs from only 9 to 5; your work week usually runs longer than Monday through Friday. The last thing you need is a subpoena: who wants to get dragged into court for someone else’s dispute?

But the business gods have different plans . . . .

Your office manager calls you to say a sheriff’s deputy just served your company with a subpoena and wants to do what needs to be done. As a savvy business manager or owner, you already know that a subpoena is a court paper requiring the recipient to appear or produce information, or both, so you’re already in a position to effectively address this situation.

First Things First

First, you thank your office manager for notifying you immediately (and congratulate yourself for hiring a stellar professional and providing good training). Second, you refer to your Subpoena Policy, which is your written game plan for this situation.…

Continue Reading Our Office Manager Received A Subpoena—What Should My Company Do Now?

Many employers are all too familiar with the experience of having to refund contributions made to the organization’s 401(k) plan by highly compensated employees to remedy the previous year’s failed actual deferral percentage (“ADP”) test. The ADP test is designed to ensure that the average deferral rates for highly and non-highly compensated employees are roughly equal. Thanks to the Setting Every Community Up for Retirement Enhancement Act (“SECURE Act”), the experience of refunding highly compensated employees’ deferrals in order to satisfy the ADP test will in many cases be consigned to history. The below addresses how the SECURE Act relaxes some of the rules affecting 401(k) plan testing.

Q: Can a 401(k) plan retroactively avoid ADP testing?

The year 2021 presents for the first time the opportunity to retroactively escape the prior year’s ADP test without regard to the extent by which contributions from highly compensated employees exceeded the average deferral percentage contributed by the organization’s non-highly compensated employees. Under the SECURE Act, it is now possible to adopt a safe harbor nonelective 401(k) feature that will exempt the plan from ADP testing with respect to the previous year. Unlike in the past, a notice to participants before the beginning of the year in which the safe harbor nonelective contribution applies is no longer required. As such, employers can now wait until the end of the year, or even longer, before deciding whether to make a safe harbor nonelective contribution for the year.

Q: How are safe harbor nonelective contributions similar to, or different from, safe harbor matching contributions?

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Continue Reading New 401k rules could end “refunded contributions”

Guest post by Madison Tanner, Esq.

It is the most wonderful time of the year! Bonus season. Jokes aside, it is the season of giving. We have all been through so much this year: a pandemic, a contentious election, and virtual meetings replacing human interaction. The challenges we faced in 2020 resulted in the closure of local restaurants, reduced hours at small boutiques, and limitation of leisurely activities outside of the home. Many of us (particularly the last minute shoppers like me) are fleeing to our favorite small businesses to purchase a gift certificate for a loved one while simultaneously supporting the “shop small” movement. Small businesses graciously save the (holi)day with their festive gift certificates and I-O-U services. Thanks to these establishments, we can purchase an experience for our loved ones ranging from a facial or massage to a meal at their ideal lunch spot. The begging question is: how long does one have to use that gift certificate? The answer: in Florida, it should not expire.

Florida Law

Florida Statute § 501.95 governs on the issue. The statute, beloved by the consumer and despised by the small business owner, was first enacted in 2007 in an effort to regulate trade and protect consumers. Pursuant to § 501.95(2)(a):

“a gift certificate purchased or credit memo issued in this state may not have an expiration date, expiration period, or any type of postsale charge or fee imposed on the gift certificate or credit memo….”

Exceptions to the Rule

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Continue Reading Small Businesses Beware and Consumers Rejoice: Gift Certificates Cannot Expire

The coronavirus has impacted more than an individual’s health and well-being. In the wake of this global pandemic, many businesses have been impacted — whether it be from an order from local or state government or because it has been directly hit with employees or customers who were diagnosed with COVID-19.

Businesses have had to grapple with the distinction between “essential” and “non-essential” and alter their budget to purchase PPE and other sanitary items. Projections for revenue for 2020 were obliterated in the process leaving business owners with difficult decisions in terms of whether it is worthwhile to remain open in a limited capacity, temporary closure, furloughs, layoffs, bankruptcy, or in some cases going out of business. The Payroll Protection Program instituted by the Federal Government has provided a temporary salve, however, in many cases business losses continue in big and small ways.

Business Interruption Insurance

The natural offshoot of this business and economic disruption for businesses is whether their business insurance coverage, for which its owners paid premiums month in and month out, ‘owe’ for business income lost, and additional expenses, due to a viral pandemic such as to COVID-19.

Multiple insurers are facing federal class action lawsuits for denying business interruption claims. Further, claims by business owners for business disruption losses have increased exponentially. This post endeavors to examine some of the issues that will be at the forefront for business owners, and carriers, as it pertains to COVID-19.

Coverage

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Continue Reading What You Need to Know About COVID-19 and Business Interruption Insurance Coverage