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Eric Perkins to Appear at the Real Estate Investment Securities Association (REISA) Annual Conference in Las Vegas

Richmond business and Regulation D compliance attorney Eric Perkins will be a panelist for a program titled “Emerging Structures in Private Placements” at the Real Estate Investment Securities Association (REISA) Annual Conference in Las Vegas, Nevada on September 14, 2014.  The session will focus on new developments in private placement offerings, including the new Rule 506(c) exemption and related regulatory issues.

Converting Your Small Business from Sole Proprietorship to LLC Easier Than You Might Think

August 10, 2014–Millions of small businesses are currently operating with no formal business structure in place–exposing the owner to unlimited personal liability and limiting future business growth and marketability in the process.  While sole proprietorships are very common and offer a tremendous level of simplicity, when one takes a holistic view and long-term approach to maximizing the value of a business enterprise, one is hard pressed to question the wisdom of converting to a business entity such as a limited liability company (LLC).  By conducting business through an LLC, an entrepreneur can reduce risk of personal liability, maximize asset protection, and come across to suppliers, lenders, potential joint venture partners, investors, and customers with a greater sense of professionalism.

The conversion process is simple, involves little paperwork, and in most cases will have not be a taxable event to the owner.  Perkins Law is pleased to offer a flat fee package for LLC startups (including sole proprietorship conversions), so if you are a Virginia business owner operating as a sole proprietor and looking to reduce your risk and take your business to the next level, reach out to us for a free brainstorming session.

 

Last Week’s Franchising Workshop a Success

August 10, 2014–The Perkins Law team enjoyed meeting a great group of entrepreneurs on Wednesday and having an interactive dialogue on all things franchising. Here’s a snapshot of what we discussed:

* Recent statistics from the franchising industry (did you know there are over 5,000 franchised businesses operating in the Richmond area?)

* Common sources of franchisee failure.

* Helpful local resources for assistance during the franchise selection, investigation, and startup process.

* Key provisions of the Franchise Disclosure Document and what to really look for.

*How federal and state laws regulate franchising and why.

* How the franchise recruiting and sales process works.

* Personality traits of successful franchisees.

These and other topics, including questions from the audience, were covered. The next Perkins Law franchising workshop will be a half-day Prospective Franchisee Boot Camp on Friday, October 24, 2014 from 8:30 – 11:30 am. Contact us for more details or to sign up.

 

Social Media Buzz Helps Bring Duck Donuts Franchise to RVA

July 9, 2014–The RVA franchise community will welcome a new franchise system to town this fall with the projected opening of a Duck Donuts location at Willow Lawn.  According to a recent article in the Richmond Times Dispatch, Keith Exton is the franchise owner of this new location, which will be the seventh donut shop for the relatively young Duck Donuts franchise that got its start in the Outer Banks, NC area and in recent years has branched into Virginia.  The franchisor specifically targeted Richmond because of “interest that’s been expressed by our consumers on social media and through our website.”

Query how they will fare in the increasingly crowded RVA donut market that includes Krispy Kreme, Sugar Shack, Country Style Doughnuts, Dixie Donuts, and multiple Dunkin Donuts franchised locations throughout the area.  Best of luck and welcome to RVA.

IRS Form 1023-EZ Now Available for Small Nonprofits

The IRS has released a new, streamlined Form 1023-EZ that offers the promise of a more efficient process for small organizations to apply for recognition of 501(c)(3) exempt status.  Only organizations that can answer “no” to a series of questions on a IRS worksheet are eligible to use the new Form 1023-EZ, but once eligibility is confirmed, the organization should enjoy a more efficient path to receiving an IRS determination letter.  The Form 1023-EZ is filed electronically and requires a lower user fee of $400 ( as compared to a user fee of either $400 or $850 associated with the regular Form 1023).  Visit the IRS website at http://www.irs.gov/uac/About-Form-1023EZ   or contact us for more information.

The Perkins Law Team Conquers Virginia Tough Mudder and Raises Funds for Charity

June 14, 2014–The Perkins Law team successfully completed the 10.1-mile, 20-obstacle Virginia Tough Mudder course on Saturday in just under four hours.  A solid six months of arduous training (including my first ever visit to an orthopedic specialist) and team building culminated in a memorable afternoon at Meadow Event Park in Doswell featuring picture-perfect weather and over 10,000 other participants all working together toward a common goal of reaching the finish line and supporting The Wounded Warrior Project in the process.

If you are a business owner or executive, I would recommend you consider fielding a team for a future Tough Mudder event.  While it is a physically challenging event, you don’t have to be a professional athlete to complete the race and have a great time, and it will be a rewarding experience you and your colleagues will not soon forget.

Kudos to Perkins Law office manager Keri Fagan for first suggesting the idea back in September 2013 and also to Fitness RVAlution conditioning coach Brooke Lipscombe for getting us physically and mentally prepared for the big event.  A great idea followed by planning, perseverance, teamwork, and execution–a recipe for success either in the office or in the mud!

PS–Perhaps best of all, thanks to the generous support of family, friends, and colleagues from the RVA business community, we collectively contributed over $1,000 to benefit The Wounded Warrior Project.  Thanks everyone!

Highlights from Today’s Nonprofit Workshop for CNE

June 12, 2014:  Thanks to the folks at the Center for Nonprofit Excellence in Charlottesville for the invitation to come speak today on the topic of reducing risk of fraud for nonprofits.  A great audience of Virginia nonprofit executives and board members turned out for this month’s edition of CNE’s brown bag lunch workshop series.  We tackled the demoralizing topics of fraud and embezzlement and to how best position an organization to reduce the risk of being victimized (and how to respond if financial wrongdoing is suspected).

The powerpoint presentation will soon be posted on Slideshare, so take a look there or contact me directly if you’d like a copy.

We covered the sad realities that:

  • nonprofits across America loses $40 billion each year to fraud
  • the perpetrators are typically “insiders” (employees or volunteers in positions of leadership and/or trust within the organization)
  • it can take a long time to discover a fraudulent scheme and, when discovered, it can be very expensive to investigate and address the problem
  • a variety of direct and indirect consequences to a nonprofit organization–all negative and potentially devastating–can result from an incident involving fraud
  • there’s no guaranteed strategy or bullet proof method of prevention, but there are steps a nonprofit organization can take to reduce the risk of being victimized and better position itself to avoid liability

Some of the suggested steps relate to:  education and awareness, oversight and internal controls, having an engaged and proactive group of officers and directors, and insurance coverage.

The latest edition of the Perkins Law “Virginia Nonprofit Q & A Update” was released earlier this week, email me if you’d like a copy or be added to the distribution list.  Next month’s issue will discuss the recent case involving a Virginia-based 501(c)(3) gymnastics booster club–how it lost its exempt status and what similarly situated organizations can do to avoid a similar fate.

Upcoming Seminar: The Franchising Path to Business Ownership

Join Perkins Law for a 60 minute introduction to franchising for entrepreneurs and others exploring options for business ownership on August 6, 2014. For more details on this event and for advanced registration please click the following link: The Franchising Path to Business Ownership

Kudos to Rep. Scott Garrett (R-NJ) for Sponsoring Private Placement Improvement Act of 2014

The Private Placement Improvement Act of 2014 (H.R 4570) is working its way through Capitol Hill.  How far this proposed legislation will make it is uncertain, but it represents a solid effort to maximize the value of the Regulation D exemptions for small business issuers attempting to raise capital.  For practical purposes, the Act also represents a defensive effort against proposed SEC rules that would add additional compliance burdens and expense for Reg. D issuers.

To quickly summarize a few key points of the Act, it would:

  • Prohibit the SEC from requiring an issuer to file Form D prior to the date of first sale in the offering.
  • Prohibit the SEC from making the filing of Form D a condition of the Rule 506 exemption.
  • Prohibit (with some narrow exceptions) the SEC from requiring an issuer relying on a Rule 506(c) exemption (general solicitation and advertising permitted) to submit its advertising materials to the SEC.

Reasonable people can and will disagree over where to strike the balance between investor protection and facilitating capital formation.  Time will tell where the SEC and Congress strike a balance in the context of Regulation D private offerings.

Choosing a Registered Agent for Your Virginia LLC

When an entrepreneur goes to form a Virginia limited liability company (or corporation), one of the three or four required bits of information for the Articles of Organization is a designation of a registered agent of the LLC. The duties of a registered agent are purely ministerial–to serve as an official point of contact for the LLC. Can anyone serve as registered agent for your LLC? No, not in Virginia. The good news is there are several options: (i) an individual owner or manager of the LLC who is a resident of Virginia, (ii) an attorney licensed to practice law in Virginia, or (iii) a company that provides registered agent services in Virginia.

Options (ii) and (iii) typically will cost in the vicinity of $75-$350 per year, depending upon the firm and whether any additional services are included. So if an entrepreneur is particularly cost conscious, then it is common for him or her to serve as registered agent of the LLC.

What can go wrong with that approach? Well, there are several reasons why a business owner might not want to serve as registered agent. First, SCC correspondence (and correspondence from other state government agencies) directed to an LLC is typically sent to the registered agent. This would include SCC annual fee assessments. The risk is that a business owner lets a little detail such as opening mail and paying the annual fee slip through the cracks as a low priority item. If the annual fee is not paid, then after a limited grace period, the SCC involuntarily terminates the existence of the LLC. The bad news is that such an occurrence could have several negative consequences to the business owner (loss of limited liability protection, falling into default under important business contracts). The good news is that a terminated LLC can get reinstated through a relatively simple filing if the problem is addressed within five years (other states are not so forgiving…one of many reasons why Virginia is such a great place to do business). Second, in the unfortunate event that an LLC gets sued, the sheriff (or process server) typically serves process on the registered agent of the LLC. For some, the prospect of having the sheriff show up at their house or place of business would be embarrassing and stress-inducing.

The Perkins Law flat fee LLC startup package includes registered agent service for the first year of the LLC’s life. Email or call anytime to chat about your Virginia LLC questions.