Tag Archives: law

J is for: Joint Venture

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It’s that time in the alphabet, MyCorp blog readers- time for some ‘J!’

And today’s letter J is brought to you by Joint Ventures.

A joint venture is a firm formed to accomplish specific objectives with a partnership; a temporary arrangement between two or more firms. They’re great as a risk reduction tool when entering a new-market and for pooling resources for large projects.

All those involved in a joint venture enter with a contract or agreement that specifies mutual responsibilities and goals. In the contract the parties should be specific about the intention behind the joint venture as well as mark out limitations.

In a JV the parties have a mutual right to control the enterprise, a right to share the profits, and a duty to share in any losses incurred. Those involved owe a standard of care to the other members and have the duty to act in good faith in matters that concern the common interest of the enterprise.

Joint ventures can end at a time specified in the contract, upon the accomplishment of the JV’s purpose, if there is a death of an active member, or if a court decides that serious disagreements between members make the continuation impractical.

So if you want to dive into a large project but don’t want to go in alone or just think it would be better tackled with more heads, look into a joint venture!

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Great Advice from Terrible Lawyers

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Is there anything that television can’t teach us? Well… yeah there is plenty but let’s focus on the positives. Lawyers have been the butt of television jokes for years – the stereotype of a sleazy, underhanded fellow in a cheap suit is alive and well on the tube.

Despite their lack of ethics and, in some cases, formal training a few of their key soundbites can instill a life-long lesson in those willing to listen. And the MyCorp Social Media team is always willing to listen to TV.

So, whether you’re a budding entrepreneur, a mid-level manager, a prisoner to your cubicle, or something else entirely, here are a few good tips from four bad lawyers.

Lionel Hutz

Can you imagine a world without lawyers?

When one of Springfield’s favorite small business owners, Moe Syzlak, steals a cocktail that Homer had invented and is suddenly flushed with success, Homer is left wondering what possible recourse is left open to him. So Homer pays a visit to his lawyer Lionel Hutz, who unfortunately gives him a bit of bad news.

Marge: So, Mr. Hutz, does my husband have a case?
Hutz: I’m sorry, Mrs. Simpson, but you can’t copyright a drink.
Homer: [whines] Oh!
Hutz: This all goes back to the Frank Wallbanger case of ’78. How about that! I looked something up! These books behind me don’t just make the office look good, they’re filled with useful legal tidbits just like that!

He didn’t know something, and used the resources available to him to find an answer! Amazing, right? While there is nothing wrong with asking for help, there are plenty of people who are afraid to do any research themselves. You should always try and educate yourself on matters of importance, even if you are going to seek out a professional, because it puts you in a better position to ask the right questions. So expand your knowledge, just like good old Mr. Hutz.

Richard Fish… from Ally McBeal (in case you don’t remember that one)

We felt this would be more useful than an actual picture of Richard Fish

Richard Fish was a bit of a standout character because, in true ’90s fashion, he said things with no other purpose than to shock and awe the audience. While people remembered him, and he apparently found some success in the field of law, it is hard to understand how he possibly did so well. In one of his more poignant moments, he goes into what drew him to law:

Fish: “I didn’t become a lawyer because I like the law. The law sucks. It’s boring. But it can also be used as a weapon. You want to bankrupt somebody, cost him everything he’s worked for, make his wife leave him, even cause his kids to cry? We can do that.”

A little sociopathic, sure, but what is important is that he found joy in his work, even if he was never really attracted to it in the first place. Finding that bit of motivation helps a job from becoming stale and tedious. That little nugget may not be obvious, but it is worth unearthing.

Saul Goodman

We'd buy a used car from him.

A lawyer, a criminal, a criminal-lawyer. In the series Breaking Bad, Saul is actually a fairly competent lawyer, he’s just a sleazy person. But it’s from that sleaziness that his prowess in court shines through, as he explains:

Goodman: “If you’re committed enough, you can make any story work. I once told a woman I was Kevin Costner, and it worked because I believed it.”

‘Believe in yourself’ is an ancient mantra that teachers and parents have chucked at us for years. It sort of loses its meaning after a while, but there is a lot of wisdom behind it. When you hold yourself in a certain way, exude a certain mood, people pick up on it. Be confident in yourself and what you do, or risk losing the confidence of others.

Barry Zuckerkorn

He's very good!

Barry Zuckerkorn is a bad lawyer, full stop. There really is no mincing words about the man’s talent. But he does show  some common sense in Arrested Development‘s first season:

Barry: “Sorry, sorry, sorry I’m so late. I had another hearing. Here’s the good news: I think I’m going to get off, huh? I have a good lawyer.”

If there is one piece of advice we can leave you with, it’s know the name of a good lawyer. They are a lot like insurance – you don’t want to be caught in a situation where you need one, but don’t have one.

Be prepared, find joy in your work, believe in yourself, and know the name of a great lawyer. Four great pieces of advice, from four not so great attorneys.

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LLC 101

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If you’ve been following our blog for the past couple of Fridays, you know that we’re covering four basic tax tips to consider when forming a new entity. If you missed the first two, read up on the C-Corporation and S-Corporation.

The four considerations we’ve been covering are:

  1. Pass through of gains
  2. Pass through of losses
  3. Transfer of assets to the entity, and
  4. Transfer of assets from the entity

Today we will cover the LLC. Before we get into the four considerations, it is important to make one distinction: the difference between an entity’s legal treatment and its tax treatment. An LLC is a type of limited liability entity (hence, Limited Liability Company) that allows the owners protection from legal liabilities. (This differs from a partnership, which is a contractual relationship between the parties, and from a Corporation, which is a creation of a state’s corporate law.) An LLC can elect its tax treatment and be taxed as if it were a Corporation or as Partnership. The distinction is made clearer below.

1. Pass through of gains

The default treatment of an LLC is to be treated as a Partnership. Any gains had by the entity will automatically be passed through to a shareholder’s personal income statement. That means that the entity doesn’t pay income taxes, only shareholders. This is similar to the treatment of the S-Corp, but with fewer restrictions. A member of an LLC or a Partnership can contract with the other members as to how the gains are allocated and distributed to the shareholders.

2. Pass through of losses

Again, the default treatment of an LLC is to be treated like that of a Partnership. Any losses will pass through to a shareholder’s personal income statement. Losses can be allocated according to the terms of the operating agreement.

3. Transfer of assets to the entity

An LLC differs from both a C-Corp and S-Corp in this respect. A transfer of assets to an LLC is not a taxable event, regardless of the amount of control owned by the shareholder transferring the assets. This could potentially make starting your new company less expensive than with other entity types, especially when there are multiple shareholders.

4. Transfer of assets from the entity to shareholders

When an LLC decides to transfer assets to a shareholder, this event is not usually taxable. Either upon distribution or liquidation a shareholder is responsible for the taxes, if any have even arisen.

Overall, an LLC is a great tax efficient way to get your company started. In most cases there will not be a tax on transferring assets to and from the company. There is also no double taxation of profits, thus saving the shareholders money. Additionally, if there is a loss, a shareholder may benefit from a tax reduction.

Since there are different on going requirements for an LLC than for a Corporation, start here to consider any additional steps you may need to take.

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