Chances are that if you operate a business you are either a director of the company, or a shareholder, or both. There are thousands of small and medium sized business in New Zealand that operate through companies.
When it is just you who is the director and shareholder, its relatively straightforward because you're going to make the decisions yourself. Good and bad. You answer to yourself, but really you probably answer to the bank and the landlord too. You probably had to give personal guarantees to them before they'd sign anything up with your company.
Overall though, its quite simple, and you know where you stand. You know where the buck stops. The bank and the landlord do too.
Where it becomes more complicated is where there are more shareholders. And where there are more directors. In other words, the business is a bit bigger than a one man job. There might be a number of shareholders and they might not all know each other. Maybe you've got some directors who have been with the company since they started it years ago. Its their baby. But now its grown, and maybe there was a decision one day to bring in an independent director or two. An outside perspective. Its even possible that these directors don't even have shares in the company.
GST and Property Transactions
There is often confusion about how to deal with GST on a property transaction. Here is a general outline of the position but beware that you should get specific legal and tax advice in these situations.
"Sort of" getting it right on the Agreement for Sale and Purchase is not really an option. That's because if its not right its wrong, and the implications for the Vendor and Purchaser can be huge, depending on how wrong the agreement is.
"Sort of" getting it right on the Agreement for Sale and Purchase is not really an option. That's because if its not right its wrong, and the implications for the Vendor and Purchaser can be huge, depending on how wrong the agreement is.
Will you or Will you not
People tell me that lawyers are the worst. We tell everyone that they should all have a Will, but half of us don't have one ourselves.
Well let me tell you this: I've got one.
Let me tell you something else: I've had people in my office who've been going to do a Will for ten years and never got around to it. Then suddenly something triggers them, they come in, they get it done, and you know what? They walk out the door as if they've just had a huge weight lifted off their shoulders.
Well let me tell you this: I've got one.
Let me tell you something else: I've had people in my office who've been going to do a Will for ten years and never got around to it. Then suddenly something triggers them, they come in, they get it done, and you know what? They walk out the door as if they've just had a huge weight lifted off their shoulders.
What is that business worth?
Putting a price tag on a business is not an exact science. But you can leave a lot of money on the table if you don't get some advice about what it might be worth.
I'd advise clients to seek valuation advice in the following situations at least:
1. If you are thinking about buying a business;
2. If you are thinking about selling your business;
3. If you have a new shareholder coming on board and need to decide what that new shareholder should pay coming in;
4. If you are restructuring and maybe transferring shares from one entity to another, such as to your Trust;
5. If things have gone bad. This could be where the shareholders are at war and maybe one is wanting to buy the other out;
6. If you and your partner have decided to separate. The shares may often be relationship property.
I'd advise clients to seek valuation advice in the following situations at least:
1. If you are thinking about buying a business;
2. If you are thinking about selling your business;
3. If you have a new shareholder coming on board and need to decide what that new shareholder should pay coming in;
4. If you are restructuring and maybe transferring shares from one entity to another, such as to your Trust;
5. If things have gone bad. This could be where the shareholders are at war and maybe one is wanting to buy the other out;
6. If you and your partner have decided to separate. The shares may often be relationship property.
You Guaranteed What!
There's a good reason why Bank's say you MUST see a lawyer before you sign a guarantee.
And what might that be?
Simple. If the punter they lend money to doesn't front up then they are coming after you. Make no bones about it.
So we'll tell you all the bad things about that guarantee, and then you'll probably sign it anyway. Because if you don't - no money.
And what might that be?
Simple. If the punter they lend money to doesn't front up then they are coming after you. Make no bones about it.
So we'll tell you all the bad things about that guarantee, and then you'll probably sign it anyway. Because if you don't - no money.
How smart is Intellectual Property
Intellectual property. Even the words themselves sound kind of smart. Clever.
And true, intellectual property can be the magic. "IP" its called. The ideas and the concepts that you dreamed up, and that set your business apart from the rest. Thats what it is - the brand names and trade marks, the new inventions and systems you've developed, the different way of doing business. The product that nobody has seen before.
But IP is also your database, the one-off documents that you've drafted, your website, linkedIn and facebook pages, even the name your business goes by. All very smart indeed, and worth protecting because they're yours. Nobody elses. Yours. And they add value to your business.
So why is it that some otherwise very switched on people in business risk it all by not protecting their intellectual property?
And true, intellectual property can be the magic. "IP" its called. The ideas and the concepts that you dreamed up, and that set your business apart from the rest. Thats what it is - the brand names and trade marks, the new inventions and systems you've developed, the different way of doing business. The product that nobody has seen before.
But IP is also your database, the one-off documents that you've drafted, your website, linkedIn and facebook pages, even the name your business goes by. All very smart indeed, and worth protecting because they're yours. Nobody elses. Yours. And they add value to your business.
So why is it that some otherwise very switched on people in business risk it all by not protecting their intellectual property?
Who is liable - company or director?
"We operate through a company so my personal assets are safe, right?" The answer is "it depends".
We're talking about a limited liability company. That is the common understanding. That the liability of the company is limited to the assets of the company. Which is why so many people think its a good idea to operate their business through a company, and why most large businesses operate through companies.
It all makes sense so far. I mean, why would you put all your assets at risk when you can operate through a separate legal entity, and then if something goes wrong it'll all be okay. They'd have to chase the company, not you.
The problem with all of this is that, yes, the liability of the company is limited to the assets of the company. But there are some fairly major asterixes to throw in at this stage. They come particularly under the guise of personal guarantees and director's duties.
We're talking about a limited liability company. That is the common understanding. That the liability of the company is limited to the assets of the company. Which is why so many people think its a good idea to operate their business through a company, and why most large businesses operate through companies.
It all makes sense so far. I mean, why would you put all your assets at risk when you can operate through a separate legal entity, and then if something goes wrong it'll all be okay. They'd have to chase the company, not you.
The problem with all of this is that, yes, the liability of the company is limited to the assets of the company. But there are some fairly major asterixes to throw in at this stage. They come particularly under the guise of personal guarantees and director's duties.
Do-It-Yourself Dispute Resolution - Good Luck!
There is something to be said for saving money. It always feels good, even if its only a few dollars here and there.
I guess that is the motivation for people trying to do things themselves instead of hiring a professional - that is, someone who does it all the time. I was guilty of that with the tiles on my verandah at home. I laid them and nearly broke my back in the process. I never wanted to look at another tile in my life by the time I finished. But I thought I did a pretty good job.
I guess that is the motivation for people trying to do things themselves instead of hiring a professional - that is, someone who does it all the time. I was guilty of that with the tiles on my verandah at home. I laid them and nearly broke my back in the process. I never wanted to look at another tile in my life by the time I finished. But I thought I did a pretty good job.
Trusts - massive change ahead
Nobody knows how many trusts there are in New Zealand. What I do know is this:
Almost every time I act for someone buying or selling a property or a business, the question comes up: "Should we use the trust for this?" Or, if they don't already have one: "Should we form a trust for this?"
Almost every time I act for someone buying or selling a property or a business, the question comes up: "Should we use the trust for this?" Or, if they don't already have one: "Should we form a trust for this?"
"Distressed Property" and the Mortgagee's Power of Sale
There have been a number of instances of borrowers suffering from what I call a “distressed property” in recent times as a result of the recession. The “distressed property” in many cases is not necessarily the family home. More often than not it is a property purchased as an investment, often immediately before the recession began.
Typically the market value of the property has eroded significantly since the date of purchase, sometimes to the point where the borrower's equity in the property is negative. However, for a variety of reasons, the borrower has not sold the property, or not been able to sell.
Typically the market value of the property has eroded significantly since the date of purchase, sometimes to the point where the borrower's equity in the property is negative. However, for a variety of reasons, the borrower has not sold the property, or not been able to sell.
Subscribe to:
Posts (Atom)