Michigan Business Lawyer Blog

Generally, if you purchase equipment for your business you have to depreciate the cost of that equipment little by little over multiple years. However, for certain equipment purchases, IRS Code Section 179 provides a way for businesses to deduct the entire cost of an equipment purchase in one year instead of over a number of years.

Quite simply, Section 179 allows businesses to simply expense certain equipment purchases instead of depreciating them. In practical terms, a Section 179 deduction means that a business gets to claim all of the money paid for the purchased equipment in the year the equipment is purchased. If the equipment purchase was depreciated, that benefit would have to be spread out over a number of years.

There are a number of requirements for a business to use Section 179:

1. A business needs to have taxable income of at least the amount that it will expense under Section 179. This taxable income can come from a variety of sources.

2. A business can either expense items under Section 179 or depreciate those items over multiple years, but not both.

3. Any item that is expensed under Section 179 must be used for more than 50% for business purposes. If it is used less than 100% for business, only the percentage used for business purposes can be claimed.

4. Any equipment that is expensed under Section 179 should still be used 50% or more for business purposes for the same number of years that it would have otherwise been depreciated.

There are a number of items that Section 179 does not apply to such as real estate, inventory items, property purchased from a relative, heating and air conditioning units, and items already owned in a previous year that are being converted to a business use.

If you own a Michigan business and have any questions about taking a Section 179 deduction, you should contact an accountant or a Michigan business lawyer for more information.

Posted by Michael J. Hamblin | Permalink | Email This Post

Posted In: Tax Issues

Bookmark:

Michigan's state government provides some very good online resources and tools for businesses. One of these tools is a web page for filing annual reports for Michigan corporations and LLC's. As long as the corporation or limited liability company is in good standing, current and prior year annual reports may be filed online.

The deadline for submitting annual reports for Michigan LLC's is February 15. However, there is no late fee if the annual report is filed late, and it can still be filed online so long as the LLC is classified by the state as being in good standing. The deadline for submitting annual reports for Michigan corporations is May 15. There is a late fee for late filings that ranges from $10 to $50 depending on when the late filing is made.

It is important to remember that when filing annual reports only required information should be included on the report statement. If non-required information is included on the report, it could delay the filing of the annual report. Finally, a business that files its annual report online must pay the required fee using a valid Visa or MasterCard.

The state maintains a very helpful web page that explains the online filing service and has answers to commonly asked questions.

Posted by Michael J. Hamblin | Permalink | Email This Post

Posted In: Corporations , Limited Liability Companies

Bookmark:

Statistics from the United States Equal Employment Opportunity Commission (EEOC) indicate that workplace religious discrimination and accommodation claims have increased by nearly 70% in the last decade. As one might imagine, this has resulted in greater monetary penalties against companies that do not properly handle religious discrimination and accommodation issues in their facilities.

Religious discrimination by employers is prohibited by both by federal law (Title VII of the Civil Rights Act) and state law (Michigan's Elliott-Larsen Civil Rights Act). These laws require covered employers to accommodate their employees' religious practices so long as such an accommodation does not impose an "undue hardship" on the employer. Some examples of religious practices that can commonly arise in the workplace include requests for days off to attend religious services or church related activities, dress and grooming issues, and expressions of faith to co-workers and customers.

When an employee requests a religious accommodation in the workplace, an employer must engage in a process to try to find a "reasonable" accommodation. Although that may seem relatively straightforward, it is often difficult to determine just how reasonable an offered accommodation is. Each case must be carefully analyzed based on the particular facts and circumstances of that case.

When faced with these kinds of issues, it is imperative that Michigan businesses consult with a Michigan business lawyer who has experience in employment law cases. Leaving these issues to chance could result in a very negative legal outcome as well as extensive damage to a business's reputation in the community.

Posted by Michael J. Hamblin | Permalink | Email This Post

Posted In: Employment Law

Bookmark:

The Federal Trade Commission (FTC) approved a new Franchise Rule on January 22, 2007. The new Rule is in the form of an amendment to the old FTC Franchise Rule.

The amendment to the old FTC Franchise Rule modifies what franchisors must disclose in their franchise disclosure documents (formerly known as Uniform Franchise Offering Circulars (UFOC's)), as well as the timing requirements for making the required disclosures. The new Franchise Rule was effective on a voluntary basis on July 1, 2007. The new Franchise Rule will become effective on July 1, 2008.

The new Franchise Rule contains a number of innovative modifications to the old Franchise Rule. These modifications include the elimination of the "first personal meeting requirement", the elimination of the requirement to separately furnish a completed franchise agreement, and the addition of an allowance for electronic delivery and execution of the franchise disclosure document and agreement. There are also changes to requirements concerning financial disclosures, disclosure of franchisee associations, disclosure of confidentiality clauses and agreements, as well as a number of other changes.

Franchises can be a very complicated area of business law. Any Michigan business or resident who is involved in a franchise transaction should seek the counsel of an experienced Michigan franchise lawyer to help them through the complexities and potential pitfalls of franchise law.

Posted by Michael J. Hamblin | Permalink | Email This Post

Posted In: Franchise Law

Bookmark:

The basic concept of a corporate merger is relatively straightforward. Put simply, when companies are merged, one company is folded into another company. The surviving company takes on all of the assets, liabilities, powers, rights, and obligations of the company that is merged into the surviving company.

To effect a merger, the shareholders and directors of each company to the merger must pass a merger plan under Section 701 of the Michigan Corporation Act. The merger plan must contain the primary terms of the merger. The kind of merger transaction that is used depends on which company will be the surviving entity when the merger is completed. Merger transactions include forward mergers, reverse mergers, forward triangular mergers and reverse triangular mergers.

If a merger transaction is properly structured, it will be treated by the IRS as a tax-free exchange pursuant to IRS Code Section 368.

Merger transactions must be adequately and properly documented. This documentation includes an agreement and plan of merger and a certificate of merger that must be filed with the state authorities. There may be other types of documents such as letters of intent, confidentiality agreements, bills of sale, legal opinions, and employment/consulting agreements.

Completing the legal requirements for a merger transaction requires specialized legal knowledge and skills. Any Michigan business taking part in a merger transaction should have the assistance of a Michigan business attorney to provide the necessary guidance to successfully complete the merger.

Posted by Michael J. Hamblin | Permalink | Email This Post

Posted In: Sale/Purchase of a Business

Bookmark:

If your business has any employees, you almost certainly have obtained the social security numbers of those individuals. Under Michigan's Social Security Number Privacy Act, you must take all reasonable steps to protect those social security numbers. The first thing you must do is put in place a social security number privacy policy. This policy must be placed in your employee handbook.

To comply with the law, your social security security number privacy policy must:

1. Assure the confidentiality of the social security numbers in your possession.

2. Prohibit the illegal disclosure of social security numbers.

3. Limit access to the social security numbers.

4. Provide a method for disposing of papers that contain social security numbers.

5. Establish penalties for violation of the policy.

There are a number of other important provisions in the Michigan Social Security Number Privacy Act. To help ensure compliance with this important law, you should contact a Michigan business attorney for assistance.

Posted by Michael J. Hamblin | Permalink | Email This Post

Posted In: General Topics

Bookmark:

Starting a new business is exciting. In addition to the fun of being involved with a business start-up, there are important and often difficult decisions to be made. These initial decisions can have a significant impact on the future success and growth of a new business.

There are a number of important considerations that a lawyer can help you focus on:

1. Choosing the correct business entity for your business (i.e., corporation, LLC, etc.).

2. Analyzing important tax issues.

3. Obtaining the proper registrations, licenses, and permits.

4. Proper negotiation and execution of important contracts and agreements.

5. Helping you comply with the appropriate procedures to raise capital to fund your business.

6. Helping you comply with laws and regulations that may govern your particular business.

7. Establishing beneficial and appropriate employment policies and agreements.

8. Protecting you from personal liability for your business's debts and obligations.

Many entrepreneurs don't realize the importance of getting good legal counsel in the initial stages of their business formation to help them with these initial decisions. Hiring a lawyer in the beginning stages of a business will be money well spent.

Posted by Michael J. Hamblin | Permalink | Email This Post

Posted In: Business Formations

Bookmark:

One of the most difficult decisions an employer can be faced with is what should be done when it appears that an employee is committing a crime. Although the first reaction may be to go to the authorities, that may not be the best course of action in all cases. Each case must be analyzed separately based on the particular facts and circumstances in that case.

While it might be entirely the right choice to turn the employee into law enforcement, a suspicious employer may want to at least consider other options because there are a number of disadvantages to turning over an employee for criminal prosecution. For example, once you turn over the case to the prosecutor, you have pretty much lost all control over the matter. The prosecutor controls the timing of the case and if the prosecutor does not have a burning interest in your case, you might wind up being frustrated at the lack of progress.

On the other hand, there are advantages to letting the authorities handle your case for you. For one thing, it will be much cheaper than if you hire your own attorney to prosecute the case in a civil proceeding. Typically, a prosecutor will seek a restitution remedy that has more "teeth" than a civil collection proceeding. Also, if the prosecutor finds your case interesting, you can bet that it will be a priority for rapid processing.

Regardless of whether you decide to involve law enforcement in this kind of situation, it is imperative that you proceed in a smart and savvy manner in order to give yourself the best chance of succeeding. Relevant facts and evidence must be gathered in a deliberate and controlled fashion. The importance of developing documentation cannot be overstated. Any investigation will at a minimum cover the basic questions such as Who, What, Where, When, Why and How? It is also important to determine whether the suspected wrongdoing is part of a pattern and practice or if it is a one-time incident or the work of a rogue employee.

A Michigan employer faced with the possibility of an employee committing a crime should immediately consult with an experienced and knowledgeable Michigan business lawyer for guidance in how to proceed in this kind of tricky situation.

Posted by Michael J. Hamblin | Permalink | Email This Post

Posted In: Employment Law

Bookmark: