Succession Planning Checklist: Five Questions for Closely Held Businesses
Posted on Sep 18, 2018 by
TURNER PADGET LITIGATION TEAM
When you invest your time, energy and hard-earned assets into building your business, it can be difficult to think about a time when you’re no longer in the picture. Being so intertwined with a small business has risks, however. Closely held businesses, such as family businesses or closed corporations with a small number of shareholders, especially need succession planning to ensure that an unexpected event doesn’t disrupt operations or wreck the company.
Succession planning isn’t just for unexpected contingencies, however. Planning for expected transitions can bring a sense of financial security in retirement and comfort in providing for your heirs with a charted course for your business after your death. Still, fewer than a quarter of small business owners have a formalized succession plan in place, according to PwC's 2017 US Family Business Survey. continue reading
S.C. Supreme Court Sets Criteria to Pierce Corporate Veil of Sibling Businesses
Posted on Jul 17, 2018 by
Richard S. Dukes
On July 10, the South Carolina Supreme Court handed down an important decision in Pertuis v. Front Roe Restaurants, establishing the criteria to determine when the corporate veil can be pierced horizontally – in other words, when a court can disregard the corporate form of sibling companies having common ownership, control, officers, or members.
The practice of corporations joining forces with others that share business goals, leadership and even finances to mitigate personal liability for those in charge is not a new one. The merging of business interests has long-been debated, going back to a 1986 Court of Appeals decision in Kincaid v. Landing Development Corp. The theory generally states that, “where multiple corporations have unified their business operations and resources to achieve a common business purpose and where adherence to the fiction of separate corporate identities would defeat justice, courts have refused to recognize the corporations’ separateness, instead regarding them as a single enterprise-in-fact.” Corporate entities could be combined into a single entity if their interests, entities and activities are so interconnected, “as to blur the legal distinction between the corporations and their activities.” Kincaid v. Landing Dev. Corp., 289 S.C. 89, 96, 344 S.E.2d 869, 874 (Ct. App. 1986).
The South Carolina Supreme Court’s latest decision in Pertuis v. Front Roe ruled in a minority shareholder oppression dispute between the owners of three restaurants and their general business manager, who claimed part ownership in the entire enterprise. The restaurants were incorporated separately in North and South Carolina but had the same shareholders and general manager. The general manager sued the majority shareholders claiming part-ownership in the entire operation and asserted that he was entitled to a percentage of the entire business as a buyout.
The trial court found that the S-corporations owning each of the three restaurants were a “partnership.” It disregarded the corporate entities and awarded the general manager a cut of the whole. The Court of Appeals affirmed.
Ultimately, the Supreme Court rejected the lower courts’ refusal to respect the individual corporate forms of the three S-corporations.
In so doing, the South Carolina Supreme Court, for the first time, adopted the single business enterprise theory and established the criteria for disregarding the corporate existence of commonly owned sibling entities. continue reading
Avoid a Summer Bummer from the IRS
Posted on Jun 29, 2018 by
J. David Johnson, IV
Suntan lotion? Check. Surfboard? Check. Passport? Not so fast.
Some summer sojourns abroad could be disrupted this season, as the Internal Revenue Service recently began enforcing a little-known provision of the Fixing America's Surface Transportation (FAST) Act that allows the agency, through the U.S. State Department, to revoke – or prevent the issuance of – a passport to any taxpayer who is found to have a "seriously delinquent tax debt."
The relevant provision – section 7345 of the Internal Revenue Code – was originally enacted during the 2015-2016 Congressional Session and languished until this February, when the IRS suddenly began exercising its power to send certifications of unpaid tax debt to the State Department. This seems to be a "hammer" the IRS long desired and one that aligns with President Trump's aim to bring in additional revenue by collecting overdue tax debt.
Under this process, anyone with a "seriously delinquent tax debt" – any "unpaid, legally enforceable federal tax debt more than $51,000 (including interest and penalties)" – is subject to having their passport seized or new application denied.
Before the IRS can start this procedure, however, it must either (1) file a notice of federal tax lien or (2) issue a levy on the debt (e.g. against the taxpayer's bank account, a garnishment on their wages).
Note that this is an "OR" test, despite some statements to the contrary that are out there. Once the IRS meets either requirement, it can certify the debt to the State Department, which is then empowered to deny the taxpayer's passport application and/or revoke a current passport.
In any case, before the State Department takes this action, taxpayers are allowed 90 days to try to resolve any certification issues, make full payment of the tax debt or enter into a payment arrangement with the IRS. continue reading
South Carolina Passes New Workplace Pregnancy Law
Posted on Jun 19, 2018 by
Reginald W. Belcher,
On May 17, 2018, Governor Henry McMaster signed into law the South Carolina Pregnancy Accommodations Act. The new law amends the South Carolina Human Affairs Law, which already prohibited discrimination by employers against employees because of race, religion, color, sex, age, national origin, or disability. The Act is effective immediately and requires employers to reasonably accommodate. continue reading
Records Retention: Which Documents Should You Keep and Which Should You Trash?
Posted on May 15, 2018 by
TURNER PADGET LITIGATION TEAM
Keeping documents has never been easier or cheaper. Cloud storage has opened up nearly infinite room to save digital files and data indefinitely. However, just because you can save documents conveniently doesn’t mean it’s always a good idea. While storage is relatively inexpensive, the risks related to retaining unneeded records can be costly.
If your business documents have been stacking up in the absence of a formal retention plan, it’s time for a spring cleaning. Don’t have a retention plan? All businesses should have one. continue reading
Tax Reform Bill Increases Businesses’ Purchasing Power
Posted on May 10, 2018 by
Julie A. Oliver
In keeping with its aim to reduce burdens and encourage businesses to make investments, the Tax Cuts and Jobs Act, effective Jan. 1, 2018, offers a variety of tax advantages that can yield big savings.
This post highlights two particularly important provisions and touches upon a few others of note. continue reading
A Bad Mistake, In Deed: Avoid this Common Divorce Pitfall
Posted on May 02, 2018 by
Jennifer T. Kerr
Divorces are obviously delicate and emotionally fraught situations, and most people getting one want nothing more than to turn the page quickly and move on with their life. But sometimes the wish for closure causes those involved to overlook key details, such as the steps necessary to make sure that property gets transferred as intended. A frustrating, time-consuming and costly experience awaits those who don’t nail things down at the time of the divorce.
Because many divorces involve some kind of real estate, it is important to remember several key concepts. continue reading
Turner Padget Celebrates One Year of Investment in “Palmetto Propeller”, Helping S.C. Businesses
Posted on May 01, 2018 by
C. Pierce Campbell
Turner Padget Graham & Laney, P.A. is pleased to celebrate the conclusion of the first year of the Palmetto Propeller initiative. Palmetto Propeller is designed to help South Carolina start-up and small businesses achieve success by providing needed legal services at no cost. For nearly 90 years, Turner Padget has been serving small businesses in South Carolina, and has been a small business itself. Their lawyers know South Carolina business, and, as a full service law firm, they know how to meet small business needs with practical, straightforward advice and strategies to propel businesses forward.
“At Turner Padget, we are strong supporters of the small business community,” said R. Wayne Byrd, Chief Executive Officer of Turner Padget. “The Palmetto Propeller project is our way of helping start-ups and small businesses and thanking them for all they do for our state, our firm, and our communities. Turner Padget committed $1,000,000 in free legal services over five years for this project to help companies capitalize on their entrepreneurial spirit and expand. The first year has well-surpassed our expectations.”
In the first year, over 40 applying businesses have been accepted into the program – more than two-thirds of all who applied. These businesses are located in all regions of the state, including the Upstate, Grand Strand, Lowcountry and the Pee Dee. More than 15 different referral partners, such as business incubators and small business development centers, have successfully encouraged their clients to apply and be accepted. continue reading