Our Denver business attorneys assist with everything from proper business formation, acquisitions & mergers, taxation needs, transfer or disposition of business assets and interests, acquisition of additional capital, compensation planning, and liability issues. Make prudent and informed business decisions with our help.

What is a Parent Corporation?

In general, a parent corporation is a corporation that would own the stock or interests in another corporation or business such that the entity can control the other business.  As a business attorney, I am often asked, what is a parent corporation?  Further, many business owners will inquire as to whether a business structure with a parent corporation could be beneficial to their business for tax purposes, business purposes and/or asset protection purposes.

The video below has been prepared by a Denver business attorney to provide information regarding a parent corporation.  You can contact The McGuire Law Firm to schedule a free consultation with a Denver business attorney.

Call 720-833-7705 to schedule a consultation with a business attorney in Denver or Golden Colorado.

Denver Business Start Up Attorney

As a Denver business attorney, John McGuire has assisted many businesses as start up businesses.  Multiple issues and concerns should be considered when starting a business.  The video below provides additional information regarding starting a business.  You can contact The McGuire Law Firm to speak with a Denver business attorney.

Schedule a free consultation with a business attorney in Denver- 720-833-7705

Denver Sales Tax License

In previous articles, we have discussed the types of taxes that are assessed and collected by the City and County of Denver.  One such tax that applies to many businesses is sales tax, and many business owners have questions related to sales tax licenses.  The article below has been drafted by a tax attorney and business attorney at The McGuire Law Firm to provide additional information related to sales tax license issues in Denver.

When a business is located in Denver, Colorado and makes retail sales, leases or even rentals of tangible personal property, the city and county of Denver requires that the business have a sales tax license.  Under certain circumstances, a sales tax license may not be required, but the business may be subject to the Denver use tax, and this may require the business to have a Denver consumer use tax registration.  Often a business owner will ask: What if my business is not located in Denver, do I need a sales tax license?  If a business is located outside of Denver, but makes retail sales, leases or rents tangible personal property in Denver, the business is required to obtain a Denver retailer’s use tax license.  Other common questions and issues are outlined below regarding sales tax in Denver.

Does Denver have an annual special event fee?  At this current time, there is no current annual event fee.

What if I am only selling my product for a couple of days in Denver?  When a business participates in an event that is 2 weeks or less, you may be required to pay a special event fee, which would only be valid for the specific event.  Any sales tax due from the special event would be due by the 20th day of the following month.

I operate my business from my home so do I need a sales tax license?  Yes, any business located in Denver making retail sales, leases or renting tangible personal property must have a sales tax license.  Again, if a business is not subject to sales tax, businesses located in Denver are subject to the consumer’s use tax, which may require a Denver use tax registration.

My business sells products on the web from my web site, do I need a sales tax license?  Yes, if you are located or have a physical presence in Denver, your business is required to obtain a Denver sales tax license, as well as collect and remit Denver sales tax on sales made in Denver.

What is the fee for a Denver sales tax license?  The current fee for the sales tax license is $50 per location, which covers a 2 year period.  You can click this link for an application, but please check to make sure it is current.

If you additional questions relating to sales tax in Denver, contact a Denver tax attorney from The McGuire Law Firm.  The McGuire Law Firm provides a free consultation with a tax attorney so you can discuss your questions and issues.

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Types of Buy Sell Agreements by Denver Business Attorney

In a prior article, buy sell agreements were discussed in general, regarding the potential benefit to small business owners.  The article below has been drafted by a business attorney to provide general information regarding certain types or forms of buy sell agreements that small business owners may be able to use for their buy sell agreement.

A cross purchase agreement is a form of buy sell agreement whereby the owners of the business will enter into an agreement holding that is one of the business owners withdraws from the business, the remaining business owners will acquire the withdrawing owner’s business interests.  The acquisition of the interest can be directly from the business owner, or from the owner’s estate.  The purchase price for the business interest will be determined and dictated by the cross purchase buy sell agreement, and the funding for the purchase price is the remaining (or contracting) owners of the business.  Thus, the business does not pay for the interest that is being acquired.  A cross purchase buy sell agreement can be contrasted to a redemption type buy sell agreement.  Under the redemption agreement the business entity agrees to redeem the contracting owner’s interest when a specific event (triggering event) occurs.  The specific triggering events could be the withdrawal of an owner, the death of an owner or other circumstances that will trigger the entities requirement to redeem or purchase the interest.

Business owners can also create a hybrid type buy sell agreement that is a combination of the cross purchase agreement and redemption agreement.  Under the hybrid version of a buy sell agreement, the business entity has the primary right to purchase or redeem the business owners interest and the remaining business owner can be allowed (or perhaps required) to purchase the withdrawing owners interest to the extent the entity does not redeem or purchase the interest.  The order of priority can also be reversed whereby the remaining owners have priority to purchase the withdrawing interest.  However, it is important to note that if the entity is a C corporation, if the remaining shareholders have the primary obligation to purchase the withdrawing shareholder’s shares, but the corporation actually purchases the shares, the remaining shareholders are treated as if they received a dividend from the corporation to the extent of the corporation’s earnings and profits.

Business owners can also structure a buy sell agreement whereby the sale would be to a designated successor.  The successor could be a complete outsider with no synergy with the business or an individual intertwined with the business.

A buy sell agreement can also be established as a sale to an ESOP.  The ESOP would be designed to invest in the securities of the corporation that created the ESOP, and could provide a tax exempt means by which employees could participate in the business.

Thus, there are multiple options when drafting a buy sell agreement for your business.  You can discuss these matters with a Denver business attorney if you have questions regarding a buy sell agreement or other business matters.  The McGuire Law Firm provides a free consultation with a business attorney in Denver or Golden Colorado.

Stock for Assets Business Acquisition

In a recent article, a Denver business attorney from The McGuire Law Firm discussed a cash for asset acquisition.  The article below will discuss a related type of transaction that is similar, but also quite different called a stock for assets acquisition.  A stock for assets acquisition may also be called “C Reorganization” and can be a tax free stock acquisition under the Internal Revenue Code.

In a stock for assets acquisition, Corporation 1 would provide common stock (as opposed to cash consideration) for the assets of Corporation 2.  Furthermore, Corporation 1 would assume all of Corporation 2’s liabilities.  Thus, the post transaction view of a stock for asset acquisition is similar to that of a stock swap merger.  After the transaction, Corporation 1 will not hold all Corporation 2 shares and Corporation 2 liabilities.

Depending upon the states that the corporations incorporated in, there may be general powers in the state corporate code that allows Corporation 1 to buy assets and for Corporation 2 to sell assets.  Additionally, other general powers may authorize Corporation 1’s assumption of Corporation 2’s liabilities.  However, the sale of all or substantially all of Corporation 2’s assets require specific authorization or steps and may require that the shareholders of Corporation 2 ratify the sale to Corporation 1.   What constitutes “substantially all” of a corporation’s assets may need to be determined based upon case law.  A Delaware case once determined the sale of substantially all corporate assets to be the sale of assets that is quantitatively vital to the operations of the corporation and would be out of the ordinary and substantially effects the existence and purpose of the corporation.  See Gimbel v. Signal Companies, Inc. (Del. Ch. 1974).  In terms of a Delaware law, another case once held that the sale of stock in a subsidiary was 68% of parent’s assets and primary income generating asset required a stockholder vote.  See Thorpe v. Serbco, Inc. (Del.1996). Certain codes or acts may replace the “all or substantially all of the corporate assets” with “a disposition that would leave the corporation without a significant continuing business purpose.  See MCBA Section 12.02.  This section also states a safe harbor where a significant continuing business purpose exists if the continuing business activity represents at least 25% of the total assets and 25% of either income (pre-tax) or revenue from pre transaction operations.

If your business is considering a transaction or acquisition, you can discuss your questions with a Denver business attorney and tax attorney from The McGuire Law Firm.  The McGuire Law Firm provides a free consultation to all potential clients to discuss your current business, tax and other legal matters.

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What is a Holding Company

What is a holding company?  Generally, a holding company could be viewed as a company that owns the stock or interests in another company.  For example, Corporation A  could own 100% of the stock of Corporation B and thus Corporation A would be a holding company.  A holding company can potentially reduce risk and exposure and also allow one company to own and control multiple businesses.  These ownership and control issues can make a holding company attractive for certain business operations.  The video below has been prepared to provide additional information regarding a holding company.  Please remember, the information provided on this website is solely for informational purposes.  It is recommended that you always contact your business attorney and/or other professional advisers prior to making any business decisions.  You can speak with a Denver business attorney by contacting The McGuire Law Firm.

Schedule a free consultation with a business attorney in Denver- contact The McGuire Law Firm.

Denver Business Attorney Free Consultation

The McGuire Law Firm provides a free consultation with a business attorney.  John McGuire, the founding partner of The McGuire Law Firm believes it is important to provide a free consultation to small business owners for many reasons.  First and foremost, as a business attorney, Mr. McGuire views his relationships with clients as a long term relationship and therefore, he feels it is very important to get to know a client and for a client to get to know and feel comfortable with their attorney.  When being charged by the hour or a for a limited consultation, a potential client will often rush or hurry through their issues.  Therefore, a potential client should be entitled to a free consultation whereby they can discuss their business issues, questions and matters, as well as their overall business goals such that the attorney can fully understand what assistance a client is looking for. Furthermore, Mr. McGuire has paid for an initial consultation with an attorney, and did not feel a benefit was received from such consultation and therefore, no fee should have been required.

In terms of business services provided, a business attorney at The McGuire Law Firm can assist your business with the formation of the business, business contracts, drafting & negotiations, business tax matters and the purchase or sale of business assets or interests.  Mr. McGuire has enjoyed long term relationships with his clients and always welcomes the opportunity to meet with potential new clients to discuss their businesses and business endeavors and goals.  You can schedule a free consultation with a Denver business attorney by contacting The McGuire Law Firm.

The video below further discusses the free consultation provided by The McGuire Law Firm, and can also act as a short introduction to the law firm.  Please feel free to contact The McGuire Law Firm at anytime.

Contact The McGuire Law Firm to speak with a business attorney in Denver, Colorado or Golden, Colorado.

Business Acquisition Documents and Agreements

What are some of the typical or general documents and agreements that parties will enter into when business assets, business interests or a business are being purchased and sold?  This is a common question a business owner may ask their business attorney when they are preparing to sell their business or purchase a business.  Although, you are likely to find a few documents involved with each business acquisition, each transaction and business acquisition may have certain documents and agreements not found in other transactions.  Typically, you may see a non disclosure agreement, a letter of intent and the purchase or sale agreement.  These documents are discussed in the video below by John McGuire, a business attorney in Denver, Colorado.  Please remember that you should always consult your attorney regarding the specific documents and agreements needed within your transaction, and their impact and meaning to your situation and the transaction as a whole.

You can schedule a free consultation with a Denver business attorney by contacting The McGuire Law Firm- offices in Denver and Golden Colorado.

Buy Sell Agreements Discussed by Denver Business Attorney

Many individuals who own closely held business interests, such as an interest within a limited liability company or closely held corporation will enter into a buy sell agreement.  These individuals (and perhaps their estate) may accomplish a number of planning objectives and goals with a buy sell agreement, and potentially optimize income, gift and estate tax outcomes and implications depending upon the overall situation.

When an individual owns a closely held business, which can be considered an interest in a business where no readily available public market exists, they may have a number of problems and related concerns regarding the closely held entity.  The individuals within the business have likely invested significant capital, and their family’s economic security and growth may depend upon the success of this business.  Moreover, if an owner of the business left due to disability, death, retirement or otherwise, the remaining owners may not want to work with a different or “new” individual, or with a member of the departed owner’s family.  Therefore, a goal and objective of a buy sell agreement is wealth preservation (and liquidity of the ownership interest under certain circumstances)  and the remaining business owners control, continuity and overall maintenance of the  business without the need to bring in “outside” third parties who may not be wanted.  There are multiple issues to discuss regarding a buy sell agreement such as the funding and pricing of the agreement and of course the overall income, gift and estate tax consequences from the agreement, which cannot be discussed all within one agreement.  Thus, the remainder of this article will outline the general types of buy sell agreements, which are discussed below.

Generally, when an owner departs from a business there are two common purchasers of the business interest.  The remaining owners may purchase the interest through a cross purchase agreement and the business entity may purchase the interest through a redemption agreement.  These cross purchase agreement and redemption agreement may be able to be combined into one hybrid buy sell agreement.  You may also have the possibility to have an agreement whereby the business interest is sold to an individual or business that previously, was not interested in the venture, or even to employee via an employee stock ownership plan.  The common types or forms of a buy sell agreement may be called or referred to as: cross purchase agreements, sale to a successor, redemption agreements, a hybrid buy-sell agreement (this would be a combination between a cross purchase and redemption agreement) and sale to ESOP (employee stock option plan).  These types of agreements will be discussed in more detail in later articles.

If you think a buy sell agreement could benefit you, contact The McGuire Law Firm to speak with a Denver business attorney.  A Denver business attorney can assist you with your options and the drafting of necessary contracts and agreements.

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What is a Letter of Intent?

What is a letter of intent?  This is a common question a client may ask their business attorney.  A letter of intent may be used in a handful of circumstances and can be useful tool when parties are attempting to spell out the major terms and conditions of an agreement prior to moving forward with further drafting and negotiations.  By ensuring the parties are in agreement with a letter of intent, significant time and money can often be saved.  The video below has been prepared by a Denver business attorney at The McGuire Law to provide information regarding a letter of intent when parties are discussing the purchase and sale of a a business or business assets.  It is always recommend you discuss your specific circumstances with your business attorney and/or business advisors.  You can contact The McGuire Law Firm to speak with a business attorney in Denver, Colorado.  The McGuire Law Firm has offices in Denver, Colorado and Golden, Colorado for your convenience.