MAKE YOUR NEW BUSINESS A SUCCESS

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“To believe your own thought, to believe that what is true for you in your private heart is true for all men – that is, genius.”  Ralph Waldo Emerson, Self-Reliance (1841)

Over the years, the Powell Law Firm has been privileged to be selected to serve many aspiring entrepreneurs with the launch of their new businesses. These businesses have included manufacturing concerns, retail businesses, restaurants, financial enterprises, and construction firms. They have ranged from purely local businesses to enterprises that have been national in scope.  Because of the long standing experience which we have had with new businesses and because we are dedicated to our new business clients, we are in the special position to assist you in creating your new business.

All of these undertakings have carried with them the dreams of the individuals who created them.   Many of these concerns have thrived, but unfortunately, we have watched some be abandoned by the very entrepreneurs who had successfully launched them.  It has been – and is – our earnest goal that each of the new businesses that we assist be successful in achieving the goals of the enterprising person who first had the courage to act on his or her dream. There are two initial keys to the success of a new business.

The first key for a new enterprise is to get good, personal legal advice at the time of creation of the business, as well as at critical junctures of its development, from an attorney who knows and understands your dreams. This cannot be short circuited by “how to” books or unreliable assurances by internet sources. Expensive mistakes are often made by business owners who try to save a few dollars in legal fees.

To ensure the success of your new business, it is important to wisely consider which legal structure you wish to utilize. Once that decision is made, all of the structure should be promptly put in place to ensure business success. This short article will only focus on the most common legal structures that can be adopted by a new business. Those are: 

• Sole Proprietorship:  This type of business is the most popular business entity in the United States. It usually consists of a single individual who is ultimately responsible for the business. This type of enterprise can be risky because all liabilities are personally assumed by that individual. 

• Partnership: A partnership is formed when two or more people, or other business entities, decide to jointly undertake a business. They will jointly share in the profits, losses, and legal responsibilities of the business. If the business is solely for one task, it is often called a joint venture. Partnerships of all types should always have a written partnership agreement which clearly sets forth the responsibilities of the partners. State statutes and case law set forth the content of these agreements.

• Regular Business Corporation: Corporations are formed to help the founders avoid personal liability for the actions of the corporation. State law usually requires that the corporate name must include the words “corporation”, “incorporated”, “company”, “limited”, or their abbreviations. Regular business corporations should not be confused with more specialized professional businesses which will not be discussed in this article. Corporations must always be registered with the Secretary of State for the state in which they are incorporated and provide for the issuance of stock, even if there is only one owner. Regular corporations are also required to follow certain “corporate formalities" set forth in state statute in order to shield the incorporators from personal liability.  An IRS Subchapter S election is available to pass certain tax savings onto the incorporators.

• Limited Liability Corporations (LLC): This type of business was created to combine the protections that corporations enjoy with what was perceived to be greater flexibility of a sole proprietorship or partnership. Like regular corporations, limited liability corporations must also follow certain “corporate formalities" set forth in state statute to avoid personal liability.  LLC’s are increasingly popular with small businesses because they allow the pass through taxation of business profits while still protecting the owners from personal liability.

• Non-profit Businesses: There may be certain instances where the new business  is not set up to make a profit, but instead to work for what the founders believe is some social good. To avoid personal liability, these are often set up as not-for-profit corporations. Like regular corporations and limited liability corporations, certain “corporate formalities" should also be followed with not-for-profit businesses.  This is especially true if the company is seeking charitable 501(c)(3) status with the U.S. Internal Revenue Service.

Successfully creating the legal structure for your business is only the beginning. The second initial key to success is the development of written business and marketing plans that clearly set forth the vision and goals of the enterprise.  Without this step, a new business is unlikely to succeed. All employees of the business should be aware of these plans, and even participate in their creation under certain circumstances, especially if they are being created after the business has been launched. There are many resources available to assist with this step, including some attorneys. Only through the implementation of this second step can substance be added to the legal structure, thereby helping your dream become a success.

PLANNING AHEAD TO HELP THE ONES YOU LOVE

–FINAL DISPOSITION DECLARATIONS–

 All of the world’s great religious faiths teach the importance of planning – out of love –­ to help our families and those who will be left when our time on this earth is at an end. At the Powell Law Firm, we have been part of that planning process for thousands of families. While most people are familiar with wills, living wills, and powers of attorney, they may not be aware of Final Disposition Directives.

In 2008, the Iowa legislature enacted the Final Disposition Act. This statute provides for an advance directive to cover that period between when an individual dies and when the person’s will or estate is probated. It was meant to solve disputes between family members as to how to deal with the final arrangements and the remains of the deceased. It specifically gives great power to the person who has died by giving them the authority to designate somebody to handle that person’s final arrangements. In Iowa, the document is a normally a simple one page document entitled, "Final Disposition Declaration." The contents of the declaration are specifically mandated by the statute.

Where should I keep my Final Disposition Declaration?

Iowa law expressly requires that the Final Disposition Declaration must be "contained in or attached to a durable power of attorney for health care." The reason for this requirement is to help ensure that the Final Disposition Declaration is immediately accessible for time sensitive end of life decision-making.

What if I change my mind and want to designate a different person as my designee?

To revoke or change a Final Disposition Declaration, you must make a declaration in writing which is signed by you and state that you want the declaration revoked. You can then execute a new Final Dispositon Declaration. Further, if you get divorced, that constitutes an automatic revocation of a spouse as your designee. Finally, a declaration will be ineffective if your designee is unable or unwilling to serve as the designee.

Is there any way that my designee’s authority can be forfeited?

The designee can forfeit the right to act under your declaration if one of two circumstances occurs. First, if your designee is charged with murdering you or is charged with voluntary manslaughter of you, then this declaration is forfeited. No conviction is required because that would only come months later. Second, if your designee does not exercise his or her authority within 24 hours of receiving notification of your death or within 40 hours of your death, whichever is earlier, then the designee’s authority is also forfeited. That is why it is critical that the Final Disposition Declaration be immediately available.

Is my declaration valid in any state besides Iowa?

Yes, it is valid in all states of United States, the District of Columbia, and all territorial possessions of United States. This is because the United States Constitution requires that the laws of one state shall have the full force and effect of law in all other states.

What if I donate my organs or my body as an anatomical gift?

Iowa law provides that the rights of a medical college or other recipient of an anatomical gift are superior to those of your designee under the Final Disposition Declaration. This means that if there is any conflict between your Final Disposition Declaration and the donation of that anatomical gift, that the anatomical gift will be honored before your Final Disposition Declaration.

Why can't I specify in the Final Disposition Declaration how I want my funeral and burial proceedings to be handled?

When the law permitting Final Disposition Declarations to be used in Iowa was being considered by the Iowa legislature, part of the statute originally permitted such directions to be included in the Final Disposition Declaration. That provision, however, was removed prior to final enactment. Because of that action, the Iowa Supreme Court has specifically held that Final Disposition Declarations cannot contain previsions setting forth how you want your funeral to be handled or where you want to be buried. This does not mean that you cannot tell your designee orally or in writing how you want those matters to be handled. Such direction, though, will not be legally enforceable.