Finding an Efficient New York Business Lawyer for your NY Business

We here at IPG obtain numerous emails and calls from potential clients in search of a New York business lawyer to act as part-time general counsel.  The majority of these intakes come from referrals from present clients, referrals from other lawyers and some trickle in via this New York Law Blog and the Korean Law Blog. From our contacts, we believe that many smaller businesses in New York are having serious difficulties in finding attorneys in New York that are NY business savvy, have the ability to efficiently work for the client and/or have an inability to handle the specific issues the client is dealing with. This dismal situation seems to stem, primarily, from the high cost of top-notch legal services in NY and the lack of many top-notch New York lawyers working in the startup and growing business space.  This reality is, only, partially true.  Many great lawyers work

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Starting A Nonprofit Corporation in New York

Here is a not-so-quick introduction of how to start a nonprofit corporation in New York. A 501(c)(3) organization, which are formed for religious, charitable, scientific, literary or educational purposes, is eligible for federal and New York state tax exemption.  But before you can have a tax exempt organization, you need to create a non-profit organization in New York.  Here is what you need to do to create a non-profit organization in New York. Creating a Non-profit Organization in New York Choose Directors Choose 3 initial directors over the age of 18, preferably people who live in New York. Select a Name Choose the name of your non-profit corporation that is distinguishable from the name of any other corporation.  To assist you, New York’s Department of State has a business name search database of New York businesses to determine whether your name is available. Select the Address Determine the address and location

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NY State and Federal Tax Exemption for your New York Nonprofit

Now that you created your New York nonprofit,  let’s discuss how your New York nonprofit can apply for state and federal tax exemption. After your New York nonprofit has held its first organizing meeting, you will need the continued assistance of an experienced attorney to file documents with the federal government and New York State. By this point, you should have already consulted an attorney about the formation of your organization and hopefully the attorney made sure that you have created an entity that the IRS will find qualifies for tax exemption. IRS Form 1023 (Federal Nonprofit) For the federal government, you will need to complete and file IRS Form 1023, which is a long and detailed form that asks for extensive information about your New York nonprofit’s organization, history, finances, structure, governance policies, operations and more. The IRS Form 1023 should be accompanied by appropriate supporting documents that your

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Winding Up Your New York Business: Essential Steps to Business Closure in New York

If you are looking to close your New York business, these are some of the many essential steps you should take.  In most cases you shall require a New York Bankruptcy lawyers to assist in the windup process: Vote to Close the New York Business No matter what form your NY business has taken, you must get all owners’ approval to close the business.  In some forms, it is easier to do than others.  For example, if your New York business is a sole proprietorship, you simply make the decision on your own.  If it is a New York limited liability company or partnership, you and your partners must agree to dissolve the business based upon the rules set out in your organizing documents and the laws of the State of New York. Dissolve your Business with the New York Government If your New York business filed documents with any

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SEC Regulation D – Private Offerings: NY Startup Law

Start-ups in New York looking for investment capital should consider the classification of investors that can and cannot partake in private offerings.  Under the Securities and Exchange Commission’s Regulation D, an organization may issue a private offering of stock to raise funds without officially registering to “go public.” We discussed the nature of Regulation D offerings, which are also called “private placements” in an earlier blog post. Only certain types of investors may participate in a Regulation D offering.  To understand why the SEC encourages certain kinds of investors over others, it is important to understand the different types of investors in the market: Accredited Investor: This is defined as an individual that has earned US$200,000 or more on an annual basis for the past two out of the three years and is likely to make that same amount this year. Alternatively, an accredited investor can fail to meet the income threshold,

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Private Placement Memos Get Start-Ups Moving

Recently, I wrote about the two tools available to small businesses to stir interest and investment – the business plan and the private placement memorandum.  Let’s focus on the private placement memorandum. A Private Placement Memorandum (or PPM for short) is a legal document that organized businesses provide to prospective private investors who may be interested in buying stock or some other kind of security in your business in some kind of private transaction. The PPM will put all of your cards on the table: 1.  Your company’s basics:  Who you are, what you are looking to accomplish and the nature of your business.  This can also include the description of your company and management structure. 2. Your terms:  First and foremost, you will need to identify the rights, restrictions and class of your securities.  This section includes the capitalization of your company before and after offering the securities or

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Registering Your New York Nonprofit For Fundraising Purpopses

If your New York nonprofit is fundraising in New York, then you may likely need to register with the New York Attorney General’s office. Before soliciting contributions from individuals, foundations, corporations or government agencies within New York, a New York nonprofit must register with the NY Attorney General’s General Charities Bureau, unless it falls within one of the many exceptions: Exceptions to the New York Nonprofit Filing Requirements Religious organizations or other organizations with a religious purpose (i.e., a religious school); Educational institutions that solicit contributions only from alumni, the student body, faculty, trustees and their families, and other educational organizations that report to or are chartered by the Board of Regents of the State University of New York are exempt; PTAs (Parent-Teacher Associations); Fraternal, patriotic, social or alumni membership organizations that limit their solicitations to its membership; Law enforcement support groups, veterans organizations, and volunteer firefighter/volunteer ambulance service organizations; Any

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Starting a New York Restaurant? New York Restaurant Law

Starting a restaurant in New York involves significant consideration of New York state and local health and safety regulations.  Because restaurants and eateries are all about serving food, New York subjects restaurants to significant regulations regarding food health and safety. The New York State Department of Health has many regulations for food service establishments, including coverage of: employee cleanliness issues; employee hand washing and food handling; employee health issues, such as prohibition from working if they have certain illnesses; washing of fruits and vegetables; reheating and thawing food; cleaning and sanitizing utensils; and garbage storage and disposal. The NYS Department of Health has a guide and other resources that can help you ensure you are meeting regulatory requirements. In addition, if your restaurant is in New York City, there are additional handbooks containing local guidelines that you must follow, including how to obtain a New York City Food Handler’s License.  New

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Liability of New York Shareholders for Unpaid Debt of a New York Company

If you reside in New York or wish to run a business in New York , it may be convenient to incorporate a business in New York. But before you do so, you should know a major disadvantage of incorporating a business in New York. Business owners tend to desire the protection that incorporation gives to its shareholders’ personal assets. But you should know of a significant exception to that rule in New York. Under N.Y. Business Corporation Law § 630, the ten largest shareholders in any non-public company can be held liable for wage claims made by corporate employees. This includes salaries, overtime, vacation, holiday, severance pay and a whole host of other types of pay. To compound matters, liability under this law is “joint and several,” meaning that a claimant can enforce a judgment against just one of the ten largest shareholders, who would then have to seek

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Factors to Consider When Forming a Corporation in New York

New York businesses are not bound to incorporate within the state to operate within New York State. In fact, start-up businesses in New York should consider incorporating outside of New York based on several factors for consideration. Some choose to keep things simple by incorporating or forming an LLC in New York, while others opt for more “business friendly” states and incorporate in Delaware, Nevada or Wyoming. In some cases, even if you wish to establish a business in New York, it is advisable to form a company outside New York and enter New York as a foreign business – one of the many reasons is the New York may impose liability on company shareholders.  Here are some of the more important factors to consider when choosing a state for incorporation: Setup & Recurring Fees While a minor consideration in the grand scheme of establishing and operating a business, you

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Successor Liability Pitfalls in New York

When buying or selling a New York business or any of a business’s assets under NY law, potential successor liability of the buyer is of primary concern.  New York Successor Liability Law is complex and the following is, only, intended as a brief overview of the matter. Successor liability in New York is liability that the buyer of a New York company’s assets may have for the liabilities of the seller of those assets performed prior to the purchase.  Essentially, a buyer would be compelled to pay off debt that the seller accumulated prior to completion of the transaction. The general rule in New York is that the buyer of company assets does not assume and is not liable for the seller’s liabilities unless otherwise expressly stated in the asset purchase agreement.  However, exceptions exist. New York Successor Liability Exception to General Rule Express or Implied Assumption by Buyer. This exception

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U.S. Patents for New York businesses

The common types of U.S. patents that are available to innovative New York entrepreneurs seeking to protect their  intellectual property falls into three common categories based on the type of invention in question: design, utility and plant patents. Utility patents are chiefly concerned with how an invention functions.  A utility patent may be applied to a wide range of unique and innovative new products or processes. It prevents others from manufacturing, selling, using or distributing your invention.  Utility patents last for 20 years running from the date that the patent application was filed.  In addition to the initial patent filing fees, inventors must submit maintenance fees throughout the life of the patent in order to keep the patent’s protection. Design patents are any enhancement or adornment applied to an existing item or the design for a new product. It protects the aesthetic appearance and can be issued for the appearance, design,

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New York Non-Compete & Confidentiality Agreements

Business in New York can be highly competitive, and relies, in part, upon a business’s ability to protect valuable information disclosed to current and past employees. Many NY companies feel that implementing non-compete agreements and other contractual obligations will encourage employee retention overall and protect information should an employee leave. It is important for New York businesses to understand, however, that there are restrictions to when and how non-compete agreements can be enforced. Traditionally, non-compete agreements in New York are used in companies and industries involving sensitive proprietary information and/or trade secrets. Non-compete agreements are commonly found across many industries regardless of size or products or services offered. They can take many forms depending on the information to be protected, including confidentiality agreements (prohibiting use or revealing information) and non-solicitation agreements (prohibiting approaching customers, poaching employees or contacting vendors). New York Courts consider the enforcement of a specific non-compete agreement

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Buying a Business in New York

When buying a business in New York, we recommend a more nuanced approach that contemplates matters beyond a mere cost benefit analysis.  Small businesses are the engine of the American economy.  According to a 2012 Small Business Administration report, small businesses “produced 46 percent of the private non-farm GDP in 2008 (the most recent year for which the source is available), compared with 48 percent in 2002.”  New York is one of the best places to establish a business in many industries, because of its educated labor force, high net worth and business infrastructure. Here are a few of the important steps to consider when buying a New York business. What is the Deal Structure? When buying a NY small business, consider the reason for the purchase. The reasons shall, often, dictate the structure of the purchase and the risks associated with the anticipated deal. What is the primary reason for the

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New York Reverse Mergers Basics

If you are looking to take your New York private business public, consider the benefits and drawbacks of a New York reverse merger.  Often executives and owners of successful New York businesses may wish to capitalize on that success by making shares of the business’s stock available to the public. Having a public company provides additional benefits to businesses, including expansion of business dealings and attracting highly talented hires with offers of stock options.  However, of course risks abound. In a reverse merger in New York, investors of a privately-held company acquire a majority of the shares of a publicly-held “shell company,” which is then merged with the privately-held company.  To consummate the deal, the private company trades shares with a public shell in exchange for the shell company’s stock, transforming the acquiring private company into a public company. An advantage of undertaking a reverse merger is the comparative ease

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Cuomo Signs Law That May Cripple Airbnb in NYC

After a summer of discontent, New York Governor Andrew Cuomo signed the toughest restrictions on short-term apartment rentals in the country that may cripple the operations of Airbnb in the state. As discussed in many previous blog posts here, Airbnb is an online marketplace where prospective guests look for a bed to stay in from hosts listing spare rooms and properties for short term rentals. Under the new rules, which we discussed in an earlier posting here, the liability for advertising short-term rentals would shift from building owners to the renters in “Class A” multiple dwellings (buildings designed for three or more families) and those who place the advertisements on sites like Airbnb. Penalties range from $1,000 for a first offense to $7,500 for third and subsequent violations. The stated intent behind the proposed bill is to protect New York’s hotel industry and owners of multiple dwelling properties by preventing illegal

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Filing a DBA Name In New York

If you want to conduct business under a trade name that is different from the name used to form your New York business, then you need to file a DBA, or a “doing business as” name, in New York. DBAs are useful for a number of reasons. They allow a business to open a bank account under a different name. They also allow a business to build a brand or product in a name other than the legal name of the business itself. Perhaps the most well-known example of a company using a “DBA” is Doctor’s Associates Inc., which is doing business under the well-known brand “Subway.” As the story goes, Doctor’s Associates Inc., which derives its name from the principal owner’s initial goal to earn enough money to pay for school tuition, was created for the operations of “Subway.” There are different requirements for different entities wishing to create a

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Proven Negotiation Tactics For New York Small Businesses

When you are running your own business in New York, you must become a skilled negotiator.  New York can be a tough place and many sharks abound. In its simplest form, negotiation means a discussion between parties looking to reach an agreement. While the concept is easy to understand, the process of negotiation is as much art as it is science. As a start on your road to becoming a good negotiator, here are some basics to think about before beginning the negotiating process. Know Your Worth Many people feel that the hardest thing to learn is their own self-worth. You and your business have much to offer – know that you are good enough to ask for the money you want! If you don’t believe in yourself, how do you expect to convince someone else to believe in you or your business? Understand Your Worth Information is power. Know

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New York City May Require High Salt Warnings in Franchised/Chain Restaurants

A New York appeals court ruling has cleared the way for New York City to begin enforcement of its rules requiring restaurants to warn of high-salt content. Recently, the First Department of the New York Appellate Court held that New York City can require chain restaurants to post warnings on items high in salt content. In doing so, the Court also lifted a stay on enforcement of the rule that was granted after the National Restaurant Association appealed a trial court ruling. The National Restaurant Association challenged the requirement, claiming that it was an unlawful and unprecedented burden on restaurant owners, resulting in confusion for customers.  It also claimed that the rule was arbitrary and capricious. New York City is the first to require restaurants with 15 or more locations nationwide to post a warning next to menu items with more than 2,300 milligrams of sodium.  Violators are subject to

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IRS 501(c)(3) Organizations vs. IRS 501(c)(4) Organizations: New York Non-Profit Law Basics

We have clients at our law firm in New York operating non-profit businesses in New York that require advice on IRS 501(c)(3) vs. IRS 501(c)(4) organizations. We hope this and a few other articles we have will be useful for the reader. Whether your New York nonprofit should apply for tax exemption under IRS 501(c)(4) depends upon the type of organization you have and the political activities it may be undertaking. New York nonprofits that are civil leagues and local associations that further a social welfare objective, but do not quite meet the level of a charitable organization (religious, educational, charitable purposes), may pursue exemption under 501(c)(3).  For example, a local civic association, homeowner’s association, or the local Lions Club, are organizations that meet this description. New York nonprofits that wish to freely conduct political or lobbying efforts, gain support or opposition for political candidates or take action to pass or

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