I am often asked by both buyers and sellers for suggestions to control their legal expenses when entering into a transaction. Here are a few suggestions:

1. Most attorneys charge by the hour, so prepare prior to any meeting or call.

2. Familiarize yourself with the documents which will be used.

3. There is no legal document(s) which can cover all contingencies.

4. Scan and email documents vs. mailing and delivery.

5. Consult with others who have experience in transactions (sellers, buyers, CPAs, bankers).

6. Ask for a quote.

7. Determine the experience and expertise level of the attorney who will be representing your interests.

8. Request that the transaction documents be drafted by the other party.

Good Luck!

Steve Sink

CBI M&AMI

ss@phxaffiliates.com

In my last blog, I outlined some important do's and don'ts for retailers to follow when doing cause marketing for a charity organization or social issue.

One important aspect to define upfront is that any cause marketing is a partnership. Not only does the cause need to fit with your particular business in some way or another, but the charity has to be ready, willing and able to really get behind your efforts. If you're doing all the work and they're not promoting it, what you're doing isn't going to be nearly as successful as it could or should be. It may not be successful at all. Don't be shy about asking how the cause is going to support your efforts.

Elaborating on a point I made in my last post, it's very important to give yourself plenty of lead time. That's especially true if you're a new retailer.

That last thing you want to do is let your enthusiasm for a cause or pressure from its supporters stampede you into throwing together a haphazard campaign in a matter of days or weeks. At best, you'll end up harried and frazzled. At worst, the effort will be a complete bust that won't do you or the charity any good.

While it will differ from cause to cause, you need to give yourself a lot of time to develop news releases and marketing materials, identify the right products and pricing, and prepare your sales staff for the big event.

Cause marketing, which is often tied to a particular event like Heart Month in February or Breast Cancer Awareness Month in October, also can be an ongoing activity. We're exploring the idea of publishing a cookbook that will be sold year-round with proceeds to go to the appropriate cause or causes.

Finally, whenever we've promoted a cause at the Heart of Iowa Market Place, I've always taken the time to analyze the campaign at its conclusion. And, you should, too. Be sure to ask yourself: Was it a success for the charity? Was it a smart use of our time and marketing resources? What can we do to make a follow-up campaign better? And, finally, should we really do it again in the future?

-Kelly Sharp

Joe Kristan is a CPA at Roth & Company P.C. 

When that great opportunity to start or buy a new business comes along, you probably need some cash to jump on it.  For many of us, our IRAs are the biggest financial asset. Yet unless it's a Roth IRA, you generally have to pay tax to get at the money, and if you are under 59, you also owe a 10% penalty. You may be able to get most or all of the cash in your Roth IRA tax-free, but then future earnings on those funds are taxable.

That's why it's tempting to try to have the IRA itself own a business. A recent Tax Court case shows that IRA ownership of a small business is playing with fire.

The biggest danger of owning your business in an IRA has been the risk of having a “prohibited transaction.” The tax law has hair-trigger rules for pension funds and other exempt organizations to prevent abuse of the funds by related parties or trustees. If you have one, you have a penalty tax of at least 15%, and maybe 100%. Worse, you terminate your IRA.

The Tax Court case involved a C corporation owned by IRAs. As is typical in a closely-held business, the lenders wanted a loan guarantee from the entreprenuers. Disaster ensued:

 As the Commissioner points out, if the statute prohibited only a loan or  loan guaranty between a disqualified person and the IRA itself, then the prohibition could be easily and abusively avoided simply by having the IRA create a shell subsidiary to whom the disqualified person could then make a loan. That, however, is an obvious evasion that Congress intended to prevent by using the word “indirect”. The language of section 4975(c)(1)(B), when given its obvious and intended meaning, prohibited Mr. Fleck and Mr. Peek from making loans or loan guaranties either directly to their IRAs or indirectly to their IRAs by way of the entity owned by the IRAs.

I suspect there are a lot of similar taxpayers out there.  They will be following this case if it is appealed with intense interest. If this ruling holds, this will be a catastrophe to such folks, in the same league as the ruin caused by Incentive Stock Options (ISOs) exercised just prior to the dot-com collapse. The ISO disaster was bad enough to get Congress to enact legislative relief. 

-Joe Kristan