Thoughts on Law and Life

The Official Blog of Astrab Legal Services LLC

Starting Your Own Business Series (Part II-Passion)

After a long absence due to business development work and other issues, I am back to blogging and will make my best efforts to maintain a daily post on this site. I had a post a couple of weeks ago that was the start of a series on starting your own business and discussed buy-in issues with regard to a spouse or significant other as a critical issue that must be addressed before any further planning is contemplated.

Today’s blog deals with deciding what to do with the business that you want to start. This may seem like common sense, but in the quest for easy money it is an area often overlooked and can doom a start-up business if not thought out properly.

My advice is to take a self-inventory and think about what you have done in the past on both a personal and professional level that has really brought out your passion. I believe that having passion is a primary key to developing a successful business. If you have no passion for something, but are merely excited about the concept, you will burn out quickly and wonder why in the world you decided to pursue the venture in the first place. Take a look at the mortgage industry – I am willing to bet that in your town a significant percentage of empty storefronts in strip malls were formerly occupied by mortgage brokers. In most instances, a wannabe entrepreneur took a look at the business environment a few years ago and saw that folks in the mortgage industry were making lots of quick easy money. The thought of “I want to be there too” came into the person’s mind and he or she quickly threw together a business. The mistake here was that the person did not look beyond the quick buck to see what was going on in the industry, such as market saturation and the clearly apparent bubble that was beginning to form in the sub-prime market. The result became that Joe, who used to work as a cell phone salesman and had no experience at all selling mortgages, got a couple of similarly inexperienced friends together, obtained a license and threw up a shingle. When the market took its inevitable downfall, selling mortgages was no longer appealing, and as the group had no collective passion for the industry, they simply gave up and folded the business.

We’ll use Joe again for a more positive example. Joe, in addition to being a cell phone salesman, was also a black belt martial artist. When he was not selling cell phones he was at a training facility not only learning but also teaching his art to less experienced students. He had a passion for the sport and knew it inside and out. What Joe should have considered was opening his own small martial arts training facility where he could use his experience and passion to not only teach his art, but also make some money while doing it. This is a pretty simplified example and does not take into consideration Joe’s business skills, market research, start-up costs, etc. What it does take into account, however, is his passion. If you have the passion for something then the rest of the pieces can fall into place much easier.

Take some time and think about why you want to start your small business…Is it because you truly have a passion for the point of the business or is it because you see the potential for a large, quick monetary gain? There will be rough times in any business – it will take your passion to get you through those rough times and onto the next level. Instead of reaching your monetary goals in six months it may take two or three years, but the trade-off is worth it!

If you are considering starting your own small business, I’d like to help. I have assembled a multi-disciplinary team that includes representatives from the accounting, insurance, banking and financial services industries to aid you in getting started, building on what you have in place already or saving what you have built from impending financial disaster. I can be reached at (216) 577-0013 or astrablegal@sbcglobal.net. There is no question that the economy is in danger – don’t let your business or dream go down because some Wall Street goof-offs could not get their houses in order!

Michael K. Astrab is the principal attorney for Astrab Legal Services LLC, located in Cleveland, Ohio. He may be reached at (216) 577-0013 or via e-mail at astrablegal@sbcglobal.net. This blog is designed for informational purposes only and does not constitute legal advice. You should ALWAYS seek out the advice of an attorney and financial professionals before starting a business.

February 26, 2009 Posted by | Financial, Law, Legal, Life, sales & marketing, small business | , , , , , , , , , , , , , , | Leave a comment

Blog Slacker

Sorry all…I’ve been extremely busy on multiple fronts for the past few days and just have not had a chance to update the blog. I’m working on ideas for new content and want to continue the small business series, so please stay tuned for updates!

February 25, 2009 Posted by | Financial, Law, Legal, Life, sales & marketing, small business | , , , , , , , , , , , , , , , , , , , , , , | Leave a comment

Personal Budgeting Assistance

A practice area that I am currently developing is a ‘family budgeting’ practice wherein I plan to work with individuals and families on structuring and maintaining a personal budget designed to help them meet savings goals, pay off debt and develop life-long good cash management habits. I will not be providing investment advice but simply acting as a coach of sorts to help folks understand their cash flow in a difficult monetary environment. I plan to utilize three primary steps:

  1. Comprehensive Review of Assets/Liabilities
  2. Estate/Education Planning Review
  3. Goal Discussion & Setting

Clearly there is a lot more to the process than this, but I’m not one to give out too much of my proprietary processes, so you’ll have to call me for more information on how I plan to assist my clients.

My plans are to offer, among many other services, regular in-person meetings with clients, assistance with tax-time document gathering/explanation and 24/7 availability for budget questions/concerns. This practice area fits into my ‘holistic’ concept, which I believe is the future of the practice of law…attorneys must learn to move beyond being viewed as transaction-based and evolve into trusted advisors to their clients. Today’s clients deserve more than a document and an invoice…they deserve personalized attention and constant contact.

If your present attorney is not helping you in these areas, or if you feel he or she is more interested in billing hours than actually listening to you, please call me at (216) 577-0013 or via e-mail at astrablegal@sbcglobal.net.

 

Michael K. Astrab is the principal attorney for Astrab Legal Services LLC, a general practice law firm located in Cleveland, Ohio. He may be reached at (216) 577-0013 or via e-mail at astrablegal@sbcglobal.net. This blog is designed for informational purposes only and does not constitute legal advice.

February 18, 2009 Posted by | Financial, Law, Life, small business | , , , , , , , , , , , , , , , , , , , , , | 1 Comment

Starting Your Own Business Series: Family Buy-In

I am concentrating my law practice on small business consultation – I want to see small business thrive, as I believe that these companies are the life-blood of our economy. My goal is to help start-ups and existing companies get off the ground and make it through the current economic crisis. An attorney should be a crucial part of your business – it is folly to rely on pre-printed business forms or software to handle your legal needs. These documents may get you going, but it is very easy to make mistakes along the way that ongoing consultation with an attorney could have avoided. The role of a business owner is to run and grow his or her business, be it a single-person company to a multiple employee enterprise. There is no reason for a small business owner to be reviewing or drafting their own contracts, drafting employee policies, negotiating deals and/or leases and handling other matters that an attorney could easily take on and free up the owner’s time to market the business.

I am starting an in-depth series on starting up a small business. Today’s topic will be short but is one of the most important concerns – ‘buy in’ from a spouse or significant other. If the life partner of a prospective business owner is not on board, the business could not only be jeopardized from the start, but the relationship could become damaged as well.

Taking on a small business will definitely mean family sacrifice. If the prospective owner is giving up a salary to get started, the family will be missing that income until the enterprise can get up and off of the ground. In addition, the ‘burn rate’ of the family’s cash will also increase as necessary start-up costs are introduced into the family’s already weakened budget. I will use a spouse as an example in this article, but long-term non-marital relationships are also extremely relevant as well.

What are the issues that need to be discussed? Here is a laundry list that barely scrapes the surface:

  • Type of business to be started: Is this a business that the prospective owner is familiar with or is this a completely ‘out-of-the-blue’ venture?
  • Funding for the business: Will the money be coming from savings or will a line of credit be sought?
  • Liability issues: What is the potential impact upon personal assets should the business fail?
  • Business plan: What is the structure of the business? What is the time frame to reach profitability? How will the business attract clients/customers?
  • Location: Will the business be run out of the home or will an office be necessary?
  • Time commitment: How will the business affect the prospective owner’s ‘at home’ time? Will responsibility for family activities be placed on the spouse?
  • Role of spouse: Will the spouse have a place or say in running the business? If not, why not?
  • Income replacement: How will the lost income be replaced in order to keep the family solvent? When will the prospective owner ‘cut loose’ from his or her salary to devote full time and attention to the business?

I could go on for pages with talking points, but I think this list can serve as a starting point. A key is total transparency with the spouse – the prospective owner cannot hide problems from his or her spouse and communication must be constant. An idea would be to schedule monthly update meetings with the spouse to provide specific operational details regarding the business. If growth is shown, it might make a nervous spouse a little more at ease with the situation.

An attorney meeting with the prospective owner and his or her spouse can go a long way in achieving buy-in. If the spouse knows that there is a third party, especially one geared to help set up and protect the business, on board, it could help calm fears. My practice would assist the family with addressing the above questions, working on setting up a family budget and staying on board to assist with ongoing business issues.

Bottom line: Do not walk in the door one evening and tell your spouse that you have quit your job and started a new business. Utilize total transparency and make the spouse a partner, either direct or indirect, from day one. Without spousal Buy In, a start up is damaged from the onset…don’t make this mistake!

I am available for consultation on these issues. Please do not hesitate to contact my office at (216) 577-0013 to set up a time to get together and discuss starting your own business. After meeting with the prospective owner, the next step would be to set up a meeting with the spouse and go over the business planning issues that have already been covered and address questions/concerns from the spouse.

If you are considering a start-up, get planning, but do it smart!

Michael K. Astrab is the principal attorney for Astrab Legal Services LLC, a general practice law firm located in Cleveland, Ohio. He may be reached at (216) 577-0013 or via e-mail at astrablegal@sbcglobal.net. This blog is designed for informational purposes only and does not constitute legal advice.

February 16, 2009 Posted by | Financial, Law, Legal, Life, sales & marketing, small business | , , , , , , , , , , , , , | Leave a comment

IRA Confusion Regarding 2009 RMDs

Good Evening! Its been a busy few days, so I’m going to borrow again and post an article that appeared in today’s Wall Street Journal regarding a topic that has generated much interest – the new IRS ruling allowing investors to forgo required mandatory distributions from IRA accounts in 2009. There is much confusion out there, and this article does a pretty good job of touching base on some areas of concern:

New IRA Law Bewilders Investors

Break From Mandatory Withdrawals, Meant to Protect Savings, Leads to Mixups, Ad Hoc Responses; ‘It’s All So Confusing’

By KELLY GREENE and ANNE TERGESEN

A new law that was intended to give retirees and their battered nest eggs some relief is causing aggravation instead.

Owners of individual retirement accounts and 401(k)s who are over age 70½, and those who have inherited such accounts, must withdraw a minimum amount from those accounts each year, based on their life expectancy. In December, lawmakers suspended that requirement for 2009, hoping to give investors a chance for their accounts to rebound after a brutal year in the markets.

Yet that seemingly simple idea — a one-year reprieve from mandatory withdrawals — is giving headaches to investors, financial planners and retirement-plan custodians. Retirees are getting mixed signals from IRA custodians and other retirement-plan administrators about how to go about suspending withdrawals — and whether they’re even allowed to do so. Administrators of 401(k) plans are worried that the participants in their plans may not be allowed to suspend their withdrawals, and say that the Internal Revenue Service and Treasury Department have yet to provide adequate guidance.

A number of IRA custodians are trying to establish procedures, especially for investors who receive automated payments each year from their retirement accounts, that will allow account holders to suspend or trim required minimum withdrawals. But some don’t plan to send letters outlining changes for 401(k) holders until April. In the meantime, some custodians are still mailing checks — even to retirees who may not want them. Other custodians are stopping payments unless account owners ask for the funds.

There is a backstop for retirees: the “60-day rule.” IRA owners can generally roll unwanted withdrawals back into their accounts, as long as they do so within 60 days. To do so, you can simply write a check to the IRA custodian for the same amount you received. You’re allowed to do one rollover per account once every 12 months. Otherwise, the distribution is taxed. It’s not uncommon for people to miss that deadline, and the IRS in recent years has been reluctant to approve requests for extensions.

“It’s all so confusing,” says Connie White, a 73-year-old retiree in Plainfield, Ind. “You have to stay on top of it.” She and her husband Paul, also 73, received a check from an IRA annuity that they had set up to generate automated payments before they thought to call to change the amount.

The Whites sought help in late January from their accountant, Martin James. Three days later, Mr. James got an email from the couple’s IRA custodian, Lansing, Mich.-based Jackson National Life Insurance Co., explaining how customers like the Whites could suspend their payments. With financial advisers’ help, Jackson National is working with customers whose automated payments already went out to return any unwanted withdrawals, says John Koehler, the company’s vice president of retirement and wealth strategies.

Some retirees, like the Whites, aren’t waiting for their IRA custodians to contact them first. But consistency is in short supply. ING Groep NV’s U.S. operation at first told IRA owners that it would continue to pay distributions that had been set up on a systematic schedule. Recently, though, the company said that, instead, it will suspend such payments unless customers ask to continue them.

“The legislation was not yet signed by the president when we issued a preliminary communication,” ING said. “Once the law was signed, we … concluded that this was the best way to be compliant and serve our customers.”

Security Benefit Corp., based in Topeka, Kan., stopped payments to IRA owners who withdraw only the required minimum each year, but it has continued payments to those who take out larger amounts. “We suspect that those people [who take out more] are probably living off that income, so we are not going to turn those withdrawals off,” says Thomas Granger, sales director to qualified plans at Security Benefit. In January, a “handful” of customers got distributions they had intended to skip this year, he says.

Gloria Guth, a 73-year-old retiree in Coconut Creek, Fla., called her IRA custodian, TIAA-CREF, in early January to see if she could take half the amount normally required. The answer, she says, was “no, or maybe.” Later, when she asked again, she was told she could do so. A TIAA-CREF spokesman says its call center handles 12,000 clients a day, “and we strive for all of those conversations to help enhance our customers’ financial security.”

The rules for 401(k)s and other workplace-sponsored retirement plans can be even murkier. Some 401(k) plans — for the moment, at least — are still requiring participants to make withdrawals. The reason: Plan sponsors have to get the documents governing their plans approved by the federal government, and some fear that allowing any suspension of payments will violate those documents. Others worry that suspending systematic payments will run afoul of their plans’ governing language.

As such, administrators are trying to figure out whether they first have to amend their plan documents, and get those amendments approved by the IRS, before they can suspend withdrawals.

“There’s confusion over whether amendments are necessary, whether you can continue payments unless the retiree opts out, or stop the payments unless the retiree opts in,” says Jan Jacobson, senior counsel for retirement policy at the American Benefits Council, a Washington, D.C., trade group.

On Friday, the council sent a letter to the IRS and Treasury Department asking for guidance on how plans can suspend distributions and how retirees who already received unwanted payouts can put them back without penalty. (People age 70½ and older who are still working aren’t required to take distributions from their current employer’s retirement plan.)

The good news: The majority of 401(k) distributions don’t go out until later in the year, “so there is time to wait for clarification,” says Terri Hale, a spokeswoman for Principal Financial Group in Des Moines, Iowa, an IRA custodian and 401(k) administrator. (Account owners who have already received payments can roll them into an IRA and possibly back into their 401(k) or other tax-deferred account, as long as they do so within 60 days.) Principal is joining with industry trade groups in asking the Treasury Department to streamline the “administrative burden” involved in suspending retirement-account withdrawals, Ms. Hale says.

Financial planners are urging investors to keep the following points in mind:

Don’t wait to hear from your IRA custodian or 401(k) administrator. If you wish to suspend distributions in 2009, or ensure delivery of payments, contact your plan and ask what steps, if any, are required.

Similarly, ask whether you will need to submit a request in 2010 — after the law authorizing the one-year suspension expires — to get automatic distributions started again. Some companies say they plan to resume distributions; others will require written requests.

If you do suspend retirement-account withdrawals this year, you may want to roll traditional IRA assets into a Roth IRA. Of course, you’ll have to pay income taxes on the amount you convert. But Roth IRAs have no required distributions and generally no tax on future earnings.

Are you the beneficiary of a trust that holds an inherited IRA? If the trust instructs the trustee to pay you only the “required” IRA distribution, you may get nothing this year, says Natalie Choate, an estate-planning attorney at Nutter McClennen & Fish LLP in Boston. If you need the money, see if the trust authorizes the trustee to pay you “additional amounts in the trustee’s discretion.”

If you were supposed to take your first distribution in 2008, and you waited to do so in the three-month grace period that ends April 1, you still have to make the withdrawal (and pay any tax due). But if you turn 70½ in 2009, you’re off the hook for your first-year withdrawal, and would have to make your second-year withdrawal by Dec. 31, 2010.

February 11, 2009 Posted by | Financial, Law, Legal, Life, sales & marketing, small business | , , , , , , , , | Leave a comment

25 Random Facts about Computers and the Tech Sector

Well, it is Sunday and I’m feeling lazy (actually I have some business-related work to do), so I’m going to post up an interesting article from John Dvorak at Marketwatch.com. Enjoy!

    

25 random facts about computers, tech sector

By John C. Dvorak

Last update: 1:26 p.m. EST Feb. 7, 2009

SAN FRANCISCO (MarketWatch) — There’s some wild fad going on in the Facebook realm where you list 25 random facts about yourself or about something you are involved with. Yesterday it crept into the New York Times sports page. Everyone is doing it and if you Google “25 random facts” you get 32,000,000 hits. I’m on it with this list!

  1. The first personal computer was the Berkeley Enterprises “Simon” which sold for $300 in 1950.
  2. Seagate Technology (STX) was originally named Shugart Technology.
  3. The precision quartz clock in a computer cannot keep accurate time.
  4. Windows was originally named Interface Manager.
  5. IBM (IBM) , which stands for International Business Machines, was an exaggerated name derived from NCR, National Cash Register.
  6. Floppy disks in the late 1970s were 8 inches in diameter.
  7. The VIC-20 computer from Commodore sold for $299 in 1980 with 5K of RAM.
  8. The world’s first one gigabyte disk drive was announced in 1980. It weighed 550 pounds and had a price tag of $40,000.
  9. Many consider the Burroughs B-5000 (circa 1955) to be the single greatest computer ever designed.
  10. IP means both Internet Protocol and Intellectual Property. Thus when you say a company is involved with IP, nobody will know what you are talking about.
  11. The ticker symbol for Sun Microsystems (JAVA) was changed from SUNW to JAVA and the company has been struggling ever since.
  12. SanDisk (SNDK) used to be called SunDisk.
  13. Apple (AAPL) popularized the laser printer.
  14. Adobe Photoshop (ADBE) was originally called Display, then ImagePro. It was not developed by Adobe, but licensed from a college student named Thomas Knoll in 1988.
  15. Ink jet ink costs $5000 per gallon.
  16. The precursor to today’s GPS car navigation system was released in 1985. It was the ETAK Navigator and used a computer with a dead reckoning program to navigate.
  17. Intel’s (INTC) first microprocessor was the 4004. It was designed for a calculator, nobody imagined where it would lead.
  18. SCO, the company that sold a version of Unix, used to be called the Santa Cruz Operation.
  19. Computers should be turned off at night.
  20. Peter Norton of the fabled Norton anti-virus program once said that there was no such thing as a computer virus and considered the whole idea some sort of hoax.
  21. “Modem” means modulator/demodulator. This referred to the modulation and demodulation of an analog signal to make it digital. By this definition the device called a cable modem is a misnomer. It should be called a network adapter.
  22. Dell Inc. (DELL) was originally called PCs Limited.
  23. The Apple 1 was the first computer developed by Apple and was nothing more than a bag of parts. The Apple II was the first finished product sold by the company.
  24. Lenovo (HK:992news chart profile ) means “new legend” — “Le” for legend and “novo” for new.
  25. In the 1950s computers were commonly referred to as “electronic brains.”

    Fun, huh? 

February 8, 2009 Posted by | Life, sales & marketing, small business | , , , , , | Leave a comment

Add Value Everyday

When I first started this blog I intended to simply write on legal issues. Taking into consideration today’s environment, however, it has morphed more into a forum on building and maintaining your business. Small business owners face huge challenges, not only from corporate competition, but also from lack of consumer liquidity, overdue accounts payable and rising costs all around. I want to offer tips and open discussions on ideas to help small business owners move forward in this economy. In addition, my firm is putting together a small business consulting practice to provide essentially a team of experts to act as a guide to business owners in all areas, including but not limited to business planning, marketing, taxes, cash management and, of course legal issues. If you want a consultation, please contact me at (216) 577-0013.

Today’s topic is on adding Value. This applies to both existing and prospective customers/clients. It is uber-critical to keep our existing customers and the best way to do that is to go overboard with customer service and attention. If you normally take a week to get a job done, do it in half the time if possible. Return phone calls immediately. Start an e-newsletter and e-mail campaign on topics not only related to your business but also to big current event issues of the day. The goal is to keep the customers engaged and maintain ‘top-of-mind’ awareness of your company amongst those customers. This will not only maintain your current base, but hopefully will grow referral opportunities.

As to prospective customers, keep pushing and make every effort to bring them on board. Always be moving, within reason, towards the sale. Offer them a door into your business by including them on your customer mailings or set up a breakfast/lunch meeting if you feel that it might help close the business. Always return their phone calls as soon as humanly possible. Understand that you are not the only business looking to bring them on board and seek avenues to place yourself above the competition.

There are many, many ways to add value to your customer/client relationships, and the methods vary from industry to industry. The bottom line is that you need paying customers in order to stay in business, so start thinking outside of the box to keep and obtain those customers.

Michael K. Astrab is the principal attorney for Astrab Legal Services LLC, a general practice law firm located in Cleveland, Ohio. He may be reached at (216) 577-0013 or via e-mail at astrablegal@sbcglobal.net. This blog is designed for informational purposes only and does not constitute legal advice.

February 4, 2009 Posted by | Financial, Law, Legal, Life, sales & marketing, small business | , , , , , , , , , , , | Leave a comment

Small Business SWAT Team

I have come up with a new element to my law practice. Given the current state of the economy and the strain that financial worries are placing on the bottom lines of many companies, I am in the process of organizing a small business ‘SWAT Team’ to assist business owners facing an uncertain future.

I am putting together an inter-disciplinary team of at least a CPA, Financial Advisor and Banking/Lending specialist to give advice to business owners. Following the holistic approach that my practice takes, I want to take a look at everything in the business – from the balance sheet to the business/marketing plan. We will be looking for opportunities to save money, either through cutting expenses or possibly renegotiating leases, as well as opportunities to grow the business through new marketing approaches or suggestions on lead generation, client retention ideas or new approaches to networking. An audit of the business may find new ways to save on taxes and the structure of the business will be analyzed to determine whether or not the creation of a new corporate entity may be in the owner’s best interest. If there are outstanding accounts payable we can discuss stepping up collection enforcement or renegotiating repayment terms in order to bring those accounts current.

My goal is to keep small businesses in business. Small business owners are the lifeblood of the new economy and must be given every opportunity to succeed. I want to use my practice to assist and am looking for any small business owners who may be interested in sitting down for a free initial consultation. I can be contacted at (216) 577-0013 or via e-mail at astrablegal@sbcglobal.net.

Michael K. Astrab is the principal attorney for Astrab Legal Services LLC, a general practice law firm located in Cleveland, Ohio. He may be reached at (216) 577-0013 or via e-mail at astrablegal@sbcglobal.net. This blog is designed for informational purposes only and does not constitute legal advice.

February 1, 2009 Posted by | Financial, Law, Legal, Life, sales & marketing, small business | , , , , , , , | 2 Comments

Quick News Note: 1099 Delivery Change

FYI – The IRS has permitted brokerage firms to delay mailing 1099B forms until February 15th of this year (with an intervening weekend and holiday pushing that date to 2/17/09), an extension of two weeks from the traditional January 31st deadline. Technically this does not affect 1099DIV and 1099INT forms, but brokerage firms are permitted to consolidate that information with the 1099B, so they may also be lumped into the delay. So the bottom line is that you most likely won’t be receiving any investment-related 1099s until sometime in mid to late February if you use a brokerage.

January 28, 2009 Posted by | Financial, Legal, Life, small business | , , , , | Leave a comment

Quick Observation: White Hell

I can see now as an adult why my parents moaned and complained about the snow. I just managed to get my car back in the garage after getting it stuck in my driveway. We’ve got at least 7 inches on the ground and this is supposed to keep going until around dinnertime…Yuk!
Oh well, back to work on shoveling!

January 28, 2009 Posted by | Life | , | Leave a comment