April, 2013 | BizSieve.com

Business Partners: Are You Responsible For Their Ethics?

Friction between business partners is common without a clear delineation of duties. Partners frequently have different ideas as to how to run the business and invest capital. Unfortunately, some businessmen seek to enrich their companies by committing fraud and tax violations. Whether an unwitting business partner is liable for that malfeasance depends upon the circumstances surrounding the people involved, the act, and even the company itself.

Privately-Held Companies and the Mens Rea

A wide array of federal crimes, including tax evasion and false claims made under the False Claims Act, require a certain level of intent to commit the act or knowledge that they were committing the act. Mens rea means “guilty mind” in Latin and is used to denote intent leading to culpability. Strict liability offenses do not require a mens rea, as intent is not required.

This means that individuals are generally not personally liable for the actions of their business partners, as the intent to commit the offense lies with the partner. Such actions can harm the company by resulting in regulatory backlash such as hefty fines. Since many business owners have not only an income interest but have also personally invested in the business, this can be painful to the partner. However, direct regulatory action against the innocent victim is unlikely.

Public Companies and the Sarbanes-Oxley Act

The matter becomes considerably more complicated if the company is public. Congress passed the Sarbanes-Oxley Act of 2002 after a series of accounting scandals around the turn of the century, most notoriously involving Enron and WorldCom. Sarbanes-Oxley imposed significant requirements upon publicly traded companies, most of which were aimed at ensuring the integrity of the company’s financial reports.

Among other requirements was the mandate for certain executives to certify the company’s periodic financial reports. The executives must certify that the statement contains no misstatements or omissions of any material facts pertaining to the company and its subsidiaries and fairly represents the financial condition of the company and its condition. Executives must also certify that the company has internal controls and that these controls have been audited in the last 90 days.

This means that if one company’s principal officers is involved in an ongoing fraud against the company and the other officers know about it, they are personally liable if they sign off on the corporate financial statements. Penalties range from a $1,000,000 fine to 10 years imprisonment or both per violation. This ensures that the controlling officers at a company cannot misrepresent their company’s financial position, including tax liability, without incurring personal liability.

Blowing the Whistle

Blowing the whistle on ongoing fraud is a personal decision with benefits and detriments. From a financial standpoint, whistleblowing activities aimed at a company in which one has a controlling interest are likely to reduce the value of that company as the government not only demands compensation but also high punitive damages. On the other hand, whistleblowers are generally entitled to a sizeable portion of the funds received from government actions. Additionally, from an ethical standpoint, fraud and misrepresentation are morally reprehensible activities that cost the taxpayers money.

Individuals interested in blowing the whistle on unlawful activity should contact an experienced false claims attorney such as Goldberg Kohn,Ltd. The whistleblowing process usually starts with a qui tam action served upon the Attorney General of the United States. The government will have the opportunity to pursue the claim itself or reject the claim, in which case the plaintiff may pursue it privately. In either case, the plaintiff is entitled to a percentage of the recovery.

No matter the source, federal investigations targeted at a company in which you own a sizeable stake are not fun. A prolonged investigation will take time and if the fraud is big enough, the ensuing regulatory action, lawsuits, and negative publicity against the company can destroy it. However, by failing to take action, executives who mistakenly went into business with a criminal condone such conduct. When a source of liability is discovered, the correct course of action is to stop all illegal activity and seek legal counsel immediately. Anyone who fails to do so may find that a lawsuit for a breach of a fiduciary duty is the least of his or her problems.

A former news journalist, Ann Bailey reports on this issue of ethics and consequences for anyone suspecting their partner of underhandedness. Goldberg Kohn,Ltd is an aggressive legal voice of protection for any client choosing to become a whistleblower to seek right from wrong in their business arena.

Photo Credit: http://www.flickr.com/photos/dellphotos/8430831912/

Women Entrepreneurs: Keeping Business Professional on Payday

Making it in the business world can be very difficult for any small business owner. Unfortunately, many women who own a business experience the additional issue of being taken less seriously than their male counterparts. In order to rise above all of the unfair generalizations about female business owners, it is important to take every step necessary to present yourself in a professional light. Although it is not fair that you might find yourself in a situation where you have to work harder to prove your worth, it is still an unfortunate aspect of life in the business world for many women. Therefore, it is best to accept this disparity for what it is and make sure that you do not inadvertently do anything that exacerbates the issue.

Importance of Payday

Regardless of how small your company is, you need to make sure that you adhere to certain guidelines if you want to be taken seriously as a business owner. For example, it is never acceptable to give your employees cash in lieu of printing paper checks. Even though some people would probably prefer this approach, it will make you look very unprofessional. It is also vital to ensure that you never miss a payday. After all, if your employees are forced to wait for even just one day longer than usual to get paid, the word is going to spread, and it will make you look like you do not have the necessary skills to make it in the business world.

Proper Tax Practices

The most important aspect of payday, besides actually making sure that your employees are paid on time, is to make sure that everyone is taxed correctly. Unfortunately, many companies opt to use an employee who has no previous payroll training as a way to cut costs, and this can lead to huge issues down the line. For example, if your payroll coordinator has not been properly trained, they might make a simple mistake at the beginning of the year that causes every employee to be under-taxed. When tax time comes, your employees will be very upset if they discover that they owe money because their payroll was not properly handled.

External Payroll Companies

If you want to ensure that payroll always goes smoothly, you should strongly consider using an external payroll company. These services will make your company look more professional, and they will also ensure that each employee is taxed correctly. Additionally, payroll companies will have the ability to cut paper checks and offer direct deposit. Most employees prefer to have their money placed into their bank account for them, so the direct deposit option is definitely a nice benefit of working with an external payroll company.

Taking the necessary steps to make sure that each payday happens without any problems is a major component of building a professional image. Therefore, you should definitely place a large emphasis on the payroll process. Working with an external company is a great option to help you meet this goal, especially if you do not have enough room in your budget to hire an experienced payroll coordinator.

A small business owner, Ann Bailey urges hiring payroll companies for any businesses with employees. Deluxe Checks is an outsourced payroll company that takes complete oversight of the payroll process and offers full service for mistake-free paydays.

Photo Credit: http://www.flickr.com/photos/proimos/7315190192/

5 Business Ideas for Shipping Containers

Shipping containers used for transporting goods overseas are an untapped industry for entrepreneurs that wish to take advantage of a green business. These sturdy metal containers, often 100 square feet or more in size, are in abundance at shipyards around the country, ready to be recycled into new products or for new uses. Shipping companies often “retire” these containers after a few uses because of changes import specifications, vendors or customers. Once retired, these containers sit there waiting to be re-purposed, otherwise they just sit and waste away.

Five Novel Business Uses:

Innovative business owners and developers have found that these shipping containers are perfect for many different types of construction projects. With a little creativity, and a little reconditioning, these containers have been changed into some wonderful structures.

1. Coffee Stand Starbucks, in an effort to be creative and stand by its environmental policy of being “good citizens to the Earth,” has taken a retired shipping container and changed it into a walk-up coffee stand in an area where they could not put in a stand-alone building. This experiment has been so popular that the company is planning to change many of their stores into this type of building.

2. Shopping Mall An innovative developer in Michigan thought that these containers could create the perfect eco-friendly shopping mall. Each container is connected by walkways, and each one is an individual store. Of course, you will not see super-sized stores in this mall, but every unit is occupied, and there is no lack of business.

3. Apartments Another developer in the Michigan area discovered that these containers could be easily changed into micro apartments, perfect for those with limited need for space or limited income. The units meet all health and safety standards and were quickly occupied.

4. Storage Facilities Developers all over the country have discovered that is is more economical and more environmentally sound to re-purpose these shipping containers into self-storage units than to build these units from scratch. This is an incredible opportunity to save resources while providing a valuable service.

5. Tool Shed These containers make great personal storage units on your own private property. A business has begun purchasing and refurbishing these shipping containers into personal workshops and tool sheds. Because these items are still considered to be “mobile” structures, many areas will not require special permits to have them on your property and they are not a built-in structure which will produce more taxes on your home.

These are just a few of the most recent uses found for these retired shipping containers. With some imagination, these containers could be re-purposed into any type of business or structure. It is an environmentally friendly type of business that will draw a lot of attention from potential clients due to its uniqueness. What is perhaps the most impressive, however, is that they are very low cost in comparison, and the potential for profit is very high.

Jonathan Billings is a small business entrepreneur and offers this article to share unique and affordable uses of containers typically thought of as only temporary shelters for valuables on job sites and other short-term uses. At StorageContainer.com you can either lease a self-contained job site office, or buy several for a cool community project!

Photo credit: http://www.flickr.com/photos/clhendricksbc/8459875381/

Why Your Internet Business Needs a Human Voice On the Line

The Internet has brought about many changes to the way a company can conduct business. One of the most significant changes is the change from brick and mortar to laptop offices. A business no longer needs to have a physical presence to conduct business. They can purchase from suppliers, contact remote employees, interact with their customers and ship their products all from their virtual location.

“This seems like the ultimate way to conduct a business!”

In most ways, this statement is true. You have reduced operating expenses, you can work from anywhere and you can produce a product or service with little effort.

However, consumers are starting to grow tired of computer generated customer service. They want to “connect” with a real person when they have a question or an issue. They want to know that the company they are dealing with is “real.” They are becoming disenchanted with live chat options and want to talk to a human being.

Is This The End For Internet Based Businesses?

Of course not, internet businesses are here to stay, they only need to adapt to their consumers. Any business that wishes to meet the needs of their clients will prosper, and Internet based companies can meet this need by investing in a virtual office.

An online solution like a virtual office from ring central(dot)com provides that personal touch that laptop businesses often lack. They have “real” receptionists to take your calls and interact with your clients. The receptionist will be assigned to your company and you can interact with them as you would an answering service.

This one feature alone can set you apart from other online businesses that only provide online contact. It will also give your company live support for any time of the day, meeting the needs of your clients in different time zones.

Can You Still Keep Operating Expenses Low?

The additional benefits of using a virtual office are that you do not have to rent office space, pay for electricity, or pay employee related expenses. You will not be obligated to pay payroll tax, carry workers compensation insurance, or worry about someone calling off from work. Your virtual office will always be there and operating, increasing your business and profit margin.

The Internet has become a large part of everyday life. More people turn to the Internet now for information, advice, and shopping than ever before. It has become a tool that helps people find what they want, regardless of distance, and make connections with people all over the world.

As much as this technology has helped advance the world, the desire to communicate with a real human still remains. People want to place a voice behind their transaction to make sure that it is real. They want to hear sympathy when they are upset with a product or service, and they want to hear a calm voice when they are angry. By providing a point-of-contact for your clients by using a virtual office, you are providing them with that voice they desire to hear. This will increase your business while still giving you the freedom to operate your Internet based business on your own terms.

A small business operator, Ann Bailey presents these tips for new ways to save and succeed in the office. Having a virtual office from ringcentral.com is an easy way to provide all of the old fashioned charm of a typical store front office while only paying for the sleek, new streamlined business model of internet enterprises.

Photo Credit: http://www.flickr.com/photos/mwichary/2398196800/

U.S. Real Estate Investment – Will It Ever Bounce Back?

When the U.S. housing market began to crash in 2007, it looked like declining values and foreclosure activity would never end. By 2009, most of the country saw a 34 percent decline in their property values, with some areas seeing drops of 65 percent or more. Every day it seemed as if the news brought only more disastrous coverage of the housing crisis.

Investors were even shying away from purchasing these low priced properties. Why purchase today when values would only drop again tomorrow? This was the sentiment felt by everyone concerning the housing market. However, time heals all market crashes, and there has never been a better time to invest into properties and “flip” them for a profit.

The Trend Started In 2012

In 2012, the housing market began to take a turn for the better. Foreclosures activity, while still high, began to ease, which allowed home values to begin to rise. During 2012, home values increased each month, even if only by a fraction of a percent, creating the best year the market has seen in half a decade.

In fact, the housing industry even contributed to the gross domestic product (GDP) of the nation in 2012, which was a first since 2005.

There are many other factors that are creating a good housing market at this time. Unemployment figures have steadily dropped over the last year and a half, consumer sentiment is on the rise, and interest rates remain low, making purchasing a home even more attractive.

What This Means For The Investor

If you are interested in investing into the distressed properties that still remain on the market, or if you are already a real estate investor, this news should make you happy. Even slight increases in home values means that you can easily purchase a distressed home, complete any necessary renovations, and flip it for a great profit because the market is now moving to benefit the seller.

If you are new to this type of business, you may wish to consider partnering with a cash-for-homes business that will help you learn the tricks of the trade. Why would a company be willing to share this type of information? Simple, because there are more than enough opportunities around that will allow everyone to profit.

Will The Trend Continue?

There are people who may wish to invest in this type of venture but are afraid that they will not be able to turn a profit because home prices are steadily increasing. This is, however, the farthest thing from the truth.

Even though home prices have been steadily increasing over the last 15 months, they are still on average 28 percent below their peak values in 2006. Some areas, such as Florida, Nevada, and parts of California are still 50 percent or more below their 2006 values. This leaves an extraordinary amount of room to generate a profit.

Additionally, there are still over 2 million homes in the Shadow Inventory. The Shadow Inventory are homes that are either severely delinquent in their mortgage payment, somewhere in the process of foreclosure, or have been seized by the lender but not placed on the market for sale. With this amount of property still looming, there will still be pliantly of properties available for investments.

Blogger Brady Sullivan is a tradesman and knows that certain types of updating and improvements actually do help your home sell faster. PDXRenovations.com has been transforming the Metro communities of Phoenix and Portland with high-quality property faceliftss, achieving quicker home sales at higher prices.

Photo credit: http://www.flickr.com/photos/arnoldmasonryandconcrete/7517687932/