Rochester Business Law, LLC

03/04/2025

I haven’t posted about the BOI reporting requirement because it’s been a moving target, but we may be approaching some clarity. After being killed and resurrected a number of times in the courts, it appears the Department of Treasury is just going to limit this to “foreign reporting companies,” which I don’t believe has been too clearly defined yet. Anyway, it would appear that at least for US citizens with an interest in LLCs or corporations registered in Minnesota or any other US state, the BOI reporting requirement is going away. We’ll see if it stays dead this time, and whether the courts may yet kill it for whatever “foreign reporting companies” turns out to mean, but for now most business owners don’t need to worry about it. If you don’t know what this BOI thing is, you may not need to learn about it anyway.

The Treasury Department is announcing today that, with respect to the Corporate Transparency Act, not only will it not enforce any penalties or fines associated with the beneficial ownership information reporting rule under the existing regulatory deadlines, but it will further not enforce any penal...

08/10/2023

This is a decent summary of some of the basics regarding trusts; why they can be a good idea, different types, etc. Call 507-281-5711 if you want to discuss whether it might be a good strategy for you.

Estate planning is critical to preserving generational wealth. For many families, a living trust can streamline the process of transferring wealth after you die by eliminating probate and minimizing estate taxes. Read: What To Do If You Owe Back Taxes to the IRS Many people think a revocable or irre...

07/19/2023

https://www.fool.com/investing/2023/07/18/is-a-living-trust-the-most-financially-savvy-way-t/

Google suggested this article to me, and I’m passing it on to all of you. Another factor not referenced in the article, which applies more in some states, such as Minnesota, than others, is the potential to help reduce or eliminate estate tax. Let me know if you’d like to discuss if this could be useful for you. 507-281-5711.

Add control, privacy, and efficiency to your final wealth transfer with this kind of trust.

07/03/2023

Minnesota has banned non-competes effective July 1, 2023. This does NOT, however, apply retroactively to preexisting non-competes. So, if you signed a non-compete before July 1, it is still binding to whatever degree it was before, which is often a complicated question. In other words, if you were restricted from competing with a current or prior employer on June 30, 2023, you still are (unless it happened to coincidentally expire by its own terms on that date). If you have questions regarding to legitimacy of the non-compete in place, feel please reach out at 507-281-5711. The new law also does not ban non-solicitation agreements, including those signed after July 1, 2023.

Business owners: if you have a standard employee or independent contractor agreement you are using now, it may need to be updated. If you are used to relying on a non-compete provision to protect your business and retain employees, you will need to start considering other strategies. Call 507-281-5711 to discuss this as well.

07/21/2021

Happened across this. I'll start by noting that Tania Shah does not endorse Rochester Business Law, or presumably know of its existence, and I don't necessarily endorse her practice or any of the advice given in this podcast, none of which is specific to Minnesota law. Those disclaimers aside, this brings up some good things to think about for those individuals working as health coaches, yoga instructors, trainers, etc. Even if you aren't selling gadgets, don't have a brick-and-mortar office, don't have partners, or aren't on the stock exchange, doesn't mean you aren't running a business and that your business can't have real consequences for your personal life.

‎Show Health Coach Radio, Ep Demystifying Legal Matters for Health Coaches | Tania Shah - Jul 14, 2021

03/16/2021

I recently had a business owner say he was considering adding a non-compete clause but he "knows they aren't enforceable anyway." This is a misunderstanding, or at the very least an oversimplification of non-compete law. Unfortunately, non-compete law is ripe for oversimplicfication. In general, the law doesn't like restricting people's ability to work. Non-competes are valid and enforceable, however, to the extent they are "reasonable." What's "reasonable"? Well, it depends on a lot of factors.

It depends on how broad the restriction is, in terms of how long it lasts, the geographic range, and the types of jobs it restricts. It depends on what the business gave up on the front end (did they pay for more training, offer a payment, was it part of a business purchase, etc.?). And it depends on other factors regarding how difficult it would be for the person to earn a living if it were enforced. Often, if the agreement is written correctly, it will be enforceable up to what is reasonable, even if the written non-compete clause itself extends beyond that. So there is a lot of uncertainty.

Beyond that, even unenforceable or questionably enforceable non-competes can have an impact. I've told people considering a new position that their old non-compete is probably not enforceable, but if their old employer wants to, they can make it expensive, time-consuming, and generally difficult to get to the point that a judge tells them it's not enforceable. Similarly, I've told employers that the non-compete they are considering might not be enforceable, but it could at least be a deterrent against the employee jumping ship to a competitor for the same reasons.

Ultimately, if you think a non-compete is clearly enforceable or unenforceable, it's probably not quite that simple. You can call 507-281-5711 to at least get some more clarity on creating or dealing with a non-compete clause or non-compete agreement.

02/17/2021

https://www.forbes.com/sites/ashleaebeling/2021/01/15/state-death-tax-changes-loom-where-not-to-die-in-2021/?sh=520fd57444cd

An interesting article for anyone planning to die in 2021, especially in Minnesota. Okay, so none of us are planning to, and hopefully no one reading this will, but that's the part of "estate planning" we don't really get to plan. We can, however, plan for it. If you're someone for whom estate taxes are a concern, an estate plan (meaning your will, trust, and related documents) can avoid or minimize what your estate has to pay. Many people don't think of themselves as having a taxable estate, but when things like life insurance death benefits for both spouses are included, their combined estates are larger than they realize.

If you're not someone for whom estate taxes are a concern right now, another take-away I got from this article is that this is fluid. Right now federal estate taxes aren't a concern for many people, but that may be changing. That change may impact some state's laws. As politcal winds draft back and forth, the exemption amount and tax rate may change significantly in either direction. I hope everyone reading this lives long enough to watch the estate tax laws ebb and flow like the tides. Since none of us knows for sure what those laws will be at the time we pass, it's important to have a plan in place and stay in touch with your estate planning professionals.

Whatever state we die in, we all hope to be surrounded by loved ones. If you also hope to leave as much of your estate to those loved ones as possible, it's a good idea to have your estate plan created or reviewed. Call Matt with any questions at 507-281-5711.

Are higher state estate taxes in your future?

12/04/2020

'Tis the season. I just got a letter noting the need to renew my LLC (or corporation) and advising me to conduct my annual meeting. So far so good, except the letter also suggested I send my annual meeting minutes to them for filing, for a fee, and pay a fee for them to renew the LLC. I'd suggest renewing your LLC or corporation for free at the Secretary of State's website (https://mblsportal.sos.state.mn.us/Business/Search). There should be no cost if you do this on time.
As for the annual meetings, it is a good idea. It could contribute to protecting you personally in the event of an issue with your company by showing you are keeping up with the "corporate formalities," which help protect against piercing the corporate veil. We do help people with this, and we do charge a fee for drafting the meeting minutes. This often also serves as a time for people to discuss whatever has been on their mind that they've meant to ask a lawyer, but haven't gotten around to. There is, however, no requirement that the meeting minutes be filed anywhere; just keep them with your other business documents in case you ever need them.
So if you get one of these letters, it can be a nice reminder of some things you should do by the end of the year, but don't send them a check. If you would like help documenting your annual meetings, or otherwise have questions regarding what is and is not required of you as a business owner, we can help at 507-281-5711.

Note: Information provided when filing a business entity is public data and may be viewable online. This includes but is not limited to all individual names and addresses.

12/01/2020

Have a plan. There can be better and worse estate plans as it pertains to tax or probate avoidance, but often the important thing is just that you have some kind of plan drafted and legally executed. If your family knows your plan, that can save a lot of trouble as well. What can happen if you don't? I'll share a recent situation I encountered, names and specifics redacted, of course. The short version is this: Husband and Wife, and their respective kids, didn't have a plan in place and it is going to add some cost and headaches, and it could have been a lot worse. If any of this sounds like it could be you or a family member, call 507-281-5711 to start getting a plan in place.

Husband and wife both have kids from previous relationships and owned a home at joint tenants. They'd always agreed that the kids on both sides would split the house when they passed, but never got around to setting that up in their estate plans. Wife passed a few years ago, and now Husband wants to do the right thing and be sure all of the kids are provided for if something happens to him. To avoid probate and other potential difficulties, we decide on a trust that appoints one of the kids to handle the sale and the distribution of proceeds, and it looks like everyone will get their share with minimal delays and headaches. But....when getting the trust deed ready, we discover that shortly before Wife passed, unbeknownst to Husband, one of her kids had her sign a document severing the joint tenancy and a will leaving her share to her kids.

We updated Husband's trust so that his half just went to his kids (actually giving them each a slightly bigger share because she had more kids). Ultimately, everyone will get more or less what the should, except now any sale will have to wait for Wife's share to go through probate, further cutting into her kids' share of the proceeds, and Husband's trustee will have to coordinate with Wife's estate's personal representative, which may or may not lead to trouble and additional expense.

I don't really blame Wife's kids for their concern; had they not severed the joint tenancy and Husband passed without a will or trust, they would have been inadvertently cut out of some of their inheritance. But by doing it hastily and at least somewhat secretly, they added a lot of cost and trouble to what could have been simple. The real lesson here is that Husband and Wife should have taken care of this when they were both still healthy. Then Wife's kids wouldn't have had to be scared of being cut out, and Husband and his kids wouldn't have found out years later that they were only planning for half of the interest in the house.

10/20/2020

An interesting discussion regarding age and brain development. Basically, the prefrontal cortex, which is the part of the brain that "helps you to inhibit impulses and to plan and organize your behavior" is not fully developed until around age 25. Now, I only dabble in neuroscience in my down time to relax; my day job involves the legal aspects of estate planning.
So what? The brain science is relevant to estate planning because if you die with a minor beneficiary, your money will go to a Uniform Transfer to Minors Account (UTMA) and distribute when the child is 21, at the latest. That means a partially developed prefrontal cortex is in charge of those funds for at least 4 years, if they last that long. Moreover, is a partially developed 18 or 21-year-old going to do something with that money that further inhibits the development of the prefrontal context?

The good news is that with trust language, we can make sure someone with a fully formed prefrontal cortex is handling the important financial decision-making until your loved ones are at least old enough to have their best chance of making good decisions. Call 507-281-5711 to find out more.... about the legal stuff, not the brain stuff. That's what google is for.

Under most laws, young people are recognized as adults at age 18. But emerging science about brain development suggests that most people don't reach full maturity until the age 25. Guest host Tony Cox discusses the research and its implications with Sandra Aamodt, neuroscientist and co-author of the...

09/30/2020

Rochester small businesses: Rochester Public Utilities still has Coronavirus Relief Funds available for eligible businesses. Check this link to find out more:

Financial Assistance