Private Sector

Have You Recently Consulted Your Attorney, CPA and/or Banker?

Private-Sector Assistance - The legal, accounting and banking small business spheres have dramatically changed. Learn how to adapt.

Multi-national corporations often have in-house attorneys and accountants who remain abreast of moment-moment changes in the legal and accounting realms, respectively, and then take appropriate actions to benefit their organizations.

Yet, small business owners are typically stretched thin selling their products or services and additionally dealing with managing employees, cybersecurity protocols and a host of other day-to-day endeavors.

There have been so many new, New Jersey employment laws signed into law this year that Steven Adler, member of the executive committee, chair of the labor and employment group at the law firm of Mandelbaum Salsburg P.C., says, “I wouldn’t be able to sleep at night if I was a small- to medium-sized employer and I didn’t at least have enough sense to call an employment attorney to say, ‘Am I doing things correctly?’”

An attorney can conduct an employment law audit, for example, to ensure the small business owner is operating within the law, and – as is often the case – such proactive legal consultations are not especially expensive and are certainly less costly than lawsuits.

An audit is not merely for new laws. Adler says he told one of his clients, overall, “Let’s [fix] the glaring things I can spot in five minutes because you are running a huge risk that [your] business [for example] doesn’t have a proper disclaimer in front of [its] handbook.’ I didn’t want someone to get terminated and then claim, ‘Well, your handbook says you’ve got to follow these progressive discipline steps before you can terminate me.’ That would be a viable claim if there was no disclaimer in the front of the handbook.”

A competent employment attorney can identify such longstanding concerns and help assure compliance with new employment regulations: First, there is the New Jersey Family Leave Act, which used to apply to businesses with 50 employees or larger, but now applies to companies with 30 or more employees. Then, there is the New Jersey Paid Sick Leave Act, for which employers are required to provide sick leave and also track associated statistics for their employees. The Equal Pay Act – which asserts that it aims to ensure equal pay for all – is another matter where an attorney can provide guidance.

Regarding the employment law landscape, Heather Boshak, partner in the employment law group at Fox Rothschild LLP, cautions, “One thing I find with small businesses is that they often view themselves as ‘Everyone is a family,’ and, ‘My employees would never do this to me; my employees would never sue,’ and it’s just not the reality. If you are close to your employees, sometimes small business employers do not delineate lines that need [to be delineated]. Sometimes you are too close [to your employees], but if something happens to that employee that is not what they want (e.g., [his or her] employment is terminated), oftentimes no matter how close you thought you were, it doesn’t stop them from bringing suit against you. You need to be vigilant about the employment laws all along.”

Boshak also mentions reasons for an employment law audit, adding, “We have worked with some clients where they are saying, ‘Can you send me a list of all the things I am supposed to be doing under the new laws?”

Other attorneys float the prospect of employment practices liability insurance, for which the cost has decreased in recent years.

Small business owners may also want to consider speaking with their attorneys about ensuring they comply with a bevy of other federal, state and local laws. Intellectual property law is an additional, emerging area that may be worth examining, as the sphere of trademarks/trade dress, patents, copyrights and trade secrets not only focuses on protecting one’s own rights, but also aims to ensure that businesses do not inadvertently infringe upon others’ rights.

Succession Planning

In the accounting/financial planning environment, experts generally concur that a major trend is that it is now one of the best times for succession planning in the past three decades. The New Jersey estate tax has long since been eliminated, and the federal gifting exemptions (the ability to transfer wealth to heirs, tax free) are at $22.8 million for a married couple, and $11.4 million for individuals. New Jersey has no gift tax. With this in mind, some people feel that the 2020 presidential elections could potentially alter the above figures, and, therefore, many individuals who are interested in succession planning – across political lines – are often engaging in it, now.

Jeffrey M. Jaskol, MSFS, founder of The Jaskol Group (financial strategists), says, “If you are 60 and you haven’t done anything [regarding succession planning], you figure you have time, but if you are 80 and you haven’t done anything, you missed the 20-year window to do planning. Now, you potentially do not have enough time to complete a gradual transition. Gradual at 80 isn’t the same as gradual at 60.”

He adds, “What I am seeing is that as a result of the fact that businesses are doing well, and owners are aging, we’re hearing from more of them, requesting information and discussion, critiques of what is going on, and how they can be most effective at pursuing whatever road they want to go down.”

For example, the patriarchs and matriarchs that operate family businesses may want to retain control of their businesses while they are simultaneously engaged in succession planning, and establishing trusts may be a means for accomplishing this goal. If younger family members are not interested in operating the family business, the world of private equity is vast enough at this time that investors are becoming involved with businesses that were once considered too small to be worth their efforts.

New Jersey taxes are increasingly a topic among financial professionals and small business owners, and Glenn Schwier, CPA, JD, principal, Nisivoccia LLP, says, “A lot of our clients who are wealthy can operate their businesses from anywhere. And they keep under that 183-day threshold by living in Florida, and avoid significant taxes …” (Residency may be established by living more than half of the year outside of New Jersey).

Banking

Regarding trends in the banking/financial realm, Josephine Moran, executive vice president/director of retail banking, Provident Bank, says that small business owners have been confident, and in tandem, the demand for credit continues to increase as business owners look to grow. She adds, “With the influx of fintech and easier access to data, the lending process has become more streamlined and convenient, with options for many businesses and credit scores.”

Receiving exceptional customer experience and having banking technology solutions are also critical to small business owners today, Moran says.

Conclusion

It is perhaps worth repeating that early consultation with a business attorney (to identify and address potential liabilities) is not only relatively inexpensive, but additionally may yield peace of mind for owners. The accountant or financial planner should likewise be consulted early on, lest the business owner miss opportunities to generate profits and/or make timely decisions.

To access more business news, visit NJB News Now.

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