Category: Business Law

Navigate the complexities of business law with insight.  This blog category covers a wide range of topics relevant to businesses of all sizes, from startups to large corporations, including contract law, employment law, intellectual property, mergers and acquisitions, compliance, and litigation. Stay informed on legal updates and strategies to protect and grow your business.

  • Small Business Impacted By CTA

    Small business in Minnesota are impacted by the Corporate Transparency Act (the “CTA”). If you are unaware of this new set of rules, it was enacted by Congress as part of its on-going effort to combat terrorism, organized crime, and money-laundering. 

    As distant as these issues might appear, this new rule set impacts small and large biz. For businesses owned by military veterans, this new rule impacts them too. Whether the business is domiciled in Minnesota or otherwise, this rule demands planning from business owners.

    Corporate Transparency Act Requirements

    The CTA requires certain entities (called “reporting companies”) to report information about the companies themselves,. Their beneficial owners and company applicants (the persons who signed the formation documents for the entity) are impacted.  As a sidebar, this will further increase proxy agents and the fees they charge.

    Back on point, this rule set is so overly broad, that it impacts big and small companies. This includes mom and pop shops. I share your frustration. Nonetheless, it is vital to understand that failing to meet CTA requirements may result in severe penalties. This can be planned for and avoided. But, failing to accurately and timely filing their required reports may initiate audits and other efforts.

    Business owners can file reports online using the system created by Financial Crimes Enforcement Network (“FinCEN”). FinCEN is a department of the United States Treasury.

    Reporting Deadlines for the CTA

    The first issue is determining when the entity or business was created. The CTA looks at whether the small business or large business started on or before December 31, 2023. Reporting for these entities are delayed until January 1, 2025.

    However, entities formed on or after January 1, 2024 are subject to these rules. In other words, the Corporate Transparency Act requires “new” businesses to report under a tighter deadline.  Under a revised rule issued November 29, 2023, FinCEN extended the deadline for entities created in 2024 ONLY to no later than 90 days after the entity is formed, instead of the original 30 days. 

    For new entities created on or after January 1, 2025, the reporting deadline will be no later than 30 days after the entity is formed. 

    Even with an extension in 2024, this may be a very short time to gather all the required information. So, it will be important for those who are forming entities beginning in 2024 to start gathering required information. Ideally, gathering information before the entity is created.  

    While it is acknowledged that several professional organizations have petitioned Congress to delay implementation of the CTA, business owners should not defer preparation for the CTA, banking on a delay being granted.

  • Registered Agents for a Business in Minnesota

    Registered Agents for a Business in Minnesota

    Registered agents have a specific purpose when specified for a business. The purpose of an agent in the business world is to complete service of process.

    When creating an estate plan, this the goal is to assure clarity.

    Simple so far, but a little more complicated as we start delegating business roles inside an estate plan. From an estate administration perspective, the question that usually follows is whether a trustee or successor trustee can serve as an agent too. This question is often asked because Minnesota’s online business formation forms calls for a declaration.

    Certainly, a business can be organized by a person. But, entity or person that serves as an agent is slightly more complicated.

    Minnesota’s rules for a Limited Liability Company broadly define the term “person” to mean:

    An individual, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, public corporation, government or governmental subdivision, agency, or instrumentality, or any other legal or commercial entity.

    Minn. Stat. 322c.0102

    On the other hand, a registered agent for a business entity is likely limited to a natural person residing in Minnesota, a domestic corporation, or limited liability company, or a foreign corporation or foreign limited liability company authorized to transact business in Minnesota.

    Trustees and successor trustees know this because of Minnesota statute 5.36. According to the plain language of this rule, it appears trustees and successor trustees cannot not serve as a registered agent. On the other hand, the natural person, who also happens to be a trustee too, can serve.

    Unfortunately, this is where the line between trustees and agents acting through a power of attorney or durable power of attorney can become blurred. In other words, preventing contradictions inside trust documents, while also delegating responsibility outside a trust is a significant goal in the estate planning process.

  • My Notary is RULONA 🍋 and they live on the Second Floor

    RULONA is a fancy acronym sweeping through Minnesota.  If you are wondering what the fuss is all about, RULONA stands for the Revised Uniform Law on Notarial Acts.

    Starting in January, the laws for notaries will be changing. Like you, I am interested in these rule changes.

    A lot of people rely on this rule for their estate plan, real estate transactions, affidavits, and business dealings.  As described by various public service websites, RULONA replaces the existing Chapters 358 on notaries, and includes the Remote Online Notarization Act.

    In my experience, far too many people take for granted the rules imposed upon a notary.  Nonetheless, take a quick peak at a few of the changes impacting nearly all of us.

    RULONA Headlines

    Here are a few headlines regarding this update to Minnesota’s notary rules:

    • It creates a more detailed “Remote Online Notarization Act”,
    • Provides feedback on recording,
    • Outlines who is authorized to perform notary acts, and
    • Develops a “security” process for a stamp.

    Of course, there are many more highlights, which were described by Minnesota’s legislature here.

  • A Business Partnership Might Be Bad for a Veteran Owned Biz

    A business partnership is a fun phrase to use when you want to engage another person or entity.  On the other hand, using this term incorrectly or failing to address the terms of a partnership can have a detrimental impact on Veteran-owned businesses.

    In general, a biz partnership means two parties what to share profits and losses, including past debts.  Unfortunately, small businesses are fooled into thinking an undefined partnership is a wonderful thing.

    Working towards a common goal sounds great until your quasi-business partnership runs into a snag.

    Avoid Business Partnership Problems

    Here are a ways Veterans can avoid problems:

    • Never use the word “partnership”
    • If a partnership is desired, have a written agreement defining the relationship,
    • Determine whether Minnesota Chapter 321 is appropriate or if a different business statute makes sense

    Business Partnership Success Stories

    Do not get me wrong, there are many examples when a partnership makes great business sense.  The issue is not goal based.

    Instead, a successful partnership starts with understanding expectations.  Failing to define this type of professional relationship can risk piercing a corporate veil or negating the value of using a legal entity in the pursuit of commerce.

  • New LLC Laws in Minnesota Impact Veteran Owned Biz

    Did you hear about the new LLC laws going into effect in Minnesota?

    Veterans who own a business or have a share in a company that has a Minnesota tie should take note because the statute changes are significant for a biz that has more than one owner or officer.

    Also, Minnesota’s LLC rules and statutes are changing as of January 1, 2018.  Thus, this might become or develop into a significant issue for business owners.

    New LLC Laws: Step 1

    In this process, let me keep the first step simple.  Where can you find the laws that apply to a Limited Liability Corporation?  Thus, here you go:

    • Old MN LLC laws are here.
    • New Minnesota LLC laws are here.

    Simple, right?  In other words, the rules that help us determine what to do and how to do it are as easy as reading the laws and applying them to our business.

    New LLC Laws: Step 2

    The second step for Veterans to determine whether the statute changes impact their business is to review when their business started before or after the year 2015.  For the military vets who do not remember, consider using this website to acquire filings and reports.

    What To-Do with Minnesota’s Rule Changes?

    Luckily, most veterans have their organizational docs organized and easily accessible.  For example, documents like:

    • Articles of Incorporation,
    • Articles of Organization,
    • Annual Renewals,
    • Changes to a Registered Agent or Office,
    • Member Control Agreement,
    • Meeting Minutes,
    • Tax Identification Numbers,
    • Accounting Records, and or
    • Certain Amendments

    On the other hand, if a business owned by Minnesota Veterans have their org docs scattered amongst other documents, then getting organized becomes an immediate priority because Minnesota’s LLC laws are changing effective January 1, 2018.

    Do You Need an Attorney?

    For some businesses, yes.  For others, no.  This really isn’t about lawyering up.  This has more to do with control over compliance issues and keeping the peace amongst owners or and the company’s affairs.

    But, any Veteran willing to educate themselves on the new LLC statutes in Minnesota, I believe the outline shared by our Secretary of State (also called OSS) is an excellent resource.  Thus, check it out here.

  • Business While Deployed is a Little Easier in Minnesota

    Managing a business while deployed is an awful stress.  I would think most military business owners know how difficult it might be to keep one hand on a business while the other hand is devoted to the battlefield.  Adding the stress of a legal proceeding can heighten this awful stress.

    Luckily, Minnesota has a rule that helps members of the military while they are deployed on TDY or otherwise.

    Business While Deployed: Protection for Military Reservists

    Minnesota statute 192.056 protects military reservists from Civil Court Proceedings.  From a practical manner, this is what this might include stopping or delaying:

    • Small claims court claims,
    • Contract disputes,
    • Collection matters,
    • Employment issues, or
    • Any other specific court proceeding.

    What About National Guard Business Owners?

    I think members of active duty or serving part-time have a strong argument why the Business While Deployed Rule applies to their deployment regardless whether they are a reservist or a member of the national guard.

    As you can read, the rule uses the term “reservist”.  But, I believe there is plenty of room for interpretation and public policy favors any member of the military.  For what ever reason, Minnesota’s rule applicable to military members owning a business are directed towards a different rule for clarifying when it applies.

    Under Minnesota statute 190.05, the term “military” is supposed to mean active service:

    ‘Active service’ means either state active service, federally funded state active service, or federal active service.

    Now, military members past or present can see the flaws with their definition.  In other words, we are stuck with the unknown when the rule might apply.  As of the date of this post, the rule I am focused on, has never been litigated.

    None the less, I think the most important point specific to the Business While Deployed Rule is this:  Minnesota’s court system is supposed to acknowledge business owners who are deployed and reduce the risk of an unfair judgment.

    At a minimum, I believe public policy supports this interpretation through and through.

    Business While Deployed Extended to Spouses

    Anybody who owns a business relies on support from their significant other.  This support is heightened when we are talking about a military spouse.

    Somewhat exciting for Minnesota’s business owners on deployment is the fact MN Statute 192.056 applies to a spouse too.

    In other words, if I own a business with my spouse and I am deployed, the business owner (spouse or not) can ask the court to delay any and all civil proceedings from taking place. Really, this is a breath of fresh while military families put managing their communications, children and home life in front of any other pending claim.

    Soldiers & Sailors Civil Relief Act

    In case it isn’t obvious, the rules and protection under rule 192.056 is in addition to any rights and benefits military business owners have under the Soldiers & Sailors Civil Relief Act.

    Thus, If you are a military business owner and need support, please contact me for help.