Compliance Alert: The Crucial Role of Legal Counsel in FINCEN Beneficial Ownership Information Reporting for Businesses

Beneficial Ownership Information Reporting

In the ever-evolving landscape of financial regulations, businesses are faced with a multitude of compliance requirements. One such imperative is the Financial Crimes Enforcement Network (FINCEN) Beneficial Ownership Information Reporting. As the regulatory environment becomes increasingly complex, the role of legal counsel in assisting businesses with compliance has never been more crucial. In this blog post, we will delve into the reasons why businesses should consider hiring a lawyer to navigate the intricate terrain of FINCEN Beneficial Ownership Information Reporting.

Interpretation and Understanding of Regulations:

Navigating the intricacies of financial regulations demands a nuanced understanding of the law. A lawyer specializing in financial regulations can provide invaluable insights into the specific requirements of FINCEN Beneficial Ownership Information Reporting. They can help businesses interpret the regulations accurately, ensuring that they stay on the right side of the law.

Risk Mitigation:

Failure to comply with FINCEN Beneficial Ownership Information Reporting can result in severe consequences, including substantial fines and legal repercussions. Legal counsel can play a pivotal role in identifying and mitigating potential risks, helping businesses establish robust compliance mechanisms to avoid costly penalties. Failure to comply can result in penalties of up to $500 for each day that the violation continues, or criminal penalties including imprisonment for up to two years and/or a fine of up to $10,000. Senior officers of an entity that fails to file a required BOI report may be held accountable for that failure. 

Tailored Compliance Strategies:

Every business is unique, and a one-size-fits-all approach to compliance is often inadequate. Lawyers can work closely with businesses to develop tailored compliance strategies that align with their specific structure, operations, and risk profile. This personalized approach enhances the effectiveness of compliance efforts and ensures that the business meets its obligations under FINCEN regulations.

Documentation and Record-Keeping:

One of the key aspects of compliance with FINCEN Beneficial Ownership Information Reporting is maintaining accurate and up-to-date records. Legal counsel can assist businesses in developing comprehensive documentation processes, ensuring that all necessary information is collected and retained in accordance with regulatory requirements.

Responding to Regulatory Changes:

Financial regulations are subject to constant changes and updates. Keeping abreast of these changes is challenging but essential for businesses. Lawyers specializing in financial regulations can help businesses stay informed about any amendments to FINCEN Beneficial Ownership Information Reporting requirements and adapt their compliance strategies accordingly.

Facilitating Communication with Regulatory Authorities:

In the event of an audit or inquiry by regulatory authorities, having legal representation can be instrumental. Lawyers can communicate with regulatory bodies on behalf of the business, ensuring that responses are accurate, timely, and in compliance with legal standards. This not only streamlines the process but also enhances the business’s credibility in the eyes of regulators.

In the face of increasingly stringent financial regulations, businesses must prioritize compliance with initiatives such as FINCEN Beneficial Ownership Information Reporting. Engaging the services of a knowledgeable and experienced lawyer can be a strategic investment in safeguarding a business from legal pitfalls, fostering a culture of compliance, and ultimately contributing to its long-term success in an ever-changing regulatory landscape.

Don’t delay! Schedule a free consultation with one of our attorneys today:

Attorney Sean Lanagan:

Attorney Matthew Rossetti:



Navigating Year-End Success: The Crucial Role of an Attorney in Business Planning and Maintenance

Navigating Year-End Success: The Crucial Role of an Attorney in Business Planning and Maintenance

As the calendar year draws to a close, businesses often find themselves immersed in a flurry of year-end tasks and responsibilities. From financial reporting and tax planning to compliance reviews and strategic evaluations, the end of the year is a critical period for setting the stage for future success. One indispensable ally in this process is an attorney, whose expertise can prove invaluable in navigating the legal complexities that businesses face. In this blog post, we’ll explore why hiring an attorney for year-end tasks is a strategic move that can safeguard your business and pave the way for a prosperous new year.

Legal Compliance and Risk Management:

Year-end tasks involve a comprehensive review of the business’s legal compliance. An attorney can help ensure that your company has adhered to all relevant regulations and laws throughout the year. From employment contracts to intellectual property concerns, having a legal professional review your operations can identify potential risks and mitigate them before they escalate.

Contract Review and Renewal:

Many businesses enter into contracts with clients, vendors, and partners that have expiration dates or renewal clauses. An attorney can assist in reviewing existing contracts, ensuring that terms are favorable and that renewals are handled appropriately. This proactive approach can prevent legal disputes and position the business for continued success.

Tax Planning and Compliance:

Year-end is synonymous with tax season, and an attorney can be instrumental in ensuring that your business is in compliance with tax laws. They can help optimize your tax strategy, identify potential deductions, and guide you through any changes in tax regulations. By working closely with your accountant, an attorney can help structure transactions and operations to minimize tax liabilities.

Employee Matters:

From reviewing employment contracts to addressing any workplace issues, an attorney can play a crucial role in managing employee-related matters at the end of the year. This includes ensuring that any changes in labor laws are reflected in employment policies and contracts, protecting the business from potential legal challenges.

Business Structure and Strategy:

The end of the year is an opportune time to assess the overall structure and strategy of your business. An attorney can provide valuable insights into potential changes in the legal landscape that may impact your industry. Whether considering expansion, restructuring, or any other strategic move, legal advice is essential for making informed decisions that align with both short-term and long-term goals.

Hiring an attorney for end-of-year tasks is not just a wise investment in legal protection; it’s a strategic move that positions your business for success in the coming year. From compliance and risk management to tax planning and strategic guidance, the legal expertise brought to the table by an attorney can make a significant difference in the trajectory of your business. As you navigate the complexities of year-end tasks, consider the invaluable role that legal counsel can play in safeguarding your business and ensuring a strong foundation for the future. Don’t delay! Schedule a free consultation with one of our attorneys today:

Attorney Sean Lanagan:

Attorney Matthew Rossetti:



The Importance of Hiring a Lawyer to Draft Website Terms and Conditions

The Importance of Hiring a Lawyer to Draft Website Terms and Conditions

Whether you’re selling products, offering services, or simply providing information, having a well-crafted set of terms and conditions for your website is crucial. However, many business owners overlook a critical aspect – legal review. These legal documents are often underestimated but play a pivotal role in protecting you, your business, and your customers. Below are a few reasons why you should hire an attorney to – at the very least – review and approve your terms and conditions. 

Legal Compliance

One of the primary reasons to hire a lawyer for website terms and conditions is to ensure legal compliance. Laws and regulations governing websites can vary greatly from one jurisdiction to another. A skilled attorney can navigate this complex landscape and draft terms and conditions that align with local, state, and federal laws, as well as international regulations if your website caters to a global audience. This will help shield your business from potential legal disputes and penalties.

Protection of Intellectual Property

Your website may contain valuable intellectual property such as copyrighted content, trademarks, or proprietary software. A lawyer can help you include clauses in your terms and conditions that clearly define your ownership rights and the rules for using your intellectual property. This safeguards your assets and reduces the risk of intellectual property theft or infringement.

User Guidelines and Behavior

Website terms and conditions serve as a rulebook for users, outlining acceptable behavior, prohibited activities, and consequences for violations. By working with a lawyer, you can craft comprehensive guidelines that protect your website from abusive users, spammers, and hackers. Additionally, these guidelines can help maintain a respectful online community, enhancing the user experience.

Limitation of Liability

In today’s litigious society, businesses often find themselves facing lawsuits, even for minor issues. A lawyer can include clauses in your terms and conditions that limit your liability, provided it’s legally permissible. These limitations can be essential in protecting your business from excessive legal claims and potential financial ruin.

Dispute Resolution

Disputes can arise between your business and its website users. A lawyer can help you establish clear dispute resolution procedures within your terms and conditions. Whether through arbitration or mediation, having a structured process in place can save your business time and money in the event of a disagreement.

Privacy and Data Protection

With growing concerns about data privacy and security, it’s crucial to address these issues in your website terms and conditions. A lawyer can assist in drafting a privacy policy that complies with applicable data protection laws, ensuring the proper collection, use, and protection of user data. This builds trust with your customers and helps avoid legal trouble related to data breaches.

Regular Updates

Laws, regulations, and your business model can evolve over time. A lawyer can ensure that your website terms and conditions stay up-to-date, reflecting any changes in the legal landscape or your business operations. Regular reviews and updates are essential to maintain legal compliance.

In the digital age, having a strong online presence is essential for businesses. However, this presence must be built on a solid legal foundation, which includes well-drafted website terms and conditions. Hiring a lawyer to assist with this task is a prudent investment that can protect your business, your customers, and your intellectual property while ensuring legal compliance. Don’t underestimate the importance of these legal documents, as they can be a safeguard against potential legal pitfalls in the online world.

Sentient Law, Ltd.’s Sean Lanagan is an IAPP Certified Information Privacy Professional and can help your business craft or review your company’s terms and conditions. Don’t delay. Schedule a free consultation today here.



The Essential Role of an Attorney in Crafting Your Website Privacy Policy

The Essential Role of an Attorney in Crafting Your Website Privacy Policy

In today’s interconnected digital landscape, a website’s privacy policy serves as a crucial document that outlines how user data is collected, processed, and protected. With data privacy concerns on the rise and regulations becoming more stringent, such as the General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA), businesses must prioritize safeguarding user information. While it might be tempting to take the DIY route when drafting a privacy policy, hiring an attorney to undertake this task offers numerous benefits that far outweigh the initial cost.

  1. Legal Expertise and Compliance: Attorneys possess a deep understanding of the complex legal requirements surrounding data protection and privacy. They stay up-to-date with the evolving landscape of privacy regulations, ensuring your privacy policy is compliant with the latest laws. Relying on their expertise minimizes the risk of legal challenges, fines, and reputational damage stemming from non-compliance.

  2. Tailored to Your Business: A generic privacy policy template may not adequately address the specific data practices of your business. Attorneys take the time to understand your operations, data collection methods, and processing procedures, allowing them to craft a policy that accurately reflects your unique needs and practices.

  3. Precise Language and Terminology: Legal documents demand a level of precision that can be challenging for non-lawyers to achieve. Attorneys are adept at using precise language and terminology to clearly communicate your data handling processes and user rights, reducing the potential for misinterpretation or confusion.

  4. Risk Mitigation: A well-crafted privacy policy can serve as a shield against potential legal disputes. By outlining your data collection, storage, and usage practices transparently, you demonstrate your commitment to data privacy and minimize the chances of user complaints or legal action.

  5. Customized Disclosures: Depending on the nature of your business and the types of data you collect, certain specialized disclosures may be required. Attorneys can tailor your privacy policy to include necessary information, such as details about third-party data sharing, cookies, and cross-border data transfers.

  6. Adaptability to Changes: As your business grows or privacy laws evolve, your privacy policy may need updates. Attorneys can draft policies with built-in flexibility, making it easier to accommodate changes while maintaining legal compliance.

  7. Confidence for Users: A professionally crafted privacy policy instills confidence in your users. Knowing that their data is handled in a secure and transparent manner can enhance your reputation and encourage user trust.

  8. Easier Integration with Agreements: Privacy policies often need to be integrated with various agreements, such as terms of use and cookie policies. Attorneys ensure that these documents align seamlessly, providing a cohesive user experience and a stronger legal foundation.

  9. Full Understanding of User Rights: Attorneys can ensure that your privacy policy comprehensively explains user rights, including how users can access, update, or delete their data. This level of clarity is essential for building trust with your audience.

  10. Long-Term Value: While hiring an attorney may involve an upfront cost, the long-term benefits far outweigh the initial investment. A well-drafted privacy policy can help you avoid legal pitfalls, establish a positive brand image, and navigate the ever-changing landscape of data protection regulations.

Sentient Law, Ltd.’s Sean Lanagan can help your business craft a privacy policy and terms and conditions. Why wait? Schedule a free consultation now here.



Start Your Dream Business During a Downturn

Slicing Pie and Dynamic Equity: The Best Way to Start Your Dream Business During a Downturn

Many potential clients and current clients have been asking us whether they should pursue their dreams and start their new business despite challenging economic conditions or put their plans on hold. While we understand that it is exceedingly difficult to raise capital and the cost of capital is increasing, we advise everyone to follow their dreams. In fact, in our opinion, challenging economic conditions are the perfect time to start a new business (I have done it) if you are using the right equity allocation model.

What is the right model?

If you are on a limited budget, plan to bootstrap your venture, and are seeking a fair method of sharing equity with your cofounders, dynamic equity is the answer. Mike Moyer, the author of The Slicing Pie Handbook and Will Work For Pie, lays the foundation for perfectly fair equity splits for bootstrapped startups. We have developed a legal framework for limited liability companies that will allow you to start your business with minimal cash investment and fairly and proportionately distribute equity.

How does the model work?

Slicing Pie or dynamic equity provides for both an equity allocation framework as well as a recovery framework. We contractually set initial specific goals for the venture at the outset. Upon founding of the business all uncompensated time, cash contributions, etc. (we call these “Inputs”) that go into the venture are tracked. When the initial specific goals are accomplished we “bake the pie” and enter into a new agreement under which each member’s ownership stake is based on their Inputs as compared to the Inputs provided by everyone.

For example, if Alex and I start a business today and our initial specific goal is to achieve $10k in monthly revenue. Upon reaching said goal, we look at our relative contributions to the venture and determine what percentage of the venture each of us should own at that time.

In other words, instead of the founders of a venture attempting to predict the future (wouldn’t that be nice!), Slicing Pie or dynamic equity provides for a quantitative algorithmic method of equity distribution. This model also provides for a recovery framework in the instance that one of the founders of the venture decides to quit for good reason or no reason at all or is terminated for cause.


There is no time like the present! Slicing Pie and dynamic equity will allow you to follow your dreams and start a new business with a limited amount of cash capital. Click here to schedule a free consultation with us today to discuss how we can help you make the most of challenging times.



How important is it that the governing law be of Country X, as opposed to Country Y?


Choosing which laws govern a contract and where contract disputes, should they arise, will be handled is an important part of contract negotiations. The choice of law and/or forum can present significant advantages to one or both parties. They can also create significant disadvantages, especially when parties and legal systems from different countries are involved. The post below is based on a recent question we answered for a client regarding these exact issues.

For context, the client was based in Country X, and they were negotiating an agreement with a party based in Country Y. The other party required that the laws of their (the other party’s) country, Country Y, will be the laws that govern the contract. As a result, our client wanted to understand what this meant from a legal perspective and how to best proceed. Our client’s question and our answer explaining the issue are below.

While it is not something that would be considered “make or break”, having Country X law as the governing law would be advantageous to you. As a person and a business that are domiciled in Country X, Country X clearly has a much stronger interest in protecting you and your business if something were to happen. Conversely, Country Y law would present the same advantage to the other party since that is where they are based. Another advantage that using Country X’s law creates for you is that you (and any Country X-based legal counsel) are much more familiar with Country X’s laws and how the legal system works in Country X. Thus, if there are ever any issues or you have any future questions, it will be much easier for your legal counsel to research the issue(s), provide you with advice, and, if necessary, represent you in court. While it is not impossible for Country X-based lawyers to research and understand Country Y law, it will likely take significantly more time and work (will need to find out where to look, possibly need to translate from Language Y to Language X, need to familiarize themselves with the court system and legal precedents, likely required to work with local counsel from Country Y if litigation is involved, etc.), which means higher legal fees.

Another aspect to consider when evaluating your choice of law is whether or not you would be able to recover any damages if something were to happen. If you were to choose Country X law, it would likely be very difficult to recover any damages in a Country Y court. The issue here is whether or not a court in Country Y would be able and/or willing to recognize the laws of a foreign country. If they are unwilling and/or unable to recognize Country X law in Country Y, which is definitely a possibility, then you would not have any way to enforce your contract against the other party. If that were the case, you could try to bring suit against them in Country X, but that is also likely to be unsuccessful because it would require them to voluntarily submit to Country X’s jurisdiction. If they refuse to submit to Country X’s jurisdiction, then there isn’t much, if anything (depends on the situation), that could be done.

While Country X law would generally be more advantageous to you, in this situation, Country Y law may be a better bet. If the contract is governed by Country Y law, then you know that the courts in Country Y will be willing and able to adjudicate an issue (as long all of the requirements for litigation are satisfied) if something were to happen. Also, since it is highly unlikely that a foreign entity who is generally not subject to Country X’s laws would submit to Country X’s jurisdiction, using Country Y law could provide a potential pathway for recovering damages through Country Y’s legal system if something were to happen.

In sum, although it is common practice for parties to choose the type of law that governs a contract, international agreements are unique because they usually involve completely separate systems of law. Choosing the law of your home jurisdiction will usually be more beneficial to you because your home jurisdiction (whether it is your country and/or state) will have a greater incentive to protect you and your interests than those of a party from another country or state. However, especially when entering into international agreements, you should consider the potential willingness and ability of a foreign jurisdiction to enforce the law selected in a choice of law provision. This is where local counsel or an attorney with expertise in that particular jurisdiction can really help clarify and explain the nuances of the local legal system in question. Here, although not ideal, we think using Country Y law would be your best option. If something were to happen it would give you a better chance at successfully bringing an action, not necessarily winning (that is dependent on the situation and circumstances), in court than Country X law. Additionally, as we mentioned above, the other party would have to be willing to submit to jurisdiction in a Country X court if Country Y doesn’t recognize Country X law, which we would not expect them to do.



Cortando el Queque

Cortando el Queque

  1. Justicia es divertida
    1. Todos comienzan en la misma página
    2. La transparencia genera confianza
    3. Creación de equipos
    4. Motivación derivada de la igualdad de capacidad para obtener equidad

Ejemplo: La fundadora y líder de los Grunts, Jane Egon, es e

mpleada a tiempo completo en Big Tech Corp. Un día, una gran idea se ocurre a Egon para una nueva aplicación de widgets tecnológicos para compartir fotos que cambiará el mundo de las aplicaciones para siempre.  Egon pasa aproximadamente 1 hora por día hábil durante un año investigando su mercado y finalmente decide organizar una nueva empresa.  Egon es sola una gerente intermedia, por lo que no puede permitirse contratar empleados o contratos independientespara hacer realidad su sueño.  Egon busca formas de recaudar fondos y justo cuando está a punto de perder la esperanza se encuentra con el libro Slicing Pie. “¡Finalmente una solución! Esto es brillante”, piensa Egon.

Egon es muy apasionada y persuasiva sobre su visión y por eso no tiene problemas para comunicar su idea de manera efectiva a cuatro empresarios tecnológicos experimentados a quienes convence para que se unan al equipo como Grunts A, B, C y D. Debido a que a Egon se le ocurrió la idea, Egon optó por aislar 51% del capital para sí misma para mantener una participación mayoritaria en la nueva empresa y no participar en el Fondo Grunt. Los cuatro grunts trabajan por una tarifa de recursos por hora de Grunt de $150 / h.

Debido a que su trabajo se volvió estresante y ya posee el 51% de la empresa, Egon dedica aproximadamente 1 hora por semana durante el año a recaudar una ronda semilla de capital.  Egon convence a un amigo rico para que contribuya con $500,000 por el 20% de la compañía y se produce la división del Fondo Grunt.  Egon y los Grunts comparte del capital de la compañía en el momento de la división del fondo Grunt que se desglosa de la siguiente manera:


Tarifa de recursos por hora de Grunt:            N/A

Entradas individuales:                                     N/A (honorarios legales pagados y tarifa de organización llc)

Cuota de miembros:                                       51%

Grunts A, B, C y D

Tarifa de recursos por hora de Grunt =          $150/h ($75/h x 2)

Aportes de los miembros:                              1043.5 horas ($156,525.00 valor por Grunt)

Total de entradas:                                          4,174 = ($626,100.00)

Cada acción de miembro:                               12.25% (Nota: 49% de la compañía está sujeta al Fondo Grunt)


En el ejemplo anterior, cada uno de los Grunts tendría derecho a un pago de Renuncia por Buena Razón de $156,525.00. Debido a que Egon solo recaudó $500k, la compañía no puede pagar el valor Renuncia por Buena Razón de cada Grunt. Si cada Grunt hubiera recibido una compensación durante la existencia del Fondo Grunt en lugar de participar en el Fondo Grunt, cada Grunt habría recibido $75/h o $78,262.50 en total. Debido a que Egon aisló el 51% de la propiedad para sí misma, cada Grunt recibe una participación diluida del 10% en la compañía recién financiada y la propiedad se desglosa de la siguiente manera:


Valoración post-dinero:                                  $2.5 millones ($500,000.00 / 20%)

Valoración pre-dinero:                                    $2 millones

Valor de las acciones del inversor:                 $500k o 20%

Valor de las acciones de Egon:                        $ 1.02 millones o 41%

Valor de propiedad de Grunt:                         $240k o 10%

Aunque el ejemplo anterior podría no verse tan mal a primera vista, recuerde que Egon apenas contribuyó a la construcción de la empresa, sin embargo, todavía posee un interés mayoritario después de una inversión de $500,000 y 4,174 horas de trabajo de Grunt.  Para obtener una mejor imagen, considere este escenario con Egon haciendo un GHRR alto sin las garantías de capital. En el siguiente ejemplo, Egon está contribuyendo al pastel en la cantidad de 261 horas por año a un GHRR de $350/h.


Tarifa de recursos por hora de Grunt:            $350/h

Aportes de los miembros:                              522 horas ($182,700)               

Gruñido A, B, C y D

Tarifa de recursos por hora de Grunt =          $150/h ($75 / h x 2)

Aportes de los miembros:                              1043.5 horas ($156,525.00 valor por Grunt)

Totales a partir de la división de Grunt Fund

Total de entradas:                                           $808,800 (4,696 horas)

 Participación de Egon:                                    22.6% ($182,700 / $808,800)            

Grunt Shares:                                                  19.4% ($156,525.00/$808,800)

Valoración pre-dinero:                                   $2 millones


Después de la división de Grunt Fund

Valoración post-dinero:                                  $2.5 millones ($500,000.00/20%)

Valor de las acciones del inversor:                 20% ($ 500k)

Valor de las acciones de Egon:                        18.0% ($450k)

Valor de propiedad de Grunt:                        15.5% ($ 387.5k cada uno)

  1. Atracción de talento
    1. Rendimientos decrecientes
    2. Incapacidad para ampliar el equipo

El impacto financiero solo comienza a contar la historia de cómo Egon ha afectado negativamente a la empresa.

En las semanas antes de la inversión de $500,000, la motivación de los Grunts comenzó a calmarse. A pesar del arduo trabajo constante de los Grunts, el interés protegido de Egon creó un techo verdadero. Cada uno de los Grunts se opuso a trabajar largas semanas por poca ganancia, mientras que Egon solo trabajaba una hora a la semana para mantener su interés.  Egon fue muy afortunada de recibir fondos cuando lo hizo porque los Grunts probablemente habrían dejado de trabajar, o solicitado una enmienda del Fondo Grunt, si sus contribuciones hubieran seguido perdiendo valor.

Además de los problemas de contribución de los Grunts, el capital de Egon impidío que la compañía creciera. Las demandas de la compañía se expandieron y Egon necesitaba adquirir más capital humano. Idealmente, Egon quería traer a otro Grunt; sin embargo, no podía traer un nuevo Grunt sin lastimar a los Grunts en su conjunto. Un nuevo Grunt significaría que cinco Grunts, no cuatro, estarían dividiendo el 61% del capital de la compañía, como máximo. Basándose en el egoísmo inicial de Egon, ahora debe elegir entre el crecimiento de la compañía y la moral de los Grunts.

  1. Posibles consecuencias comerciales
    1. Responsabilidad legal por actuar de mala fe
    2. Caracterización de los empleados
    3. Daño irreparable para mantener el equipo en el futuro

Los líderes de los Grunts que alteran el modelo de fondo grunt para aislar porciones significativas de capital de la participación en el Fondo potencialmente se exponen a responsabilidad legal. Cuando un Líder Grunt confiere beneficios a expensas de los Grunts, un tribunal puede exigir al Líder Grunt que haga una restitución a los Grunts para evitar un enriquecimiento injusto del Grunt Leader.

Las alteraciones al modelo del Fondo de los Grunts que hacen que la relación Grunt Leader-Grunt se caracterice como una relación empleador-empleado puede ser una violacion de la ley laboral. La falta de pago del salario mínimo y las horas extraordinarias son las violaciones más probables a las que se enfrenta un líder de los Grunts en estas circunstancias. Las sanciones por estas violaciones incluyen: pagos atrasados, daños liquidados, multas de $1,000 por cada violación y honorarios de abogados y costos judiciales.

En resumen, el modelo del Fondo de los Grunts fomenta la creación de equipos saludables y la colaboración a través de los principios de equidad incorporados en el modelo. Cuando el Líder de los Grunts se reserva grandes porciones de capital para sí mismo, compensa injustamente al Líder a la expensa de los Grunts. Este desequilibrio erosiona la moral del equipo y crea los mismos problemas que el modelo del Fondo de los Grunts se busca evitar, es decir, el conflicto entre los fundadores sobre las divisiones de capital. Este conflicto tiene el potencial de destruir el desarrollo de la compañía y/o causar un colapso del negocio por completo.

Starting a Business Aged 50 Plus

Setting up a business when you are older can seem like a crazy idea. Friends and family might even tell you that. But there are some real pros to being an older person and setting up a business, as long as you have the dedication to keep going with it. Here we will give you the lowdown on starting a business aged fifty plus.

That One Big Idea

If you have that one big idea that you have been considering for years, why not just go for it? Chances are your idea is brilliant and people will love it. Make sure to check that someone else hasn’t beat you to it. Also don’t worry if they have, adapt it a little give it a new spin and see what you can come up with. It is likely if you have had that idea in your head for many years, it is a good one and what is the harm in giving it a go?

Get Help

A great way to be as savvy as possible is to get some external help you can trust. Come at it from a business perspective. Do not just employ your niece as she made a great PowerPoint once, ensure that you are getting professional help. When it comes to business you know your strengths, but it can be difficult to see your own weaknesses, especially if you don’t know what you are meant to be strong or weak at! On freelancer sites like Fiverr and UpWork, you can hire freelancers to help you write a business plan. This is a great start. Ensure you read over their reviews before entering a contract. You can also get mentored with online business support and coaching, which can be very helpful for new entrepreneurs.

DIY Business

Once you have a plan and know where you are going, you can start to look around for free to use resources to help you set up your business. A brilliant example of this is to create your logo. A business logo does not need to come from an expensive designer nowadays but can come from an online logo creator tool just as easily and without the hefty price tag.

Social networks are a must-have for new businesses. Sign up to them and fill your pages with your branding. There are many socials that when you sign up to them as a business that you can use for free to market yourself to your chosen demographic.

Starting a business when you are fifty plus is a great chance to renew your life, live your dreams and enjoy yourself. It’s also a great way to earn more money before you retire. However, it does not always work out so make sure you are cautious while having fun and don’t invest too much money before you know it is already working!

Should My Company Issue Stock Appreciation Rights (SAR)?

Why Should I Offer Stock Appreciation Rights?

Two of the most common benefit plans companies offer their employees are employee stock option plans (ESOP) and stock appreciation rights (SAR). While both have unique benefits, for the employer and its employees, there are differences and financial considerations that must be addressed before choosing the right benefit incentive plan for your company. Whichever plan you choose, each method motivates employees to increase shareholder wealth and offers compensation for their hard work and commitment. In this article, we will focus on SAR. Read our article on ESOP to compare options and follow up with business startup expert, attorney, Matthew Rossetti. 

In the know – key terms

  • Grant date is the date that the employer and employee agree to the terms and conditions of a stock option, or equity-based award. Once agreed upon the stock appreciation right is granted to the employee and the date is recorded as such. The grant date also determines the exercise price.
  • Vesting date is the date an employee is eligible to exercise a specific number of options. Typically, starting on the date of vesting to the ending on the SAR’s expiration date, a vested SAR may be exercised, in whole or partially. Prior to this date, no payout will be granted. Note, exercising your rights may be dependent on how long an employee works for the company, employee performance, or based on the overall performance of the company.
  • Expiration date refers to the last day an employee can exercise stock appreciation rights, and only if the market price exceeds the exercise price. However, if the SAR’s market price is below the exercise price, the shares are worth nothing and can never be exercised. Furthermore, If the terms and conditions of the bonus agreement are not met by this date, the employee will lose the SAR.
  • Exercise price is the market price of the stock on the grant date, and the price an employee is able to purchase shares, once options are vested. There is also an exercise period, which is the time in between the vested rights and the expiration date, wherein the employee may exercise their appreciation rights. 

Unpacking SARs

Offering a SAR is a great benefits plan for startups, especially if you are an S-Corp, LLC, partnership, or other business entity that is unable to award stock. A SAR allows a business to reward its employees without exhausting any cash reserves or giving up any equity and they can usually fund the rights through the organization’s payroll system.

Stock appreciation rights are essentially a bonus – usually paid out in cash, sometimes stock, or a combination of the two – to a company’s employees. These bonuses are issued with a grant date, an exercise price, a vesting date, and an expiration date. This type of benefit plan enables an employee to cash-in on appreciating stock prices, after a specified vesting period, between the grant date and the exercise date. However, this payout is only accomplished if the employer’s stock price rises. 

Planning is key

The ability to create a customized benefits plan, structured for the betterment of a business and its employees, is what makes SARs a popular option amongst many businesses looking to incentivize their employees. Depending on how a company is set up, employers have a lot of flexibility when planning because there are few to no restrictions. 

  • Employers have the ability to offer their employees options to exercise their SAR when they choose to.
  • Vesting schedules provide a performance-based retention tool, structured in a way that bonuses are only paid out if an employee lives up to the original terms and conditions agreed to on the grant date. 
  • Predetermined plans can be agreed upon as to what an employee will receive if he/she resigns or is terminated, if anything at all.
  • Non-compete clauses can be implemented into the employer/employee agreement in order to ensure employee loyalty.  
  • Employers can further incentivize top performers by offering some of the net proceeds if the company is sold.
  • Companies that already have an ESOP in place can offer SAR as an additional incentive for its employees.

While stock appreciation rights do have their advantages, such as tax deductions for corporations, and no upfront cost to employees to exercise rights, there are a few things to understand in advance. 

  • An employer is required to withhold taxes, either by withholding cash or shares.
  • Publicly traded companies may require shareholder approval when issuing stock appreciation rights.
  • A company may need to follow retirement plan rules if it wishes to cover all employees and offer benefits after termination.
  • Employees will not receive dividends or voting rights.
  • Upon exercising rights, employees must report any income on the fair market value of the amount of the right received at vesting – even if it is a share and is not sold.
  • If employees receive cash upon the sale of the company, it will be taxed as ordinary income tax

When planning, many decisions must be made carefully and strategically. Employers must consider vesting rules, liquidity concerns, eligibility, rights to interim distributions of earnings, tax implications and so much more. It is always advisable to discuss any plan to issue SARs with a knowledgeable attorney. Sentient Law is here to assist you.

Is An ESOP Right For My Company?


An Employee Stock Ownership Plan (ESOP), is the most popular form of employee ownership in the U.S. ESOPs helps businesses establish a transition plan by creating a market for their company’s stock. This method of ownership transfer or sale can be a sound strategic move for business owners to ease the burden of retirement and to sell in a way that is advantageous for tax purposes. The benefits of an ESOP are not mutually exclusive, it is also a great way to spread the wealth amongst dedicated employees and promotes an ownership culture within a company, making this a win-win benefit plan. After all, giving employees a sense of ownership can make them feel like an important part of the company, incentivizing them to work harder and fostering loyalty and productivity.

The implementation of an ESOP can be extremely complicated, Matthew Rossetti is an expert in this area of practice and will confidently guide you through the process. Let’s take a deeper look into it to determine if an ESOP is the best option for your company.

ESOP simplified

Stock options give employees the opportunity to own parts of the company they work for. In an employee stock option plan a company sets up a trust and this trust can acquire, hold, and sell the company’s stock. An ESOP (employee stock ownership or employee share ownership) is a kind of employee benefit plan offered by employers. In most cases, ESOPs are a contribution made from the company to the employee, rather than an employee purchase. It is a defined-contribution (employees do not pay income tax on the amount contributed by their employer until they withdraw money from the plan) similar to profit-sharing or a 401(k) employee benefit retirement plan. Company shares are allocated to individual employees’ accounts annually. Upon retirement, disability, termination, or death the employer must buy back the stock at fair market value from the employee unless there is a public market for the shares. 

With an ESOP an owner of a company can sell parts or all of its shares and continue to maintain control of the company and its business operations. It is important to note, while this plan is referred to as employee stock ownership, the employees don’t actually own stock in the company. The ESOP is an organized retirement account, held by a trustee for the benefit of the employee. That person, or trust company, will negotiate a closing deal on behalf of the employees and hold the sold stock in trust. Although employees have an ownership stake in the company, they don’t actually have a right to vote the shares, to elect the board of directors, or any say as to how the company should or will be operated. When the employees retire, then, they reap the rewards and get a payment based on what the shares are worth.

Why is it advantageous to an employer?

Choosing to sell a business to an ESOP requires much consideration for a business owner. While establishing an ESOP has its advantages, an ESOP is not the proper course of action for all corporations, and particular entity formations do not meet the requirements for this type of employee benefit plan. For example, an S corporation and a C Corporation have the ability to establish an ESOP. However, an LLC is not permitted to have an ESOP because it does not have stock, it has memberships or units, therefore it can not offer ESOP stock options. That being said, an LLC that is taxed as an S corporation does qualify for an ESOP. Rather than stock, the unit shares will have the same rights to distribution, dividends, and liquidation proceeds.

For those companies that do qualify and opt for an employee stock option plan, there are substantial tax advantages. Not only is it a tax-exempt trust, transferring to an ESOP allows a business owner to defer or bypass capital gains taxes. Moreover, contributions of stock and cash are tax-deductible, and when an ESOP is used to borrow money both the loan repayments and interest are tax-deductible. The benefits of an ESOP will vary depending on the type of entity a business owner chooses for their company. Many companies choose to convert LLC taxed partnerships into an LLC taxed as a corporation, S corporations into C corporations, and C corporations into S corporations after having more clarity as to the benefits of each. A popular choice of entity selection for businesses aiming to offer an ESOP is choosing an S corporation, due to its significant tax advantages.

If the ESOP holds shares in an S corporation, the earnings from the ESOP shares are not taxable. Furthermore, an S corporation can avoid tax distributions all together and hold on to the cash in the company, for reinvestment into the business, if the ESOP owns 100 percent of the company. This is because S corps don’t pay tax on their profits, their profits and losses are passed through to their shareholders based on the percentage of their ownership. If an ESOP owns the company, there is no federal tax due because the ESOP is in a trust, which is tax exempt, allowing companies to retain more of its earnings. With the increase of cash flow, corporations are able to quickly reduce debt, enhance employee benefits, and have funds for greater capital investments and acquisitions. This is a huge tax advantage for S corporations. Do keep in mind,  Any changes that are to be made to your business entity should be done after consulting a qualified attorney, due to possible adverse consequences. 

1 2 3