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Happy Veterans Day: Resources for Veterans Owning a Small Business in Hawaii

Thank you to all our veterans! Happy Veterans Day!

Support for Veterans Through Business Ownership

Happy Veterans Day and thank you to all the people who have enlisted to serve our country. I thank all veterans, but this post is mainly for highlighting those resources available to vets for small business ownership. As it is a topic that I care about and my personal sentiment is if you as a vet have taken the sacrifice in defending our country, then we can sacrifice some time to educate and help the transition to successful civilian life.

One path can be owning your own business.  I find that here in Hawaii, so many military personnel consider settling down in the islands after they are done with their military service. Then the question turns into opening a business due to the opportunities of being a contractor.  However, unfortunately business law tends to be abstract and also given the way the islands tends to do business and regulation that adds to their complexity. So hopefully if you, as a vet (or their spouse) are reading this, you find it helpful as a start.

Getting ready to become a business owner as a Veteran means educating yourself on aspects of small business ownership life. Fortunately, there are a lot of resources.

What a Vet Should Learn Prior to Starting a Business

In the past have had the fortune of conducting one of my favorite seminars as a part of the Boots 2 Business (B2B) program. More on that down below. Specifically, entity formation, but as an attorney I would stress understanding more than just choosing between LLC or corporation. If opening a business as a vet consider the following:

  1. forming a business entity;
  2. differences between LLCs and corporations;
  3. structuring and governing the entity you choose;
  4. tax and accounting issues;
  5. basics of contract law;
  6. understand local and state regulations;
  7. applying to be a government contractor;
  8. if you have a service-related disability, then understanding the program requirements for the Service-Disabled Veteran-Owned Small Business Program;
  9. moving your business and/or operating in multiple states; and
  10. if you are going to have a partner, then really understanding what a business partnership entails.

This is not an exhaustive list, but what I’ve come across in terms of frequently asked questions or issues. There are many other aspects such, as operational, marketing, human resource, and financial concerns for business ownership. In terms of where to get that education the B2B program is an educational and training program offered by the U.S. Small Business Administration (SBA). It is put out under the Department of Defense’s (DOD) Transition Assistance Program (TAP) and basically gives a survey course of business ownership. Note that it is open not only to Veterans, but also Active Duty Service members, and their spouses. Definitely worth a check out if you are considering opening a business an eligible.

Other Resources

In addition to the US SBA’s main website, if you are in Hawaii, then consider the following:

  • The SBA local office
  • The Veteran’s Business Outreach Center of the Pacific (VBOC)– The VBOC is a program of the University of Hawaiʻi at Hilo and funded partly by the SBA. It is committed to assisting veteran entrepreneurs by providing access to advisers on business and strategic planning, marketing, financial decisions, and starting, running, and exiting a small business.
  • Hawai’i Small Business Development Center (SBDC)– The SBDC is also funded in part through the SBA, but also by the State of Hawaii. The SBDC provides advice, research, and training for business owners.
  • SCORE Hawaii– is an organization dedicated to helping small businesses via education and mentorship. So they offer a varieties of educational activities, such as low-cost workshops or access to *mentoring.

*Note: whenever counseling with a new potential business owner client, I always tell them the biggest thing you can do for yourself is finding a good mentor.

Final Words

Sometimes closing down isn’t permanent. Sometimes you need a change of plan to reopen. The main goal is having a plan to execute.

Usually, military people transitioning to civilian life or vets have saved enough come to me when starting a new business. I would say that energy and enthusiasm is always enjoyable to work with, but as any small business owner can tell you there are other stresses. The stress of making it work. Stress of work-life balance. The stress of moving out of state. Sadness of closing down.

Just remember that there are all these resources not only to help start the business, but helping you move through your life of owning a business. For an attorney’s part, we do help with the formation, but also advising strategic decisions, which may or may not be tied to the business. One particular situation I see is military families starting a business here and then moving back to their home state. The question is what to do with the Hawaii-based business. This one-sheet should answer some preliminary questions, but as always you probably want to speak directly to an attorney for planning. Why? There is no one size fits all plan for every type of business owner. However, gaining key advice helps with strategic planning and I feel that veterans know the value of having a plan.

Finally, I would like to extend a big mahalo to all of the veterans (and to the family members that support them) for your dedication and service to your country. Thank you.

– RKH

DISCLAIMER: This post provides general information, but does not constitute legal advice in any respect.  No reader should act or refrain from acting based on information contained in the post without seeking the advice of  an attorney in the relevant jurisdiction.  Hew & Bordenave, LLLP expressly disclaims all liability in respect to any actions taken or not taken based on the contents of this post.

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Celebrating Our 2nd Anniversary

2nd Anniversary

What’s Going On with Our 2nd Anniversary

It is our 2nd Anniversary and we are celebrating by inviting you to our Open House! If you are in the Honolulu area on Thursday, November 1st then stop by our offices to meet with us, our staff, and learn something. We will be conducting five (5) free seminars throughout the day. I, Ryan K. Hew, will be doing various business law topics meant for small business owners. My partner, Trejur P. Bordenave, will be going over the basics of personal injury and making a claim.

2nd Anniversary

Join us on November 1st for our free seminars!

Sign Up at EventBrite

So if you are interested in:

  • Internet and Social Media Law for Small Business Owners
  • Contracts for Small Business Owners
  • Forming a Business Entity
  • Plaintiff’s Injury Claims: What to do if you get hurt

Then please find the details and sign-up at Eventbrite. Also throughout the day, if you want to swing by and say hi or sign up for an initial consult for another date and time that would be great too.

Thanks and see you around!

-RKH

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Oahu Pedestrian Fatalities in 2018 Increases: What is Going On?

2018 Oahu pedestrian deaths on the rise

The Rise In Pedestrian Fatalities Is Shocking.

As a father with a young daughter, and someone who enjoys walking around our office and neighborhood, it is shocking to read about the rise of pedestrian accidents leading to fatalities here on Oahu. The Department of Transportation reports that Oahu has gone from 3 recorded deaths from January to September 2017, to 19 pedestrian-related fatalities for the same period in 2018. This 525% increase is disheartening to say the least. There are some reports, primarily in the news, that fault lies in part to people crossing the street where there is no crosswalk. However, make no mistake, drivers should always be vigilant even where no crosswalks are present.  Also, but for the two that occurred this past Tuesday, they all happened at night.

S. Beretania crosswalk

I walk around the office on S. Beretania to grab a bite and sometimes even I can’t help but feel anxious about crossing the street.

Is Enforcement The Answer?

Is there something that we can do to address this problem on the systemic level? The Honolulu Police Department recently issued a mandate to increase enforcement for both pedestrians and drivers.  However, the question remains, is it really an enforcement issue? As highlighted above, sometimes it is not solely the driver’s fault, but what about other facts? Does the government need to rethink the  streetlights and road markings?

An important part of my job is to ask questions. I spend a lot of time reviewing the facts of our personal injury  cases. I often focus on how my client came to their injures.  If there is a trend in similar cases, I begin to wonder what environmental commonalities are present, and if there is something that can be done. When this logic is applied to societal problems, such as a dramatic rise in pedestrian accidents, there may be outlier problems, but there are always underlying root causes. in the end, enforcement is part of the resolution, but this prompts the question of why is it happening, and at such an increase year-to-year?

Send Me Your Thoughts And Stories.

What do you think is going on? Let me know your thoughts and stories. I bet some of you have had some close calls, and I would like hear from you. Soon, I plan to compile the information and send a letter to the City and County of Oahu and the State Legislature to consider commissioning a study to take a look at this issue, particularly if the trend continues. You can email me at trejur@hewbordenave.com.

Stay safe!

Update to this story KHON2 report (10/5/2018): HPD cracks down on violators to prevent more deaths on the roads

Update to this story in the Star Advertiser (10/10/2018): Pedestrian Hit By Truck On Pali Highway Dies From Injuries, which is just one day after a similar report of 2 different pedestrian hit-and-run accidents, resulting in the tragic death of one.

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Ryan Responds: What’s the Difference Between a Trade Name and Trademark?

Ryan Responds trade name vs trademark

Is a Trade Name and a Trademark the Same Thing, or are They Different?

In this Ryan Responds video, what are the differences between a trade name and a trademark. Short answer: they are different. Much of the confusion comes up nowadays when people are registering their business and trying to come up with the marketing and advertising for it. This is especially true when you add in the registration of domain names and social media accounts; this shall be a future post when it comes to branding strategy and protection in our interconnected world. However, for today’s topic we are focused on just trade names and trademarks.

Critical for Business Owners to Understand for their Marketing and Branding Strategy

If you are launching a new business, then you really need to grasp the difference between these abstract legal terms. It will impact your naming and registration strategy for the business and its brands before you launch. Why? Because you will do a lot of market research prior to registering your business and applying for trade names and trademarks.

I’ve seen many new business owner fail to grasp these intellectual property and business registration issues; they then go through all this energy and expenditure planning for the naming and marketing of their business, only to pay the price in changing registrations and applications, taking down their advertising, and basically upending their whole marketing strategy. They have to rethink their branding. As always it is best to do some research and speak to an attorney prior to taking any action that could make you liable, especially if you are unclear about intellectual property infringement.

Finally, in addition to the video below we provide a one-sheet on the same topic for your reading.

 

If You have a Question for Future Ryan Responds Videos …

Finally, if there is a short question you want the answer to submit them to admin@hewbordenave.com with the Subject line “Ryan Responds”. Please keep your questions short, general, and related to a business topic. Please do not provide specific details of  your matter or attempt to seek direct and specific legal advice through this format. If you need assistance and legal services, then please schedule a consultation with an attorney in your relevant jurisdiction.

If your matter is located in the Hawaii or California jurisdictions, then feel free to reach out to us to schedule an initial consultation here.

Thanks for watching!

RKH

Disclaimer: The content of this video is for general information purposes only. Nothing should be taken as legal advice for an individual cases or situations. The viewing of this video does not create an attorney-client relationship. If you need legal advice, please contact an attorney in your relevant jurisdiction.

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A Chef’s Work-Life Balance: Closed for Dinner, but Open to Subleasing or Partnering?

Between work and life.

Chefs and their Work-Life Dilemma: Dinner Service vs. Quality of Living

A friend and a client recently shared a Food & Wine article on their social media. It was entitled “Why So Many Top Restaurants Are Closing for Dinner“. The article was about how restaurateurs and chefs were seeking better work-life balance by opting not to provide dinner service. Instead they would focus on higher quality breakfast and lunch and that would be it.

Closed restaurant.

Can a restaurant owner afford not to be open for dinner?

I love food and of course, as a small business attorney, I like finding new spots to eat. Networking, meeting clients for lunch, and yes, sometimes picking up the owner as a client. Shouldn’t chefs and lawyers be friends? I often joke that I would trade services for food. Legalese in exchange for pasta bolognese! So as a fellow small business owner I do get the appeal of setting your own work hours, especially for the tough life of restaurant owners and chefs. The desire to spend quality time with friends and family, but of course there is a catch – is it cost effective?

Throughout the article there are comments about the economic realities of this operational decision:

“Though it seems like these breezy cafés should allow their owners and chefs to live breezier lives, many struggle to earn a decent living. Diners who don’t blink at a $100 dinner for two balk at lunch tabs that are half that. Lower price-points make it tough for even the busiest daytime restaurants to pay the bills.”

“Nicholas Morgenstern, owner of New York City’s vegetable-centric cafe El Rey, has been avoiding dinner service, but says it’s not sustainable.”

You Not Being Open for Dinner Might Create Opportunities

While I read through this article, I constantly wondered are there missed opportunities or creative solutions? My practice resolves around assisting business partners formalize their relationships. I also review commercial leases for food service and retail clients. So my feeling was: wow, no dinner service?! That is a lot downtime and an empty space not being utilized!

The following ideas are not complete solutions to the work-life balance equation. However, they do give restaurateurs and chefs, or any businesses in a commercial lease setting some options to consider. They may not be suitable for every business owner that is chasing that work-life balance.  Further, they do require a lot of planning and communicating. Executing them also requires all the right pieces, but they may be worth considering if you are a chef (or an overworked small business owner) trying to get to that magical work-life balance ratio.

Ways to Make Full Use of a Space, While Not Being There: Sublease or Partnering

So what struck me about this article is that these restaurants all likely have a lease; it is rare for a new restaurant business owns the property and building. Meaning the restaurateur is entitled to the premises which they are leasing. Kind of obvious, yeah? But, if they choose not to open for dinner, then that creates a possible opportunity, as they are not maximizing the use of the leased space. What do I mean?

Retail and restaurant space for lease.

A tenant that leases a space has a lot of control over the space. When to open, when to close.

In a lease situation, the renter has property rights. While, the tenant does not have superior ownership rights with respect to the property owner, they do lease the premises. Obviously, there the space comes with restrictions and requirements, such as insurance, indemnification, specific-use, rent, but as the business tenant can use the space as they see fit  Therefore, by shutting the space down for dinner, that means the space is down to 2/3rds of its total use time, that is breakfast and lunch. Granted operating for dinner has costs and expenses, but as pointed out in the article dinner service can be a huge revenue generator with higher ticket food items and alcohol sales.

So how do you operate in a space when you do not want to be there? Why not consider subleasing or partnering. Have someone else make use of the premises for the evening, while you are having dinner with your loved ones. Of course this is easier said than done. I will run through the differences between the two and some of the issues, but if all parties involved can come to terms either one may be a workable solution for the chef that wants to go home for the night.

Subleasing: Becoming the Landlord to Your Own Tenant

Subleasing is a situation where there is a lease in place and the tenant leases out the space to another tenant below them. The legal relationship would look like this: landlord <– (lease) –> primary tenant <– (sublease) –> subtenant.  The primary tenant acts like a mini-landlord to the subtenant. This would mean that the primary tenant, who only wants to operate for breakfast and lunch would lease out the space for dinner time to another business. Thus the premises are used throughout the day and everyone is happy, right?

Issues with Subleasing: Caught in the Middle

Hold on! It is not that simple. Remember I mentioned there is a lot of planning and communicating? First, is there even a market for another business who wants to sublease the space? Sometimes. Obviously, it depends on your city, but consider that there are food truck owners who may want to test out their food in a restaurant setting and they need a certified kitchen in some cities because of food safety laws. Other times newly-minted chefs want to do pop-ups or pastry chefs would like to focus on doing a dessert bar.  You will have to ask around. Time to use those networking skills of yours!

Second, is the landlord even going to go for this? Depends. Commercial leases almost always have anti-assignment, subleasing, etc … clauses. These provisions make it so that the tenant cannot convey any property rights (such as the act of leasing and using the premises) to another party without the consent of the landlord. It would violate the lease if the tenant did entered into the sublease without the landlord’s approval. So if you did find another party willing to sublease, then you would need to work with your landlord first before formalizing with your subtenant. Sometimes the landlord would make you co-tenants or have the subtenant make a personal guarantee; for them it is all about the risk.

Even if your landlord lets you sublease are you ready to manage your own tenant?

Other issues with commercial leases and subleasing are where is your restaurant located? Often times for malls there are certain operational hours that a business can be open for. If you are intending to sublease for dinner service and that subtenant wants to sale alcohol, they will have to get a liquor license which are often tied to zoning laws. In addition, if the subtenant is going to do a food service that is different than yours, like I mentioned the dessert bar, are there specific-use clauses in the lease? Mall owners tend to want to limit the kind of services depending on size and location as they do not want their businesses to directly compete with each other. Other times large national brands force the mall owner to allow them to be the only type located at the mall.

Finally, you are acting as a landlord to this subtenant. They are a separate business. So that means they have to get their own insurance. Furthermore, as the middle person between your landlord and them, you are responsible to both of them. If your subtenant messes up, say missing rent to you or they burn down the kitchen, then you still will be on the hook to your landlord. On a personal note too, I know with many chefs if it is their kitchen it is their rules. If you are leasing out your kitchen to another how will you tell them to use your equipment and tools? Will you even allow them to? Again, lots of planning and communicating.

Partnering: Two Chef Owners are Better than One

So maybe subleasing is not for you, as you do not want to be a landlord. What about having a partner? Maybe you have an upcoming protégé or work well with someone who want to focus/specializes in dinner, but does not want to manager their own independent business.

Partnering, when you have a business entity, a LLC or a corporation, means having a business partner join in as an equity partner by offering them ownership/membership interest or stocks/shares, respectively.  Especially, with LLCs, members (the owners of the LLC) have a lot of flexibility in designing the partnership arrangement.

Two chefs back-to-back.

Two chefs might mean that the restaurant stays open, that is if they can come to terms of agreement.

Consider that for some doctors’ groups that operate as a partnership they cover each other;  say one doctor wants to go on vacation, well then the others would cover their work thus guaranteeing continual operation and coverage for medical services. Similarly, for the restaurant, one chef partner agrees to provide breakfast and lunch, while the other does dinner. Another option may be it is on an alternating basis, where one chef does breakfast, lunch, and dinner for one week and then it changes to the other partnering chef the next. There are a lot of options to the division of labor.

What about the money? With LLCs, they are flexible in having the “keep what you kill method” via their Operating Agreements. Each member would take a share of the money based on how much they brought in. Partnering lawyers sometimes consider this method when they just want to share in the expenses of the firm, but would like to be responsible for how much they bring in. So for a chef working only during the day, then they would get the money from the sales of breakfast and lunch. So course the chef who opens for dinner gets the profit from the dinner service. Even if they are 50/50 members in the restaurant LLC that does not mean they have to split the profits 50/50. LLCs are flexible business entities. Obviously, for this method to work, you need a good accountability system.

*While a corporation remains a possibility, usually much more goes into such a relationship, such as tax and accounting planning, use of employment agreements, and drafting of specific corporate governance documents.

Issues with Partnering: Are You Ready for Business Divorce?

So again, just opening your business entity and suddenly having a partner is not at all what it is cracked up to be. First, often times when launching a food business many chefs do not have the funds to open their restaurant. They need a financial backer. Whoever is funding them, is either a formal partner already or have a loan to the restaurant. Either way, adding a new person to the mix is something a financial backer may be concerned about.

Second, even if you get the money situation squared away to what is deemed “fair” between the partnering chefs there are still a host of other issues. They may or may not have an equal say in running the business. Even if you are majority partner and they are the junior partner, how long will they keep working with you if you keep overriding all their decisions or input? Can there two chefs use the same kitchen? What about branding? In this scenario, you do not have two separate businesses, but just the one. So personalities, visions, goals, and even styles of may not be aligned. Even if you both have a unified vision, what about consistency and quality? If the breakfast and lunch food items are awesome, but dinner services are subpar, you can only imagine what the Yelp reviews will say …

Partnering is not for everyone and is not someone should do seeking a quick fix for business issues as business divorce is not pretty.

If clients come to me and they want to talk to me about partnering, then my first question to them is: are you ready to be married? Having a  partner means making a lot of decisions together. Decisions where money is involved, how to split it up profits or how much to contribute to pay for expenses. You will be discussing marketing, finance, accounting, and HR issues. So if work ethics and personalities clash, then you will be looking at business divorce. Your pursuit of a work-life balance may turn into a nightmare if nothing is in writing. Business divorces can be costly in terms of time and money. I’ve seen situations where it takes months (years) before former partners even agree to the value of their contributions and the business itself; this says nothing of the payment process of a buyout. Again, planning/communicating is key, then documenting it.

One Last Bite on this Topic

Sometimes going out and networking is best to float ideas and opportunities, especially with a trusted adviser or mentor.

All of this is not to frighten off a chef making the personal decision of limiting their operating hours. However, like the article points out dinner is a revenue generator. So then the question becomes is there another way to maximize the leased space? I’ve offered a sampling of some creative solutions, but yes, subleasing may not be an option with a stringent landlord. For partnering, maybe you are seeking work-life balance to spend more time with your spouse, but you may be getting a business spouse. Can you juggle both?

Consider that closing down for dinner service might be a business opportunity for another who wants a shot at it. While there are no free lunches in these scenarios, try sharing a meal with a trusted adviser or two, or maybe a mentor or peer. It never hurts to ask, especially when your goal is to spend time with loved ones. Cheers and bon appétit!

-RKH

DISCLAIMER: This post provides general information, but does not constitute legal advice in any respect.  No reader should act or refrain from acting based on information contained in the post without seeking the advice of  an attorney in the relevant jurisdiction.  Hew & Bordenave, LLLP expressly disclaims all liability in respect to any actions taken or not taken based on the contents of this post.

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Ryan Responds: “What should go in your Operating Agreement?”

Ryan Responds trade name vs trademark

What Should go in your Operating Agreement?

In this Ryan Responds video, I go over some of the more important items that an Operating Agreement should cover. While, not an exhaustive list, it is illustrative of the conversations LLC members and managers should have with one another. Business partners should strive to have this organizational document meet their expectations. It is a contract after all.

We also provide a one-sheet if you would like to read more about Operating Agreements. Finally, if you have any questions about reviewing, drafting, or even disputing an operating agreement please contact us or an attorney in your relevant jurisdiction for an initial consultation.

If You have a Question for Future Ryan Responds Videos …

We launched this on a YouTube channel, as we hope to publish educational videos on other topics in the future. Finally, if there is a short question you want the answer to submit them to admin@hewbordenave.com with the Subject line “Ryan Responds”. Please keep your questions short, general, and related to a business topic. Please do not provide specific details of  your matter or attempt to seek direct and specific legal advice through this format. If you need assistance and legal services, then please schedule a consultation with an attorney in your relevant jurisdiction.

Thanks and Cheers!

RKH

Disclaimer: The content of this video is for general information purposes only. Nothing should be taken as legal advice for an individual cases or situations. The viewing of this video does not create an attorney-client relationship. If you need legal advice, please contact an attorney in your relevant jurisdiction.

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Honoring Fred Korematsu Day

I’d like to share some of my views on Fred Korematsu Day of Civil Liberties and the Constitution. California created this special day, held every January 30, posthumously for Fred T. Korematsu. It is also celebrated in Hawaii and a number of other states. The Day commemorates Fred Korematsu’s birthday and his contributions as a Japanese American civil rights activist. It recognizes his contributions in fighting the injustice of Japanese interment during World War II, but in general recognizing civil liberties under the U.S. Constitution.

Manzanar War Relocation Center, California was the internment camp for Japanese Americans during World War 2.

Background and Context

In Korematsu v. United States, 323 U.S. 214 (1944), the Supreme Court sided with the U.S. government in upholding Executive Order 9066. An order that forced Japanese Americans into internment camps during World War II regardless of citizenship. The Korematsu case decision showed how deeply ingrained racism was and still is in our government and society. Racial profiling and the stripping of citizens of their civil liberties is not gone from the American experience. This conversation is still going on as we can see in today’s politics and news.

For example, author Lily Rothman poignantly observes in her Time’s article that knowing the history of Japanese internment matters a great deal. While the internment of Japanese Americans took place nearly 80 years ago, the themes of racial exclusion and stigma still linger today.

Therefore, I think I should share some of my views on this matter so you can understand the value’s of the firm and the kind of law that we practice.

This is a monument to Japanese interred at Manazar.

 

Words of Ryan K. Hew

I am sure people are wondering what impact does Fred Korematsu day have to do with a business attorney. Isn’t business law all about contracts or stymieing people’s rights in transactions?  I would probably respond that: (a) that nearly 90% of businesses in the U.S. are small businesses (20 workers or less); and (b) the government tramples the rights of the business owners as it did with the Japanese Americans during internment.  Japanese American business owners were forced out of business and into the camps. Nowadays, many immigrant business owners fear the law or lack access to legal assistance.

None of this is new, making Fred Korematsu Day an important symbol to remember and continue his legacy. I was a history major during my undergraduate days and even prior to the events of World War II and the unjust internment of Japanese Americans I learned about the Chinese Exclusion Act of 1882. This was one of the first major pieces of U.S. law to restrict immigration. Similar to today’s arguments on immigration, the Act was born out of fear of Chinese workers. Fears of them causing unemployment, depressing wages, and bringing other problems due to their ethnicity. The law acted to effectively ban Chinese immigration into the United States and prevent them from becoming U.S. citizens.  For me, this other dark piece of history is no different than the Japanese internment. It represents laws based on fear and bias.

Japanese Americas were forced to close their businesses and relocated to the internment camps.

My Personal History and Connection to What I Do

For me, reading about this history from as an undergraduate to a law student, did have personal relevance. My mother always told me stories of how my grandfather owned a popular shop in Chinatown Honolulu. However, unfortunately cancer took him at an early age. Soon after, my widowed grandmother was exploited due to her lack of English and inability to understand the law. Eventually she lost the business and much more due to the loss of income. To me the U.S. government forcing Japanese Americans from their homes and businesses was no different. Both scenarios arose out of the lack of justice and exploitation of the law. This is why I launched my own practice, why I enjoy educating small business owners with a variety of backgrounds on their business rights, and why I do pro bono with the Business Law Corps, whose motto is lawyers for economic justice, at the Patsy T. Mink Center for Business and Leadership.  The fight for civil liberties also means giving people fair chance at starting and owning their own business.

Final Words

I would like to extend my appreciation and thanks to Fred T. Korematsu and the Fred T. Korematsu Institute for continuing his legacy. At the firm I’m with, we fight for individual rights, economic justice, and civil liberties in our own way. Fred Korematsu Day highlights the need for us to remember and educate. Thank you for reading this post.

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Ryan Responds: “Do I Need to Form a Business (Entity)?”

Ryan Responds trade name vs trademark

Ryan Responds Video on “Do I Need to Form a Business (Entity)?”

One of my New Year resolutions was to finally start doing short informative videos on various aspects of business law. Many social media consultant and other small practice firm friends urged me to do this, as I already do educational seminars for business owners. If you are in Honolulu on January 31st, you can come attend one.

So the “Ryan Responds” videos are meant to be a quick reply to people’s FAQs about business law. They are not specific in-depth advice. So they are not a replacement for consultation time directly with an attorney. Rather they are meant to bite-sized and approachable for people that have general questions.

If You have a Question for Future Ryan Responds Videos …

We launched this on a YouTube channel, as we hope to publish educational videos on other topics in the future. Finally, if there is a short question you want the answer to submit them to admin@hewbordenave.com with the Subject line “Ryan Responds”. Please keep your questions short, general, and related to a business topic. Please do not provide specific details of  your matter or attempt to seek direct and specific legal advice through this format. If you need assistance and legal services, then please schedule a consultation with an attorney in your relevant jurisdiction.

Thanks and Cheers!

RKH

Disclaimer: The content of this video is for general information purposes only. Nothing should be taken as legal advice for an individual cases or situations. The viewing of this video does not create an attorney-client relationship. If you need legal advice, please contact an attorney in your relevant jurisdiction.

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Recap: Horrors of Business Ownership Part I

Horror Stories of Owning a Business and How to Deal with Them

The seminar focused on stressful situations encountered by business owners and how to deal with them.

Horror Stories of Business Ownership: Recap of Seminar

How is the beginning of your November 2017 going? Are you scared there are only 2 months left till the end of the year? Well, speaking of frights, I did a seminar with the Better Business Bureau of Hawaii (BBB) this past Monday celebrating Hallloween. We told spooky stories, well sort of. We discussed the horrors of business ownership. Specifically, I talked about these broader topics:

  1. structure of entity – failing to plan properly;
  2. disputes with business partners and managers;
  3. government regulations – the revoking of permits and licenses; and
  4. intellectual property infringement.

Lisa Nakao,Director of Operations of the BBB, discussed the resources the BBB offers and how to deal with reviews and complaints by customers hosted on the BBB’s website (I will cover some of this in a Part II to this post). If you could not make it to this seminar do not worry. I will continue presenting seminars aimed at educating business owners about the legal issues. So be sure to check back and follow us.

Some of the Horrors of Owning a Business – Highlights

I’d like to take this time to discuss some highlights of the seminar. While, I will not cover everything from the seminar, as you will  just have to come to the next one, this post will touch upon a couple of issues. Particularly the ones that gave good discussion or attendees asked a lot of questions.

1. Managerial Authority in a LLC: Friends, Family Members, and/or Relatives of Friends as Your Manager

I’ve discussed in the past of business partner disputes, but this following scenario is derived on a similar theme. Consider the situation where many small and medium-sized business owners rely on family or friends to help run their business, including relatives of friends. This tight-knit network can be a boon or a misfortune. Especially, here in Hawaii where people tend to rely on local connections the trust and reliance can run high and sometimes too quickly. Specifically, I refer to hiring someone as a manager of your LLC or corporation and giving them access to the company’s bank account and credit cards. Then the business owner discovers the person they thought they could trust is gone the business account is empty and the credit cards are over extended. Worst yet, there is no written management agreement.

Don't lose your business account.

Be careful of giving your manager too much access to your finances.

Is there Nothing that Can be Done? 

While, legally there is a lot to do, such as suing them or attempting to report them to the police for theft – the reality is proof and evidence issues. Many times business owners in this situation rely on a handshake, only talk to their manager on the phone, and their emails and texts refer to managerial duties/obligations obliquely. There is no writing of the contract. Further, consider even if you have a good case, you have to find them and force them to give back the money, which by the time you get the the lawsuit filed, served, and litigated, they’ve probably spent it.

So again, this is an urging to slow it down and think methodically. I get it. Small business owners are trying to get help and tread water. However, consider the following ideas:

  1. conduct due diligence – find out more about them before you hire them;
  2. limit their access to the business bank account and credit cards – you do not need to give them unfettered access;
  3. if you cannot do a full-blown management agreement, then at least tackle the main terms in some of memorandum, letter, or lengthy email;
  4. as to point 3 make sure you get their signature, acknowledgment, and confirmation!

While, those things will not always save you, the point is getting you into the habit of preparing, doing your research, and record keeping when you finally decide to take an action that may be risky.

2. Shutting Down Business Operations Due to Lost of License or Permit

So I told a story during the seminar of a business owner who relied on their accountant to do the business entity’s Annual Filings with the State of Hawaii’s Department of Commerce Affairs (DCCA). Only problem with that was the accountant was not actually doing the filings; it was not a part of their services. So the DCCA administratively terminated the corporation’s existence. So leaving the account and taxation issues aside, the main focus of this section I want to focus on is government licensing and permitting. See LLCs and corporations are legal persons. They may not be a living, breathing individual like you and me, but they are persons under the law. So often time government licenses and permits, for example liquor licenses, issues to the business entity itself and not the individual owners of the business.

So when the DCCA administratively terminated this corporation the business owner also lost their government license. In this instance, they could not operate the business because it would be illegal to operate without a license. So they had to shutter their business and form a new corporation, then reapply for a completely new government license.

Did they Really have to Close Their Business?

Yes, unfortunately in this case they did. However, sometimes the government fails to follow proper procedure when revoking or suspending a business owner’s license or permit. If the government does not follow its own rules and regulations there may be opportunity to stop the government’s action. However, it depends on the type of permit or license being revoked and the applicable laws and regulations surrounding it.  In this instance, the business owner could have saved themselves by routinely checking the DCCA and communicating with their accountant. Finally, catching the administrative termination of their original corporation earlier could’ve resulted in a successful petition to reinstate it.

You should know the filings you need to make with the government and calendar them into your schedule. Further, consider an annual business checkup to assist you in navigating your business’s compliance requirements. If you are interested in an initial consult to begin the process of an annual business checkup contact us today!

Be vigilant in your compliance.

Keep your business compliant or you may be forced to shut it down by the government.

There will be a Part II to this post; it will focus on the BBB Reports and Complaints and resources/information they shared. So check back!

DISCLAIMER: This post discusses general legal issues, but does not constitute legal advice in any respect.  No reader should act or refrain from acting based on information contained in the post without seeking the advice of  an attorney in the relevant jurisdiction.  Hew & Bordenave, LLLP expressly disclaims all liability in respect to any actions taken or not taken based on the contents of this post.

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High Profile Sexual Abuse Allegations Tied to a Longstanding Reality

Opening door.

Opening door.

Sexual Abuse Suits: A Change in Society or Exposing Institutional Problems?

Recently, there have been high profile sexual abuse lawsuits making headlines across the nation. In light of this, people often ask, “Is something happening to our society causing this increase in harm to children?” Based on statistical analysis it would seem it is more of an unmasking of longstanding problems.

For instance, in 2016, lawsuits were brought against MJJ Productions, a multimedia creation and distribution company founded by the late singer Michael Jackson. One lawsuit accuses MJJ Productions of negligence in the handling of sexual abuse allegations. While it is impossible to predict the outcome of pending litigation, the available evidence and allegations of “businesses [designed] to operate as a child sexual abuse operation, specifically designed to locate, attract, lure and seduce child sexual abuse victims” are disturbing at the very least.

More recently, lawsuits were filed against several prominent members of United States Gymnastics, as well as the governing body itself. The lawsuits allege negligence on the part of the USA Gymnastics. Specifically, it had a pattern of harboring, concealing, and promoting abusive behavior; this is in addition to other claims of action against the athletic organization. The civil action centers around the criminal prosecution of USA Gymnastics’ former team doctor, Dr. Lawrence Nassar.  He faces over 100 complaints of sexual abuse and sexual assault from the athletes that were under his care. According to one complaint, the USA Gymnastics failed to take measures to adequately protect its young athletes from him. The reason: they chose to handle the sexual abuse allegations against the doctor internally, rather than reporting these potential crimes to the appropriate authorities.

The Statistics Show that this is Not a New Problem

These headline cases should motivate people to be more sensitive and handle situations properly. Those in authority sometimes fail to properly react. They can often mismanage or mishandle reported abuse. All jurisdictions mandate reporting of potential sexual abuse of a minor to the proper authorities. The goal being to prevent persons and organizations from covering up the problem.

No one should sweep abusive conduct out of the public eye. Criminal prosecutions might initially stop a perpetrator, and civil cases might deter organizations, but public admonitions, settlements, and convictions make communities safer. This is unlike what happens when childhood sexual abuse remains hidden behind a veil of shame and secrecy.

While, headline cases might shake our belief in the people and organizations we trust, the unfortunate reality is this behavior has persisted. It lurks beneath the surface and research confirms as much. According to the National Center For Victims of Crime, 1 in 5 girls and 1 in 20 boys will be a victim of child sexual abuse. If that is not sobering, consider the further following statistics:

Reporting Sometimes Not Enough

Further sobering statistics highlight the realities of this problem. First, reporting the suspected abuse may not be enough. Even if holding perpetrators responsible, but not the those responsible for victims’ safety, may ultimately hide the problem. Those in power may know about patterns of abuse, but do nothing about it, or worst, turn a blind eye. News stories, reports, and studies bring light to an ongoing situation. However, the unfortunate reality is that the news does not cover less sensational stories, even while these victims’ pain is just as real.

Further Information

For more information on the cases discussed in this post you can visit:

  1. the Hollywood Reporter for updates on the MJJ Productions case; and
  2. the L.A. Times for the USA Gymnastics case.

If you or someone you know is a victim of sexual abuse, please seek help. You are not alone in this situation; there are people and organizations that can help. In Hawaii, there is the Sexual Abuse Treatment Center. For California, there are variety of resources, not only for sexual abuse victims, but many other kinds of problems, consider the California Victim Compensation Board’s Victim Resources page.

Lastly, if you are seeking legal representation to handle your matter, or a loved one’s matter, with diligence and compassion, please consider contacting Hew and Bordenave.  We assist clients both in Hawaii and California and diligently protect the identities of our clients.

DISCLAIMER: This post contains comments and opinions of cases in the news as well as factual data.  It does not constitute as legal advice to any particular person in any respect.  If the reader feels they have an injury or need specific advice based on the information contained in this post, then they should seek the advice of  an attorney in their relevant jurisdiction.  Hew & Bordenave, LLLP expressly disclaims all liability in respect to any actions taken or not taken based on the contents of this post.