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Benefits of incorporating if you are an independent contractor

10/28/2014

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What is a 1099 Independent Contractor? 

The IRS defines Independent Contractors as: "People such as doctors, dentists, veterinarians, lawyers, accountants, contractors, subcontractors, public stenographers, or auctioneers who are in an independent trade, business, or profession in which they offer their services to the general public are generally independent contractors. However, whether these people are independent contractors or employees depends on the facts in each case. The general rule is that an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done. The earnings of a person who is working as an independent contractor are subject to Self-Employment Tax." 

Independent Contractors/ Self Employed Independent Contractors (IC): What do we need to know? 
  • Income for Independent Contractors are reported on a 1099 form  
  • Any suit against an Independent Contractor can affect their personal assets unless they are Incorporated. 
  • Independent Contractors are responsible for a Self-Employment Tax of 15.3%  on the first $117,000 of your income and 2.9% thereafter. 



What options does a 1099 Contractor have in Incorporating? 

When you are performing your duties as an Independent Contractor, you carry the liability of being sued for your actions or inaction's for the work you perform. In the event of a suit, your personal assets are put at risk unless you  incorporate. There are two option typically available that are viable for Independent Contractors. 1. S-Corporation, 2. Limited Liability Company (LLC).  

Limited Liability Company 
  • By Incorporating as an LLC, you remove the risk of suitors reaching into your personal assets in the event of litigation 
  • LLC, you have the option of an S or C election with the IRS. Hence, you can avoid double taxation by electing to be treated like an S-Corporation for Tax purposes. 
  • Can reduce your tax liability (discussed below) (Similar to S Corp) 

S-Corporation 
  • Incorporating as a S Corp can reduce your self-employment tax depending on the amount you make. Self-employment tax covers all who earn a living for themselves. The self-employment tax is 15.3%. By structuring and proper allocation of income, you can reduce the total amount you will have to pay the IRS. 

Example: If you are currently making 100,000 dollars, which is typical for an Independent Contractor in California. You will be responsible for almost $15,000 in self-employment taxes ($14,990 to be exact). By incorporating as an S-Corp or LLC, and by allocating proper income that a person in your position would get it can save you on the amount of taxes that you would owe. These savings can be serious. For instance, if we determine that your industry salary is $50,000 and you are making a total of $100,000. You would only pay self-employment tax on $50,000, which is $7495 instead of $14,990, you just saved $7495 in taxes with proper planning, not to mention the added liability protection.  
  • The remainder would be a distribution which is not subject to the FICA Taxes, which is distributions going to Medicare and Social Security programs, a.k.a Self-Employment Taxes. 
  • Other benefits include one-Participant 401K plans.  


Contract us if you are an Independent Contractor looking to Incorporate to maximize your savings. Our goal is to answer all your questions and create a plan that works for you. 

Drason Law Firm 
560 S. Winchester Blvd, Suite 500
San Jose, CA 95128
Phone: 1-800-929-5140
Email: info@drasonlaw.com
www.drasonlaw.com

Disclaimer: This is not legal advice. Please contact us or your attorney if you have any questions. 
Attorney: Ripal Patel, Esq.


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STARTUP SHARES | AUTHORIZE SHARES | HOW MANY?

10/24/2014

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These are very common questions from our clients that are in the process of either starting their company or looking for advice on share(s), structure, and compensation in equity. 

WHAT ARE AUTHORIZED SHARES? Part of the Incorporation process is filing a Certification of Incorporation with the Secretary of State. In this document, companies list the number of shares that they would like to start with. Typically, this number is between 10-20 million for most Startups; enough to address their needs for 6 months to 2 years. Timelines are unimportant here. As we have seen and experienced, Startup arena is wild and full of surprises. Some companies gain traction and experience growth quicker than others; changes are quick in such companies. The reason for this digression is that if you are experience fast growth or are in a fast growth industry, things may have to be done a little differently. For one, Instead of starting with just a single class of stock, as most Startups do, you may want to consider multiple classes of stocks. 

HOW MANY SHARES SHOULD A STARTUP AUTHORIZE? For a typical Startup, we recommend 20 Million shares. This amount is usually enough to carry on with daily needs, hire employees, seek initial investment. To be honest, the number of shares authorized is not important, but you still need enough of it to pass around. If your company is only authorizing 10,000 shares, there might not be enough to go around. Though you can always add to the pool, but you want to minimize such administrative tasks as much as possible in the initial stages. 

Which looks more attractive? Giving 10 shares vs. 10,000 shares to a potential new hire or investor? 

The number of shares authorized will not affect the overall value of the company. Investors use a formula to value your company, and the number of shares does not make a difference to the valuation, it only affects the value of each share at that point in time. Remember, Board of Directors can authorize additional shares at any time in the future without investor approval. 

Startups have options when it comes to authorizing shares, series and allocation. I highly recommend you flush out your concerns and discuss your options with an attorney.

Contact us today if you are looking with an attorney to help with your Startup. Our hourly rates a lower than most law firms. We work with our Startup clients to keep their legal costs under control, by providing them low monthly payment options, or partial deferral options. 


Drason Law Firm 
560 S. Winchester Blvd, Suite 500
San Jose, CA 95128
Phone: 1-800-929-5140
Email: info@drasonlaw.com
www.drasonlaw.com

Disclaimer: This is not legal advice. Please contact us or your attorney if you have any questions. 
Attorney: Ripal Patel, Esq.
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Professional Corporation-benefits, information

10/23/2014

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If you are a licensed professional, your options to incorporate maybe limited. California prohibits certain licensed professionals from doing business under traditional corporate models such as Limited Liability Company, S-Corp or C-Corp, instead, they must incorporate as a professional corporation.

What professionals can incorporate as Professional Corporations? This list is not an all-inclusive list but examples of the type of professions that fall within the definition requiring them to incorporate as a Professional Corporation if they choose to incorporate. They are: dentists, certified public accountants, doctors, lawyers, optometrists, psychiatrists, and psychologists.

Why do certain professions have to incorporate as Professional Corporations? The stance behind this requirement is an attempt to protect the integrity of the profession. State wants to ensure that certain professions maintain their core integrity as they grow and expand. These restrictions are placed in the form of Professional Corporation, which has well defined rules all must follow. Such as having a license in the profession if you wish to become a shareholder and become part of the business; though there are certain exceptions depending on your profession. Example: Accountancy Firm can have non-licensed shareholders, to do so, they are required to comply with certain requirements.

Professionals are also regulated by applicable governmental agencies, thus, there may be additional rules to comply with.

Benefits of having a Professional Corporation? Forming a Professional Corporation will never protect you against malpractice because professionals are always held personally or jointly liable (depending on the profession) for such actions. There is no way out of it. But a Professional Corporation will protect you from negligence of other owners. You also get deductions that are otherwise unavailable to you, such as benefit plans, disability, health insurance, long term disability. Other benefits included unlimited owners.

All Professional Corporations must be approved by the state.

We consult with clients who are looking to form a Professional Corporation, file all the necessary documents with the state such as Articles of Incorporation, Statement of Information, we will obtain your EIN and prepare and file your Bylaws with the state.

Contact us at:

Drason Law Firm 
560 S. Winchester Blvd, Suite 500
San Jose, CA 95128
Phone: 1-800-929-5140
Email: info@drasonlaw.com
www.drasonlaw.com

Disclaimer: This is not legal advice. Please contact us or your attorney if you have any questions. 
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Commercial Tenant Eviction

10/22/2014

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Landlords should be aware that the rules for evicting a commercial tenant are different than residential tenants. If you are a landlord currently leasing office space, or property to a commercial tenant and are seeking to 


Commercial Tenants are typically considered sophisticated parties.  This also means they are afforded less protections because of this status. The eviction process is also different for Commercial Tenants and it is considered an issue of Contract Law.

What are some reasons to evict a Commercial Tenant? Unable to Pay rents, improper use of the property, failure to pay up to 20% in excess of rent.

Eviction Process for Commercial Tenants

A landlord is required to provide a three day notice. What is the tenant supposed to do during this time? They have three days to correct the problem for which eviction is taking place. If the Tenant fails to comply with the notice, then the landlord can serve them with an notice unlawful detainer, after which Landlord must give tenant 5 days to leave the premises. What happens if the tenant fails to leave after the unlawful detainer notice? If the tenant fails to leave the premises within 5 days of the notice, the landlord will have to go to court to force the tenant to leave the premises. What can the landlord do after going to court? They can lock the premises and prevent access to tenant.

How much time does a commercial tenant have after judgment to collect property and belongings? The will be given 15 days to collect any of their possessions which they have left at the property. What is if the tenant does nothing in the 15 days? If the 15 days pass, the tenant can mail a “notice of belief of Abandonment of Commercial property,” this informs tenant that the property is presumed to be abandoned; the landlord must give tenant another 18 days to claim property. What can the landlord do with the property after this point? The landlord is free to sell the property that is abandoned.

What is the most important aspect of a Commercial Landlord and tenant relationship? In our opinion, the Commercial lease agreement is the most important aspect; it governs the relationship and expectations of each party. You should always have an Attorney (Contract or Real Estate) involved before signing a lease agreement 



Our Attorneys help Landlords with Commercial disputes, evictions and contracts. Please contact us if you have any questions. 

Drason Law Firm 
560 S. Winchester Blvd, Suite 500
San Jose, CA 95128
Phone: 1-800-929-5140
Email: info@drasonlaw.com
www.drasonlaw.com

Disclaimer: This is not legal advice. Please contact us or your attorney if you have any questions. 
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Important Stock Restriction language for Professionally incorporated accountancy firms | Accountancy bylaws | 5079 Accountancy Act

10/22/2014

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Below is language every accountant who is professionally incorporating should consider adding to their Bylaws. Drason Law Firm helps clients incorporate and draft bylaws. With Professional Corporations, there are considerations that need attention in order to be compliant with the Licensing Board.

Notwithstanding any provisions in the bylaws to the contrary, the following restrictions shall apply to the ownership of shares of the corporation.

(a)    licensee Shares may be issued only to licensed persons and are subject to the restrictions on ownership and transfer prescribed under Sec. 13406 and 13407 of the Corporations Code.

(b)    the Shares of the corporation owned by a person who (i) dies, (ii) ceases to be an eligible shareholder, or (iii) becomes a disqualified person as defined in Section 13401(e) of the California Corporations Code, for a period exceeding ninety (90) days, shall be sold and transferred to the corporation, its shareholders, or to a person licensed to practice the same profession in the jurisdiction or jurisdictions in which the person practices, on such terms as are agreed upon by the corporation and its shareholders.  Such sale or transfer shall occur not later than six (6) months after any such death and not later than ninety (90) days after the date the shareholder ceases to be an eligible shareholder, or ninety (90) days after the date the shareholder becomes a disqualified person.  Such shareholder shall have no voting or other rights from and after the date of death or disqualification or termination of eligibility, except the right to receive payment for such shares in accordance with the agreement of sale.  The income of the corporation attributable to the practice of the profession of the issuing corporation while a shareholder is a disqualified person shall not in any manner accrue to the benefit of such shareholder or his shares.

(c)   the share certificates of the corporation shall contain a legend setting forth the foregoing restrictions above, the conditions and restrictions on non-licensee ownership specified in section 5079 of the Accountancy Act shall be clearly set forth on each Shate Certificate issued to a nonlicensee.

Section 5079 of the Accountancy Act

(a) Notwithstanding any other provision of this chapter, any firm lawfully engaged in the practice of public accountancy in this state may have owners who are not licensed as certified public accountants or public accountants if the following conditions are met:

(1) Nonlicensee owners shall be natural persons or entities, such as partnerships, professional corporations, or others, provided that each ultimate beneficial owner of an equity interest in that entity shall be a natural person materially participating in the business conducted by the firm or an entity controlled by the firm.

(2) Nonlicensee owners shall materially participate in the business of the firm, or an entity controlled by the firm, and their ownership interest shall revert to the firm upon the cessation of any material participation.

(3) Licensees shall in the aggregate, directly or beneficially, comprise a majority of owners, except that firms with two owners may have one owner who is a nonlicensee.

(4) Licensees shall in the aggregate, directly or beneficially, hold more than half of the equity capital and possess majority voting rights.

(5) Nonlicensee owners shall not hold themselves out as certified public accountants or public accountants and each licensed firm shall disclose actual or potential involvement of nonlicensee owners in the services provided.

(6) There shall be a certified public accountant or public accountant who has ultimate responsibility for each financial statement attest and compilation service engagement.

(7) Except as permitted by the board in the exercise of its discretion, a person may not become a nonlicensee owner or remain a nonlicensee owner if the person has done either of the following:

(A) Been convicted of any crime, an element of which is dishonesty or fraud, under the laws of any state, of the United States, or of any other jurisdiction.

(B) Had a professional license or the right to practice revoked or suspended for reasons other than nonpayment of dues or fees, or has voluntarily surrendered a license or right to practice with disciplinary charges or a disciplinary investigation pending, and not reinstated by a licensing or regulatory agency of any state, or of the United States, including, but not limited to, the Securities and Exchange Commission or Public Company Accounting Oversight Board, or of any other jurisdiction.

(b) (1) A nonlicensee owner of a licensed firm shall report to the board in writing of the occurrence of any of the events set forth in paragraph (7) of subdivision (a) within 30 days of the date the nonlicensee owner has knowledge of the event. A conviction includes the initial plea, verdict, or finding of guilt, pleas of no contest, or pronouncement of sentence by a trial court even though that conviction may not be final or sentence actually imposed until appeals are exhausted.

(2) A California nonlicensee owner of a licensed firm shall report to the board in writing the occurrence of any of the following events occurring on or after January 1, 2006, within 30 days of the date the California nonlicensee owner has knowledge of the events:

(A) Any notice of the opening or initiation of a formal investigation of the nonlicensee owner by the Securities and Exchange Commission or its designee, or any notice from the Securities and Exchange Commission to a nonlicensee owner requesting a Wells submission.

(B) Any notice of the opening or initiation of an investigation of the nonlicensee owner by the Public Company Accounting Oversight Board or its designee.

(C) Any notice of the opening or initiation of an investigation of the nonlicensee owner by another professional licensing agency.

(3) The report required by paragraphs (1) and (2) shall be signed by the nonlicensee owner and set forth the facts that constitute the reportable event. If the reportable event involves the action of an administrative agency or court, the report shall identify the name of the agency or court, the title of the matter, and the date of occurrence of the event.

(4) Notwithstanding any other provision of law, reports received by the board pursuant to paragraph (2) shall not be disclosed to the public pursuant to the California Public Records Act (Chapter 3.5 (commencing with Section 6250) of Division 7 of Title 1 of the Government Code) other than (A) in the course of any disciplinary proceeding by the board after the filing of a formal accusation, (B) in the course of any legal action to which the board is a party, (C) in response to an official inquiry from a state or federal agency, (D) in response to a subpoena or summons enforceable by order of a court, or (E) when otherwise specifically required by law.

(5) Nothing in this subdivision shall impose a duty upon any licensee or nonlicensee owner to report to the board the occurrence of any events set forth in paragraph (7) of subdivision (a) or paragraph (2) of this subdivision either by or against any other nonlicensee owner.

(c) For purposes of this section, the following definitions apply:

(1) “Licensee” means a certified public accountant or public accountant in this state or a certified public accountant in good standing in another state.

(2) “Material participation” means an activity that is regular, continuous, and substantial.

(d) All firms with nonlicensee owners shall certify at the time of registration and renewal that the firm is in compliance with this section.

(e) The board shall adopt regulations to implement, interpret, or make specific this section.

Please contact us if you have any questions. 

Drason Law Firm 
560 S. Winchester Blvd, Suite 500
San Jose, CA 95128
Phone: 1-800-929-5140
Email: info@drasonlaw.com
www.drasonlaw.com

Disclaimer: This is not legal advice. Please contact us or your attorney if you have any questions. 
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Arbitration Clauses | Risks with Simplification

10/21/2014

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Drason Law Firm has experience representing clients in Arbitration Proceedings. We have drafted, reviewed and edited countless Arbitration Clauses in various agreements. Below are a few thoughts on them to educate and help our clients and others understand risk with poor arbitration clauses. 

The presence of Arbitration Clauses in agreements has been unprecedented. Majority of Contracts we draft for our clients contain an Arbitration Clause. When reviewing contracts on behalf of my clients or representing them in contractual disputes containing arbitration clauses; we have seen good arbitration clauses and poor ones. 

Simplicity in contracts is important. A straightforward contract in our opinion is the best form of contract. One has to be cautious in not trading completeness of a contract for simplicity. You do not want to over simply clauses impacting the legal significance and implication of the clause. Though a rare occurrence, we’ve seen it happen. One such area is arbitration clauses.

An overly simplified clause poses danger. A dangerous battle that will make your wallets bleed in attempting to figure out how the clause should be interpreted and applied.

This is an actual clause I encountered in reviewing a contract for one of our clients was to sign. “In the event of a dispute, both Parties agree to Arbitration, but will try mediation first.” What is the risk here? The risk one runs with such a clause absence of any language even remotely alluding to the process that the Parties shall employ in the event of a dispute. Jurisdiction? AAA? JAMS? Notices? Number of Arbitrators? Including how mediation is going to be handled.

Resolving the questions above might bleed most non-sophisticated parties dry. Determining the Jurisdiction, who will arbitrate?, how many arbitrators? This is just beginning of the death spiral. How about who will pay for arbitration? A good clause will usually specify this along with other important provisions.

A bigger question, is the one liner Arbitration clause enforceable? Yes. The clause clearly states that Arbitration is required in an event of a dispute. The process on how to achieve fair Arbitration is absent. What does this mean? Two things come to mind. 1. The Gaps can be filled with The Federal Arbitration Act, or, 2. Traditional Litigation.

In summary, you want a well-balanced arbitration clause that is not overly specific or overly simplified. You don’t want an arbitration clause itself to become the point of contention. 

Contact us today, if you are currently drafting a contract and have questions, or want a second opinion on your contract. 

Drason Law Firm | Business Law Firm 
560 S. Winchester. Blvd, suite 500
San Jose, CA 95128
Email: Info@drasonlaw.com
Phone: 1-800-929-5140


Attorney: Ripal Patel, Esq. 
Disclaimer: This is not legal advice. Please contact your attorney or us if you have any questions. 
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Saas Agreements | What to look out for | Saas Agreement Lawyers

10/21/2014

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Important Considerations for Software as a Service (SaaS) Agreements

SaaS have become increasingly popular. Easy implementation with less maintenance on the part of your company or business does make it a solid contender. So, you contact a Service Provider and they give you a SaaS Agreement to sign. What do you do? It is important to review the agreement and make sure it is adequate. We have seen many SaaS agreements that are deficient and lack clarity. We do offer Agreement/Contract review services to our clients, where we highlight the areas that need revisions and ones where more discussions are required to avoid confusion and potential problems. We often redline such contracts for our clients so that Service Providers have an opportunity to review them and provide their feedback.

Here are some points you should negotiate and review when a SaaS contract is presented to you:

Term of the Service: Your Business or Company should have discussions on your commitment to a particular SaaS service. If a SaaS Agreement provides for a default Term; discuss this with the provider’s representative and see if you can get it changed. Depending on the Term, you may be in a position to negotiate discounts. Long term contracts are good because they provide assurance that the service will be delivered as promised, but you also have to make sure that there are appropriate clauses to let you out of the contract should something happen (or not happen, i.e. Company goes bankrupt, service expectations are not met, or violations of various contractual agreements).

Pricing and Possible Changes in the near future or during the Term: For the most part, if a vendor agrees on pricing, they will honor it as promised, but always look out for “slick” language that leave wiggle room for SaaS Service Providers to increase or change pricing. Negotiate such language, you may even add notification language and opt-out clauses in the event you and the SaaS Service Provider are unable to come to an agreement.

Payments: This is a hot topic for many contractual matters. Net 20? Net 30? Upfront payment? Different companies have different policies. Never assume that the Service Providers has the same payment policies you do. Discuss this during negotiations, and negotiate them if need be, but do not assume. I have had clients call me just to negotiate this very issue; they will negotiate the whole agreement having forgotten to discuss the payment issue, when the time comes to write a check, we have a problem. I will say this one more time, please discuss this with the Service Provider.

Maintenance/Support Costs: SaaS services do require maintenance such as providing support to your staff; time spent resolving issues, upgrades etc. Many SaaS Agreements will not call this out as a separate item as they consider this an in-house item (as part and price of the service being offered), but it is good practice to look out for such clauses because they will add to the cost over time. Having this in an agreement is not bad in itself, but it should be factored into the overall cost of the product.

Service Level Agreement & Penalities: Also known as SLA’s, they are common in the web-development, server and general web-service and software industry; commitment to provide adequate services is important. You want the service you are paying for to be reliable and have maximum uptime. You will see such commitments in your contract represented in percentages. Note: always ask to see what formulas or considerations the vendor is using in calculating their uptime. SLA’s also call out for penalties for failed delivery to failure to stay true to their promise. I have seen per occurrence penalty, tabular penalty and everything in between. It is also recommended that you take the time to flush out all possible scenarios and penalties associated with them if there a tabular model is being used. If there is a per occurrence penalty you want to be sure that it is adequate under the circumstances, push for stricter penalties to ensure reliability and commitments.

Renewal Process:  If you are entering into a contract and there is potential for long term commitments by both parties. Discuss the renewal process. How will the renewal process start? Notices? Meetings? Emails? How long will the process take? Will there be discounts? Any price hikes? Will the current contract be amended with extension on service or will there have to be a new contract? There are just some of the many questions you should consider.

Discounts: Ask for discounts even where there are none. It never hurts to ask, and you won’t get them unless you ask for them, especially for custom services where prices and discounts are not readily published. Sign up discounts? Renewal discounts? My practice is have my clients ask for discounts whenever possible.

Data Recovery/Loss: Machines fail: servers, computers, networks to name a few. Is there a proper Data recover or loss policy? How will the Service Provider handles such issues, in the event of an outage or loss, how will the Service Provider work to get your data back? What happens if the data is not recoverable? You should include this in the contract.

Data Transfer: If you have used a particular service for years, and now wish to switch, how will the data be transferred? Who is responsible for the cost of the Transfer? How long does it typically take? Some service providers include such cost in the pricing model they propose, others have a separate fee.

Customer Services: Few of the points I’ve mentioned above can be lumped into this category. Customer Service! You as a person, small business or mid-to-large corporation purchasing a SaaS service have expectations, and they are high. You will fork up good money to ensure that these expectations are being met. Which makes it all the more important to flush out the details and have a comprehensive SaaS Agreement.

Data Security: This has become a hot topic. Data breaches are reality, it is happening everywhere and every day. What steps is your SaaS Service Provider taking to ensure that your services is protected and that it will not lead to any breaches that could seriously compromise your business. 

Drason Law Firm has counseled in Software Agreements. We regularly engage in develop custom software contracts for our clients. If you are currently looking for a software Attorney, or wish to consult with one of our attorneys regarding your SaaS Agreement; Call us today at 1-800-929-5140

Drason Law Firm | Business Law Firm 
560 S. Winchester Blvd, Suite 500
San Jose, CA 95128

Phone: 1-800-929-5140
Email:info@drasonlaw.com

Article by: Attorney: Ripal Patel, Esq. 
Disclaimer: This is not legal advice. Please consult with your attorney or with us if you have any questions. 

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Terms and Services for website. Good practice. What is legally required for terms and services?

10/14/2014

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If you have created an online account in the past few years, you may have either checked a box on the bottom of your signup page that states “I understand and accept the terms of use” followed by a hyperlink.  The hyperlinks are the actual terms of use by the Website Company or owner to the user. Such terms cover general liabilities, use of data, privacy expectations, and dispute resolution clauses. There are many variations of this. Some are good and some are bad-really-really bad. There are other privacy considerations that need attention when developing the Terms and Conditions for your website, and you should contact a lawyer if you have any questions. Reach out to us if you are looking for an attorney.

Though checking a box is the most common form of acknowledgement that users have read and agree to the terms of the website, there are other variations out there. Some are good and some are bad.

BEST form of Terms and Conditions Notices: A Terms and Conditions scroll box built right into the signup page, where users have to scroll all the way to the bottom and click on the acceptance box before continuing. There are variations of this format out there. Generally, this satisfies the notice and actual knowledge requirement of the Terms and Conditions pertaining to a website.

GOOD form of Terms and Conditions Notices: The most common form of notice is checking a box at the bottom of the signup page which is usually followed by a hyperlink, which users can click to view the Terms and Conditions that they are agreeing to. Though this has been in practice for some time, I believe it is a good practice not the best one. The reason being is though it satisfies the notice requirement; it still leaves room for possible arguments, such as whether there was actual knowledge of the Terms and Conditions. This format is not likely to create any immediate problems, as most courts will likely hold this to have satisfied the notice requirement. However, as the web evolves courts may take a different stance on browsewrap agreements. A possible reason for change in stance might be due to the increase in users; more people are using the web than ever before and more services are offered online than in other traditional models. If such services become necessities rather than options, the courts might be inclined to add additional shields to protect consumers. But as of right now, this method possesses low risk to companies.

POOR form of Terms and Service Notices: A recent case in the Ninth Circuit is a good example of a poor implementation of Terms and Conditions disclosures. In Nguyen v. Barnes & Noble, Inc., the Ninth Circuit upheld the lower court’s decision not the compel arbitration as outlined in the Terms and Conditions of Barnes and Nobles. Though, Barnes and Nobles had Terms and Conditions, and I am certain their attorneys spent hours developing it, it was not upheld by the courts. The reason for not upholding was simple. The method in which Barnes and Nobles implemented such Notice was improper. Barnes and Nobles had placed the Terms and Conditions link on the bottom of all the pages on their website. Courts determined that simply placing a link on the bottom of the pages was insufficient to amount to actual notice of the Terms and Conditions. This practice did not amount to a Notice of the Terms and Condition, not even constructive notice. 


Contact us if you are currently looking to develop Terms and Conditions of Use and Data for your website. We will guide you every step of the way.

Drason Law Firm | Business Law Firm
560 S. Winchester Blvd, Suite 500
San Jose, CA 95128


Phone: 1-800-929-5140
Phone: 1-408-307-9366
Email: Info@drasonlaw.com
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Common Causes of software disputes | software Agreement disputes

10/13/2014

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Drason law Firm represents clients from Software Agreement Development, Revisions, Negotiations to Litigation. Below are some common reasons we have found from our experience. 

COMMON CAUSES OF SOFTWARE DISPUTES BETWEEN CUSTOMER AND SOFTWARE DEVELOPER.
 
A.     Poor project and/or service management
B.     Changes in Scope, often known as scope creep. Where contract fails to properly address this issue
C.     Improper testing of software to workout bugs
D.     Customer has become increasing difficult to work with, refuse to communicate
E.     Lacking developmental and testing resources 
F.     Inadequate project planning and scoping 
G.    Unrealistic expectations from development company 
H.    Unable to finalize scope of project 
I.      Under quoting by development company without considering true cost of development
J.     Customers refusal to pay
K.    Customer has changed their mind 

Having a proper agreement in place is a good start. Template agreement do not provide for certain scenarios, they can be counter product and an illusion in you saving money. The cost savings often experienced with using a Template as your Agreement are outweighed by the cost incurred in legal fees when the contract goes into dispute. Of course, there are situations that will require legal interference whether you use an attorney or not. This is an unavoidable consequence of doing business. Our goal is to ensure and reduce the frequency engaging in litigation by providing for various situations within the contract. A good contract will no doubt reduce legal fees incurred over the cycle of the contract. 

If you are in the software development business or are looking to have a contract developed for you or your company, contact us today. Feel free to contact us if you have any questions. 

Drason Law Firm
560 S. Winchester Blvd, Suite 500
San Jose, CA 95128


Email: Info@drasonlaw.com
Phone: 1-800-929-5140

This Blog is for information purposes only, and does not amount to legal advice. All Parties reading this blog should contract a lawyer if they have any questions. 

By: Ripal Patel, Esq.

Keywords: Software Agreement Attorney | Software Privacy Attorney | Software Contract Attorney | Software Agreement Law Firm | Software Litigation Lawyer
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Low Profit LLC's or L3C's | What are they? | benefits? | California Alternatives to L3cs

10/3/2014

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Low Profit LLCs | L3C | L3C lawyers | L3C Law firm 

What is an L3C?

A L3C is a for profit organization that pay tax on their profits. They are usually for organizations that wish to conduct charitable acts and realize small profits in doing so. However, majority of their interest and acts are for charitable purposes. 

Can a L3C receive charitable contributions?

Yes, a L3C can receive contributions from a private foundations, government funding and investment 
capital. 

Can L3C receive traditional grants and tax-deductible charitable contributions?

Our Attorneys at Drason Law Firm consult on L3C contributions and help you determine the legitimacy 
of contributions and whether they comply with regulations. Our L3C attorney will tell you that 
traditional grants or tax deductible charitable contributions are not permitted for L3C. However, there 
may be other consideration, sometimes transactions or proposed transactions need legal consideration 
for proper determination and assessment. If your L3C Corporation is receiving contributions and you 
need proper advice and guidance on the transactions, please contact us today. 

What are the advantages of form an L3C or Low Profit LLC?

L3C or Low Profit LLC’s are beneficial for foundation that wants to receive investment for socially 
beneficial purpose that is consistent with the foundations existence or mission. 
Having the status of L3C is an automatic Program related Investment (PRI) qualification which assures 
other investors in the program that you are already qualified as an L3C, and that you will not be 
spending a lot of money qualifying such status. 

What do I need to know about L3C or Low Profit LLCs?

L3C is a form of Limited Liability Company (LLC), so owners of an L3C enjoy flexible ownership, 
management, limited liability as an LLC, tax benefits by structuring as an LLC. 

Why is investing in a L3C beneficial to other non-profit foundations?

If you currently have an L3C and are seeking investments, it is much easier to make a pitch to 
foundations that provide traditional grants (where they give money away), to make an investment in 
your L3C, such investment is good news for foundations because there is a potential upside, if profits are 
realized, the grant can reap small benefits from it, a nonprofit will enjoy such profits on a tax-exempt 
status. 

What are the requirements in forming a L3C?

  1. The company must significantly further the accomplishment of one or more charitable or educational purposes. Note: Basically the L3C would not exist without a charitable purpose in mind.
  2.  No significant purpose of the company is the production of income or appreciation of property. Note: An L3C should engage in charitable purposes and their purpose should not be the production of money or acquiring assets that will significantly increase in value. This is to prevent disguised for profit corporations.
  3. L3C’s cannot be used to accomplish political or legislative purposes. 


Can you form an L3C in California?

Currently, you cannot form an L3C llc in California. However, there are some very attractive alternatives that accomplish the same goals such as Flexible Purpose Corporation. Contact us today, if you are currently looking into incorporating in California with L3C in mind, we will show you how a Flexible Purpose Corporation accomplishes the same goals.

What is a PRI (Private Letter Ruling)?

PRI’s are also known as Program related investments and are loans made by foundations to organizations that serve a common goal or good. IRS requires approval (ruling) known as PRI rulings on such loans to maintain status. This can be costly and expensive, a L3C is designed to ease this process, by acquiring the PRI by design. 

Have questions on L3C? Contact us today. 1-800-929-5140
www.drasonlaw.com
https://www.drasonlaw.com/business-law.html

Drason Law Firm | Business Law Firm 
560 S. Winchester Blvd, Suite 500
San Jose, CA 95128

Email: info@drasonlaw.com
Attorney Ripal Patel: Phone: 408-667-7233
1-800-929-5140
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