News and Articles

June 2015 NEWSLETTER

Yogi Patel - Thursday, June 04, 2015

Dear valued clients and supporters: This month's newsletter will focus on: (1) the treatment of household employees under Internal Revenue Code and state statutes; and (2) a closer look at raising capital through preferred shares in the context of our continuing series of articles on start-up entrepreneurs.

Household Employees


While it is not impossible to lawfully employ a household employee, it can be tricky. A household employee is a person who generally does such domestic work as housecleaning, cooking and/or child care. The implications of hiring a household employee often surface when the employee files for unemployment or disability insurance or if the employee simply goes to a reputable accountant to file their yearly income taxes - thereby triggering what is known as the "nanny audit" in the accounting and legal industries. Employers should be mindful that the Internal Revenue Code requires a household employee to be treated similarly to any other employee. Thus, besides the wages paid to the employee, the employer is also responsible for social security, medicare, and unemployment insurance (under both State and Federal Law) contributions on the employee's behalf. The employer must also withhold taxes and pay the employee as a W-2 employee and make timely payments to the IRS for any withholdings. In addition, New York law requires employers to obtain a Workers' Compensation policy as well as a disability policy. Employers are also advised to comply with the minimum wage and overtime provisions of the labor law as household employees are not exempt from these laws. Failure to adhere to these regulations under Federal and State law subject the employer to personal liability. Both employers and employees are advised to consider the exposure in back-taxes to the IRS, as well as the possibility of criminal prosecution for willful failure to comply. 

 

Start-up ventures, raising money and legal obligations


Last month's newsletter rolled out the first article of a three-part series on start-up ventures and capital. The first article, focuses on corporate structures, corporate formalities and applying for securities registrations exemption prior to the "seed" money or "friends and family" stage of raising capital. The second article , focuses on issues faced by a start-up entrepreneur that has already used the initial “seed” money to start the business, but is now at the stage requiring additional capital infusion to fuel the company’s growth. While there are many avenues through which additional capital can be raised, the second article in the series considers the issuing of preferred shares of stock in the company as the mechanism for raising capital. 
      

Preferred stock is a class of shares that by definition entitle their holders to priority payment on dividends and their asset value in the event of liquidation over holders of common stock. Preferred stock typically give investors a fixed, prioritized return, but they do not necessarily come with voting rights or a proportional share in the value of a company when it is sold. However, the specific attributes of the preferred shares that a company sells are variable, and a major aspect of negotiations with investors is designing the shares in a way that meets the needs of both parties. 

The article on our site  discusses three of the most important negotiable attributes of preferred stock: liquidation preferences, conversion rights, and voting rights. The article also briefly discusses the federal and state registration requirements entrepreneurs must follow when executing such transactions.


Recent Posts


Tags

Paycheck Protection Program Federal Small Business Assistance Unionization COVID-19 Housing Law Transgender protections marijuana usage Employee Salary Histories Employment Offer/Agreement Employment Contracts Executive Severance Federal Overtime Law Federal Joint Employer Rule Prenup Minimum wage Trade Secrets Act Fair Pay and Safe Workplace Executive Order Nanny Audit Business Overtime Rules Westchester County implementing new leave laws sexual harassment training Landlord-Tenant Law Paid Family Leave LinkedIn Business Law Marijuana Testing Employer Mandate $15 Minimum Wage Salary History Inquiries Out-of-State LLC Owners Facebook Privacy and Litigation Sexual Harassment Fair Chance Act Womens Rights Interns as Employees Independent Contractor AirBnB Payroll Scams Immigration Status NQSO employment discrimination lawsuits Affordable Care Act Economic Injury Disaster Loans NY payroll law Right to Unionize Freelance Isn't Free NYC Sexual harrassment law Security Workplace Requirements ACA Credit Fair Work Week Legislation Emergency Economic Injury Grants Federal Acquisition Regulatory Council Firm Announcements Start-up Ventures Wage and Hour Law Intellectual Property Joint-Employer Relationship federal Department of Labor Trademark licensing Sexual Harassment and Discrimination In The Workplace Fair Labor Standards Act (FLSA) Real Estate Law Glatt v. Fox Searchlight Pictures Arbitration Agreements NYC Salary History Law Fair Workweek Law Fair Play to Pay Act Unions workplace discrimination Attracting Investment Alter-Ego Doctrine stocks National Labor Relations Board I-9 Verification Human Rights Law graduate students Corporate Law #meToo Credit History Families First Coronavirus Response Act Criminal Record Worker's Rights Glatt v. Fox Searchlight Pictures, Inc. Postnup Westchester Safe and Sick Time Laws Hairstyle Discrimination New York City Human Rights Law Tax-Deferred Savings Non-Qualified Stock Options Apple vs. FBI Employee Manuals and Policies Department of Labor Internet Law Divorce Negotiating Health Care drug testing EEOC Filing Requirement New York Earned Sick Time Act Trade Secrets Credit Checks Plastic Bag Ban Domain Name Illegal rentals National Labor Relations Act Technology Ban the Box Executive Negotiation NYC Sick Leave Law Trademark Law U.S. Department of Labor Interns Interview Series NYC Human Right's Law's Nobel Prize Pregnancy Household Employees Web Domains Sexual Harassment policy Selling Business Lactation Law Employment Law Mandatory Class Action Waivers Overtime Exemptions entrepreneur Public-Sector Union Fees Webinar NLRB Wage Theft Protection Act Browning-Ferris Case Federal Contractors Privacy Newsletter New Address commuter benefits Fair Labor Standards Act

Archive

EDIT - blog-container - This controls the styles for the headings

EDIT - BlogTagCloud - Font style

description

  • EDIT  - post-body - Font style

EDIT - side-panel - This is the colour of the sidebar headings

Snap | BC Module - Blog - Blog Description

Snap | BC Module - Blog - Blog Title

EDIT - Snap | BC Module - Blog - Date - This is the date box style

EDIT - Snap | BC Module - Blog - Post Content - Font style

EDIT - Snap | BC Module - Blog - Post Title - Heading style

EDIT  - Snap | BC Module - Blog - Sidebar Content - Font style

EDIT - Snap | BC Module - Blog - Sidebar Title - Heading style

latest blog title snap text

 

Disclaimer: Nothing on this website is or should be construed as legal advice.
An attorney-client relationship does not exist with our firm unless a signed
retainer agreement is executed, and we do not offer legal advice through
this site or any of the content located on it. For legal advice for your
particular circumstances, please contact us directly.