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Austin Listed in Top Five Markets to Watch

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On behalf of John McDuff, Attorney at Law posted in Business Transactions

Austin, Texas came in second on Price Waterhouse Cooper’s annual ranking of markets to watch in 2012. Washington, D.C. finished in first, with San Francisco, New York City and Boston taking the remaining top five spots.

The report found that Austin has a perfect mix of features necessary to address the realities of the 21st century real estate market and business environment. For example, because the city features such diverse career opportunities – in education, government, medical and high-tech fields – it is insulated from the boom-bust cycles that have plagued other cities. Further, the academic environment buoyed by the University of Texas supports emerging tech companies and helps attract energetic young talent.

The rankings also noted that Austin is an eminently livable city with high quality-of-life measures. Specifically, it noted the city’s 24-hour core and abundance of nightlife options – and cited favorably Austin’s pedestrian-friendly layout and apartment-based neighborhoods.

Starting a Business?

The rankings illustrate what Texans have known for years – Austin is a great place to start a new business. However, starting a business is a challenging endeavor, even in a friendly environment. New business owners would do well to enlist the help of an experienced Austin business transactions lawyer.

An experienced attorney can help with all aspects of business formation, from choosing what form to take – partnership, LLC or even S corporation – to franchise agreements, real estate negotiations and asset purchases. Attorneys can also help with tax compliance and contract disputes.

These issues are too complicated, and too important, for most businesses to handle on their own. Starting a business certainly requires some risk-taking, but owners shouldn’t gamble on their futures by trying to do their business transactions by themselves.

Banks Vow to Lend More to Small Businesses

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On behalf of John McDuff, Attorney at Law posted in Business Transactions

There have been many explanations given as to why the American economy is mired in a prolonged recession. One of the factors often cited as contributing to the length of the economic situation is that banks have tightened lending restrictions and are less willing to lend money to small businesses. Several large banks, many with ties to the Austin area, are vowing to address this factor.

Karen Mills, head of the Small Business Administration, announced in late September that 13 banks have agreed to increase amounts lent to small business over the next three years by $20 billion. This is welcomed news for small businesses that are looking to expand operations or hire more workers and entrepreneurs looking to start new businesses in Texas.

“We know that many small businesses, particularly in traditional underserved communities still face challenges in accessing the capital they need,” stated Mills. “[The commitment to lend] will provide billions of capital to help small businesses all across the country grow and create jobs.”

The 13 banks vowing to increase lending, some of which have locations in the Austin area, include: Wells Fargo, Bank of America, JP Morgan Chase, Citigroup, KeyBank, TD Bank, US Bank, PNC Bank, Regions Bank, M&T Bank, SunTrust Bank, Citizens Financial Group and Huntington Bank.

Small business owners, especially entrepreneurs trying to start a new business venture, should contact an attorney to discuss the business startup process. The process of starting a new business can be complex, and an attorney experienced in helping small business owners can help you start your business on the right foot.

Source: Banks Offer $20B in Help to Small Business

Austin Business Owners Should Take Steps to Prevent Business Fraud

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On behalf of John McDuff, Attorney at Law posted in Business Transactions

While sophisticated financial scams involving amorphous cyber-attack groups have stolen the headlines for the past decade, Austin small business owners should be aware that the most likely source of business fraud and losses is actually employees. A recent article from Smart Business citing the Association of Certified Fraud Examiners reports that four out of five internal fraud cases occur in small businesses.

Employee fraud and theft is one of the fastest growing crimes in the U.S., according to the FBI. In fact, the U.S. Chamber of Commerce estimates that 75 percent of all employees steal at least one time, and half of those will steal again. Moreover, in the United States 20 percent of every dollar earned is lost to employee fraud and theft, according to estimates by the American Society of Employees.

Business Owners Must Look For Signs of Fraud in Employees

In a press release from the Association of Certified Fraud Examiners, the ACFE profiled the persons most likely to commit fraud in a small business. Even if a small business owner does not suspect fraud, he or she should be on the lookout for these signs:

  • Employees who are most likely to commit fraud include accountants, sales persons, managers, customer service representatives, employees in operations or buyers
  • Employees who commit fraud are more likely to be in their thirties or early forties
  • Employees who commit fraud might have an unusually lavish lifestyle or difficulties meeting financial obligations
  • Employees who commit fraud generally do not have previous fraud convictions or financial crimes charges

Steps to Prevent Fraud: Oversight, Control of Bank Accounts, Random Audits

Smart Business advises Texas small business owners to take proactive steps to prevent fraud. Small business owners should complete criminal background checks on potential employees as a condition of a job offer. Even though most fraud is committed by people without criminal records, this step is still helpful to prevent hiring a repeat fraudster.

The business owner should not turn over complete control of the books to one employee and should have internal checks and balances in place so that coworkers can easily report suspicious activity, too. Finally, business owners should hire a financial auditor or CPA to conduct random, unscheduled audits at least once a quarter.

Local Startup Secures Funding for Technology Designed to Help Retailers

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On behalf of John McDuff, Attorney at Law posted in Business Transactions

Austin-based startup NewComLink – which was founded in 2008 by Suneet Paul and Jim White, formerly of Dell Financial Services – recently announced that it has secured $10 million in venture capital financing. This funding will help the company introduce technology designed to change the way businesses handle consumer credit – namely by giving shoppers more credit options as they are in the check-out line.

“Retailers lose tens of billions of dollars each year because they tell customers ‘no,’ instead of offering them other options,” Paul told The Statesman. “We want to make sure that no customer walks away without some form of purchase.”

Like several other technology companies in Austin, such as Freescale Semiconductor and Tivoli, NewComLink received part of its funding from Austin Ventures. NewComLink also received capital from StarVest Partners.

Funding Options for Startup Businesses

Any entrepreneur can attest to the fact that starting a business doesn’t come cheap. In many cases, the funding for a startups come from business owners themselves – who dip into their own savings, use credit cards or get home equity loans to make their business dreams come true. In other cases, these entrepreneurs get funding from their friends and families, bank loans, business grants or from people known as angels – that is, individuals with a high-net worth who believe in what the business owner is trying to accomplish.

In other cases, entrepreneurs are able to obtain venture capital for their startup businesses – although companies first starting out are generally unable to get this type of funding. In order to be considered for venture capital, business owners must provide potential investors with a business plan that includes information on the potential customers and earnings of the venture.

When entrepreneurs are able to secure venture capital for their startups, they must be careful about the terms of the agreement – which may require that they pay a percentage of their profits. In order to ensure the best terms in an agreement, an entrepreneur should consult a qualified business attorney – who can advise the business owners of the law and negotiate the best terms in a venture capital arrangement.

Borders Out of Business — What Happens When a Business Closes?

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On behalf of John McDuff, Attorney at Law posted in Business Transactions

Bought any good books lately? With the closure of all three Borders stores in Austin, Texas, earlier this year and the final liquidation of the entire chain expected to be complete by the end of September, readers have fewer brick-and-mortar bookstore shelves to browse.

“Closed for Business” a Sign of the Times

The demise of the 40-year-old bookselling retailer follows a nationwide trend in this tough economy. The most recent statistics from the Department of Labor show the number of businesses closing their doors exceeds the number of new businesses starting up over the past three years. And while winding down operations can present unique challenges for a large chain like Borders – which once boasted over 1,000 locations – there is a long checklist of issues that businesses of any size must run through before closing for good.

Legal Issues to Consider During Texas Dissolution

In general when dissolving an entity, Texas business owners must:

  • File a dissolution document and pay a filing fee
  • File various federal, state, county and city tax documents
  • Cancel tax identification numbers, registrations, permits, licenses and business names
  • Notify and pay employees, creditors, suppliers, vendors and contractors
  • Close bank accounts

Other specific legalities will apply depending on how your business entity was structured (corporation, LLC, partnership or sole proprietor). There are filing and notification deadlines, along with consequences for missing them or for filing the wrong form.

Your business’s own governing documents may contain various “winding down” requirements and obligations that may need interpretation in light of ever-changing federal, state and local laws and regulations.

What About Business Property and Contracts?

Many businesses will benefit from an evaluation of assets and property – physical and intellectual – owned, leased or licensed by the company or to others. Contracts of all types will need to be reviewed and, perhaps, renegotiated. You also may benefit from outside legal help if business assets need to be distributed to partners, co-owners, or company officers.

No matter how large or small your business is and no matter why it’s closing, an experienced Austin business attorney holding a CPA can work with you to make sure you follow the right steps once you’ve made the decision to shut down.

Reorganization Helps Austin Businesses Stay Afloat

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On behalf of John McDuff, Attorney at Law posted in Business Transactions

Running a successful business can be challenging in any economy and the pressure only increases when times are tough. With the modest pace of the nation’s recovery from the current economic crisis, more and more businesses in Austin, and across the country, are feeling the crunch.

Many Austin businesses facing financial difficulties are finding that they need to reorganize in order to restore or improve their financial viability. Freescale Semiconductor is one of these companies.

After its recent reorganization, Freescale dramatically reduced its net losses from $538 million in the second quarter last year to just $168 million during the same period this year. This translates to a drop in net losses from $2.73 per share to 79 cents per share. Over the same time period, Freescale’s gross profit margin increased by nearly five percentage points, and it reported net operating earnings of $31 million, compared to a previous operating loss of $18 million.

As demonstrated by Freescale, reorganization can make the difference between survival and defeat for a business facing difficult economic times. Through reorganization, a business can cut its costs without doing further damage to the business. In some cases, reorganization may be limited to “trimming the fat,” while in others, it may involve more complicated transactions such as dividing a business into separate legal entities.

Because restructuring or reorganizing a business incorrectly can be highly counterproductive, it is essential to have a detailed and carefully crafted reorganization plan that is responsive to your company’s specific needs and circumstances.

If you are business owner in the Austin area and are thinking of reorganizing, an experienced business attorney with a CPA can help you explore your options and determine which path can best serve your long-term business goals.

Texas’ Largest Brokerage Firm Expands to Austin

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On behalf of John McDuff, Attorney at Law posted in Business Transactions

The business landscape in Austin changed recently when Certified Business Brokers (CBB) announced its expansion into the Central Texas market. Based out of Houston, CBB has facilitated thousands of business transactions since 1974. In speaking to PRWeb, CEO Frank Stabler explained that “Austin’s diverse and dynamic business environment offers numerous opportunities for both buyers and sellers to achieve their goals.”

Stabler’s remarks reflect the growing business climate in Austin. A report by Portfolio.com indicates that the city experienced the highest growth in small business activity between 2006 and 2007 and expanded its job base by 15 percent between 2003 and 2009. According to Portfolio’s six part study to gauge the best areas for small business development, Austin prevailed over other cities such as Portland, Oregon; Raleigh, North Carolina; and Baton Rouge, Louisiana.

As the state capital, Austin is the center of education and government in Texas. Its growing cadre of technology companies leads it to be called the “Silicon Hills” of Texas. LegalZoom.com is one of its newest residents, moving from California amidst the Golden State’s worst budget crisis.

CBB boasts that clients and future customers will benefit from experienced professionals with expertise in mergers and acquisitions, business valuations and appraisals, among many other brokerage components. According to CBB, the resources and information other firms provide pale in comparison to CBB’s systems, processes, and extensive transaction database.

With strong business expansion comes the potential for business litigation, as not all investments are fruitful, and because disputes invariably arise. The most common issues involve fraud and misrepresentation in private offerings and other stock purchases. With the potential for costly litigation, it is prudent to contact an experienced business attorney if you hold concerns about a transaction or feel that misrepresentation or fraud was involved.

New Texas Legislation Could Affect Austin Businesses

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On behalf of John McDuff, Attorney at Law posted in Business Transactions

The Austin Business Journal reported that Texas lawmakers have over 7,500 pieces of proposed legislation to consider this session. Incredibly, over 5,000 of these bills could affect Austin businesses, and experts estimate that one in five bills will be signed into law at some point. Texas’ economic climate is much different one than a year ago, prompting the flurry of proposed laws.

This presents an overwhelming number of changes for small and midsized businesses, as most entities don’t have in-house counsel to monitor the Austin business law scene on a daily basis. What may have been an advisable transaction last year may no longer be in the company’s best interest, or vice versa. Because of this dynamic economy, prudent Austin businesses often rely on the skill and experience of a business attorney to guide them in business transactions. Below are a few of the proposed laws that could impact Austin businesses:

  • One piece of legislation would help businesses owned by disabled veterans when they are bidding for state contracts, as reported by KFDM Austin. The bill seeks to put these qualified companies in a category with businesses owned by minorities or women, therefore requiring Texas agencies to make efforts in awarding these groups a certain percentage of government contracts each year.
  • House Bill 433 was recently presented to the Small Business and Economic Development Committee. Said bill would present a state tax break to qualified manufacturing companies. The bill’s goal is to stop the loss of Texas manufacturing jobs and entice companies into expanding operations within the state.
  • Texas legislature continues its challenge to the federal health care legislation President Obama signed into law in 2010. The success or failure of the challenge could have a tremendous impact on healthcare-related businesses across in Travis County.

As Texas lawmakers mull over the 7,500 bills, remember that reputable business lawyers stay attuned to law changes that may impact their clients.

Source: SCNTX.com

Austin’s Economy Bringing in New Business

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On behalf of John McDuff, Attorney at Law posted in Business Transactions

Over the past few years, the country has seen a dramatic rise in unemployment rates, drop in housing prices and an economy struggling to recover. But the City of Austin is seeing growth and has an optimistic outlook for 2011.

The growth of Austin, Texas is based in part on California’s troubles. A recent Newsweek report notes that many employers are choosing Texas as a good place to avoid the high cost of living, taxes and unemployment rates of California, as they did with Arizona, Oregon and Nevada over the past decade. As a result, Texas is now home to more Fortune 500 companies than New York.

Newsweek also named Austin as one of the top 10 cities best situated for recovery, citing the strong economy of the capital. Forbes named Austin one of the most affordable cities in the country and Kiplinger’s placed Austin as number one on the list of top cities for the next decade.

New Businesses Coming

According to the Austin Business Journal, several new businesses have recently opened, bringing new employment opportunities to the area. Zed’s, an American style restaurant, will employ over 100 people and will add up to 50 more within the next year. The restaurant will also house two music venues with an amphitheatre that will hold 1,000 people; it is scheduled for a spring 2011 opening.

The ABJ also reports that the Dallas-based Corner Bakery Cafe will be expanding its Texas presence as well. The company plans to nearly double the number of franchises in the state to 140, which will include the first franchise in the Austin area. John LaBarge, Corner Bakery’s vice president of franchise development, cites the large student population and strong economy of the city as reasons for the company’s expansion into Austin.

Working With an Attorney

Deciding to start a business or enter into a franchise agreement is a big step and there are many decisions to make. Whether you need help deciding which business entity is right for you, have tax questions or need help understanding the many business contracts and financial agreements you will need to enter into, it is important to work with an experienced Austin business law attorney who can help you make the right decisions for your business.

Austin Banks Merging: Finding A Way to Survive in Hard Times

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On behalf of John McDuff, Attorney at Law posted in Business Transactions

Two struggling Austin banks are poised to merge into an existing entity in the near future. Community State Bank on Ranch Road 620 and Westlake’s Treaty Oak Bank are working out the details of mergers with Carlile Bancshare Inc.

These acquisitions are a way for the banks to survive difficult financial circumstances. Carlile Bancshare reports that the banks’ names will change but that much will stay the same. Carlile has been acquiring troubled banks throughout Texas and the U.S. and found the two Austin banks to be good candidates to join their group.

Business Transactions in Austin

Mergers and acquisitions are just a few of the possible business transactions that Travis County entities can consider when they are looking to expand, change ownership or find a way to survive tough financial times. Some of the options that businesses have are:

  • Changing a business form: restructuring from a sole proprietorship to a limited partnership
  • Buying or selling a business
  • Asset purchases
  • Refinancing

Some businesses are not as troubled as the aforementioned banks and simply need help in the creation, negotiation or litigation of a business contract. Every Austin business typically needs to enter into contracts with many different parties to be successful. Below are just a few examples of the contracts that businesses routinely enter into:

  • Leasehold and real estate agreements
  • Contracts with suppliers
  • Contracts with customers or clients
  • Financing agreements
  • Non-compete contracts or covenants not to compete

The above contracts are a crucial component for every business but require experience and careful skill. A poorly drafted contract or a failure to negotiate important terms may have a negative and lasting impact upon any business. It is important to do things right the first time, because Texas law supports parties’ rights to freely contract with each other and is reluctant to modify or overturn a business agreement.

Source: PR Newswire

Austin Bouncing Back from Great Recession

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On behalf of John McDuff, Attorney at Law posted in Business Transactions

Austin, the eyes of Texas (and many other states) are upon you.

At a time when manufacturing in Texas is taking a hit and high-tech companies are taking a wallop, Austin is not only outstripping Dallas, Fort Worth, San Antonio, and Houston but is doubling the state’s job-growth rate and posting its lowest unemployment rate.

Central Texas is shaking off the Great Recession, according to The Texas Workforce Commission, gaining 18,700 jobs from August 2009 to last month, for a total of 769,200 jobs. From December 2009 to August, Austin had a job-growth rate of 4.5 percent–probably among the nation’s highest, says Keith Phillips, a senior economist with the Federal Reserve Bank of Dallas. In Austin, nearly every industry is expanding: in manufacturing alone, 1,100 jobs have opened up this year.

Even more remarkably, the gains are coming in high tech industries, which four years ago saw precipitous plunges as Dell and other electronics firms imposed draconian cuts in chip-making. Though manufacturing jobs are still down 20 percent overall, Samsung Electronics Co. Ltd. is putting up $3.6 billion to enlarge its Austin chip factory during the next year, creating 500 new jobs. And in July, Applied Materials Inc., the largest maker of semiconductor manufacturing equipment, announced it will soon add more than 200 jobs in Austin.

Why the dramatic turnaround? Phillips believes some of the high-tech companies are rebuilding inventories, but he also points to the popularity of consumer electronics as an attractive alternative to big-ticket purchases. In a time of recession, he told the Austin American-Statesman on September 17, 2010, “Maybe you can’t splurge on a new house, but maybe you can buy a new iPod or an iPad.”

As the rebound continues, investors and businesses will need expert consultation on a wide range of transactions:

  • contracts
  • limited-liability companies and S corporations
  • partnerships
  • buying and selling businesses
  • venture-capital investments
  • asset purchases
  • non-compete covenants
  • complex business startups
  • shareholder agreements

Source: Austin American-Statesman