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Q.   How do I get a power of attorney for a major shareholder who has Alzheimer’s disease?

A:  You may have a problem obtaining a power of attorney depending on the state of the Alzheimer’s disease.  It may not be possible to get a power of attorney if the major shareholder is already suffering the effects of the disease.  If she still has lucid moments and the capacity to understand the legal consequences of granting another a power of attorney, it may be possible to have a lawyer prepare a power of attorney to sign in the presence of a notary.  In the event that she does not have the requisite capacity, you may have to discuss guardianship with her family or next of kin.

 In any event, to get a power of attorney, you should consult an attorney to draft appropriate provisions that will ensure someone has the “power” to act for another.  Those provisions could be broad or very specific.  Once the terms are agreed, it must be signed in the presence of a notary.  In the event that the mental capacity is questionable, I would have at least 2 witnesses attest that the one granting the power of attorney has the proper capacity.

Q.  Does someone need any specific capacity to enter into a contract for the company like you need for a power of attorney?

A:  To enter into a binding contract, you must have an offer, acceptance and consideration.  Generally speaking, an offer is simply an offer to provide product and/or perform services.  Another party must agree and then offer some type of consideration (i.e. traditionally money).  Generally, a contract, with some exceptions, can be oral and enforceable.  Many believe they have entered into a binding contract if they simply have the offer, acceptance and consideration elements only.  However, Texas recognizes many affirmative defenses and arguments against enforcement of contracts, whether written or oral.  Without limitation, capacity is a huge factor.  Clearly, a Judge should not enforce a contract made with a party who is clearly incapacitated and did not understand the effects of the agreement.  Moreover, fraudulent inducement is a defense to the contract enforcement.  Many elements must be proven and analyzed before relying on some of these defenses.  

 Another legal term of art is “meeting of the minds” which suggests that the party to a contract agreed to the terms before execution and thus the contract should be enforced.  Absent a meeting of the minds, a contract should not be enforced.  It is much easier to prove a meeting of the minds when the contract is written. 

The final advice is to fully understand what documents you are signing on behalf of your business and be sure to have legal counsel review them and their effects.  Remember not to sign a contract that you have not read and fully understand because it is a difficult battle to challenge a contract that bears your signature somewhere on the four corners of the document.

However you celebrate this season, be it Christmas, Hanukkah, Ramadan, Kwanza, Winter Solstice, Festivus, or as a holiday abstainer, it is virtually impossible to avoid the expectations of others as well as expectations of ourselves.  We experience this in our workplaces and in our home lives.

Such is the power of the media.  We are constantly inundated with images of happiness, glowing health, warm fuzzies, family good feeling, cheer, joy, peace, and togetherness.  This is marketed to us as the “normal” experience.  But, trying to live up to these ideals is insane.  Yet under its influence, many of us feel confused, angry, and disappointed when the experience falls short of expectations.  We blame ourselves and everyone around us.  No peace on earth and goodwill toward few.

It is vitally important for our peace of mind as well as the sanity of those in our workplace and home for us to have a reality check concerning our expectations about the holidays:

• Reality is too much to do and not enough time to do it. 
• Reality is deadlines at work for end of the year or inability to do your work because other people are out on vacation, taking personal time, etc.
• Reality is presents to buy for people we don’t like and don’t see and resentment about the money to pay for them. 
• Reality is one business or social event after another when you are so tired you want and need to stay home. 
• Reality is having your entire routine thrown off with drop-in internal and external customers, visitors and family. 
• Reality is rich holiday food lurking everywhere you go and not being able to say no. 
• Reality is, in a word, STRESS!

I am certain you have many more that you can add to the list.  However, just because there are demands made upon us beyond our abilities to satisfy, does not mean that we have to succumb to them.  Carrying the weight of unresolved expectations quickly moves us into the land of diminishing returns where the more we work the less we accomplish and the more frustrated we become.

Q.    I have heard about this new margin tax.  Who is subject to it and how much is it?

A:  The margin tax is imposed on all business except (i) sole proprietorships (ii) general partnerships –“the direct ownership of which is entirely composed of natural persons” and (iii) certain passive entities.  Therefore, corporations, limited partnerships, certain general partnership, limited liability companies, business trusts and professional association are subject to the margin tax.  Taxable entities that have $300,000 or less in gross revenue in a year or whose margin tax liability is less than $1,000, are exempt for that year.  In a nutshell, the calculation of the new margin tax is based on a taxable entity’s gross receipts after deduction for either compensation or cost of goods sold. The tax rate applied to the Texas portion of the tax base is 1% for all taxpayers except for a narrowly defined group of retail and wholesale businesses which pay a .5% rate.  Be advised, an entity may be obligated to pay a margin tax even if it is reporting a loss for federal income tax purposes and has a negative cash flow.

As you can read, the margin tax is quite complex and for further discussion and examination, consult a qualified attorney or tax advisor.  This tax is new and has many nuances that need to be dissected for your business application.

Q.  I set up a corporation years ago and not sure if I should continue to operate my business as   a Texas corporation.  What are the advantages of operating a business as a corporation?

A:  Generally, a corporation has limited liability of shareholders, centralized management, flexibility in capital structure and status as a separate legal entity. With all advantages, there are disadvantages.  Those include the expense of formation and maintenance, statutorily required formalities and tax treatment (i.e. double taxation for the c-corporation and restriction on the s-corporation).

Limited liability is one of the most important advantages of doing business as a corporation.  In corporate law, it is fundamental that shareholders, officers, and directors are ordinarily protected from personal liability arising from the activities of the corporation.  Generally6, shareholders of a corporation will not be personally liable for debts and obligations of the corporation in excess of the shareholder’s investment in the corporation.  In limited circumstances, courts will pierce the corporate veil.

We've all been there. Ready to expand our sales, we rush to hire more sales people. We go through the standard interview process, find someone we like, and quickly bring them on board. Only to be disappointed-either with performance, or with company fit.

Hiring a salesperson is perhaps the most difficult task for any organization. Your salespeople are on the front lines, representing your company and its products and services EVERY day. Making a hiring mistake cannot only be costly to your image, but also to your pocketbook.