Category Archives: tips

Keeping your company in compliance with “The Man”

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General Casey signing papers

Even Generals have to keep up with paperwork

As the year draws rapidly to a close, take some time to make sure that your company is in compliance with “the man.”  Whether your business is a Co., an Inc., an L.L.C., a P.A., or a P.L.L.C., you need to make sure that your business follows all applicable corporate formalities.  These include holding annual meetings, updating corporate minutes, and filing annual reports.  You need to ensure that your business is meeting all corporate formalities not just in the state where it is incorporated,  but also any other state in which the company is doing business.  Of course, it goes without saying that you need to also maintain proper professional licensing in each state in which you conduct business.

In addition to following governmental mandates, you should ensure that you are, in practice, keeping company money separate from personal finances and otherwise show that the corporation is more than “the mere instrumentality” of you as an individual.  If you fail to do so, you may be sued individually based on a “piercing the corporate veil” theory.  [There are many factors courts look at to make this determination, which include the domination/control of the corporate entity, inadequate capitalization, siphoning or commingling of funds with the dominant shareholder, and the absence of corporate records, among others].

As we discussed with the insurance check-up, you should also consider a yearly corporate check-up with your attorney to keep your corporation intact and your personal assets protected.  If you would like to discuss having such a corporate check-up, give me a ring.  And as always, your comments, thoughts, and questions are welcome in the comment section below.

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Photo courtesy of U.S. Army.

Tues Tip: How NOT to give a deposition

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In the off chance that you are sued, you will inevitably have to sit for a deposition at some point. This is a time when, under oath, you are asked to give testimony to the other side’s lawyer. Some depositions are easier than others. Found a little gem on youtube that I thought I’d share as an object lesson in how *not* to give a deposition. The video is about 1 minute long and is worth it to sit through to the end. (Warning: video contains cursing at end, so don’t watch if that offends):

Comments? Questions? Thoughts on how his angry outburst completely destroys his credibility?  Comment below.

Insurance Physical: worth the check up!

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check up

An insurance “check up” can keep your business fit & healthy

Recently I was contacted by a blog reader– let’s call him Mark–  who suggested that I write a post on reviewing insurance policies. “Mark” shared a personal story in which, even though he had incorporated his business, he was sued personally under a “piercing the corporate veil” theory.  Essentially, the plaintiff was trying to get at his personal assets.  After reporting the claim to his insurance agent, he discovered he may not have had sufficient insurance coverage.  He did not have a D&O policy, which can provide protection for a corporation’s directors and officers.

Contrary to insurance being just another item to scratch off your list, take some time to review your insurance policies and see if you have the coverage you think you have, and if there are other coverages which you might need but have not yet obtained.  In addition to D&O policies, there are E&O (errors & omissions) policies for design professionals, CGL (commercial general liability) policies, builders’ risk policies, workers’ compensation policies, and umbrella policies, to name a few.  The language and endorsements in your particular policy are important, and it is worth taking time (perhaps annually) for an overall insurance-health checkup.

You should make sure that your insurance agent knows your business and the possible risks.  An insurance agent that specializes in your type of business is your best bet to ensure that you obtain and maintain full coverage.  In addition, it is a good idea to have your policies reviewed by your construction attorney, so you can learn exactly what is—and what is not—covered.

Next week (on Wednesday), we will have a guest post on how indemnity language in your contracts can limit (or eliminate) your insurance coverage.  Stay tuned.

In the meantime, questions or comments about insurance for construction and design professionals?  Join the conversation in the comment section, below. 

Photo Courtesy of U.S. Army. 

How Does a Construction Loan Work? (Tue Tip)

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house and calculator

For today’s tip, we have a guest post by Emma Martin on the process of obtaining a construction loan.  Emma writes for CB Structures, a family owned Construction and Engineering Company that specializes in garage buildings and pole building design.

As the name implies, a construction loan is specifically meant for those who wish to undertake the construction of a building rather than buying one that is already complete.  There are many reasons why an individual or entity would seek this type of loan, and there are actually several choices when it comes to securing such funding, from different loans to different lenders, but you may not realize that your reasons for wanting to construct a building (and your ultimate goal for your completed structure) may make a difference in not only how much money you can borrow, but what type of loan you get.  So before you go ahead and purchase a parcel of land, there are a few things you may want to consider.

  1. Your goal.  If you are a private individual, chances are you’re looking to build your dream home.  You may own land already or you may be seeking a space to erect your structure, but ultimately, you’re looking for a family home.  A company seeking a construction loan may be interested in owning office space or they may simply be in the business of building and selling property.  Whatever your goal, it will almost certainly have bearing on the type of loan you select, and it might also affect what a lender is willing to offer you.
  2. Credit score.  Your FICO score will definitely come into play any time you attempt to secure a loan, and planning for construction is no different.  A high credit rating will not only give you a better chance of getting approved for a loan, it will help you to set a budget.  Also taken into account are assets and outstanding debt, so you’ll want to try to pay off car loans and credit cards if you can (although you could also roll them into the new loan amount).
  3. Budget.  You need to start with a budget in mind.  You’d do the same for any large purchase, so do your homework before you get to the bank.  Find a piece of land you’d like to buy, get bids from contractors, and see if there are ways you can cut back while still getting what you want.  If you approach a lender with a solid plan for spending, you might have a better shot at getting the loan you desire.  Of equal importance is knowing what you can afford.  Just because you CAN get a loan for double what you think you’ll need doesn’t mean you SHOULD.  You should always opt for a 10-20% buffer for unexpected costs, but don’t take more than you can afford to pay back.
  4. Loan type.  Once you have formulated a plan, set a budget, and gotten approval, it’s time to consider loan options.  For private homeowners, the best bet is usually a 30-year fixed or 15-year fixed loan (the same type you would opt for in a home loan) because you can treat it like a mortgage rather than paying processing fees and closing costs twice (once for the construction loan and then again for the mortgage loan when construction is completed).  Those who are looking to build and sell immediately may do better with a short-term, low monthly payment loan such as an interest-only option.  This will allow them to allocate all of their resources to construction and recoup costs upon sale.
  5. Lending institution.  Rather than shopping around at local banks for a construction loan (which may not even be available), consider contacting a construction loan broker who will do the shopping for you.  They will have a good idea which lenders offer the type of loan you need and for a fee, they can probably get you the best deal in town.

Do you have experience getting a construction loan?  How difficult did you find the process to be?  What do you, as a construction professional, advise your clients?  Emma and I encourage you to share in the comments section below.

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Photo ©iStockphoto.com/burtongirl

wind turbine

NC Green Contractors & Professionals Directory (Tue Tip)

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wind turbineUpdate 3/9/2017: The NC Solar Center is now the NC Clean Energy Technology Center.  When last visited, the Professional Directory was no longer active.

Considering a Renewable Energy project?  Professional who specializes in green construction?  Either way, check out the North Carolina Green Professional Directory, published (with disclaimers) by the NC Solar Center.  The directory is searchable by professional type, by green technology, and by location, and professionals who qualify can apply to be added to the directory.

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Photo from NC Solar Center