The Dangers of Operating An LLC Without an Operating Agreement
What could possibly go wrong if you and your fellow limited liability company owners decide to operate your LLC without an operating agreement? Lots of things, many of which could cause you significant financial pain and mental distress. Many business partners who form an LLC decide not to develop and adopt an operating agreement for their LLC because the state in which they are forming their LLC has an LLC Act that provides default provisions absent a written agreement. Thinking . . . Read More
Good News for Offerors who Provide Unique Low-cost Solutions to the Government
The author and playwright Clare Boothe Luce, known for her feline wit, is famously supposed to have said “No good deed goes unpunished.” While that remark may have had validity that in the 1930s New York café society, it should have no place in federal contracting. To that end, the Government Accountability Office (“GAO”) recently issued an important opinion that, in effect, reminds the government contracting community that offerors who provide unique low-cost solutions to the Government should not be . . . Read More
Should You Be an LLC or S Corp?
The answer is it depends, as a business owner, on what your goals and objectives are. Both LLCs and S corporations are tax efficient. LLCs and S corporations are both pass-through entities; meaning, generally speaking, the entity itself is not subject to taxation. Rather, the profits and losses flow through to the owners, who either pay taxes on the profits or get to use the losses to offset income. Both LLCs and S corporations protect the owners and management against . . . Read More
Once 8(a) Competitive, Not Always 8(a) Competitive
Unlike other sole source authorities for small business programs, such as that recently granted to the WOSB program via the 2015 NDAA, a recent decision from GAO confirms that the sole source authority given to the 8(a) program has very few limits, especially with regard to Tribally-owned entities or Alaska Native Corporations. In the case of Agency Management Concepts, Inc., B-411206 (April 21, 2015), the Department of State (“DOS”) sought to sole source a contract for lock services to a . . . Read More
The Trade Agreements Act: An Unknown Compliance Issue for Small Businesses
Small businesses often enter into government contracts unaware of all the laws and regulations that may apply when selling to the government. One of the laws that is often overlooked is the Trade Agreement Act (TAA). Under the TAA, certain products that are sold to the U.S. Government must originate either in the United States or in one of the countries with which the United States has a special trade agreement. Because of the TAA, small businesses selling goods to . . . Read More
Tax-Exempt Parent Companies with For-Profit Subsidiaries
By Kimi Murakami Recently, tax-exempt organizations have inquired whether it was legally permissible to establish a for-profit subsidiary to perform profitable work developed by the non-profit parent. The answer is yes. Like for-profit corporate entities, non-profit organizations are formed at the state level similar to forming for-profit corporate entities. To become tax exempt, once the corporate entity is recognized by the state, it must apply to the IRS to obtain tax-exempt status such as the commonly known charitable organization under . . . Read More
The CVE Reverification Process is Not as Simple as Advertised For Veteran-Owned Firms
The Department of Veterans Affairs (VA) Veterans First Contracting Program continues to attract more and more veteran-owned small businesses (VOSBs) and service-disabled veteran-owned small businesses (SDVOSBs). Indeed, the ability to gain access to VA contracts set aside for VOSBs and SDVOSBs remains an incredibly popular tool among small businesses in the veteran contracting community. Much to the dismay of many potentially eligible firms, the process of applying to the VA, Center for Verification and Evaluation (CVE) to be verified . . . Read More
Qui Tam Actions on the Rise, but they Fall Short When the DOJ Does Not Intervene
By Ambi Biggs The number of qui tam actions–lawsuits brought by whistleblowers on behalf of the United States–has increased in recent years, more than doubling from 2003 to 2013. The primary federal statute under which qui tam actions can be brought is the False Claims Act (“FCA”), 31 U.S.C. § 3729, et seq. Under the FCA, anyone who knowingly presents a false or fraudulent claim to the government for payment or approval or knowingly makes or uses a false record . . . Read More
Proposed Rule Expected for White-Collar FLSA Overtime Exemptions
Secretary of Labor Thomas Perez announced yesterday that the U.S. Department of Labor has submitted a proposed rule on the white-collar FLSA overtime exemptions to the Office of Management and Budget (OMB). The proposed rule is in response to President Obama’s March 13, 2014 directive to the Secretary to revise the current regulations because of actual or perceived abuses of the exemptions and because the salary basis test has failed to rise at the rate of inflation. The salary threshold . . . Read More
WOSBs: Now It’s Your Turn
By Ann Sullivan, Madison Services Group, Inc. Published in PilieroMazza’s Second Quarter 2015 Legal Advisor by guest author Ann Sullivan of Madison Services Group. In the coming days, the SBA is expected to issue proposed rules to implement sole source authority for the WOSB Federal Contracting Program. To be clear, as many are anxiously waiting, sole source authority is not yet available. But for those following the program, the hopefully-soon implementation will mark the final step in a 15-year crusade to start and strengthen a small . . . Read More