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Tax Advantages of ROBS Rollovers for Business Funding

Greg Silberman of Ritterband tax & Accounting Solutions LLC is a member of XPX Atlanta
Greg Silberman
Ritterband Tax & Accounting Solutions LLC
4 months ago

ROBS – or use funds from their existing personal 401(k) or other retirement accounts as capital for buying a business.   In addition to creating cash flow and minimizing the use of debt, ROBS are an attractive source of funds unlocking value from an individual’s retirement savings to fund a business, what are the tax advantages that make considering a ROBS strategy worthwhile?  First, there is the aspect of tax deferral. Financing through ROBS avoids the early withdrawal penalty normally incurred when funds are withdrawn from retirement savings prior to retirement. When you use the capital from your 401(k) to fund a new income taxes or penalties, more money is available to go into the business, thus maximizing your available capital.  In addition to increasing capital efficiency, you avoid loan obligations because ROBS is not a debt product. It’s simply accessing the equity you already have built up in your retirement plan, so there’s no monthly repayments or interest like you would incur with a loan.  Accessing Business Capital Through ROBS  Here are some points to remember about how the flow of money works when using a ROBS strategy:  The new business entity to be funded must specifically be established as a C-Corp.  After a new 401(k) or profit-sharing plan is the business advisory space and how to implement a ROBS strategy. For a consultation on your business plans and objectives, please contact us at 770.740.0797 or email info2@SJGorowitz.com. 

Understanding Qualified Small Business Stock (QSBS)

Billy Amberg of Bloomwood is a member of XPX Atlanta
Billy Amberg
Bloomwood
4 months ago

Qualified Small Business Stock is a type of stock that includes immense tax relief for investors. Those benefits serve to stimulate investment in small businesses by mitigating the tax consequences that attach to their returns. Below is an article that discusses the definition of QSBS, the relevant IRC section at play, the tax benefits flowing from QSBS, the standards for obtaining QSBS, and the costs and importance involved in gaining a QSBS certification. What is Qualified Small Business Stock? Qualified Small Business Stock is that class of stock issued by a small C corporation that meets specific qualifications specified in the Internal Revenue Code. It enables the investor in QSBS to exclude from federal income taxation up to 100% of the capital gain realized upon the sale of such stock, provided certain requirements are met. The provision is meant to incentivize investment in startups and small businesses as a means of promoting innovation and driving economic growth. Governing Section of the Internal Revenue Code Treatment of QSBS is given under Section 1202 of the Internal Revenue Code. This section was enacted as part of the Revenue Reconciliation Act of 1993 and has undergone several amendments to expand the benefits available to investors. Section 1202 outlines those requirements that must be satisfied for stock to qualify as QSBS, along with particular tax benefits available to the investors. Examples of Qualified Small Business Stock Tax Benefits Investing in QSBS offers substantial benefits in terms of tax. Example: Exclusion of Capital Gains: Depending on when the QSBS was acquired, up to 100% of the capital gains from the sale of QSBS can be excluded from federal income tax. The exclusion percentages are as follows: 50% of the stock acquired from August 11, 1993 to February 17, 2009. 75% for stock acquired between February 18, 2009 and September 27, 2010. 100% for stock acquired after September 27, 2010. Limitation on Gain: The amount of gain to be excluded is limited to the greater of $10 million or ten times the adjusted basis in the stock. The generous cap allows for significant tax savings by investors. The Alternative Minimum Tax (AMT) stipulates that gains exempted under Section 1202 do not qualify as preference items for the purposes of AMT, potentially offering supplementary tax relief. State Tax Benefits: Some states follow federal QSBS exclusion rules, giving additional state tax benefits. Investors should check the particular rules of the state pertaining to QSBS. How to Meet the QSBS Requirements To qualify for QSBS treatment, certain requirements must be met: Qualified Small Business: The issuing corporation must be a domestic C-corporation and it must meet the definition of a “qualified small business.” A qualified small business is one in which the corporation’s aggregate gross assets do not exceed $50 million at any time before and immediately after the issuance of the stock. Active Business Requirement: During at least 80% of the period the investment is held, assets of the corporation must be used in the active conduct of one or more qualified trades or businesses. The following types of businesses specifically do not qualify:. The stock must be obtained directly from the corporation when the stock is originally issued, in exchange for money, other property but not stock, or as compensation for services. Holding Period: The investor must hold the QSBS for more than five years to qualify under the capital gains exclusion. These requirements are often complex to navigate, and guidance is usually sought from a tax specialist to ensure compliance with the law. What is a Qualified Small Business Stock Attestation? A Qualified Small Business Stock Attestation is the declaration of a corporation; a formal statement that the stock of the particular corporation meets all the qualifications necessary for the classification to be deemed a QSBS under Section 1202 of the Internal Revenue Code. This certification gives assurance of qualification both to investors and the tax authorities, confirming the eligibility for the tax advantages to the owners. Importance and Cost of a Qualified Small Business Stock Attestation Investor Confidence: It enhances investor confidence because the attestation is basically a documented proof that the stock is qualified for favorable tax treatment; thus, making it more attractive to prospective investors. Tax Compliance: An attestation plays a crucial role in confirming adherence to tax regulations and can promote more efficient engagement with tax authorities. It functions as proof that the corporation satisfies the QSBS requirements, which may streamline the tax reporting procedure. Risk Mitigation: The attestation works by giving a risk mitigation of disputes or challenges in the future that may develop in the mind of the IRS about the stock’s QSBS status. Cost The costs for obtaining a QSBS certification will depend on many factors, such as the extent of complexity of the company’s organizational structure and how much any given professional services company charges for providing the certification. In most cases, the costs range between several thousand to tens of thousands of dollars. Regardless of the monetary investment, the tax advantages likely to be gained for the backers, coupled with increased certainty of conformity, could make the expense a wise investment. Conclusion Qualified Small Business Stock provides substantial tax advantages to investors in the interest of enabling small businesses to energize the economy. Controlled by Section 1202 of the Internal Revenue Code, QSBS enables considerable exclusions from federal income taxation of capital gains. However, fulfilling these requirements can be tricky, and the ability to get a QSBS attestation may provide much value through assurance with compliance and qualification for huge tax benefits. Although obtaining such certification does involve some costs, the potential tax incentives and reduced liabilities make it an important consideration for companies and investors alike.

Structures Business Owners Should Consider Before Selling Their Business

David Wilson of Sincerus Advisory is a member of XPX New York
David Flores Wilson
Sincerus Advisory
1 year ago

Planning an optimal business sale requires careful consideration and understanding of various sale options and structures, as well as a thorough understanding of the sales’s effect on the business owner’s personal financial planning. Many owners leave money on the table during a sale while they stay focused on growing their business or finding the right buyer. Effective exit planning involves many moving pieces and may be a multi-year process which is why it is crucial for business owners to prioritize their personal goals alongside the 2017 Tax Cuts and Jobs Act isn’t renewed. On the other hand, capital gains rates can range from 0% to 23.8% at the federal level. The difference between ordinary income tax rates and capital gain tax rates can be profound, so any offer should be evaluated on an after-tax basis. Moreover, timing differences in long-term versus upfront compensation should also be adjusted to the present value when negotiating. Stock Sales Versus Assets Sales There are a significant number of implications and motivations when it comes to structuring a business sale as an asset sale versus a stock sale. While the business entity type and individual circumstances matter greatly, purchasers usually want to structure the sale as an asset sale, while stock sale transactions tend to be more optimal for business owners and their charitable strategies. These strategies can not only amplify their philanthropic impact but also potentially reduce their liability for capital gains taxes, income taxes, state taxes, and/or financial planners, business owners can align their personal and financial goals while enhancing their preparedness for a successful business sale. Sincerus Advisory.

Structured Installment Sales – A tax smart solution for individuals selling business.

Chad Ettmueller of JCR Settlements, LLC is a member of XPX Atlanta
Chad D. Ettmueller
JCR Settlements, LLC
1 year ago

For more information on the benefits of this IRC Section 453 solution, give this podcast a listen.  While the topic of this episode dealt with the sale of land, the solution is also available to individuals selling their business, allowing them the unique opportunity to defer immediate tax obligations and maximize the sale through personally designed future annuity payments.

Defer Capital Gains Taxes on Investment Properties

Stephen Davis of Safe Harbor Asset Management is a member of XPX Tri-State
Stephen K Davis
Safe Harbor Asset Management
1 year ago

Learn how you can use 1031 exchanges and DSTs to your advantage by Downloading my FREE Brochure. Read About: What a 1031 exchange is and an overview of the basic steps Essential rules and timeline to follow in a 1031 exchange The expected net proceeds of selling a property vs using a 1031 exchange The vast range of “like-kind” properties available for investment The many benefits of a Delaware Statutory Trust (DST) Follow the Link for Brochure Download:  

Structured Installment Sales: Defer Taxes, Maximize the Sale, Secure Your Financial Future

Chad Ettmueller of JCR Settlements, LLC is a member of XPX Atlanta
Chad D. Ettmueller
JCR Settlements, LLC
1 year ago

Defer Taxes, Maximize the Sale, Secure the Financial Future…. Chad Ettmueller – JCR Settlements, LLC. What if you could offer your clients a way to sell their business, property or other appreciated asset and avoid immediate tax obligations while growing the net proceeds in an attractive, tax-deferred manner with future payments they design unique to their needs? If it seems too good to be true, you need to explore Structured Installment Sales (SIS).  Following approved IRS guidelines under IRC Section 453, Structured Installment Sales allow an individual the unique opportunity to defer their immediate tax obligation by placing a portion of their net proceeds into an annuity product with highly rated life insurance carriers. In so doing the Seller avoids constructive receipt of the funds and the IRS cannot tax them on that portion of the sale. Sellers can design a future payment schedule that meets their unique needs, realizing significant income growth through the investment (as high as 10% depending on the design), paying a deferred tax obligation in the future year(s) when annuity payment is received. The Seller will pay both a pro-rated Capital Gains tax (at the cap-gains rate in the year payment is received) and a pro-rated Ordinary Income tax on the interest earned. Traditional Installment Sales transact between the Buyer and the Seller and are wrought with risk, as the Seller is dependent on the creditworthiness of the Buyer and is hoping they will successfully make the future payments. A SIS changes everything, placing the creditworthiness of the life insurance company at the forefront of the transaction and allowing both parties to move forward without future risk. Moreover, as a result of the investment growth associated with the annuity, the Seller can quite often entertain offers that are lower than they have targeted, knowing the investment yield will more than make up for the difference. Combine that growth with the immediate tax savings on the portion placed into the annuity and the Structured Installment Sale offers a serious solution to many sales transactions. In fact, more and more savvy Buyers are making offers wherein they incorporate a SIS as part of their offer. As a result, they are able to offer the Seller (ultimately) more than asking price while securing the property or business at a discounted price, providing them more immediate operating capital to make necessary enhancements to the property or business. If all of this is not exciting enough, there are other highlights to the Structured Installment Sale: – Seller can defer first payment up to 40 years. – No investment minimums or maximums. – Include future payment schedules to match future needs, including monthly, quarterly, semi-annual or annual payments and    lump sums on identified future dates. – Index linked, market-based growth, with a guaranteed floor payment and uncapped growth based on market performance. – For use in the sale of businesses, real estate or appreciated asset collections (art collections, vintage vehicles, wine, etc.) – Backed by highly rated life insurance markets. SHOW ME THE MONEY Please take a look at the attached illustration for a real life example of how the product works and the type of income such a solution can produce.  The highlighted area on page 3 will show the projected yields.  Pages 5-6 will show the projected monthly income. As a quick example, a 51-year-old Seller in Florida sold his business for $25M. He placed $10M of the purchase into a Structured Installment Sale, saving approximately $1M in immediate tax obligations.  He deferred first payment 14 years, to his age 65, taking monthly payments for twenty (20) years thereafter. Based on the projected growth of the Indexed linked annuity, and back testing, all the way back to 2006, the Seller is projected to earn between $50.5 and $157M, with a projected median growth of $85.5M. These are jaw dropping numbers to say the least and illustrate the power of the product. KEY CONSIDERATIONS To comport with IRS guidelines, the payment schedule for any SIS must be incorporated into the Sales Agreement as an addendum to the sale. All parties must sign an assignment document, acknowledging the fact that all future payments are forthcoming from the life company, and not the Buyer. Payment for the annuity must go directly from the Buyer to the Life Insurance Company with whom the SIS is placed to avoid constructive receipt by the Seller. If funds are deposited into the Seller’s account, this will trigger constructive receipt in the eyes of the IRS and an immediate tax obligation will be required and a structured installment sale cannot take place. Depreciation Recapture cannot be placed into a SIS. All depreciation recapture must be recorded and appropriate taxes paid in the year of sale. Deposits of more than $5M into the SIS will trigger an IRS Interest Penalty on an annual basis. This penalty is nominal and an annual lump sum equal to the penalty amount can be established, through the future payment schedule of the annuity, to pay this obligation. Structured Installment Sales offer a remarkable advantage to all parties involved in a given transaction and should be considered in nearly every sale. There are no associated costs to establish a structured installment sale now, or in the future. However, such a sale must be coordinated by a licensed and appointed annuity advisor. JCR Settlements enjoys serving as a Gold Sponsor of XPX and looks forward to assisting you and your clients, as appropriate. Please do not hesitate to call or email with any questions or to request an investment illustration. Chad Ettmueller Senior Vice President JCR Settlements, LLC 770-886-7400 cettmueller@jcrsettlements.com

Donna Beatty, Frazier & Deeter, and Robert Stephens, CFO Navigator join “ProfitSense”

Bill McDermott of The Profitability Coach is a member of XPX Atlanta
Bill McDermott
The Profitability Coach
2 years ago

Donna Beatty, Tax Partner with Frazier & Deeter, and Robert Stephens, Managing Partner of CFO Navigator, were Bill McDermott’s guests on this episode of Profit Sense with Bill McDermott. Donna provided timely advice about taxes, new laws, and advice for business owners. Robert Stephens talked about how he helps businesses as a financial guide, how he speaks about both accounting and business, the advice he gives his clients on the current economy, and much more. Bill closed the show with a commentary on how to transition from employee to owner. ProfitSense with Bill McDermott is produced and broadcast by the 

The Top 5 Misconceptions About 1031 Exchanges in 2022

Stephen Davis of Safe Harbor Asset Management is a member of XPX Tri-State
Stephen K Davis
Safe Harbor Asset Management
2 years ago

After a tsunami of a year facilitating 1031 Exchange transactions, we found there are many misconceptions among investors about 1031 Exchanges. Here are five of the most common areas of investor confusion. Reverse Exchanges Are Quick & Simple: Identifying replacement property in a hot market was a challenge for 1031 Exchangers this past year, causing many sellers to pursue a strategy of purchasing a replacement property before selling their relinquished property. Known as the Reverse Exchange, in this scenario, the investor first buys a new property of equal or greater value than the relinquished property and then has 180 days to sell their relinquished property. With a Reverse Exchange, you cannot own your replacement property and relinquished property at the same time, requiring an affiliated entity (a Qualified Intermediary) to hold the title of the relinquished property or the new replacement property. While Reverse Exchanges can benefit sellers in hot markets, they take longer to arrange, include more steps, and have, additional costs and fees compared to the more common Delayed Exchange. Vacation Homes/Secondary Homes Qualify for an Exchange: Residential property can only be considered “like-kind” if held for investment purposes. The rules are very specific. You can sell your vacation/secondary home through a 1031 Exchange if you rented it for more than 14 days per year and your personal use was no more than 14 days per year (and less than 10% of the total nights rented over the two years leading up to the sale). When renting a vacation home you purchased as part of a 1031 Exchange, you must charge rates at fair market value. You cannot rent to a “family member” for $1.00 per night! 1031 Exchanges are a “tax Loophole”: Since 1921, 1031 Exchanges have been a vital part of U.S. tax policy. Exchanges have been available in their current form since 1986. Like-kind exchanges encourage capital investment for the highest and best use of real estate, thus improving communities and increasing the local and state tax base. Section 1031 like-kind exchanges give businesses and entrepreneurs more incentive and ability to make real estate and capital investments. Far from being a tax loophole, the 1031 Exchange, which has enjoyed political support from Republican and Democrat legislators for decades, is a powerful economic tool that allows investors to grow and transfer their wealth to future generations in the most tax-efficient manner. Partners in an LLC Can Simply Separate in the Middle of an Exchange: The “Drop & Swap” alternative is an exit strategy for the sale of real property held in an LLC where two or more partners in the LLC have differing ideas about what to do with the proceeds in another property and continue deferring taxes to “drop” the partnership interests in the LLC and “swap” for Tenant-in-Common (TIC) interests. But the Drop and Swap strategy is not simple, and careful planning is required. It is recommended to prepare the property being sold for separate exits before signing a listing agreement with a real estate brokerage. Considering Replacement Property Options Can Wait Until Closing of the Relinquished Property: You’ve heard the adage, “timing is everything,” and that certainly holds true regarding the timeline requirements of a 1031 Exchange. Many first-time exchangers, aware of the 45-day replacement property identification rule, often wait too long to explore their options, only to discover their deadline passes before selecting a property. And their exchange fails. That’s why it’s critical that you work closely with your 1031 Exchange investment professional and Qualified Intermediary to ensure you take the necessary actions at each stage so that your exchange is successful. Get clear on conducting a proper 1031 Exchange, feel-free to contact me.     Disclosure: The commentary in this blog post reflects the personal opinions, viewpoints and analyses of the Safe Harbor Asset Management, Inc.’s employees providing such comments, and should not be regarded as a description of advisory services provided by Safe Harbor Asset Management, Inc.’s or performance returns of any Safe Harbor Asset Management Inc.’s Investments client. The views reflected in the commentary are subject to change at any time without notice. Nothing in this blog constitutes investment advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Safe Harbor Asset Management, Inc. manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.

The Importance of Filing Business Returns in Advance of the September 15 Tax Deadline

Stacey Gorowitz, CPA of SJ Gorowitz Accounting & Tax Services, P.C. is a member of XPX Atlanta
Stacey J. Gorowitz, CPA
SJ Gorowitz Accounting & Tax Services, P.C.
2 years ago

Don’t Leave Money on The Table Does your CPA always wait until the last minute? Do they not get your returns filed until the due date and then you’re scrambling to review and make sure there are no errors? Is yours the business that has all of your work done in advance, but your CPA treats you like you’re unimportant and the reason you don’t file on time is because they didn’t have the staff, bandwidth, experience or professionalism to take care of it? This is how mistakes happen on your return When we see math and spelling errors on returns, we know that someone didn’t take pride in their work. Glaring errors = red flags, noticeable by a professional. If we can notice it, certainly a taxing authority will notice it. It may not even be an error in reporting, it may just be an error in bookkeeping that could have been recorded differently to benefit the organization, potentially leaving money on the table. An example of this is having salaries for shareholders set too high thereby reducing the potential QBI deduction and potentially paying too much in payroll taxes. If your returns are always completed at the last minute or on the fifteenth, this is a bad sign. The level of quality offered by a firm is substandard if they are doing things late, not asking questions, not providing adequate time for review and not providing suggestions. There are two types of business taxpayers that have not completed 2021 tax filings to date— people who have done their planning and are prepared but awaiting paperwork that is beyond their control and people who owe money and are disorganized and want to delay the inevitable. There really isn’t a good reason for a business not having their tax returns prepared by July, if you had a calendar year end. The taxpayers with different fiscal year ends are an anomaly. Plan for Growth and Change Having accurate timely financial records and filed income tax returns is essential. Business owners have so much responsibility, that they may not be aware that late prepared and filed tax returns can result in: Costly penalties and interest Inability to qualify for financing Prevention of a successful Merger, Sale or Acquisition (M&A transaction) Inability to provide timely information for managerial decision making Lack of confidence for partners and shareholders awaiting K-1s Financial wrongdoing to go undetected Missed tax credits Just think, without proper returns you’re unprepared to open that additional location, hire those additional employees, plan for asset acquisition, begin offering new products or services, or work on long-time planning and exit strategies.

Your Most Googled Financial Questions Answered: Taxes, Credits, & Deductions

Bill McDermott of The Profitability Coach is a member of XPX Atlanta
Bill McDermott
The Profitability Coach
2 years ago

Wrapping up our series on your most googled financial questions, we saved a big one for last: taxes. A word that strikes fear in the hearts and minds of many business owners. But, it doesn’t have to. Every business owner has a big dream for their business and wants to make it happen. However, many business owners don’t follow a unified strategy to get there, leaving them overwhelmed and sometimes angry. Some of that anger is relegated to the amount of taxes they had to pay on last year’s income. Part of that unified strategy is to sit down with your tax accountant annually, maybe even twice a year if your taxable income is large. Read more:

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How to Post a Photo and Company Logo to Your Member Profile: A Step-by-Step Guide

Cheryl Centeno of XPX Global is a member of XPX
Cheryl Centeno
XPX Global
1 day ago

Enhance your member profile by adding a photo and your company logo! It’s a great way to personalize your presence and showcase your organization. Follow these simple steps to update your profile: 1. Log In to Your Account First, make sure you’re logged in to your member account by going to www.exitplanningexchange.com and clicking on the Log In button on the top right-hand corner of the page. Remember to use the email address associated with your member profile as your username. 2. Go to Your Profile Once logged in, navigate to your member profile. You can usually find this by clicking on your profile picture or your name at the top of the page. 3. Select “Edit Photo” Look for the “Edit Photo” button—typically located near the top of your member profile’s dropdown menu (photo below). Click on it to upload or update your high-res photo.

New Years Resolutions: Why They Miss the Mark, and What to Do Instead

Maria Forbes of FIREPOWER Business Catalyst, LLC. is a member of XPX Atlanta
Maria C Forbes
FIREPOWER Business Catalyst, LLC.
5 days ago

Entrepreneurial business owners, is it time to consider a new approach to setting goals in the New Year? We’ve all been there. January 1 rolls around, and we set resolutions with the best intentions. “This will be the year I double my business,” we say. An article in Forbes 1 states by mid-February, 80% of people have made their resolutions a distant memory. Why? Because we have high ambitions hinging on mostly unrealistic and unsustainable methods, setting broad, lofty goals without a roadmap is like trying to sail a ship without a compass—directionless and daunting. There is a simple fix for this problem.  Start the road map with some pre-work. The root issue? New Year’s goals should always start with who you are, how you want to serve, and what you want to enjoy. If you start a New Year’s Resolution with what is trending in the world, in business, or in society, you will leave some or all your resolutions behind as you realize there is a misalignment between who you are and what is trending. It’s all one path! As business owners, we are bombarded with tasks that can be exhausting and lack enjoyment. Goals should be derived from envisioning a picture of your personal world: God, business, family, your unique personal desire to share creatively, and the core of who you are, so your business and your world are synced within a set of goals. What should your world look like in the New Year? Don’t compartmentalize! Your business cannot be separated from all the rest; successful business owners know who they are and how they intend to serve.  Get reacquainted with who you are, your personal talents to serve (clients, friends, family), and how you can get back to enjoying your life. Now we can talk about Business Resolutions You know what you want to achieve for your business. Now, make it a team effort. Go beyond your own efforts to engage your team in goals that are well aligned with their strengths and do it in a doable fashion that engages the spirit of growth together. The Problem with Most Resolutions Resolutions lack specificity, accountability, and, most importantly, our teams’ collective firepower. Transformative change doesn’t come from wishful thinking but from actionable, measurable steps involving everyone on deck. So, what’s the game plan? Shift from solo resolutions to team-powered actions. Set Specific Goals: Break down that big vision into smaller, achievable milestones. “Increase sales by 10% in Q1” beats “Double my business” for clear targets. Harness Team Strengths: Every member has unique skills. Use them to your advantage by assigning roles that match their strengths and watch motivation soar. Perform Regular Check-Ins: Make accountability a team effort. Frequent updates keep everyone on the same page and moving forward together. Celebrate Wins: Whether you hit a small target or make significant progress, celebrate as a team. This will help you feel more united and keep the momentum going. Making Sustainable Resolutions Remember, a sustainable resolution starts with the core of who you are as an owner, how you want to serve, and what is enjoyable to you.  Once you know what you want to achieve for your business your team can help you get there. With some pre-work, a New Year resolution might spark the fire, and then your team’s day-to-day actions will keep it blazing.

Quantum Computing Investments: Key Players, Risks, and Opportunities for 2025

Billy Amberg of Bloomwood is a member of XPX Atlanta
Billy Amberg
Bloomwood
6 days ago

Listen to this post as a podcast: www.adviserinfo.sec.gov). Please read the disclosure statement carefully before you engage our firm for advisory services. The information provided is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor’s particular investment objectives, strategies, tax status or investment horizon. You should consult your attorney or tax advisor.   The views expressed in this commentary are subject to change based on the market and other conditions. These documents may contain certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Any projections, market outlooks, or estimates are based upon certain assumptions and should not be construed as indicative of actual events that will occur.    All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed.  There is no representation or warranty as to the current accuracy, reliability, or completeness of, nor liability for, decisions based on such information and it should not be relied on as such. Bloomwood is a registered investment advisor. Advisory services are only offered to clients or prospective clients where Bloomwood and its representatives are properly licensed or exempt from licensure. 730 Starlight Lane, Atlanta, GA 30342.

What to Expect in 2025: Changes to the Three Branches of Government

Robert Brody of Brody and Associates, LLC is a member of XPX Tri-State
Robert G. Brody
Brody and Associates, LLC
2 weeks ago

As we enter 2025, businesses face a rapidly evolving employment law landscape shaped by dynamic shifts across all three branches of government. With a new president set to take office, significant developments at the Supreme Court, and the Republicans securing control of Congress, 2025 is shaping up to be a year defined by upheaval. Each branch of government will be different than any of us have seen in decades. The Executive Branch First and foremost, Donald Trump’s second presidential term is set to begin on January 20. Over the last four years, the Biden administration, known for their pro-employee policies, ushered in a wave of regulations aimed at expanding worker protections. Conversely, the Trump administration is expected to continue their pro-employer, laissez-faire approach that prioritized deregulation and employer flexibility during his first term. (Interestingly, the Trump Administration has started supporting more union issues and no one knows how that will impact his second term.) Significantly, labor and employment law developments often arise from action on behalf of various agencies such as the National Labor Relations Board (“NLRB”) and the Department of Labor (“DOL”). Because these agencies are part of the Executive branch, the president is effectively charged with overseeing them, and therefore plays a significant role in the implementation of their policies. Employers should expect Trump to utilize these agencies to implement his pro-business agenda. It is worth noting, however, that a 2024 Supreme Court decision (Loper Bright Enterprises v. Raimondo) overturned the long-standing Chevron doctrine, a legal principle that directed courts to defer to federal agency’s interpretations of law that agency is empowered to enforce. As a result of this decision, the Executive branch was effectively weakened, shifting greater interpretative authority to the Judicial branch. It will be interesting to see how much impact this change will have on the balance of power among our branches of government. The Judicial Branch Loper was not the only Supreme Court decision in 2024 that contributed to the shift in power in favor of the Judicial branch. The Supreme Court’s decision in Dobbs v. Jackson Women’s Health Organization, overturned the landmark abortion decision Roe v. Wade. Historically, courts, including the Supreme Court, follow precedent created by earlier decisions. But now the Supreme Court showed its willingness to overturn longstanding precedent based on a difference in their opinion of what is right or wrong. This shift away from strict adherence to precedent allows the Supreme Court greater latitude to reinterpret past decisions. With more flexibility to pursue a wider range of cases, as well as greater interpretive authority, the Judicial branch is shaping up to be much more powerful than it has been in the past. The Legislative Branch Lastly, in the 2024 election, the Republicans secured a majority in both the House of Representatives and the Senate. This means that the Legislative branch will have broad authority to enact their agenda over the next two years. Additionally, with Donald Trump in the White House, the likelihood of presidential vetoes decreases significantly.  This alignment will increase the likelihood that Congress will pass more new laws than is typically seen under a divided legislature. As a result, employers should closely monitor what new laws Congress enacts. Employer Takeaways Overall, the three branches of government are all undergoing significant changes. Donald Trump is likely to resume his pro-employer agenda, albeit with a slightly weakened Executive branch in the wake of the Loper decision. The Judicial branch is as powerful as ever, exemplified by the Supreme Court’s willingness to overturn longstanding precedent. Lastly, with Republicans in control of both the Senate and the House, the Legislative branch is primed for significant activity through 2026. With all these changes taking place, it is crucial for businesses to keep abreast of developments in labor and employment laws to ensure compliance and minimize legal risk in the new year. Brody and Associates regularly advises management on complying with the latest local, state, and federal employment laws. If we can be of assistance in this area, please contact us at info@brodyandassociates.com or 203.454.0560.

Developing Leadership Depth for Business Exit Readiness

Marci Caudle of Tagro Solutions is a member of XPX Philadelphia
Marci Caudle
Tagro Solutions
2 weeks ago

A robust leadership pipeline is crucial for any business, but it becomes particularly vital when preparing for a business exit. Whether you’re planning a sale, merger, or leadership transition, ensuring that your leadership depth is strong can significantly enhance the attractiveness and value of your business. This HR Insight explores how strategic human resources management can cultivate leadership depth to support a smooth business transition. The Importance of Leadership Depth in Exit Planning Leadership depth refers to a company’s ability to fill key leadership roles from within, ensuring business continuity and operational stability. For businesses considering an exit, strong leadership depth reassures potential buyers and investors of the company’s resilience and future performance potential. A well-prepared leadership team can effectively manage transitions, uphold company values, and drive growth, even during periods of change. Strategies for Developing Leadership Depth Leadership Development Programs: Implement comprehensive leadership development programs tailored to your company’s needs. These programs should focus on nurturing high-potential employees with critical skills such as strategic thinking, decision-making, and change management. Methods might include formal training sessions, mentorship programs, and leadership retreats that emphasize real-world business challenges and leadership responsibilities. Succession Planning: Effective succession planning is essential for ensuring that key positions can be filled quickly and competently. HR should work with current leaders to identify potential successors for each critical role. This process includes assessing the skills and readiness of potential leaders and providing targeted development opportunities to prepare them for future roles. Talent Identification and Management: Use talent management tools and assessments to identify employees who have the potential to become future leaders. Once identified, provide these individuals with customized development plans that align with their career aspirations and the company’s strategic goals. This approach not only prepares them for leadership roles but also helps retain top talent by actively investing in their career growth. Performance Management: Align performance management systems to leadership development goals. Regular performance reviews and feedback sessions help potential leaders understand their strengths and areas for improvement, ensuring they are on the right track to taking on more significant roles within the company. Cultivating a Leadership Culture: Foster a culture that promotes leadership from every level of the organization. Encourage employees to take initiative, lead projects, or mentor others. This environment supports leadership development organically and can identify and elevate hidden talents within the organization. The Impact of Leadership Depth on Business Valuation A strong leadership team can significantly enhance a company’s valuation during an exit. It demonstrates to potential buyers and investors that the company is well-managed, has a clear direction, and is capable of sustaining growth without the original owner or current leadership team. Additionally, companies with effective leadership transitions are more likely to maintain performance levels during and after the exit process, reducing risks associated with the transition. Developing leadership depth is not just about filling positions but about creating a sustainable framework that supports the company’s long-term goals and ensures a legacy of success. As businesses prepare for exit, the role of HR in cultivating this environment becomes a cornerstone of strategic exit planning. By investing in leadership development, companies not only enhance their marketability and potential sale value but also secure a stable and prosperous future for all stakeholders. At Tagro Solutions, we bring our deep expertise in Human Resources consulting to the table, aligning HR strategies with business objectives to enhance company performance and prepare for successful transitions. Our approach integrates seamlessly with the philosophy of the Exit Planning Exchange, which fosters collaborative exchanges of information and experiences among its members. Together, we aim to empower business owners through strategic insights and actionable solutions, making the journey from business operation to exit as profitable and smooth as possible.

New York City Mayor Signs Legislation Regulating Hotel Safety: What Employers Need to Know

Robert Brody of Brody and Associates, LLC is a member of XPX Tri-State
Robert G. Brody
Brody and Associates, LLC
1 month ago

On November 4, 2024, NYC Mayor Eric Adams signed into law the Safe Hotels Act (Int. No. 991-C) aiming to promote hotel safety and boost tourism. The Act, taking effect May 3, 2025, requires hotel licenses, restructuring of employment agreements, and a number of new staffing requirements. Hotel License Requirements Hotel operators defined as persons who own, lease, or manage a hotel, and control day-to-day operations, must obtain a hotel license from the Department of Consumer and Worker Protection (DWCP) to legally operate a hotel. Hotel operators must file an application with the Commissioner of the DWCP to obtain a license. The application must contain contact information as well as details of safeguards and procedures which show the hotel is in compliance with the Act’s staffing, safety, employment, and cleanliness requirements. The application will differ if the operator has a collective bargaining agreement (CBA) with a union. If the operator has a CBA which contains the required information and references the CBA in their application this may satisfy the Acts notification rules. The notification requirement will be satisfied for the term of the CBA or 10 years from the date of the application (whichever is longer). The commissioner must be notified if there are changes to the CBA which remove references to the Act’s requirements. The hotel license may be denied or revoked if operators fail to comply with the Act, however there are a number of notice requirements for the Commissioner prior to revoking a license. The Commissioner must notify the licensee of a potential revocation in writing. The licensee must be given 30 days from the notification to remedy the violation and this notice must be in writing. A license will not be revoked if it can be demonstrated that the condition has been resolved in the 30-day period. Evidence of this correction can be delivered electronically or in person. Upon the Commissioner’s decision, the licensee has 15 days to request a review of the decision. A license will not be revoked in the following situations: service disruptions such as construction work noise; conditions that the hotel is aware of and treats within 24 hours such as bed bugs, rodents, etc.; unavailability of hotel amenities for a period of 48 hours; unavailability of utilities for a period of 24 hours; and importantly any strike, picketing, lockout, or demonstration at or by the hotel. Hotel operators must display their license in a public area.   Employment Agreement Requirements The Act requires hotel owners, with 100 or more guest rooms, “directly employ” all “core employees”, except a single hotel operator to manage operations on the owner’s behalf. This rule effectively eliminates intermediaries such as staffing agencies or management companies. Core employees include those whose work relates to housekeeping, front desk, or front service. Valets, maintenance workers, parking security, and employees mostly working with food and beverages are not considered core employees. This provision greatly impacts employers who utilize subcontractors; however some contracting agreements may be grandfathered in if they are entered into prior to the effective date and have a specific termination date. Violating this provision may serve as the basis of license revocation. Staffing Requirements In order to maintain safe conditions for guests and hotel workers, the Act implements a number of new staffing requirements. One employee must provide front desk coverage at all times (during night shifts a security guard who has received human trafficking training may take this employee’s place). Hotels with more than 400 guest rooms must have a minimum of one security guard providing continuous coverage while any room is occupied. Hotels must maintain cleanliness and not impose fees for daily room cleaning. Core employes must receive training on how to identify human trafficking within 60 days of employment. Hotels must not accept reservations for less than 4 hours. Penalties and What Else Employers Need to Know Hotel operators are strictly prohibited from retaliating against any employee who discloses a potential violation or assists in an investigation. Hotel operators are also prohibited from retaliating against employees who refuse to partake in a dangerous activity that is not part of their job. As previously discussed, noncompliance can result in a hotel operator’s license being revoked, but that is not all. Anyone alleging a violation can seek a civil action within 6 months of the alleged violation. Furthermore, the Act provides for civil penalties which vary based on the number of violations: $500 for a first violation, $1,000 for a second, $2,500 for a third, and $5,000 for subsequent violations. The Commissioner is expected to issue rules by which this law will be enforced. A timetable for their issuance has yet to be set. Brody and Associates regularly advises management on complying with the latest local, state and federal employment laws.  If we can be of assistance in this area, please contact us at info@brodyandassociates.com or 203.454.0560  

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