Atlanta Business Attorney Blog

If you are a starting a georgia corporation and considering a catchy
trade name, it is extremely important that any contracts you sign list
the actual name of your corporation. In forming new corporations, our
clients often come up with a catchy name after we incorporate their
business that they want to use instead of their corporate name.

Generally speaking, there is nothing wrong with this. If the name is
a good one, it could mean a great deal of money for the new business
from a marketing perspective. As long as the client follows three
simple rules.

A recent Georgia Court of Appeals case highlights for everyone three
important rules. In Yim v. J’s Fashion Accessories Inc. A09A1369.
As Mr. Benjamin Yim found out the hard way, if you do not properly use
your trade name, you will be held personally responsible for any
contracts you enter into. That is exactly what happened Mr. Yim.

Continue reading " Using Trade Names in Georgia " »

If you are a Georgia Small Business owner, certain tax incentives have been created, extended or expanded in the way of business tax deductions and credits under the American Recovery and Reinvestment Act (ARRA), enacted in February. The bonus depreciation and increased section 179 deduction, for example—are only available this year, eligible businesses only have a few months to take action and save on their taxes.

Many Georgia small businesses that invest in new property or equipment may be able to write off most or all of these purchases on their 2009 returns. The new Act extends through 2009 the special 50 percent depreciation allowance, also known as bonus depreciation, and increased limits on the section 179 deduction. The Section 179 deduction is so named for the relevant section of the Internal Revenue Code. After 2009, Georgia businesses will only be able to recover these capital investments through annual depreciation deductions spread over several years. Until then, Georgia businesses are encouraged to make investments by enabling businesses to write the investments off more quickly.

Under the current Act, the bonus depreciation provision generally enables businesses to deduct half the cost of qualifying property in the year it is placed in service. The section 179 deduction enables Georgia small businesses to deduct up to $250,000 of the cost of machinery, equipment, vehicles, furniture and other qualifying property placed in service during 2009. Without the new law, the limit would have dropped to $133,000. The existing $25,000 limit still applies to sport utility vehicles. A special phase-out provision effectively targets the section 179 deduction to small businesses and generally eliminates it for most larger businesses.

Bonus depreciation and the section 179 deductions are claimed on IRS Form 4562.

The Georgia Court of Appeals recently released the decision of Kitchen v. Insuramerica Corp., case number A08A1986, in which it found that a former employee had an enforceable contract with the Georgia corporation that had employed him for the transfer of a 25% interest in stock in the corporation’s subsidiaries. This case illustrates the importance of both parties agreeing on all of the material terms of a contract, which is known as a “meeting of the minds.” In the Kitchen case, the Georgia Court of Appeals states that the enforceability of a contract is tested by “whether it is expressed in language sufficiently plain and explicit to convey what the parties agreed upon.” It is also important to keep in mind that courts decide contract cases based on the specific facts of each case.

In the Kitchen case, the parties had agreed that the employee would receive a 25% interest in the corporation’s subsidiaries as part of the compensation for his employment with the company. The material terms of the agreement were laid out in a letter that was signed by both parties, which further showed their agreement. The Georgia Court of Appeals in Kitchens found that the letter clearly described the material terms of the stock transfer by providing: (1) the employee would work for the corporation and its subsidiaries in a certain position; (2) that by a certain date, the employee would receive 25% of the corporation’s subsidiaries’ outstanding stock; and (3) a formula for calculating the employee’s “ownership equity.” Additionally, the Georgia Court of Appeals found that the rest of the letter provides enough additional detail on the agreement for it to be enforceable even though there may be some uncertainty as to other aspects of the agreement.

In the Kitchens case, it appears that the letter signed by both parties governed the relationship between the Georgia corporation and the employee. In the absence of this letter, there likely would have been a different result. This case illustrates that it is good practice for contracting parties to sign a contract which includes the basic terms of the agreement. This contract needs to include all of the important terms. The more detail the parties agree on and include in the contract, the less likely a dispute will arise later on.