FORETHOUGHT - Whyte Hirschboeck Dudek SC

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Taxes The U.S. Tax Code is complicated. Putting the rules to work with another country’s tax regime is even more complicated. The United States has an extensive network of tax treaties with various countries, with the general goal of the treaties to eliminate double taxation. If a business doubles its profits through international expansion but its taxes also double, the expansion will not be considered successful. Spending time up front to determine a proper structure is essential to minimizing the impact of two taxing jurisdictions. The choice of a legal entity in a foreign country will determine how the entity is taxed, both in that country and in the United States. In addition, it is essential to consider how profits will be returned to the United States. This could include such basic questions as how to capitalize the initial investment, be it debt or equity, or whether to charge an affiliate for intellectual property. Protect Intellectual Property It goes without saying that moving intellectual property offshore exposes it to more risk. The legal issues vary greatly from country to country and preparation is essential to protecting the intellectual property. On the practical side, there are things a business can do to provide protection. For example, intellectual property can be broken into subgroups so that there is less risk that the intellectual property will be stolen. Many companies in China remove all intellectual property from their computer servers every evening. Understand the Cloud Doing business in the “cloud” has become more and more common. The cloud, or cloud computing, is a term used for anything that involves delivering hosted services over the Internet. While the law in this area is relatively undeveloped, having a presence in the cloud raises many issues. For example, does a cloud presence create potential liability in a jurisdiction Will a cloud presence subject a business to tax Does having a presence mean the business is required to comply with various data secrecy laws applicable in a particular country Understand Employment Relationships Many businesses expand initially by setting up a network of independent sales representatives in a foreign jurisdiction. While they may be considered independent sales representatives in the United States, it is important to understand what that relationship is in the foreign country. For example, if the sales representative only works for one business and exclusively sells that company’s product, that person may be the business’ employee. This could result in an employment relationship and long-lasting liability for social taxes and other benefits. In addition, having an employee in a foreign country may subject the business to income tax in that foreign country. Practice Patience What is commonplace in the United States is not in many parts of the world. For example, nearly any lawyer in the United States can set up a company and help open a bank account the same day. However, in Belgium, the same action can take a month or more and the client may be required to personally appear before a notary or another official. Prepare for Dispute Resolution Unfortunately, litigation happens, both domestically and abroad. It is very important to establish the forum and governing law for resolution of any offshore disputes. Parties typically agree to arbitrate disputes in a neutral location so that neither has a “home court” advantage. Conclusion Various technological advances have made doing international business much more commonplace. As with any new venture, it is important to fully plan for an offshore venture. While it is impossible to plan for every contingency, a well-thoughtout plan should make a move abroad more successful. n 10 WHD <strong>FORETHOUGHT</strong>
BUILDING A FAMILY BUSINESS LEGACY: THE U.S. ECONOMY DEPENDS ON SUCCESS Written by Sverre David Roang Many families dream of the possibility of building a business enterprise that can support and be enjoyed by many generations of the family. But making important and sometimes necessary transitions along the way can be difficult. Many advisers know the best techniques to make those transitions in a tax-efficient and legally beneficial matter, yet it is still notoriously difficult to maintain a family business through succeeding generations. In fact, most businesses do not make it past two or three generations. “From shirtsleeves to shirtsleeves in three generations” is a well-known saying in the United States that represents this difficulty. There are similar sayings in cultures around the world, suggesting that this unfortunate cycle is a universal human phenomenon. This cycle must be broken for the good of the entire economy. An estimated 80% to 90% of the country’s businesses are family businesses, and an astonishing one-third of Fortune 500 companies are family owned. More than 60% of the U.S. gross domestic product comes from family businesses, and they employ more than 60% of the country’s workforce. In other words, the overall U.S. economy needs family businesses to thrive. So, what keeps a succession plan from being truly “great” Some best practices have emerged. Here are the top 10 questions every family business should be asking to reach for long-term success. 1. Do we have an independent board of directors Time and again, research has shown that the key to longterm success for family businesses from generation to generation is the establishment of an independent board. This is a difficult decision for many entrepreneurs who are accustomed to running every aspect of their business, but good business governance is critical to validate and bring perspective to the direction of the business. 2. Do we have an ownership council Too many family businesses fail to recognize that the needs and desires of the business owners often differ from the needs and desires of the business. In addition to good corporate governance, successful family businesses have established good governance procedures for the owners. Sticky issues such as voting of ownership interests and owner exits from the business become far easier with good procedures established in advance. As the ownership grows to include far-flung cousins, these ownership governance CORPORATE 11
Page 1: FORETHOUGHT Find opportunities. Ant
Page 4 and 5: FOREWORD
Page 6 and 7: TABLE OF CONTENTS
Page 8 and 9: CORPORATE 8 WHD FORETHOUGHT
Page 12 and 13: structures become even more critica
Page 14 and 15: DODD FRANK ACT: A THREAT TO MAINSTR
Page 16 and 17: further, will ensure that the CFPB
Page 18 and 19: A BUMPY ROAD AHEAD FOR EMPLOYERS: E
Page 20 and 21: (2) disclose the analysis to employ
Page 22 and 23: ule or order of the DWD, compensati
Page 24 and 25: Will Employers be Subject to Immigr
Page 26 and 27: TAKE HEED, O INVENTOR: BEWARE THE I
Page 28 and 29: WHY ARE INTELLECTUAL PROPERTY NOTIC
Page 30 and 31: LITIGATION 30 WHD FORETHOUGHT
Page 32 and 33: Conclusion The possibility of creat
Page 34 and 35: According to Zach Brandon, Director
Page 36 and 37: IS IT AS EASY AS CLICKING “I ACCE
Page 38 and 39: REAL ESTATE/ ENVIRONMENTAL 38 WHD F
Page 40 and 41: agriculture. Even during normal yea
Page 42 and 43: HUD CERTIFICATION FOR CONDOMINIUM A
Page 44 and 45: ABOUT THE AUTHORS 44 WHD FORETHOUGH
Page 46 and 47: served as Editor of the Nebraska La
Page 48 and 49: employment-based immigration issues
Page 50: U.S. Congressman, in which she rese

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