If you’re thinking about starting a business in Pennsylvania, an important part of the financial side of your business plan is to evaluate the impact of taxes on your new business. Your lawyer and your accountant are key members of your business team that can help you evaluate what type of entity to form, how that entity should be taxed, and the taxes applicable to your business.

Part three of this series discusses taxes associated with ownership of real estate and employment taxes. Part one discussed sales and use taxes and others that may apply based on the nature of the goods you sell or the services you provide. Part two discussed taxes that may apply depending on the way your business is organized.

This post is not intended to be a substitute for legal or tax advice from your lawyer or accountant – you should talk to them in order to obtain advice to address your specific situation. Need a lawyer or an accountant? We might be able to help you with that! Continue Reading Pennsylvania Business Taxes – Property and Employment Taxes

One of the most important pieces of advice I give builders and developers is to “get it in writing.”  It turns out that when you get it in writing is also critical.  A big national builder found itself in Court with a home buyer because the builder did not put its arbitration clause in the Agreement of Sale. The builder used a form purchase agreement which referenced the builder’s limited warranty. Months later, at the settlement table, the builder finally gave the buyers the limited warranty. The limited warranty contained a requirement to arbitrate all disputes.  When the buyers later had problems with their home, they went directly to Court instead of to arbitration. The Pennsylvania Superior Court said the arbitration clause was not enforceable because it was not provided at the time of the Agreement of Sale.  The only mention of arbitration was provided months later, after the Agreement of Sale was signed. Continue Reading Real Estate Developers: Make sure all of your important contract provisions are included in the Agreement of Sale

The Pennsylvania Liquor Control Board announced its seventh auction of expired restaurant liquor licenses and will be accepting bids until October 30th.

While this may sound like good news if you are an aspiring restaurateur in the mid-state area, don’t get your hopes up just yet. As with its prior auctions, the PLCB is only auctioning licenses in the counties where there remains a quota of unexpired licenses, so there are no licenses available in York, Lancaster, Chester, or Cumberland counties. There is one license available in both Lebanon and Dauphin counties; however, even if you are interested in a license in one of those counties, be aware that the PLCB requires that the full purchase price for the license be placed in escrow with the PLCB within two weeks of being notified that they were the successful bidder in the auction. As a practical matter, and as has been the case throughout the license auction process, that eliminates nearly all new restaurateurs or small business owners who do not have the cash immediately available to deposit with the PLCB. It is for that reason that the overwhelming majority of auctioned licenses have been sold to large convenience and grocery store chains.

While the PLCB may have thought they were helping the marketplace and providing additional licenses for restaurateurs, the reality is that because of the way the purchase structure is set up, the only beneficiaries of this license auction have been large grocery and convenience store chains that can afford to put hundreds of thousands of dollars of cash toward the purchase of a license.  So if you’re in the market and don’t mind bidding against large central Pennsylvania retailers, good luck.  Otherwise, consider purchasing an existing business or finding another option to obtain a liquor license.

Aaron Zeamer is an attorney at Russell, Krafft & Gruber, LLP, in Lancaster, Pennsylvania. He practices in a variety of areas including Business Law and Liquor License matters. Aaron works frequently with commercial real estate agents, brokers, restaurant and bar owners, breweries, distilleries, and wineries to facilitate the sale and transfer of PA liquor licenses.

If you’re thinking about starting a business in Pennsylvania, an important part of the financial side of your business plan is to evaluate the impact of taxes on your new business. Your lawyer and your accountant are key members of your business team that can help you evaluate what type of entity to form, how that entity should be taxed, and the taxes applicable to your business.

Part one of this series is a high level overview of the common taxes that you may be subject to depending on the nature of the goods or services your business provides.

This post is not intended to be a substitute for legal or tax advice from your lawyer or accountant – you should talk to them in order to obtain advice to address your specific situation. Need a lawyer or an accountant? We might be able to help you with that! Continue Reading Pennsylvania Business Taxes – Sales and Use Tax

In the summer of 2017, property tax assessments and assessment appeals were a big topic of discussion.  That is because 2017 marked the countywide reassessment for all properties.  The County Tax Assessment Appeal Board heard tens of thousands of assessment appeals.  Some of the appeals resulted in substantial savings for the property owners.

This blog article is a reminder that even if you did not appeal your property tax assessment in 2017, you can still appeal that assessment in 2018.  Appeals must be filed on or before August 1, 2018.

            Here are a few of the topics that this blog covered in 2017:

If you did not appeal your assessment in 2017, but you think that your assessment is wrong, you have another chance to reduce your property taxes.  If you wonder whether you should appeal, we would be happy to help.

Aaron Marines is an attorney at Russell, Krafft & Gruber, LLP, in Lancaster, Pennsylvania. He received his law degree from Widener University and practices in a variety of areas including Commercial and Residential Real Estate, Land Use, Land Planning and Zoning matters.

Kathleen Krafft Miller is an attorney at Russell, Krafft & Gruber, LLP, in Lancaster, Pennsylvania. She received her law degree from Widener University and regularly advises homeowners and individuals on legal matters ranging from tax assessment appeals to domestic relations matters and estate planning.

Lancaster County continues to be an attractive marketplace for entrepreneurs in the technology sector. Over the last few weeks, the below articles caught my eye as interesting examples of what Lancaster has to offer to growing companies:

$50,000 Big Idea contest for tech entrepreneurs names 7 finalists

Ben Franklin Technology Partners of Central & Northern PA have been investing big time in Lancaster, including this contest and the TechCelerator at the Candy Factory. This article highlights the finalists in the Big Idea competition – best of luck to them!

A vision for Lancaster as the Silicon Valley of social enterprise

As co-executive director of Assets (a nonprofit that promotes entrepreneurship as a means to combat poverty), Jonathan Coleman shares his ideas for how Lancaster could be a hub for benefit corporations.

NeuroFlow is heading to Lancaster to see if its biz model makes sense

A medical technology startup takes advantage of Lancaster’s Smart Health Innovation Lab, a joint venture between Aspire Ventures, Capital BlueCross, Clio Health and Penn Medicine Lancaster General Health.

Where American Politics Can Still Work: From the Bottom Up

New York Times opinion columnist Thomas L. Friedman writes about the revitalization of Lancaster from a “crime ridden ghost town” 20 years ago to a thriving community that serves as an example for other cities.

These articles are just a few examples of the resources available to businesses and entrepreneurs in Lancaster County. We’ve previously written about other options available here, here and here. Have questions about starting or growing your business in Lancaster County? Feel free to contact us.

Matt Landis is an attorney at Russell, Krafft & Gruber, LLP, in Lancaster, Pennsylvania. He received his law degree from Widener University Commonwealth School of Law and works regularly with business owners and entrepreneurs.

With all the uproar about Facebook’s use of our data and businesses bracing to deal with the EU’s GDPR, it is easy to forget there is no general obligation to protect your personal information. The Third Circuit Court of Appeal’s decision last week in Enslin v. Coca-Cola, et al. is the latest reminder of that fact.

Shane Enslin is a former employee of Coca-Cola. As part of his employment, he submitted, as we all do, personal information including his social security number. Coca-Cola discovered that one of its IT staffers was stealing company laptops and taking them home for his own use or giving them to others. Among the devices stolen were machines used by human resources employees that contained sensitive personal information, like Enslin’s social security number. After the devices were stolen, Enslin was the victim of identity theft. Continue Reading Third Circuit Avoids Ruling on a Duty to Protect Employees’ Personal Information

We have written a few articles about the changes to the Tax Code.  The change that many professionals are trying to figure out is the 20% deduction for individuals using a pass-through business entity such as a partnership, LLC, “S” corporation or sole proprietorship.  Code Section 199A is not just a minor change in already settled law.  It is a brand new concept.  Even the AICPA has requested – twice – that the IRS and Department of the Treasury provide guidance on the pass-through deduction.

There are a couple of key concepts that are building blocks to understanding Section 199A.  Some of these are:

  • The business must be a “qualified business.” A qualified business is anything that is not a “specified service trade or business.”  This means that service businesses such as accounting, actuaries, brokers, consultants and lawyers are not qualified businesses and cannot take advantage of the deduction.  Engineers and architects are qualified businesses, and the owners may use the deduction.

Of course, this exclusion has an exception.  If a business would otherwise be disqualified, but the taxpayer has a taxable income less than $207,500.00 for an individual ($415,000.00 for taxpayers filing a joint return), then the taxpayer may be eligible for the deduction.  In this case the deduction is phased out depending on how close the income is to that threshold amount.

  • The deductible amount requires a lot of calculation. The deduction that a taxpayer can take is the lesser of (A) 20% of the taxpayer’s business income or (B) the greater of either:  (i) 50% of the W-2 wages paid by the business; or (ii) the sum of 25% of the W-2 wages paid by the business plus 2.5% of the unadjusted basis of qualified property of the business.

But even this confusing definition has different qualifiers.  For example, qualified business income excludes net capital gain.  This means that the higher the ratio of net capital gain to taxable income, the lower the pass-through deduction.  The deduction favors companies with employees because 50% of the W-2 wages paid could be deductible.  On the other hand, if a company has few employees, but creates income through its depreciable assets (such as landlords), they can deduct up to 2.5% of the unadjusted basis of the property. Continue Reading Questions About the Tax Deduction for Pass-Through Income

In a ruling issued yesterday, the United States Supreme Court held that states can require internet merchants to collect sales tax, even if they do not have a physical presence in that state. This overturned the previous rule from Quill Corp. v. North Dakota, which required collection and remittance of state sales tax when a retailer has a physical presence in the state. If sales tax was not collected through the transaction, the burden fell to consumers to report and remit use tax for out of state purchases.

Here’s a link to the full text of the opinion: South Dakota v. Wayfair, Inc., et al. In this case, South Dakota enacted a law that required all merchants to collect a 4.5% sales tax if they had more than 200 individual transactions in the state or have more than $100,000 in annual sales in the state.

As of now, the Court’s decision only paves the way for states to collect sales tax from merchants. Therefore, merchants should pay attention to actions by Congress and state legislatures on this issue to determine what their ongoing compliance obligations will be. As states begin to implement the Court’s ruling and require collection of sales tax, in the coming months consumers may notice an increasing number of retailers collecting sales tax for online purchases.

Matt Landis is an attorney at Russell, Krafft & Gruber, LLP, in Lancaster, Pennsylvania. He received his law degree from Widener University Commonwealth School of Law and works regularly with business owners and entrepreneurs.

* House Bill 595 was signed by Governor Tom Wolf on Monday, May 7, 2018.  The Bill becomes effective on Wednesday, July 6.

The Pennsylvania General Assembly passed House Bill 595, which is expected to be signed by Governor Wolf.  This Bill gives a process for deciding disputes in Condominium and Homeowners’ Associations.  There are a few things that every Association should know about this new requirement.  They are:

  • Most Associations need to adopt bylaws or rules and regulations that establish Alternate Dispute Resolution (ADR) procedures. This includes procedures for disputes between two or more unit owners and/or between a unit owner and the Association.
  • A “unit owner in good standing” can file a Complaint with the Attorney General’s Bureau of Consumer Protection for a violation of the Act relating to meetings, quorums, voting, proxies, and Association records. Previously, this option was available only to disputes over Association financial records.
  • A “unit owner in good standing” is someone who has no past due assessments. So a unit owner that is behind on their assessments cannot file a Complaint with the Bureau of Consumer Protection.  Except that if the unpaid assessments are related to a Complaint filed with the Bureau of Consumer Protection, then the unit owner is in good standing regardless of unpaid assessments.
  • A unit owner cannot file a Complaint with the Bureau of Consumer Protection until he or she has exhausted the ADR procedure or at least 100 days after the unit owner started the Alternative Dispute Resolution procedure. If there is no ADR procedure, the unit owner can go straight to the Bureau.
  • Finally, if a unit owner has a dispute with the Association and wins, he or she may be entitled to an award of costs and reasonable attorney’s fees.

These additions to the Uniform Condominium Act and the Uniform Planned Communities Act are intended to help owners and Associations settle their differences without going to court.  In order to do this, Associations will need to take some steps to prepare themselves: Continue Reading Alternate Dispute Resolution Comes to Association Communities (Whether they want it or not)