Corporate Strategies

The Importance of Corporate Social Responsibility Reports

The Importance of Corporate Social Responsibility Reports

Corporate Social Responsibility (CSR) reporting has become a popular method for companies to integrate CSR and sustainability into their decision-making processes. This tool helps the company to identify material issues, risks, and opportunities. By reporting on its environmental, economic, and social impact on the community, a company is able to engage with stakeholders and maintain a meaningful dialogue on the direction of the business. In an age of negative public perception of corporations, CSR reports can help to build a company’s positive image. Regular CSR reports which are relevant, honest, and correctly targeted will strengthen credibility with stakeholders and the general public, and in turn aid the company in gaining a competitive advantage. Reports also improve employee morale and motivation, as they gain confidence in their employer and their own roles within the company. We are currently seeing a shift in reporting methods, from simply informing the public to a more comprehensive approach of engaging with them in open and meaningful dialogue. CSR is no longer an afterthought, but is integrated into mainstream corporate communications. The delivery method for communications should reflect the diverse needs of stakeholders. For this reason, a web-based approach is more desirable and is becoming more common. The flexibility of communicating via the internet allows global stakeholders greater access to information, and allows companies to update information in real time. CSR reporting via the web also allows for better customization of message delivery, with richer content and more engaging multimedia options. Company websites are seen by the public as key sources for information. Therefore, they should be seen by corporations as a primary means of communicating their CSR activities. As the digital age progresses, full CSR reporting via the web will become even more critical to competition and success. Bethel Law Corporation is experienced in CSR reporting. Please contact us to set up a...

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Business Process Improvement Strategy

Business Process Improvement Strategy

In the business world, much depends upon developing a clear and competitive strategy. This is why business leaders spend so much time and money on research and development of their ideas. However, no amount of strategy will help a business succeed unless the plans are executed correctly. Efficient and effective operating processes are needed to avoid waste of time, money and resources. This also supports employee morale, as workers see their efforts pay off in increased productivity and success for the company as a whole. Successful companies realize these facts, and employ business process improvement methods in order to ensure their success. These methods may be introduced by either an internal team or external consultants, but the process is relatively the same for each. A good business process improvement plan will seek to identify the goals of both the customer and the business. Then the key business processes which are intended to meet these goals are analyzed in three ways. It is recognized that the way a process is viewed by workers and management is not usually how it actually works in real life. This difference is often the culprit in production and customer service problems. The business process improvement team then conceptualizes the process the way it should work, and re-engineers it to meet these new, improved standards. The end result is an operating procedure that works in real life the way it was designed, reduces waste of time and resources, and results in greater customer satisfaction. Obviously, in tough economic times the need for business process improvement increases. As companies fail due to the poor economy, there is an even more pressing desire to stay ahead of the competition. When prices rise on fuel and other resources, it is imperative to reduce waste and streamline operation times. However, simply hiring a process improvement team may not solve all of these problems. Business leaders should take special care not to implement any new procedures that violate industry regulations or the law. All new operations must continue to comply with the law while providing the desired streamlined and cost-cutting effects. After all, doing things the easy way is not always the best way in the long run, and this fact is often reflected in the rules created by society. Consultation with an experienced and knowledgeable attorney is the key to making sure business process improvement is implemented successfully. Contact...

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Protection of Trade Secrets

Protection of Trade Secrets

In industry, it is generally recognized that one’s livelihood may be at least partially derived from certain information or processes unique to that business. This has led to a desire to protect these “trade secrets”, so inappropriate use or outright theft of the intellectual property cannot be used by a competitor. Protection of trade secrets is covered under tort law, which provides a legal avenue for compensation to the injured party. The Uniform Trade Secrets Act was originally published by the Uniform Law Commission in 1979, in an effort to provide a framework for a uniform set of regulations pertaining to trade secrets in industry.  Prior to the widespread adoption of the UTSA, protection of trade secrets fell under common law in individual states. With the exceptions of Texas, Massachusetts, and New York, forty-seven states and the District of the Columbia have now passed regulations based upon the UTSA model. This provides greater consistency, and therefore better legal protection, from one state to another. The UTSA defines a trade secret by several qualifying factors. A trade secret can be any type of information such as formulas, techniques, patterns, devices, programs, methods, or processes, which has economic value stemming from the fact that it is not generally known by other persons who may profit from using or knowing it. The person or industry which claims to own the trade secret must have made reasonable efforts to protect its secrecy. It does not matter whether the information has real economic value or only potential value. Both are protected under the UTSA. In order for a trade secrets claim to qualify under UTSA guidelines, the subject matter in question must first qualify as a trade secret by this definition. The owner of the information must also prove that reasonable measures were taken to protect it, and that the offending party wrongfully acquired the information. This last qualification is very important. There are basically two situations which qualify for the wrongful acquisition of a trade secret: a breach of confidence or improper means of gaining the information. There are many lawful ways in which a competitor may acquire a trade secret and use it to their own advantage, such as reverse engineering or independent discovery. If it can be proven that the trade secret owner did not take reasonable measure to protect the information, then the original owner will probably not succeed in...

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Social Enterprise

Social Enterprise

Anyone who watches the news, or simply goes out into the world every day, has probably already gained the impression that communities are facing an enormous amount of social and environmental problems. The number of issues facing the world today is far greater and more complex than ever, and these problems have quickly outstripped the government’s ability to solve them. Even non-profit organizations, which are created solely for charitable purposes, are unable to meet the needs of our society in an era of reduced contributions due to a weak economy. In order to meet the growing needs and widening gap between those needs and the available support, businesses are innovating and restructuring to find a working middle ground between the profit motive, and the nonprofit charitable purpose.  A hybrid of profits with a conscience.   This is what social enterprise movement attempts to accomplish. Corporations are realizing that corporations need their communities just as much as communities need corporations. After all, no amount of strategy will help a business succeed if the world crumbles around it. A benefit corporation is one which holds itself to higher standards of purpose, accountability, and transparency. Purpose has been reinvented, and these corporations now include the production of high quality jobs and improved quality of life along with the traditional goal of turning a profit. There is a growing interest amongst investors to contribute to companies which strive to address environmental and social concerns. A benefit corporation seeks to bridge the desires of these motivated, philanthropic investors with the pressing needs of the community. The social enterprise movement has become so popular that it has inspired bi-partisan support for legislation in 11 states. Sixteen more states are poised to join them, by creating laws to give businesses the freedom and protection to create this new corporate structure. These laws carry no impact for state budgets, but improve the quality of life for all citizens. As corporate leaders recognize the mutual benefits for both themselves and their communities, we will continue to see more companies restructure themselves into benefit corporations. At Bethel Law Corporation, we are assisting organizations in the establishment of this corporate structure.  We invite you to contact our office for further...

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Family Limited Partnerships

Family Limited Partnerships

This memorandum is intended to be a reminder of the importance of proper management and operation of your Family Limited Partnership. In order to preserve the estate tax benefits and creditor protection that can be provided by your Family Limited Partnership, it is extremely important that you follow the guidelines described in this memorandum. This is a standard memorandum and will not necessarily apply to all clients. Nevertheless, virtually every client of ours with a Limited Partnership needs to be aware of these rules. Your Family Limited Partnership is a separate legal entity, and must be treated as such. While the case law on valuation discounts with respect to Family Limited Partnerships has generally been extremely positive, there have been several cases where the taxpayers failed to adhere to the necessary legal formalities and ignored the Partnership structure, with disastrous results. Here are some do’s and don’ts in this regard: Don’t use the partnership account as your own personal checkbook. These funds belong to the Partnership and should only be used to pay partnership related items. If you need to obtain funds from the Partnership, a pro rata distribution will usually need tobe made to all of the partners. This requirement is discussed in more detail below. Don’t contribute personal use items to the Partnership and retain the use of those items without paying fair market value to the Partnership for their use. Any implied agreement whereby you can use partnership assets like the vacation home without paying fair market value rent can result in the entire limited partnership being subject to federal estate tax. This was the result that one taxpayer recently experienced in Tax Court. Don’t make distributions from the Partnership that are not pro rata to the ownership to the ownership percentage interests as of the date of distribution. For example, if your Partnership is owned 1% by a corporate General Partner which you own, 79% by your Living Trust, and 20% by an irrevocable Gifting Trust, and you wish to receive $10,000 from the Partnership, then a total distribution of $12,500 will need to be made from the Partnership, of which $125 will be paid to the Corporation (and may immediately thereafter redistributed to you if you own the Corporation), $9,875 will be paid to your Living Trust, and $2,500 will be paid to the Gifting Trust. Please notify us or your CPA if you...

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Gifting Interest in Your Business

Gifting Interest in Your Business

PROBLEM: When a business owner dies, the FMV of the business is included in the owner’s gross estate for estate tax purposes. Estate tax breaks are available only if the business is a significant portion of the owner’s gross estate (generally 35% to 50%). APPLICABLE RULES: 1) A tax payer can give $13,000 to any number of recipients each year. No estate or gift tax is due on the gifts as long as no recipient receives more than $13,000. To qualify for the annual exclusion a gift must be a present interest (not in trust or conditional). A married couple can give $26,000 per recipient per year. 2) A gift is valued at the time it is made. THe recipient’s basis for calculating gain is the donor’s adjusted basis plus any gift tax paid on the appreciation of the property to the time of the gift. The basis for calculating loss is the lower of donor’s adjusted basis or FMV at the time of the gift. 3) Property acquired from a decedent is valued on the date of decedent’s death or six months after death if alternate valuation is elected. Basis is the FMV on the date of death or on the alternate valuation date. 4) The value of a gift of less than a controlling interest in a business can be discounted on a gift or estate tax return. The discount is based on the recipient’s lack of control over the business and the absence of a ready market for the shares. Discounts range from 20 to 35% but have been higher in some cases. SOLUTION: A long-range gift program can be used to remove business interests from the owner’s taxable estate. Transfers of business interests must generally be made incrementally to keep each gift below the $13,000 annual exclusion limit. Gifts of stock shares or partnership interests can be used to remove business interests from the estate. Business owners can also use a family limited partnership to carry out a gifting program. Gifts of limited partnership interests qualify for the annual exclusion as present interest gifts even if the donor is the general partner controlling the partnership. A family limited partnership gives the added advantage that the owners, as general partners, can retain control over the assets for a longer period of...

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