Covering Your Assets – Steps to Guarding your Goods from Creditors

By Brittany Robinett

When you own a business, you often juggle multiple jobs: from marketing, to hiring, to bookkeeping, the list can seem never-ending.  Add the demands of personal life, and wearing several hats can easily blur lines between personal and business transactions.  Without an established asset protection plan, personal assets become an easy target for business creditors.  There are many ways to make personal assets appear “unattractive” to creditors.  Remembering four keywords can help prevent unnecessary risk to your personal assets:  structure, separate, research, and insure. 

1.     Structure your business as a separate legal entity.

Injured Piggy Bank WIth CrutchesMany minds equate asset protection with establishing a business as a separate legal entity.  Doing so distinguishes your business as its own legal “person,” capable of incurring its own debts and liabilities.  While business creditors can go after the business’s assets, personal creditors cannot.

When forming a business entity, most owners either form an LLC (“limited liability company”) or a corporation (usually an “S Corporation”), because they provide the most extensive liability protection for small businesses.

An LLC is an “informal” entity, operating more flexibly than a corporation.  “Limited liability” means that creditors cannot hold an owner liable for more than the amount he or she has personally invested.  LLCs are the more popular structure for small businesses, given the low start-up cost, minimal paperwork, and pass-through tax treatment.  However, this structure is not always appropriate, given the limited duration of LLCs and the crystal-clear distinctions required between the LLC’s affairs and the owner’s affairs.

A corporation is more “formal,” requiring the business to satisfy several technicalities, such as mandatory reports, meetings, and shareholder limitations.  Usually, an S Corporation is a more appropriate structure for small businesses, given the high tax payments associated with C Corporations.  Owners are generally not held liable for debts or liabilities incurred by the business.  They demand higher start-up costs and compliance with strict structural guidelines.  However, excess profits are entitled to tax benefits that LLCs do not offer.

When forming a business entity, attorney consultation can help you assess the positives and negatives of each structure and determine which formation best serves your interests.

2.     Separate personal accounts and business accounts.

Certain things in life are better left unmixed –bleach and ammonia, for example.  Comingling funds is equally ill-advised, as creating a business entity does not immunize an owner’s personal assets from business creditors.  If your business creditors and your personal creditors are the same people, you’ll likely find yourself treading dangerous waters.  For this reason, any debts or judgments that you are personally responsible for ought to be satisfied entirely by your own pockets and assets.   Additionally, any debts or judgments incurred by your business should be satisfied solely by the business.

To simplify the separation, create an account devoted purely to handling business transactions.  Funds in that account should NEVER touch personal expenses.  Likewise, funds within any personal account should be kept separate from business expenses.

3.     Research available asset protections.

As trivial as it sounds, it is important to regularly inventory all of your assets, as well as the values and debts associated with them.  Doing so enables you to identify which assets might be exposed to creditors.  Once familiar with your weak spots, you can research which assets are exempt from creditor action by state or federal law.

Assets falling within the business entity may only be pursued by business creditors.  Personal assets that are not exempt may be pursued by personal creditors.  To protect these personal assets, you can set up protective entities, such as trusts.  A trust places asset ownership into another’s hands for your intended beneficiaries.  While assets are removed from your ultimate control, they may be removed from creditors’ reach.

4.     Insure both personal and business assets.

Asset protection does NOT substitute the protection that insurance offers.  The two are unique and serve separate functions.  Asset protection helps deter creditors, but it is not always 100% effective.  Should creditors pursue your personal assets, insurance pays for legal defense in a lawsuit.  Types of policies regularly considered are liability insurance, property insurance, and umbrella liability insurance.

Be certain to have an attorney look over any policies prior to signing.  Attorneys can determine whether you are getting the best coverage available and whether your assets are effectively protected.

Bexley Law Firm, LLC

About the Author:  Brittany Robinett is a second year law student at the Georgia State University College of Law.


Estate Planning: Safeguarding Your Business when Hindsight Is Not an Option

By Brittany Robinett

“What would you do to protect your loved ones?”  For most people, the instinctual response is “anything.”


It should follow that those individuals would plan to protect their families in case something unfortunate, such as terminal illness or death, befell them.  Statistics, however, speak to the contrary.  A recent poll revealed that too few Americans – a maximum of 50% – have wills in place.  Even fewer have arranged a living will or power of attorney to carry out their wishes in the event of incapacitation.  Perhaps such inaction stems from the misconception that wills are for the wealthy or from fear of thinking about the unpredictable end.  Regardless of social status, however, surprises are rarely welcomed by the survivors left to pick up the pieces.

Suppose I instead asked, “What would you do to protect your business?”  It seems to escape many small business owners that their personal estate includes, in fact, their business, and it is in their best interest to establish a plan for it to continue in their absence.  For both emotional and financial reasons, owners often resist relinquishing control; yet transfer of ownership, like death, is inevitable.  Planning for the future not only eliminates stress on the bereaved, but it is also cost-effective.

Consider some consequences that could arise if your business’s affairs were not in order.  If death or illness struck, could family members and co-owners tie up loose ends?  Would someone be familiar with all associated accounts, know how to run the business, and manage it accordingly?  How would the IRS value and tax your estate’s assets?  Would the estate be left to probate and at what expense to your loved ones?  When you weigh the risks, why wouldn’t you plan ahead?

Every business structure is unique, and the steps necessary to protect each differ.  Additionally, the personal interests of owners influence those steps.  Legal counsel can evaluate these concerns and advise the best course of action for a business to take.  While plans may differ, there are certain safeguards that all small business owners should consider adopting: a living will, a power of attorney, and a trust.

1)     A living will documents an individual’s healthcare wishes in the event of incapacitation.  Living wills ensure that these wishes will be carried out, even if the person cannot express them.

2)     Two types of power of attorney are recommended for business owners: a healthcare power of attorney and a durable financial power of attorney.  A healthcare power of attorney is a document appointing an individual to make healthcare decisions fulfilling the wishes of the incapacitated.  For various reasons, an owner might not want a person with healthcare power of attorney to have additional financial control.  Since incapacitated persons cannot legally contract, a financial power of attorney appoints someone to handle your financial affairs and run the business within the scope of your instruction.  Financial POAs may handle anything from paying bills, to handling paperwork, to managing the business in your absence.

3)     A trust permits an owner to transfer property with others while retaining some management authority and ability to recover income and benefits.  Since the trust owns your assets, there is no fear of them going into probate.  Essentially, it allows a business to run in your absence while freeing it from any personal debts and obligations upon death.

In the words of Lieutenant General Claude Christianson, “Your biggest enemy is the unknown and assumptions.”  Don’t be your own worst enemy.  Plan for today so that the fruits of your labor can be enjoyed tomorrow.  Those you leave behind will surely thank you for it.

Bexley Law Firm, LLC

About the Author:  Brittany Robinett is a second year law student at the Georgia State University College of Law.

Preserving Privacy in a Publicized World: Maintaining an Online Presence while Protecting Personal Data

By Brittany Robinett

We live in a world where phonebooks are obsolete, maps rest in photo frames instead of dashboards, and online reviews are given preference over word of mouth.  When locating a carpet cleaner, people use their iPhones.  If they can’t MapQuest Peking Palace, they will order takeout from MuLan’s instead.  When choosing a doctor’s office, they choose the location with the highest Healthgrades reviews rather than trusting their co-worker’s opinion.

To summarize, Internet presence is everything in today’s business culture.  Why?  Because a business’s online image serves as its face and reputation; the more publicized the presence, the greater the trust consumers are likely to have.  In what Forbes refers to as the “mobile app culture,” small business owners are keystrokes away from countless, affordable advertising and marketing opportunities.  Yet, surprisingly, small business owners fail to maximize their online business opportunities for two reasons:

  1. They do not utilize the Internet to their fullest extent.
  2. They utilize online services without protecting themselves from legal oversight.

In her article “How Small Business Owners are Wrecking Their Own Chances of Success,” Forbes contributor Erika Anderson notes that only half of small businesses maintain a website or social media presence.  Although less shocking, those that do maintain an online presence do not take the precautions necessary to protect themselves from data breaches.  Some business owners are reluctant to develop an online presence, particularly where a website would be used to gather personal information from customers.  Such reluctance, though understandable, could be alleviated if businesses protected themselves by obtaining legal counsel.

Small businesses pride themselves on providing a higher quality of care from an intimate distance.  In a globalized, computer-centric generation, such intimacy may be necessarily achieved through a readily accessible link on a screen.  While convenient, this exposes both clients and companies to risks of privacy and security breaches.  These breaches may subject businesses to liability.  With this in mind, can “high quality” truly be delivered when the risk of legal errors runs concurrently “high?”

Contrary to popular belief, hackers don’t simply target large business corporations.  In 2013, USA Today reported that over half of small businesses in the country admitted to experiencing privacy breaches.  Over half of those businesses fell victim to multiple attacks.  The constant media coverage surrounding the recent (and massive) Target credit card breach might lead one to associate such financial fiascos with larger businesses; however, credit card breach is problem that more commonly plagues small businesses.  Where they are comfortable with their internal privacy policies, smaller business owners may be more reluctant to invest in more expensive software, to conduct more far-reaching background checks, and to pay extensive amounts for liability insurance.  However, data breaches more frequently occur externally, and they require that additional privacy measures be taken.

Most states require all businesses to report data breaches to the affected individuals, although many businesses chose to ignore breaches and let them go unnoticed.  However, this can subject businesses to hefty fines and negative publicity, as well as threats of consumer lawsuits.

Clearly, it is important for businesses to abide by online privacy policies.  Unfortunately, businesses that lack legal counsel might not know what steps to take to effectively follow those policies, nor know what steps to take when following those policies isn’t enough to protect them.  For these reasons, hiring legal counsel prior to a breach is often a legally effective solution.  Retaining an attorney can also be more cost efficient than hiring after a breach has occurred.  Prior to sharing personal data with payment processors and other third parties, businesses may contract with those parties to hold them liable for breaches occurring while personal information is in their hands.  Having an attorney prepare and execute the contracts may prevent any loopholes from going unnoticed and effectively bind third parties to their errors.  This greatly prevents the risk of consumer lawsuits.  As well as eliminating risks of immediate financial damages, an attorney’s legal oversight additionally eliminates the risk of a damaged reputation arising from a litigated breach.  Further, since data breaches are not 100% unavoidable, having attorney ensures that the correct measures will be taken immediately – preventing both businesses and their reputations from harm.

Ultimately, people chose a business because they trust it.  In a culture that most values the information on the screen in front of them, make sure the business behind that screen can be trusted.

Bexley Law Firm, LLC

About the Author:  Brittany Robinett is a second year law student at the Georgia State University College of Law.

Goodwill Hunting

It could be argued that a business’s most valuable asset is its goodwill. Most business owners would likely agree that although goodwill can take years to establish, it takes only minutes to destroy.

Goodwill” is a qualitative measure of a company’s reputation, market presence, and customer loyalty. This aspect of a business is very difficult to attach a price, but any competent business will zealously guard their company’s goodwill at any cost.

While any natural disaster can destroy inventory and real estate, a store’s good reputation can withstand almost any storm. So too can the most solid of foundations be shattered by poor decisions and lousy consumer outreach.


Right now, one of my favorite shows on television is “Bar Rescue.” Bar Rescue is a reality show featuring host, Jon Taffer, a long-time food & beverage industry consultant specializing in nightclubs and pubs, who “rescues” failing bars, pubs, taverns, and grills from the brink of failure. Each episode focuses on a single failing establishment and it is up to Taffer to figure out what is the cause of the problems. Often, the root issue is a combination of poor service, management, and décor. Most of these issues can be solved with training the management and staff, retooling the drink and food menus, and renovating the interior of the restaurant or bar. In essence, the establishment gets a healthy new coat of paint and everyone is happy. Every now and then, however, Taffer has to completely overhaul everything, including the image and reputation of the establishment. Essentially, the business has so completely ruined their goodwill in its community and market that it must start from scratch.

No business should allow this to happen to itself. Reputation is more than just the sum of employee’s personalities, but a reflection of how a company conducts business. It is not just the price of goods and services, but the value offered to customers and clients. A business must always ask itself: Why should someone give me money instead of my competition? What is it that sets this business apart from any other business in that market place?

Poor goodwill is not a symptom, but the product of a diseased company culture. Whether fueled by apathy, poor management, greed, or some other cause, the result is almost always the same: failure. While some companies can survive controversy by tapping an almost limitless reserve of goodwill stored up over decades (i.e., Toyota, with its seemingly endless chain of recalls), others can falter and crumble under much less scrutiny (i.e., Kmart, which was once a titan in the superstore market, but is notorious for very low quality products and selection).

Goodwill can be cultivated and preserved by establishing sound business strategies, competitive prices, and excellent customer service.  In addition, a business must possess strong internal processes to ensure productivity and efficiency and to minimize exposure to unnecessary litigation.

A small business legal consultant can assist owners and managers in making sound business decisions to protect the company’s goodwill by providing expert advice and consultation on a host of issues, including hiring practices, employee management and compensation, vendor relationships, inventory and financial planning, and other day-to-day business decisions.

Robert S. Bexley, Attorney
Bexley Law Firm, LLC

The Good, the Bad, and the Ugly (Reasons) for Termination in Georgia

Pop quiz!  You are an employee for Walmart and as you arrive at work, you see a man leave his dog locked in a car with the windows rolled up.  It’s 90 degrees out and you are worried about the life of the dog.  What do you do to avoid being fired?

(A) Do nothing

(B) Call the police

(C) Find the owner and convince them to do something

(D) Grab a brick and rescue the dog yourself

(E) Tell your manager and go back to work

(See poll at end of blog)

If you live in Georgia (and five other states, including Alabama, Louisiana, Maine, Nebraska, New York, and Rhode Island), this is a trick question.  In these dirty half-dozen states, there is no public policy exception to terminating an employee in an at-will employment arrangement.

Now, most of you reading that sentence just had your eyes glaze over and may have fallen asleep in some law-jargon-induced, narcoleptic seizure. That’s understandable. But luckily, there are people specially trained to decipher such gibberish.

So let break this down : 1) At will employment is an employment law doctrine that defines an employment relationship in which either the employer or employee can immediately terminate the relationship at any time with or without any advance warning.  2) A public policy exception to at will employment allows an employee to recover if they are wrongfully terminated for a reason that typically benefits the public or society at large.  Such public policy exception could include whistleblowing on an employer who knowingly produces a defective product, reporting illegal actions by the employer, or a filing workers’ compensation claim.  In states with public policy exceptions, employees are protected from the retaliatory actions of their employer when the employee engages in conduct that benefits society, even at the expense of the employer.  The reasoning for such exceptions is that employees are naturally discouraged from certain lawful activities if they know that they could be terminated for engaging in those activities.

The quiz at the beginning of this article is based upon a Walmart employee in Ontario, Canada who was fired for taking action when she saw a dangerous (and possibly illegal) activity in the parking lot where she worked.  While Walmart will claim insubordination as the reason for termination (arguing with her boss and declaring she won’t abide by store policy won’t win an employee any favors), a strong case could be made that the employee’s sin was in acting independently of consulting with her manager.  This sort of punitive action will likely discourage other employees at that Walmart from acting when they bear witness to any dangerous or illegal activity on the store premises.  See a dog or baby locked in a car in the summer?  Get the manager if he isn’t busy and get back to work.  See a person being attacked?  It’s none of your business, you have bills to pay.

As mentioned earlier, Georgia does not have a public policy exception for wrongful termination.  Any employee of a private employer can be fired for any good reason, bad reason, or no reason at all.  The employer cannot fire an employee due to race, gender (sometimes), national origin, religion, or disability, but beyond that, there’s not much else that can be done.  You cannot be fired for voting, jury duty, or military service, but that’s pretty much it.

Employers, however, should use their ability to fire employees with relative abandon and impunity sparingly, but not for any real legal reason.  Training good employees can be costly and time consuming.  High turnover will deplete morale.  And having employees afraid to bring management’s attention to activities that open up the company to potential litigation is a recipe for disaster.  Instead, employers should reward employees for their diligence, honesty, and willingness to act.  Management should be receptive to criticism, understanding of grievances, and willing to act when there is a moral imperative to do so.

Robert S. Bexley, Attorney
Bexley Law Firm, LLC

What can small businesses learn from Paula Deen?

I am an active user of Facebook. The site provides an easy to use forum to keep in touch with friends, family, and to help promote the things that interest you. It is also a good way to share ideas and to discuss the topics of the day with people from a wide variety of backgrounds and cultures. So, when a hot issue starts making its way around the country, it is inevitable that Facebook users will be there to dissect it in every way possible.

I do not want to be sued by Paula Deen, so here is a picture of a pound of butter.

I do not want to be sued by Paula Deen, so here is a picture of a pound of butter.

Case in point: Paula Deen.

For those of you who have been living on an island with a basketball named Rawlings, here’s what happened: Paula Deen, a celebrated chef that specializes in rich, savory Southeastern American cuisine, is being sued by a former manager of one of Deen’s restaurants for sexual and racial harassment.  During a deposition of Deen, she admitted to having used racial epithets in the past. Once these statements were made public, Ms. Deen clumsily attempted to apologize and ultimately made things worse.  Coupled with some problematic public statements Deen made on some television shows, several very prominent sponsors have chosen to either not renew her contract, or to dump her altogether.

In reading the various responses and replies, I noticed that many people were either dismissive of her behavior or were apathetic to the inane ramblings of yet another celebrity. The problem is that Deen is not just some television celebrity, but a restaurant owner that operates 2 locations and employs dozens of people (not to mention the crew that records and produces her show). Paula Deen is a celebrity business owner, and a business owner still has obligations to her employees and business partners. And Deen’s business owners are none too pleased.

To date, Walmart, Target, Kmart, the Food Network, Sears, Home Depot, and others have all dropped Deen.  Caesar’s Entertainment, which owns Harrah’s Casinos, will rebrand all four of their Paula Deen in-house restaurants. A spokesperson for Caesar’s Entertainment stated, “it is in the best interest of both parties to part ways.”

When entering into partnerships with another business, whether for advertising, endorsements, or for services, small businesses should always ask, “Is this in my best interest?” Due diligence is essential before chaining one’s business to any other entity.  Despite popular misconception, the Food Network did not “fire” Deen, but it did not renew her contract. A fine difference, but an important one. Had her contract not been eligible for renewal right as this controversy broke, then it would have been much more difficult for the Food Network to have terminated the relationship.

A business must sustain itself on the quality of its product or service and its goodwill within the community. Thus, regardless of the personal politics of the owners, to take unnecessarily controversial stances is to court bad publicity. Generally speaking, the best path to take as a small business owner is that of least resistance. Do not alienate your customers. Do not ostracize your business partners. Do not discriminate against your employees. Walmart, Target, Home Depot, etc. risk losing 100 customers offended by Paula Deen’s comments for every one of those who would stick with her to the gates of Hell.

Robert S. Bexley, Attorney
Bexley Law Firm, LLC

Right to Life vs. Right to Work: The Walmart Method

I never intended this blog to become an anti-Walmart screed.  However, as noted in my last blog post (How to Ensure Bad Customer Service:  The Walmart Method), Walmart has long since become the one-stop-shopping source for what NOT to do when running a successful small business.

First, I need to address a straw-man: How can I possibly levy a charge against Walmart, the largest retailer on the planet, for being unsuccessful? The answer is complicated. Simply put, the Walmart of today has little in common with the Walmart of the past. In 1962, Sam Walton founded the Walmart Discount City store in Rogers, Arkansas. Walton created his discount store based on the model of low cost-high volume. He intended his stores to be for working class people. These principals are still followed today by the retail giant. However, the success of Walton’s first stores was also modeled on excellent customer service, happy workers, and fair business practices. If Sam Walton had created his first stores selling cheap products made from Chinese slave labor, with 1 cashier for every 10 customers waiting in line, and employee treatment that would make Bank of America green with envy, his 5 children would be working as managers for Target and K-Mart instead of being 5 of the wealthiest people in human existence.

Rather, the basis for this blog rests in a recent report of the increasingly awful treatment of  pregnant workers, Walmart’s role in discriminating against pregnant employees, and what small business owners can learn from those mistakes.


In 2008, Heather Myers was pregnant and worked for Walmart. Following doctor’s orders, Myers kept a water bottle with her while stocking shelves to keep hydrated and to help with a urinary tract infection (a common ailment with pregnant women). Long story short, Myer’s manager gave her an ultimatum: stop drinking from a water bottle or you will be fired.  Myers chose Option C, quit and sue.  She chose correctly because Walmart eventually settled with her out of court.

Walmart settled with its former employee because its lawyers knew that it had a losing case. In 1978, Congress passed the Pregnancy Discrimination Act, a law protecting the employment rights of pregnant women in the workforce by amending Title VII of the Civil Rights Act of 1964 by prohibiting sex discrimination on the basis of pregnancy.  This Act was strengthened in 2008 by adding common ailments associated with being pregnant to the Americans with Disabilities Act, which prohibits discrimination against workers with disabilities (a common misconception is that pregnancy is a listed disability; it is not, but many of the associated health issues with a pregnancy are temporarily disabling, and are therefore protected).

There are two issues at play in how a small business treats its pregnant employees:  what is moral and what is legal.

There is no moral basis for an employer to harass, discriminate, or punish a pregnant employee. If we as a nation want to believe in a “right to life” and the “sanctity of life,” then we cannot then turn around and punish women for becoming pregnant and having the audacity to work in order to provide for their unborn children. In fact, morality demands that we hold employers to a higher standard when it concerns pregnant women who work. Thus, laws have been passed to protect women from undue punishment from the hands of employers who would rather fire a pregnant mother than to briefly accommodate that mother-to-be.

Legally, there is very little defense for not providing reasonable accommodations for a pregnant woman. We as a society have decided, both by law and through social compact, that certain individuals deserve increased protection due to historical discrimination in the workplace. Yet, even 35 years after the Pregnancy Discrimination Act and almost 50 years after the Civil Rights Act, employers are still discriminating against the most vulnerable and the most deserving of protection.

The best way to avoid litigation is to treat your employees with respect, be honest with your customers, treat your competition how you would want to be treated, and to follow the law.

Robert S. Bexley, Attorney
Bexley Law Firm, LLC