Atlanta Business Lawyer Blog

The Atlanta tax attorneys as well as the Atlanta Business Attorneys at The Adams Law Offices are always informing, educating, and assisting individuals and business owners about incurring taxable income (tax liability) without the liquidity to pay taxes on this income. This scenario can be a taxpayer’s worst nightmare and often generates significant internal struggles, infighting, and conflict between business owners. The Atlanta business lawyers and Atlanta tax lawyers at our Firm refer to the scenario of incurring tax liability without producing the liquidity to pay these taxes as “phantom income.” “Phantom income” means you have taxable income but no cash to pay taxes on this income.

“Phantom income” occurs most frequently in Subchapter S corporations and limited liability companies (LLCs), which are presently the most common and popular business entity forms for doing business in Georgia. This is especially true in small businesses owned by taxpayers who may not be aware how “phantom income” can be incurred or what “phantom income” is.

“Phantom income” occurs when Subchapter S corporations and LLCs are taxed. The income in these business entities is passed to the owners whether or not cash is actually distributed to the owners. Moreover, if a business makes a profit, at least for tax purposes, but the business owner(s) keeps most of the money in the business as so often is the case (especially in small businesses), then a “phantom income” scenario can result.

For example, suppose your business has a tax profit of $100,000, but you only distribute $10,000 because you need the rest of the money in the business to keep operating the business. However, you are taxed on $100,000 even though you only received $10,000. This is one instance where you have been the unknowing casualty of “phantom income.”

Thus, the question arises: How do you avoid phantom income? The answer is the proper drafting and prudent use of a well-crafted operating agreement.

Continue reading " TAX AND BUSINESS LAW FIRMS -- BEWARE OF “PHANTOM INCOME” IN YOUR CLIENT’S LIMITED LIABILITY COMPANY (“LLC”) OR “SUBCHAPTER S” CORPORATION " »

As Atlanta construction litigation attorneys and Atlanta Business attorneys alike, I know that one of the most important tools for contractors and subcontractors looking to protect their rights and ensure payment on a building or construction project is a lien. I also recognize that nothing is more frustrating to a new homeowner or property owner than an improperly filed lien, or an unexpected lien filed by a subcontractor after the property owner believes everyone has been paid.

The Georgia Legislature has recently made subtle but significant changes to the lien laws in Georgia. These changes state when and how a lien must be filed, how it can be removed, and how the lien may be enforced.

Several years ago, the law was changed to state that only attorneys may file liens. However, even Georgia real estate and construction attorneys may not be familiar with these changes and the various statutory requirements and “hoops” one must “jump through” to have a valid lien on file in the property records. Consequently, it is very important to consult Atlanta Construction Lawyers very familiar with lien laws in general, and the new changes in particular, if you are a contractor, subcontractor, or supplier looking to protect your rights, or if you are a property owner looking to challenge a lien.

In this ever-changing real estate and construction market, it is increasingly important to protect your hard work and your real property investment. This is why you must choose Atlanta real estate, construction, and business attorneys who understand the complexity of these revised lien laws and who can advise you on how to protect your business, your hard work, as well as your investment.

The Adams Law Offices has been at the forefront of the revised lien laws and the new Georgia construction arbitration statutes as they relate to contractors, builders, and homeowners alike. Our Firm of Atlanta construction attorneys specialize in liens, the “Right to Repair Act,” the new Georgia construction arbitration statutes, procedures and laws.

Continue reading " ATLANTA BUSINESS AND CONSTRUCTION ATTORNEYS – GEORGIA HAS NEW LIEN LAWS " »