Does Your Client Have Enough Licenses?

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View the original article from Nevada Lawyer Magazine here

Like many lawyers, I’m faced with an unfortunate number of clients who call me to help them solve their legal problems rather than to prevent them before they happen. A recurring issue involves entrepreneurs who start new businesses: they know that they need “a business license,” but they often don’t know exactly which licenses they are required to obtain. So they head down to city hall, apply for a business license, pay the fee and leave with the erroneous belief that they are now fully compliant with all licensing requirements. After all, if there was something else they were supposed to do, wouldn’t the person behind the counter have told them? Unfortunately, the answer is “no.”

Businesses Need State, County and Municipal Business Licenses In Nevada.

Entrepreneurs typically need a business license from every state, county and municipality in which they plan to conduct business. Although this article only addresses Nevada business licenses, it is important to remind your clients that they may need to register their businesses and obtain even more business licenses in other states where they perform services.

The general rule is that any person who engages in a business or trade for profit in Nevada is required to obtain a business license from the State of Nevada. As always, there are several exceptions, most notably nonprofit entities and religious entities. Most exceptions still require the person to file a request for exemption. If you think your client may be exempt, be sure to consult the statutes to determine whether or not such a request needs to be filed. In addition to the state business license, counties and municipalities may require their own business license. Not all counties and cities have elected to do so, but most cities and municipalities require an additional business license for anyone conducting business in their jurisdictions. Each county and city has discretion to set its own guidelines for business licenses, so the fact that your client is exempt from obtaining a state business license does not necessarily mean he or she is exempt from obtaining a local license. For example, a natural person whose sole business is the rental of four or fewer dwelling units is exempt from obtaining a state business license, but a natural person whose sole business is the rental of three or more residential dwelling units on one parcel of land in Reno is required to obtain a business license from the City of Reno. You should therefore review the rules for each jurisdiction in which your clients are conducting business in order to determine whether they need a business license for that jurisdiction. Each jurisdiction requires licenses from businesses actually conducting business within the jurisdiction. A brick-and-mortar retail store would, therefore, need a business license based only upon the location of the store. However, a business that provides services in various places, such as a landscaper, needs a business license in each jurisdiction in which the business performs services. In areas like Reno, Sparks and Tahoe, a landscaping business might need business licenses from the state of Nevada, Washoe County, Carson City, the City of Reno and the City of Sparks, depending on their clients’ locations. A landscaping business in the south might need business licenses from the state of Nevada, Clark County, the City of Las Vegas, the City of North Las Vegas and the City of Henderson. Entrepreneurs are typically less than thrilled to learn this. Luckily, businesses can obtain multi-jurisdictional business licenses for Reno, Sparks and Washoe County or for Las Vegas, North Las Vegas, Henderson and Clark County.

Check Nevada Licensing Boards

Entrepreneurs may also need additional licenses due to the nature of their businesses. Many such licenses are obvious: you are unlikely to encounter an entrepreneur looking to open a doctor’s office without realizing he needs a license to practice medicine. However, as Uber can attest, the licensing requirements for other professions and businesses can be more ambiguous. Be sure to determine whether or not your client needs any additional licensing based upon the nature of his business, and don’t assume that your client will already know his professional licensing requirements.

A Business License is Not a Business Approval

It is important to ensure that your clients are aware that all these licenses do not constitute broad governmental approval of their businesses. Entrepreneurs sometimes believe the various government agencies that they have paid for business licenses have conducted thorough compliance reviews prior to granting those licenses.This mistake can lead to very costly consequences.

For example, a barber might assume that, since he applied for a business license for a barber shop and listed the intended address of the barber shop on the application, the city, county and/or state must have confirmed that the listed location was actually zoned for a barber shop, and that the barber has all the licenses required. So when the barber receives his business license, he assumes that his barber shop is “government approved” and that there’s nothing else he needs to worry about from a regulatory standpoint. Unfortunately, as we know, his is not the case; the well-intentioned barber could be shut down by the Nevada Barbers’ Health and Sanitation Board for working without a license and charged with a misdemeanor and an administrative fine. This error can easily be avoided by taking the time to explain to your client what a business license is and what it means for their business. When working with entrepreneurs, especially when helping them start their business, always remember to explain to your clients that they might need a number of different licenses, and tell them what those different licenses do, and do not, allow them to do.

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Do You Know What Your Bylaws Say?

NNBWLawGuide

Austin headshotBy Austin K. Sweet.
If you own a business, you probably have a business entity. Maybe you heard that business entities provide some sort of liability protection, and someone mentioned that you should form an LLC, so you wen online, or better yet, to a lawyer, and formed and LLC. A few weeks later, you got a fancy looking book with your company’s name embossed in gold lettering. You played with the neat little company seal thingy for a few minutes, patted yourself on the back for being a responsible business owner with such an official looking book and seal, and then put to book on a shelf never to be touched again.

That is, of course, until your lawyer asked you to bring that book to his office because its contents will dramatically impact the outcome of the dispute you’ve recently entered into with your partner. Are you sure that book says what you want it to say? Do you even know what it says? How will this impact your business?

Read the full article featured in Northern Nevada Business Weekly Business Law Guide Here (page 7)

Following Through With a Judgment: Working Towards a Successful Debt Collection

Nevada Business Magazine

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By John R. Funk

When your business sells goods or services, you expect to be paid.  However, payment is not always the reality.  If your business is not getting paid, you can seek repayment either informally or formally.  If your informal methods of trying to convince the debtor to pay have been unsuccessful; consider formally seeking payment by filing a lawsuit.  This article focuses on the realities of using the judicial system to collect amounts owed to your business.

Once you file a lawsuit, the debtor has the opportunity to defend the action.  The debtor may assert defenses that it does not owe as much as you think, that the goods were defective, or the services subpar.  Fast forward—the judge has decided the debtor’s defenses are without merit and has awarded you a monetary judgment for the full amount you sought.  Hey, you just won your lawsuit!  Congratulations are in order, right?

Wrong, merely winning a lawsuit and obtaining a judgment does not mean you automatically receive a deposit in your business’s bank account.  Rather, that judgment only allows you to use the courts and sheriff’s office to enforce your judgment.

Satisfying Your Judgment

In Nevada, those who have monetary judgments against another (“judgment creditors”) have a variety of statutory tools at their disposal to compel those who owe them money (“judgment debtors”) to satisfy the judgment.  At its most basic level, Nevada’s debt collection statutes allow judgment creditors to satisfy their judgments by having the sheriff’s office seize property belonging to the judgment debtor.  The sheriff’s office will then sell that seized property and give the proceeds of the sale to the judgment creditor.  The judgment creditor can have this process repeated until the judgment is paid in full.  Thus, judgments are only as good as the judgment debtor’s quality and quantity of assets.

Locating the Judgment Debtor’s Assets

The question then becomes, how do you know what property to have the sheriff seize.  Nevada allows a judgment creditor to obtain information directly from the judgment debtor, or any other person, concerning the judgment debtor’s property.  For instance, judgment creditors may subpoena the judgment debtor’s accountants, managers, or any person when seeking information concerning the judgment debtor’s property.  If that person refuses or fails to answer, they may become responsible for paying the amounts owed to your business.

Sometimes, by the time the judgment creditor obtains its judgment, the judgment debtor has transferred all of its assets to a separate entity or to the entity’s principals in hopes of avoiding the judgment.  Once again, the judicial process has a solution for the judgment creditor.

Discovery of Nonparties’ Assets

The Nevada Supreme Court recently permitted a judgment creditor to obtain information concerning the assets of a non-debtor.  Rock Bay, LLC v. Dist. Ct., 129 Nev. Adv. Op. 21 (Nev. Apr. 4, 2013).  In that recent case, the Nevada Supreme Court allowed the judgment creditor to ascertain information concerning the assets of an entity that was not a debtor, but who participated in various financial transfers with the judgment debtor after a lawsuit was filed.  This third-party was formed by one of the judgment debtors and it appeared to be used as a vehicle to hide money from the judgment creditor.

The Nevada Supreme Court explained that allowing discovery into the assets of non-debtors is permissible if it will lead to the discovery of hidden or concealed assets of the judgment debtor.  To convince a court to allow such discovery, the judgment creditor may show that transfers to the third party took place and that the relationship between the judgment debtor and the nonparty is sufficient to raise a reasonable suspicion concerning the propriety and permissibility of the transfers.

When your business is owed money, you have various options available to you to seek payment.  Typically, you should start by informally seeking to convince the debtor to pay your bill without having to hire a debt collector or without having to file a lawsuit.  However, when that debtor refuses to pay, even though it has the apparent ability or assets to do so, your business should consider filing a lawsuit.

John R. Funk is an Associate at Gunderson Law Firm, and can be contacted directly at jfunk@gundersonlaw.com or by calling (775) 829-1222.

Electronic Service – Three Days for Emailing?

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By Austin K. Sweet

The law is often slow to catch up with technology, but thankfully courts moved quickly to adopt electronic filing.  Most members of the Young Lawyers Section living in Washoe County or Clark County have spent our entire careers with electronic filing and can hardly bear the thought of actually leaving the office and go stand in line at the courthouse to file a document.  But the quick adoption of electronic filing left some oddities – namely, the handling of electronic service.

Before electronic filing, documents could be served by hand or by first class mail.  Because service by mail takes longer, the rules provide that a responding party shall have three extra days to respond when a document is served by mail.  NRCP 6(e).  This rule makes perfect sense.

Then fax machines came along, creating a new method of service.  Facsimile service is only acceptable if the parties consent, and still allows for three extra days to respond.  NRCP 5(b)(2)(D); NRCP 6(e).  As technology advanced, service by email became acceptable and was lumped into the rules with service by fax.  Again, three days are added to the prescribed period to respond.  Id.  That’s where the logic starts to get fuzzy.

Things became more convoluted when electronic filing was introduced.  The Nevada Electronic Filing and Conversion Rules (“NEFCR”) were adopted by the Supreme Court and became effective on March 1, 2007.  Second Judicial (Washoe County) has adopted the NEFCR.  NEFCR 9(b) provides that the court’s electronic service provider must send an email to all registered users that a document has been filed.  NEFCR 9(f) provides that electronic service is complete at the time of transmission of the NEFCR 9(b) email.

Eighth Judicial (Clark County) has not adopted the NEFCR, instead adopting its own electronic filing rules.  EDCR 8.05(a) provides that documents electronically served through that court’s electronic filing process are subject to NRCP 5(b)(2)(D) and, by proxy, NRCP 6(e).

So what does all this mean?  When documents are electronically served through the court’s filing system in the Nevada Supreme Court or in Washoe County, three days are not added to the prescribed period to respond.  When documents are electronically served through the court’s filing system in Clark County, three days are added.  Likewise, when documents are electronically served in accordance with an agreement between the parties, three days are added.

Not surprisingly, this has created confusion.  Practitioners in Washoe County regularly misinterpret the relationship between NEFCR 9(f) and NRCP 6(e) and mistakenly believe that they are entitled to an additional three days when documents are served through eFlex.  This confusion is so widespread that the rules are rarely enforced as written and the Second Judicial judges are discussing revisions to the rules.

There is an easy solution to this problem – stop adding three days for emailing.  In today’s world of computers and smart phones, most attorneys check their email constantly.  It is likely that the average attorney reads the automated notifications from eFlex / Wiznet within minutes of receiving them.  By contrast, documents served by hand must be driven (or biked) from one office to another, processed through the firm, and eventually delivered to the attorney handling the case.

Chances are, attorneys are able to access and read electronically-served documents hours, or even days, before they are able to access and read hand-served documents.  Why then are attorneys granted three extra days to respond to documents served electronically?  If logic ever existed for this rule, it does not exist today.

The state and local rules throughout Nevada should be amended to reflect the realities of today’s electronic world.  Adding three days for electronic service is counterintuitive and unduly dilatory.  The rules should be modified and clarified to plainly provide that documents served electronically are deemed received the day they are served without adding three days.

Austin K. Sweet is an Associate at Gunderson Law Firm. He earned his Juris Doctorate from Boston University School of Law and can be contacted directly at asweet@gundersonlaw.com or 775-829-1222.