Frequently Asked Questions:

Business Law

  • First, you need to develop a business plan to establish basic parameters for your business, such as the Start up and operating costs, Intended/potential profits and losses, Labor and employment laws, Potential liabilities, Insurance coverage, and Taxes.

    Business is always a risky endeavor. An entrepreneur cannot know everything. Every business should have a working relationship with a lawyer, accountant, insurance agent, and banker. For seasoned legal advice for your business, contact our Birmingham business lawyers at Covenant Law Firm today.

  • When you start your business, you have to choose which sort of business you will form. The many types include:

    Sole proprietorship: Simple and cheap, but may expose your personal assets to risks associated with the business

    Corporation: A legal “person” in the eyes of the law—your company has its own identity, meaning it pays taxes, can own property, and sue/be sued. It protects the owners from creditors, contracting firms, and other third parties

    S-Corporation: A corporation that has elected to be taxed as a partnership

    Partnership: 2 or more people go into business to make a profit; can be general or limited

    Limited liability company: The liability standing of a corporation and tax laws of a general partnership

  • Most small businesses do not succeed in the long run. Frequent pitfalls include:

    Lack of a thorough business plan, Not understanding the industry, Underestimating the costs and taxes of doing business, Lack of timely financial reports to adjust to current economic conditions, Failure to recognize a sinking ship, Inability to make an adjustment due to a stalemate on control, & Cutting corners.

Family Law

  • Because of the devastating emotional impact that divorce may have on one or more of the individuals involved, some financial issues between the parties may be overlooked:

    Negotiating to retain the marital home without obtaining its current value in relation to a mortgage debt

    Negotiating to retain the marital home when the client cannot afford it

    Not obtaining complete information on all retirement plans, employee benefits, and stock options and not evaluating the defined benefit pension plan correctly

    Thinking that retirement assets have the same value as equal dollar amount on non-retirement assets

    Not understanding the purpose of a QDRO and the need to get it completed and filed at the time of the divorce or immediately after the divorce is final

    Not looking at the long-term impact of a financial settlement

    Not understanding the importance of making the spouse—who receives the spousal and child support payments—the owner of a line insurance contract

    Making isolated financial decisions versus looking at the big picture and analyzing how each financial decision impacts other decisions

    Failing to consider the cost basis of property and believing that a 50/50 division of property is an equitable division of property

    Not taking into account the effect of deferred taxes when dividing the assets

    Not understanding how to divide debt

  • Alabama recognizes the following grounds for divorce, but incompatibility of temperament and irreconcilable differences are predominantly used:

    Physical/incurable incapacitation at time of marriage

    Adultery

    Abandonment for at least one year

    Imprisonment for at least two years

    Crime against nature

    Drug or alcohol abuse/addiction

    Incompatibility of temperament

    Confinement to a mental hospital with no hope of recovery

    Irreconcilable differences

    If the wife was pregnant at the time of the marriage, without husband’s knowledge

    Domestic abuse

    Two year separation

  • DNA is deoxyribonucleic acid. It contains the genetic information used by cells to synthesize the various proteins in the human body. It is unique to each individual, except identical twins, and can provide a basis for identification.

    In paternity cases, DNA evidence can be used to exclude a putative father as the father of a child. On the other hand, DNA can fail to exclude a putative father. This is strong evidence that he indeed is the father of the child.

Taxation

  • Company taxes are often unanticipated for first-time business owners. Local, state, and federal governments levy a variety of taxes on businesses, such as:

    Business license, permit, application fees, and business privilege taxes

    Payroll taxes and withholdings (both the employer and the employee portions)

    Excise taxes on products, goods, or services (e.g., petroleum products)

    Sales and use taxes

    Property taxes

    Federal and state income taxes

  • The Internal Revenue Service is in the process of increasing its taxpayer compliance through audits of individual and business tax returns. If you are notified by the IRS of a pending audit of your business or personal tax return:

    Retain a tax professional to represent your interests before the IRS

    Cooperate fully with the tax professional; you are paying for the tax professional’s time. Full cooperation with the tax professional saves time and money

    Carefully evaluate the options that you may have

  • Once the IRS contacts you over delinquent tax notices, wage garnishment, bank levy, or other collection procedure, contact a tax professional immediately. The tax professionals at Covenant Law Firm are experienced in:

    Preparation of delinquent tax returns

    Offer in Compromise

    Stop wage garnishment

    Bank levy releases

    Innocent spouse relief

    Eliminating penalties if qualified

  • Tax Court charges a filing fee at the start of a case. You are permitted to represent yourself in Tax Court, but it is best to involve a lawyer admitted to US Tax Court. You will find Tax Court-ready attorneys with Covenant Law Firm. Our Birmingham taxation law firm can help.

Wills, Trusts, & Estates

  • In general, you must be at least 18 years old, and you must understand that you are making a will to direct the division of your property

    It is best to consult with a wills and estate attorney to ensure that your will satisfies any further state requirements.

  • An estate tax is the tax levied on your taxable estate upon death. Your taxable estate equals your gross estate less allowable deductions.

  • Probate is the process of proving a will. A court makes sure that your will has your valid signature and is a genuine statement of how you want your assets distributed.

  • Without a will, the court appoints an administrator for your estate. The court also notifies everyone with an interest in your property that your estate will be distributed. In general, administration of a decedent’s estate is a more costly procedure than probating a will.

    For more help on wills and trusts in Birmingham or throughout central Alabama, get in touch with the Covenant Law Firm, P.C.

Useful External Links

Here are some legal resources you may find useful:

Legal

Business

Family

Taxation

Wills, Trusts, & Estates