Covenant Law Firm: FAQs

The attorneys at Covenant Law Firm, P.C., provide these helpful questions and answers for your immediate legal concerns.  For personalized attention and seasoned advice on your case, contact our Birmingham, Alabama, law firm today.

Business Law

I am going into business for myself; what do I need to know?
First, you need to develop a business plan to establish basic parameters for your business, such as:

  • Start up and operating costs
  • Intended/potential profits and losses
  • Labor and employment laws
  • Potential liabilities
  • Insurance coverage
  • 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.

What form of business entity should I use?
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

What are some common mistakes that entrepreneurs make?
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 

What are common mistakes dealing with financial issues of divorce?
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

What are the grounds for divorce in Alabama?
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

What is DNA and how does it affect court cases?
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.

If you are looking to get a divorce in Birmingham or in the central Alabama area, contact Covenant Law Firm, P.C. for help.

Taxation

What tax liabilities will I face for my business?
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

What should I do if I am notified by the Internal Revenue Service that my business or personal tax return is under audit?
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

What tax relief services are available if I receive a statement from the IRS demanding payments of taxes, interest, and penalties for delinquent tax returns?

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

How much does it cost to start a tax case?
Tax Court charges a $60.00 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 Alabama, what are the legal requirements for a will?

  • You must be at least 18 years old
  • 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.

What is an Estate Tax?

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

What is Probate?
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.

What if I do not have a will?
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.

Contact the Covenant Law Firm, P.C., for legal help or advice,  or call us at 1 205 323.6006.

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