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Many small business owners do not necessarily think about their financial liability when they first start their company—they tend to focus more on market research, securing funding and building up the infrastructure of their new business. However, it is important to understand the financial risks you face as the owner of a new company.

If you are a sole proprietor, those risks are significantly greater, because there is no structure standing between you and your business. If your company were to be sued and the business was unable to pay, the court would come after you and your own personal assets.

Structures that will reduce your financial liability

Fortunately, there are ways you can reduce the liability you face as a small business owner. The best way to do so is to establish your business in a structure that includes some liability limiting capabilities.

  • S Corporation: The S Corporation is a great option for smaller business to reduce their liability while also being incorporated. There are other additional benefits to this structure, including pass-through taxation, but you will be required to start a board of directors, have annual board meetings and file extra paperwork to ensure your compliance.
  • The limited liability company (LLC): This is the most popular option for small business owners to limit their liability and protect their personal assets. The same benefits as the S Corp exist in this structure, but there are fewer regulatory requirements and less paperwork involved. However, if you decide you will seek funding form outside investors, you’ll likely find those investors want you to be incorporated, so there is an extra challenge in that regard.

However, it is important to note that even if you do create an S Corp or an LLC, you are not completely protected from financial liability. There are several circumstances in which your assets could become vulnerable, including if your business entity itself is noncompliant with federal rules, if you decide you will personally guarantee a business loan, if you sign a business contract under your name or if you commit a crime.

Therefore, your best bet to avoid any chance of being liable financially is to work with an attorney. Your business attorney can provide you with advice about how to act in certain situations and how to set up your company in a way where you do not have to constantly have this financial liability hanging over your head.

For more information about reducing your liability as a small business owner, contact a knowledgeable corporate planning lawyer in the U.S. Virgin Islands.

J. Nash Davis is an Associate Attorney in the Corporate, Tax and Estate Planning Practice Group at BoltNagi PC, a full service business law firm serving the U.S. Virgin Islands.

Issues to Cover in Your Employee Handbook

by karin on April 26, 2018

Having an employee handbook is a great way to introduce new employees to your company and the various policies you have in place.

There are several issues you are required by law to cover in your handbook. For example, you must have family medical leave policies listed in the handbook under the Family Medical Leave Act (FMLA), as well as equal employment and non-discrimination policies and worker’s compensation policies. Other issues you might be required by law to cover include information regarding accommodation of people with disabilities, policies on military leave and policies for leave of victims with crimes.

But what about issues that are not legally required? What might you want to include in your handbook, or what could potentially be helpful for your employees? Here are a few ideas.

  • A statement that the handbook is the ultimate procedural document: To eliminate any potential for confusion if you had previously used other policy documents, there should be a clarifying statement that your handbook is the final word on all company policies, superseding any previous documents that existed. Be sure to note that its policies are subject to change as needed.
    Employee acknowledgement: To protect your business, you should have a page that your employee signs and returns to indicate he or she acknowledges the policies outlined in the book and that he or she is responsible for knowing and following the rules outlined in it.
  • Company history: It can be helpful to write a brief overview of your company’s history, and include a company mission statement, a market position overview and other information that will help set the tone of the handbook and provide more character and contextualization for your company.
  • Paid time off: If your company has a vacation or PTO policy, you should include that in the handbook. It should indicate the holidays your company observes, how vacation time is earned and how vacation can be scheduled. This is also a good place to discuss sick leave, FMLA leave and military spousal leave.
  • Behavioral guidelines: Lay out general behavioral expectations of employees, including attendance, breaks and employee conduct. Common specific examples include smoking bans, substance abuse policies, internet use policies, dress code and employee harassment and discrimination policies. You don’t need to go into too much detail.
  • Payment: Include information about payment methods, pay grade structure and promotion opportunities. If you have compensation packages such as stock offers, this is where you’ll want to outline them.
  • Benefits: Be sure to outline the various benefits your company offers, such as life insurance, health care, dental, vision and retirement plans. Don’t discuss any specific policies with companies here—your benefit offerings are likely to change. Instead, provide general information about the available benefits, who is eligible for those benefits and the criteria for eligibility for those benefits.

For more information about how to create a thorough employee handbook, contact an experienced corporate planning attorney in the U.S. Virgin islands.

Ravinder S. Nagi is Assistant Managing Attorney and Chair of the Labor & Employment Practice Group at BoltNagi PC, a full service business law firm assisting clients in the U.S. Virgin Islands.

Just about every company has sensitive information it needs to protect. Many times this comes in the form of intellectual property, such as product designs or blueprints, service methods and patents.

It feels like there’s a new high-profile breach showing up in the news every week these days. In such an environment, it’s more important than ever before for business owners to take the appropriate steps needed to protect their intellectual property.

Here are a few steps your business can take to keep its IP and trade secrets safe:

  • Make protection a priority: Despite the growing need for businesses to implement greater protections for their IP, there are relatively few companies that actually have meaningful data protection practices and policies in place. Companies must approach data protection as if it is a necessity for their business’s viability. If it is not prioritized, it likely will not get done, meaning your business will stand to sustain a significant amount of damage if a breach occurs.
  • Determine which IP is most valuable: Beyond prioritizing your IP in general, you should also prioritize specific IP by determining which is the most valuable. You should know exactly where your IP is stored and which need to have greater protections in place. The most valuable pieces of IP are the ones an attacker would be most likely to go after.
    Protect those assets: Once you have identified sensitive assets or data, label them appropriately to give a visual cue to other employees that the document must be handled with care. Implement technologies to ensure your IP stays protected. You can encrypt files that are stored online. If you have physical files that need to be stored, you can set access control points and limit who has clearance to access the file storage area.
  • Train your employees: Stronger employee awareness of the importance of information security will go a long way toward preventing breaches. All internal documents should have data protection, including employment agreements and manuals. All of your employees, from executives to interns, should be trained in your policies regarding how your company handles confidential data. Additional security awareness training at regular intervals can help. Even your vendors should be made subject to your data protection policies to ensure a breach doesn’t occur as a result of the carelessness or wrongdoing of a third party.
  • Invest in data protection: Cybercriminals are constantly getting more sophisticated, and will attack any business they believe to be vulnerable. There are third-party cybersecurity professionals that offer plenty of solutions for businesses of all sizes and with varying degrees of security needs. If you have a lot of sensitive data, it makes sense to invest in a data protection plan from cybersecurity experts.

For more information about protecting your business’s intellectual property, contact a corporate planning attorney in the U.S. Virgin Islands.

Steven K. Hardy is an attorney with the Corporate, Tax and Estate Planning Practice Group at Bolt Nagi PC, a full service business law firm assisting clients in the U.S. Virgin Islands.

Officials from the Department of Labor recently told lawmakers in the U.S. Virgin Islands that understaffing in the DOL has prevented the department from pursuing legal action against employers who have failed to make their unemployment insurance payments. These delayed and missing payments have, in turn, delayed the payment of benefits to newly unemployed citizens.

The DOL representatives revealed this information during a hearing of the Legislature of the Virgin Islands’ Committee on Workforce Development, Consumer Affairs and Culture. At the hearing, the Department of Licensing and Consumer of Affairs, the Department of Tourism and the Virgin Islands Carnival Committee also all testified.

A look at the issue

Elton George, who is the director of the Unemployment Insurance Division, said that when employers do not make their required unemployment insurance payments, the Virgin Islands Department of Labor then begins garnishing the claimant’s financial records to determine the amount of the unemployment check. However, understaffing at the Department of Labor has led to none of the typical legal action being taken against delinquent companies. According to George, the delay has been made even worse by a larger than usual number of unemployment claims coming into the UID.

Virgin Islands lawmakers were not satisfied with the explanation. According to Senator Jean Forde, unemployment has increased dramatically in the wake of the hurricanes that hit the Territory last fall. As such, the Department of Labor should not have understaffing problems, especially considering the vacancies are fully funded. The positions must be filled to allow the Department to process unemployment benefits to help the people in need throughout the territory.

Virgin Islands media became aware of the issue when former employees of the Schneider Regional Center and Juan F. Luis Hospital told reporters they had not received their promised unemployment benefits since losing their jobs. Resulting investigations revealed widespread issues throughout the Virgin Islands with people not receiving the unemployment benefits they are owed.

Considering the harsh living conditions Virgin Islanders have had to deal with since Hurricanes Irma and Maria hit the Territory, it is even more important than it might typically be for citizens to get these benefits in a timely manner so they can afford basic living necessities, not to mention ongoing repairs to their properties.

According to Senator Nereida Rivera O’Reilly, some people who have lodged complaints with the government have not received any unemployment checks since October 2017—that’s months’ worth of missing payments caused by dysfunction in the government.

This is an issue affecting employers and employees alike. For more information about the state of the Department of Labor and how this issue will affect your business’s long-term planning, contact an attorney in the U.S. Virgin Islands.


Ravinder S. Nagi is a shareholder and Chair of the Labor and Employment Practice Group of BoltNagi Pc, a full service business law firm serving the U.S. Virgin Islands.

It’s been about six months since the U.S. Virgin Islands were devastated by a pair of Category 5 hurricanes. Some sense of normalcy is finally returning to the Territory—services are back up and running, businesses and homes are rebuilding, and tourists have begun coming back to the U.S. Virgin Islands.

In fact, some airlines are even preparing to launch new flights to the U.S. Virgin Islands. Spirit Airlines, for example, announced that it would begin providing a brand new nonstop flight between Fort Lauderdale and St. Croix running three times a week (Tuesdays, Thursdays and Sundays).

The U.S. Virgin Islands Department of Tourism also announced Spirit along with Delta Air Lines and JetBlue Airways would be expanding its services to St. Thomas, and that in April, United Airlines will resume its services to St. Thomas from cities including Houston, Texas; Washington, D.C. and Newark, New Jersey.

Challenges with accommodations

Still, it will be a long time before the Territory is able to truly return to normal. The hurricanes did a tremendous amount of damage to the islands.

While tourists are starting to come back to the territory, flights are still far below their levels at this time in 2017. St. Thomas is down about 50 percent in flight capacity, and St. Croix’s flight levels are about 15 percent below where they were at this point last year.

The tourists that have been coming back to the Virgin Islands have been having some difficulty finding accommodations. Many of the larger hotels are still closed and awaiting repairs. The lack of available accommodations has wide-reaching effects on the tourism industry, including the Territory’s ability to collect hotel occupancy taxes, as well as the various activities and adventures offered primarily to tourists. The taxi industry and other vendors have also suffered, as there have been significantly fewer visitors so far in 2018.

The U.S. Virgin Islands has been hit perhaps the hardest by the significant decrease in cruise ships arrivals to the Territory since the hurricanes. There’s expected to be a drop off of 30 percent of cruise ship visits to the area. It will be some time before cruise ship visits begin to stabilize and reach their figures before the hurricanes hit, and there’s no denying the economic impact that has on the Territory. These cruise ships are packed with tourists who flood the islands’ restaurants, bars, shops and activities.

Leadership in the tourism industry remains positive about the growth and recovery efforts after the hurricanes, but everyone understands there is still a long way to go.

For more information about recovery efforts and the outlook for your business in 2018, contact a trusted corporate planning attorney in the U.S. Virgin Islands.


Tom Bolt is Managing Attorney of BoltNagi PC, a full service law firm in St. Thomas U.S. Virgin Islands.

We are now in the midst of tax season, which means people across the United States and its territories are busy compiling their records and receipts and preparing their income tax return paperwork. This can be a stressful time of the year, especially if you are not entirely sure what is required out of you in regard to tax preparation.

To help, we have created a tax preparation checklist that covers most individuals’ needs for their individual or joint tax returns. For more personalized information, we strongly encourage you to consult an experienced U.S. Virgin Islands tax planning attorney.

Income information

  • Income you’ve earned from jobs, as evidenced on forms W-2
  • Income earned from investments, using various forms 1099, K-1s and stock option information
  • Alimony income
  • Income from businesses or farming (profit/loss statements, capital equipment information)
  • Home office expenses and the size of your home office space
  • Distributions from IRAs and pensions (forms 1099-R, 8606)
  • Social Security benefits (form SSA, 1099)
  • Income and expenses associated with rental properties (profit/loss statements, suspended loss information)
  • Prior year installment sale info (SSN/address of payer, form 6252)
  • Miscellaneous income (gambling winnings, scholarships, health savings account, lottery)

Income adjustments

The below factors may reduce your taxable income, which can either increase your tax refund or lower amount of money you owe.

  • Energy credits
  • Student loan interest
  • Moving costs
  • HAS contributions
  • Health insurance payments (if self-employed)
  • Alimony payments
  • IRA contributions
  • Educator expenses
  • SIMPLE or other self-employed pension plans


  • Childcare costs
  • Education costs (form 1098-T)
  • Advance Child Tax Credit
  • Adoption costs
  • Investment interest
  • Charitable donations
  • Casualty/theft losses
  • Home mortgage interest and points paid (form 1098)
  • Medical and dental expenses
  • Miscellaneous tax deductions (union dues, seminars, continuing education, uniforms, business travel)

Paid taxes

  • State and local income taxes
  • Real estate taxes
  • Personal property taxes (vehicle license fee)


Adam N. Marinelli is an associate in the Corporate, Tax and Estate Planning Practice Group at BoltNagi PC and concentrates his practice in tax matters. BoltNagi is a full service business law firm serving the U.S. Virgin Islands.

When you are preparing to purchase another business, the acquisition agreement is a crucial step in the process. Here’s a brief overview of what you can expect out of an acquisition agreement.

Two models of purchase agreements

There are two general models of purchase agreements: an entity purchase agreement and an asset purchase agreement. The way the transaction actually occurs will really depend on the size and type of each business involved, but you can at least have a general idea of what to expect when you use one of these two models.

In an entity purchase agreement, the buyer purchases the business entity through buying a majority (or all) of its stock. In this situation, the new owner of the company fulfills the role of the previous owners of the purchased company, and also takes on all of that company’s debts.

In an asset purchase agreement, the buyer purchases all of the assets, whether tangible (real estate, inventory, equipment) or intangible (intellectual property, trade secrets). While the structure of the purchased company, along with its original owners, remain in place, there is not really a business to run anymore, because all of the assets are gone.

Selecting a model of acquisition

So which model of purchase agreement works best in your situation?

First, you should consider the tax implications of the purchase. Usually it is better from a tax perspective to use an asset purchase agreement, because the buyer can start depreciating those assets almost instantly. The seller, however, often prefers an entity purchase agreement, because such an arrangement allows the seller to pay taxes at the lower capital gain rate. This is especially true if the seller is a C corporation, because that structure places them at double the tax risk.

The other primary consideration is debts and liabilities. It’s also a better arrangement for the buyer to use an asset sale from this perspective, as the buyer does not take on the business’s debts unless they agree to do so. Obviously, the seller would rather have the debts taken on by the new owner, which makes an entity sale advantageous to them.

Ultimately, coming to an agreement in a sale and the kind of acquisition agreement that will be used for that sale takes a significant amount of negotiation. Trained business planning attorneys are skilled in working with both parties in business sales to help develop arrangements that work for all sides.

To learn more about acquisition agreements and the steps you should take if you are preparing to sell or purchase a business, we encourage you to contact an experienced corporate planning attorney in the U.S. Virgin Islands. We will be happy to answer any questions you have.

Steven K. Hardy is Chair of the Corporate Tax & Estate Planning Practice Group at BoltNagi PC, a full service law firm in St. Thomas, U.S. Virgin Islands.

The recent hurricanes in the U.S. Virgin Islands left homeowners and businesses alike with massive damage unlike anything they had seen in the past. These property losses continue to have major implications on families and businesses now that tax season is upon us.

Fortunately, new laws enacted several months ago provide special tax breaks for those who suffered damage due to Hurricanes Harvey, Irma and Maria. Below are a few tips to get some extra tax relief this spring:

Use personal casualty loss write-offs to their fullest extent

You legally suffer a casualty loss whenever the fair market value of your property is reduced by an event such as a storm, flood or earthquake, to the extent those losses are not covered by insurance. These deductions are usually less than what one might expect due to the limitations of standard tax laws, but the laws implemented this fall loosen those restrictions. As a result, hurricane victims can take advantage of more deductions.

A knowledgeable tax planning attorney can provide you with more detailed information about the amount you could save through this deduction.

Use business casualty write-offs if you own business property

You can double dip on casualty write-offs if you suffered major damage to both your personal and business properties. For business property, you would deduct the full amount of uninsured loss as a business expense or, if you operate as a sole proprietor, on Form 1040.

As with personal casualty losses, business casualty write-offs can only be used for federally declared disasters. The hurricanes from this past fall do qualify.

Consider special rules for a primary residence

Special rules apply to any involuntary conversion gains on a primary residence. A primary residence is considered the place that is your main home for the last two years. For owned primary residences, you may use the federal gain exclusion tax to reduce these conversion gains. If, after taking advantage of the gain exclusion tax break, you still have a gain, you have four years (instead of the standard two) to make appropriate payments to repair or replace property and avoid involuntary conversion gains.

If you rent your home, there is no taxable gain from any insurance proceeds that cover losses to personal property. Thus, you do not need to repair or replace damaged items to avoid the conversion gain. Instead, you can do whatever you want with your insurance money.

Leverage your retirement account

The IRS has announced that 401(k) plans and other employer-sponsored retirement accounts can make loans or hardship distributions to hurricane victims and their families. Typically, there would be a 10 percent early withdrawal penalty, but hurricane victims can avoid paying that penalty for a limited amount of time while they fix their homes.

Extend your deadlines

Hurricane victims can benefit from extended deadlines. In the U.S. Virgin Islands, for example, tax filing and payment deadlines that had been set for early September were pushed to January 31, without any application for such an extension being necessary. Taxpayers may apply for other extensions to give themselves more time to get their affairs in order while they concentrate on making repairs.

For more information on tax relief opportunities available to hurricane victims, meet with a skilled tax planning attorney in the U.S. Virgin Islands.

Adam N. Marinelli is an associate in the Corporate, Tax and Estate Planning Practice Group at BoltNagi PC and concentrates his practice in tax matters. BoltNagi is a full service business law firm serving the U.S. Virgin Islands.

The Impact of Federal Tax Cuts on the US Virgin Islands

March 14, 2018

In December, both houses of Congress passed and President Trump signed into law the “Tax Cuts and Jobs Act”, commonly known as the “tax reform bill.” The $1.5 trillion tax package reduced individual tax rates for the next eight years while cutting the top corporate tax rate to 21 percent indefinitely. The tax bill will […]

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How This Fall’s Hurricanes Will Play a Role in Tax Season

March 14, 2018

This year’s tax season looks a little different than in the past for people who live in areas that were affected by the major hurricanes in 2017. The IRS is still focused on accommodating the various tax needs, including relief efforts, of individuals impacted by the disasters. On September 29, Congress passed the Disaster Tax […]

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