What Every Business Owner Should Know About Contract Law

Contract Law Business Owner Element
Contract Law for Business Owners

It is unrealistic to expect every business owner to have a thorough command of contract law. Running a business is a very demanding job, and so unless they are fortunate to have a formal background in law business owners simply do not have the time required to master all the finer points of contracts. But, though mastery may be unattainable, most – and ideally all – business owners should make it a priority to acquire at least a basic understanding of contract law.

Having a grasp of basic contract principles is beneficial to business owners in myriad ways. Business owners can look forward to negotiating deals with other businesspeople with greater confidence; they can confer with business lawyers with greater ability; they will have a better sense of the implications which can follow from discussions with employees. In short, they will be able to run all areas of their business with an increased level of independence.

Business owners can best serve themselves by gaining a firm understanding of the elements of a contract. The elements of a contract are relatively easy to learn; but, as we have seen in prior installments of Huddleston Tax Weekly, tricky things start to emerge when these seemingly straightforward elements apply to complex factual scenarios.

Contract Elements

There are five elements which must always be met in order for a valid (i.e. enforceable) contract to be formed: these elements are offer, acceptance, consideration, legality and capacity. The sixth element of a contract – writing – need only be met in certain rather than all cases.

The rationale of each of these elements is quite straightforward. In order for a contract to be formed, there must be an offer which discloses clearly what the terms of the agreement will be. These terms must be clearly understood by all parties. The terms must be fully accepted by all parties. There must be adequate consideration between the parties – that is, there must be an exchange of things which are of roughly equal value. The terms of the contract must be legal – in other words, people cannot contract for goods or services which are prohibited by law. And the parties of a contract must have the capacity – meaning they are of sufficient age and mental condition – to accept the terms of the agreement.

In cases involving things which are of high monetary value the parties must also put the terms of the contract in writing. However, if writing is not required, a valid contract has been formed when all of the other five elements have been satisfied.

The Enforceability of Promises

Contract law is concerned with determining which agreements (or promises) are enforceable by courts. The elements listed above are required in order for an agreement to be facially valid; however, though this is the case, in certain instances promises may be enforced despite the fact that not all elements were met. For example, the doctrine of promissory estoppel can be invoked when someone relies on a promise to their detriment even though a facially valid contract may not have been formed.

As mentioned above, complexity arises when these elements are applied to real factual scenarios. The factual details of agreements may yield doubt as to whether specific contractual elements were properly satisfied; courts are designed to step in and settle these disputes. Our entire body of contract case law is a record of how parties can have very disparate views of the same facts which surround the creation of a contract.

It is important for business owners to fully understand the elements of a contract; but they must also be aware of how easily disputes can arise as to whether elements were adequately met.

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Tax Reduction Strategies for Small Law Firms by Steven Lok, CPA

Small Law Firms Tax Reduction Strategies
Small Law Firms

Huddleston Tax CPAs takes a particular interest in helping small businesses with their tax and accounting needs. Consistent with this interest is our focus on the tax strategies which may assist small law firms. Our CPA, Steven Lok, will be giving a presentation on December 7, 2016 which will discuss these tax strategies.

Among the topics covered by Mr. Lok will be entity selection, client trust funds, accounting methods, deductions and others as well.

The webcast is entirely free to view. Individuals who’d like to attend can sign up (for free) at www.smallbusinesswebcast.com.

The presentation will commence at 10:00 am PST and end no later than 11:00 am PST.

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Video introduction to our upcoming webcast

Characteristics of SEO-Friendly Web Content

random assortment of seo terms
Factors of SEO Web Content

Producing high quality, SEO-friendly content for your website is a strenuous task. Creating optimal content requires that you not only develop informative, well written material but also manage this material along generally recognized SEO guidelines. Many of the factors – in fact, most – which characterize SEO-friendly website content are self-evident; however, certain factors depend more greatly on research.

In this article we will describe some of the basic characteristics of SEO-friendly content. Readers should be mindful that this list is not exhaustive and that numerous other factors influence whether content is desirable or not.


This factor likely falls under the self-evident category: material which has more words is generally thought to be favored over material with fewer words. SERPIQ found that content length positively correlated with ranking position. Length is rewarded because length typically denotes a greater amount of effort. Of course, it is not necessarily the case that length indicates quality, but for SEO purposes length tends to send a positive signal.


It is essential that every individual page of your website features content which is wholly original. Content which is pilfered or clearly derivative of preexisting content on the web will produce a negative algorithm response. What’s more, duplicate content will also cause your SEO to suffer. Original content requires effort and therefore it receives favorable treatment.


As a general matter, adding images to pages tends to improve SEO value. However, when you add images to your page content you can enhance the value they confer by optimizing such images along certain guidelines. When you add images, be sure to pay close attention to their file name, title, description, caption and alt text as these things send relevancy signals.


Content which is updated frequently and substantively will receive favored treatment over content which is left unchanged and ignored. Periodic updates signal that your site is well maintained and that your pages are displaying relevant information. As with other factors, freshness denotes effort.

Reading Level

It is well established that Google estimates the reading level of web content. What is less certain is how these estimates affect search engine results. Some SEO specialists feel that more advanced content is favored; others argue that the simplest content is preferred. Though the debate is alive and well, a fair number of SEO professionals feel that the middle ground is the best option. These people feel that both overly simple and overly sophisticated (or specialized) content will fail to attract the largest number of readers and therefore an “intermediate level” is optimal. For most site owners, it is enough to state that your content should be useful but also accessible to your target audience.

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SEO is becoming an increasingly important field for small business owners. To learn more about how small business owners can utilize SEO principles view the following video

Five Beneficial SEO Techniques

SEO Link Building
SEO Techniques

In a previous article we briefly discussed the Google Algorithm and its central importance in the field of SEO. As stated in that article, the Google Algorithm is modified periodically so as to prevent the accumulation of too much knowledge of its operation. However, though it is continually updated, a number of techniques have been shown to be consistently effective for improving site quality. In this article we will cover five such techniques.

Update Content

The algorithm rewards diligence and penalizes laziness. Consequently, static content which is left untouched for a long period of time will almost certainly draw negative reactions from the algorithm. It is important to note that both the frequency and magnitude of content updates have SEO effects. Sites which are updated regularly are favored; sites which are updated thoroughly are favored over those which only show superficial changes.

Avoid Duplicate Content

Sites which have duplicate content – or even content which is only slightly dissimilar from other content – may also receive negative responses from the algorithm. The assumption is that duplicate content is the result of laziness and should be penalized accordingly. Site owners should be sure to only publish content which is entirely original.

Monitor Link Relevancy

It is important that site owners keep track of the relevancy of outbound links. If you have a page about a particular subject – financial derivatives, as an example – be sure that you only include links which have a clear connection to that subject. The reason for this is because irrelevant links will misrepresent your page’s theme and consequently will cause the algorithm to inaccurately classify your page. A page about financial derivatives which links to pages about automobiles will send incorrect relevancy signals to the algorithm.

Avoid Broken Links

If your page contains an excess of broken links this may incite a negative response from the algorithm. Broken links tend to indicate laziness or outright neglect. It is particularly important to make sure that you have functioning links on your homepage.

Add YouTube Videos

Adding multimedia (i.e. images, videos, audio, etc.) is generally recognized as a beneficial practice for sites. Including YouTube videos specifically may be even more beneficial. Videos tend to have high SEO value as a general matter, and YouTube videos are thought to carry greater weight than other videos because YouTube is now owned by Google. This may be shamelessly self-promotional on the part of Google, but it is a fact nonetheless.

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To learn more about SEO view this clip about SEO tactics for small businesses

What is Mark-to-Market Accounting?

Mark to Market Accounting
Mark to Market Accounting

Mark-to-market accounting – also referred to as “fair value accounting” by some – is a type of accounting which attempts to reflect the market price of assets and liabilities. In mark-to-market, the value of assets and liabilities may change in tandem with market fluctuations. The rationale of mark-to-market accounting is to portray financial conditions with greater accuracy: because values change based on market fluctuations they are supposedly in greater agreement with reality. However, while mark-to-market may create a more accurate financial picture in certain cases, in other cases it can become problematic when market conditions are highly unstable. Mark-to-market can also become problematic in situations in which the market price of a given asset cannot be objectively determined.

The reputation of mark-to-market has taken a hit because of its association with the Enron scandal of 2001. However, if used properly, mark-to-market can be a valuable tool for accountants and businesspeople.


Mark-to-market accounting developed among traders on futures exchanges. Traders used mark-to-market as a means of staying informed about the current value of their accounts on the exchange. Traders often engage in deals which change the value of their accounts rapidly and dramatically; using mark-to-market enabled traders to conduct business with updated information.

In the 1980s, mark-to-market spread to major banks and corporations. In the 1990s, mark-to-market began to figure prominently in a number of accounting scandals. As mentioned prior, when no fixed or recognized market exists, assets are valued “marked to model” using complex financial models; marking assets in this manner creates opportunities for overly-optimistic projections and even outright distortion. In the Enron scandal, Enron executives used financial modeling to hide debts and liabilities in order to create an inaccurate financial picture of the company.

Easy Example

Suppose an investor buys 100 shares of stock at $5 per share. And then let’s suppose the stock begins to trade at $7 per share. With mark-to-market accounting, the stock now holds a value of $700 (100 shares multiplied by $7), whereas the “book value” of the stock might otherwise only be $500. Likewise, if the stock declined to $3 per share, the mark-to-market value of the account would drop to $300 and the investor would have an unrealized loss of $200.

As you’ll notice, the basic principles of mark-to-market are actually quite easy to understand. And by all indications this system of accounting developed with perfectly good intentions. Problems only begin to emerge when the market price of an asset cannot be objectively assessed. However, even then, whether an account is accurate depends greatly on the intentions of the financial professional involved.

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If you’re interested in learning more about accounting you may want to view this presentation on QuickBooks essentials by our CPA Jessica Chisholm

SEO Mostly Follows from Common Sense

SEO Marketing

Search engine optimization (SEO) remains a widely unknown concept throughout the business world. Slowly but certainly, however, familiarity is increasing as business owners realize that healthy SEO metrics are critically important for business success. But, even among those who are acquainted with the concept, there exists an impression that SEO is an abstruse field only understandable by a tiny minority of computer experts. This impression plays a large role in preventing business owners from learning more about SEO and utilizing basic strategies to improve their online performance. In point of fact, though SEO can be a bit technical in some respects, many of the core principles of SEO follow naturally from common sense and can be mastered quite easily. In this article we will discuss the common sense basis of SEO.

The most essential principle of SEO can be summarized with this phrase: diligence and expertise are rewarded, while laziness and incompetence are punished. As much as SEO professionals may prefer to think of SEO in more complex terms, it is this simple principle which sheds the most light on why certain sites perform well and others perform poorly. Why does the website of The Wall Street Journal – http://www.wsj.com – perform so well? It is possible to explain the performance of this site by analyzing all of its SEO activity in great detail; one could look at the quality of its links, authors, layout, imagery, keyword density and so forth. But, the simplest way to explain its performance is still the following: http://www.wsj.com put more effort into its development than other sites which perform less well by comparison.

Of course, not every business owner has the budget of The Wall Street Journal, and so setting the performance of WSJ’s site as a benchmark is likely not a wise decision. However, as long as you do not cut corners and attempt to “trick the system,” it is reasonable to expect that you will receive favorable treatment from SEO metrics without having to invest an exorbitant amount of money.

For instance, as referenced in a previous article, it is imperative that business owners create original, high quality content for their site. Business owners who pilfer content or publish content which is patently substandard will be slapped with penalties. It does not require large sums of money to produce quality original content; it requires time, energy, knowledge and skill. No matter if a fortune were spent, the SEO metrics are not going to reward a business owner who tries to go around these requirements. In a sense, then, SEO has a democratic or egalitarian orientation: good metrics have to be earned through hard work, they cannot just be bought by the highest bidder.

In short, as long as business owners use common sense when developing their site and exercise good diligence, they can expect solid SEO performance.

Be sure to view this presentation to learn more about the basics of SEO for small business

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Essential SEO Principles for Small Businesses

SEO Business Internet Marketing

Search engine optimization (SEO) is a marketing strategy which focuses on tailoring your website so that it can attain the best possible position in search engine rankings. SEO is a growing field and is becoming increasingly essential to the success of modern businesses. However, despite its growing importance, SEO is still relatively unknown to the general public, and even those who are familiar with it tend to have a poor grasp of its basic principles. In this article we will discuss several of these principles and explain why SEO is vital to the success and growth of your business.

The Google Algorithm

Before discussing the basics of SEO strategy, it is necessary to give a cursory look at the so-called Google Algorithm. The Google Algorithm is the mechanism by which sites (and website pages) are ranked to determine their order in searches. The algorithm is highly complex and is modified on a regular basis so as to prevent the accumulation of too much knowledge of its functioning. For the scope of this article, it is enough to say that this algorithm plays a central role in SEO and so business owners should at least be conscious of it.

Link Building

Regardless of whatever changes are made to the algorithm, one SEO strategy which is almost certain to remain effective is link building. Link building involves reaching out to other websites in an effort to receive links back to one’s own site. This is achieved through a variety of means, but one of the most common means is through content sharing (i.e. contributing material to the foreign site). Link building is predicated on the fact that site authority is “shareable” in the sense that highly authoritative sites share their authority when they link to a different site — the algorithm treats this reference to another site as an endorsement of its content and so the other site is regarded favorably as a consequence. Link building requires a considerable amount of effort and knowledge to be done properly, but if it is done right it can be an extremely effective SEO tool.

Original Content

Along with link building, another bedrock principle every business owner should be aware of is the value of original content. Though things like keyword frequency, meta tags and social media promotion are undoubtedly important, the creation of original, high quality content is absolutely essential to the health of a site. The algorithm does not reward laziness; in fact, it punishes laziness. If a business owner tries to cut corners and pilfers content from a different site or from off the web, the algorithm will catch this and penalize the offending site accordingly. It is critically important that every business owner produce high quality, original content for each and every page of the company website. What’s more, new content should also be added on a continuing basis: if a site goes stagnant and fails to refresh itself with new content, this is regarded unfavorably.

The SEO Pyramid

By now, most readers can probably tell that it’s not possible to cover all of the principles of SEO in this article. In truth, SEO is a very involved field and requires a considerable amount of time to become well conversant with. But, along with the strategies identified above, there is one other SEO fact which business owners must be aware of — this is the SEO pyramid. Business owners should look at SEO as a hierarchy of priorities: just as with a pyramid, they need a strong base, a solid middle and an apex. In the SEO pyramid, the base represents the content, the middle is occupied by keyword strategies, internal anchor text, on page targeting and link building, and the apex represents social media. When building your site, always be certain to construct a solid base and sturdy middle otherwise you may lose a competitive advantage.

To learn more, view the following webcast on SEO

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You can learn more by viewing the following webcast


The Tax Benefits of the Legal Profession

Law Profession Tax Tips
Tax Tips for Lawyers

Few occupations receive as much attention as the legal profession. Lawyers hold a high position on the occupational totem pole and are regularly portrayed as characters in a variety of media – films, television shows, books and others. Historically, the legal profession has possessed a considerable amount of prestige and many of our most talented citizens aspire to work in law in one capacity or another. Along with prestige, the legal profession has also been regarded as one of the surest routes to financial success. As it turns out, there are a variety of tax benefits lawyers may utilize to strengthen their financial condition. In this article we will discuss several of these benefits.

In order to develop their practice, lawyers regularly conduct formal business discussions with prospective clients and other professionals. Occasionally, these discussions occur just before or after some form of entertainment (such as a show, sporting event, etc.). Fortunately for lawyers, these entertainment expenses are deductible. However, under section 274 of the Internal Revenue Code, lawyers must comply with multiple requirements in order to deduct these expenses: they must be able to thoroughly substantiate the expenses (i.e. who was entertained, when did the entertainment occur, etc.), and they must also prove that there was a clear association between the entertainment and the business discussion.

Travel expenses incurred by lawyers are also deductible. As with entertainment expenses, travel expenses must be fully substantiated. The IRS is quite strict about these types of deductions and so it is imperative that lawyers keep excellent records of every individual expense.

Lawyers have to conduct a lot of research throughout the course of their practice and as a consequence they spend considerable sums on books, periodical and research software. The cost for books and subscription services which have a useful life greater than one year may be depreciated over a five year period; software is not considered depreciable and must be amortized over a three year straight line period. If a lawyer purchases books, periodicals or software on an annual subscription basis – thus making these materials accessible for one year at a time – then these expenses would be deductible in the normal fashion.

Another tax issue which lawyers must be aware of relates to client based expenses. It is not uncommon for lawyers to advance money to clients or to incur expenses on direct behalf of clients. If money is advanced to the client, this is treated as a loan for tax purposes and so it cannot be deducted. However, there is an important exception to this rule: if a lawyer incurs expenses on behalf of a client as part of normal operating procedure and then fails to receive reimbursement then these expenses become deductible. An example of this would be expenses such as postage and photocopies. These expenses are supposed to be charged to clients, but if a lawyer is somehow unable to collect payment for them then they may be written-off as “bad debts.”

These are just a few of the tax perks available to lawyers. In addition to these benefits, lawyers also need contemplate other tax related issues such as entity selection (or business structure), client trust funds, client-related expenses, accounting methods and others as well.

To learn more, view the presentation given by our CPA Lance Hulbert.

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For more information please view the following video presentation

The Basics of Starting Your Own Business

Starting Business Entrepreneur

Starting a new business is an exciting, life-altering endeavor. Historically, it has been America’s entrepreneurial spirit which has pushed us along from the days of the general store up to the bustling multistate corporation. Whether self-taught or equipped with an MBA, all aspiring entrepreneurs have to be aware of a number of essential points when setting up a brand new business. In this article we will discuss in detail several of these points.

One of the first – and most important – things an aspiring entrepreneur must consider is business structure. That is, future businesspeople must decide which business entity is most appropriate for them. Aspiring business owners can choose between the following options: sole proprietorship, LLC, partnership, C Corporation and S Corporation. Depending on the details of a person’s circumstances, each of these options has the potential to be optimal. The sole proprietorship is the easiest entity to set up; however, one drawback of the sole proprietorship is that profits are subjected to the employment tax of 15.3 percent. Before selecting an entity, be sure that you consider every relevant aspect of your situation and then make the decision accordingly.

Another important item for businesspeople is name selection. When creating a new business, the future business owner cannot simply choose any name which suits his or her fancy; the businessperson must select a name which has not already been registered with the state. Whatever name a person decides on, the name must be unique. For this reason, before settling on a particular name, it is important to search your state’s website in order to see whether a given name has already been chosen. Business owners will also need a license before they can begin any commercial activity. Licensing requirements vary state to state and so it is incumbent upon aspiring entrepreneurs to determine the specific requirements which apply in their state.

In the majority of cases, future business owners also need to procure an Employer Identification Number (EIN). EINs are required for corporations, partnerships and all businesses which have employees. Sole proprietorships and single-member LLCs with zero employees are not required to obtain an EIN. The simplest way to obtain an EIN is to apply online on the website of the IRS; applying online will allow businesspeople to receive their EIN immediately. Business owners can also print out a paper application and then mail the form (known as SS4) directly to the IRS.

These are just several of the essential steps an aspiring businessperson must take in order to establish a new business. In addition to these steps, future entrepreneurs will also need to consider a few other things; they will need to determine what accounting method they will use, whether their business is considered a business or a hobby by the IRS, how to add employees, business taxes and so forth. If you’d like to pursue these issues in greater depth, check out the presentation given by our CPA Jessica Chisholm.

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To learn more view the following video from Small Business Webcast

Tax Deductions for Engineers, Architects & Construction Professionals

Engineer Architect Construction Tax Tips

Careers in engineering, architecture and construction all have the potential to be extremely rewarding. Though these professions may emphasize different skill sets, they are similar in one very important dimension: all of these fields involve building new things from scratch. There is a creative process inherent to these fields which attracts workers who are not merely bright but also driven to see theoretical projects transmitted into physical reality. Professionals in engineering, architecture and construction play a vital role in our society as they develop and maintain the infrastructure which allows our economy to function successfully. Given their important role in our society, it is not surprising that there are a variety of tax deductions available to professionals in these fields. In this article we will cover two of these deductions.

Engineers, architects and construction professionals may take advantage of the so-called “meals and entertainment” deduction. This deduction is designed to stimulate business activity and also promote productivity while on the job. With this perk, professionals from these fields may deduct 50% of their meals and entertainment costs on their tax return. However, there is one exception to this rule: if an employer provides a meal to his employees as a matter of convenience, then the cost is 100% deductible. This exception may come up if there are no eating establishments nearby a job site and the boss does not wish to risk his employees returning late from a meal break.

This deduction may be utilized when professionals engage in business discussions during the course of a meal. However, people who wish to use the deduction in this manner must be able to provide specific information regarding the occasion (i.e. who was entertained, where and when did the meal occur, why did the meal occur, what was the cost, and so forth).

Another perk available to professionals in these fields is the Domestic Production Activities Deduction (or the Section 199 Deduction). The DPAD is a very significant tax break which incentivizes professionals to operate on projects within the United States. With this perk, entities may take a 9% (as of the current year) deduction on net profit derived from engineering, architectural and construction services performed within the U.S. However, the amount of this deduction may not exceed 50% of W-2 wages, and this includes wages paid to the owner.

These are just two of the deductions currently available to engineering, architecture and construction professionals. To learn more about these and other deductions for professionals in these fields, be sure to read the transcript of the webcast by our CPA Jessica Chisholm.

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To learn more please view the following video