Month: November 2018

Financial Assistance for Agricultural Entrepreneurs

By: Sarah Phillips

Starting your own agricultural business, whether it be agritourism, a microbrewery, organic farm, etc., can be a daunting task. Not only do you have typical start-up considerations but you will also need land, access to equipment, labor, a plan for managing your crops, and avenues to market and sell your product. In addition, you need to have the proper infrastructure, which can be the most expensive aspect of building an agricultural business. If you were not born in the 2% of American farm families, you might be left wondering how you could possibly access all that you need to start your business. If you are lucky enough to be part of a farm family, you may be wondering how you can access the expensive specialty tools and equipment that a standard farm operation may not have.

The United States Department of Agriculture (USDA) offers many funding programs aimed at facilitating the growth and success of agricultural businesses through grants and loans. The Specialty Crop Block Grant Program, the Farmers Market Promotion Program and the Organic Cost Share Program are all financial assistance opportunities that agricultural entrepreneurs are able to take advantage of in order to put their ideas into practice.

What are my Funding Options?

It can be overwhelming to read through all the options while trying to figure out which avenue is best for you and your business. How do you know which one to pick? The Specialty Crop Block Grant Program, the Farmers Market Promotion Program and the Organic Cost Share Program are three programs that all agricultural entrepreneurs should look at first because they cover a wide range of potential businesses and they recognize non-traditional agricultural opportunities.

     1. Specialty Crop Block Grant Program

Interested in opening your own microbrewery? Then this program is for you! The goal of this grant is to help agricultural entrepreneurs enhance the competitiveness of specialty crops. Specialty crops are considered to be fruits and vegetables, tree nuts, dried fruits, horticulture and nursery crops (including floriculture). If you are planning on growing any of these plants and want to apply for funding through the Specialty Crop Block Grant Program (SCBGP), your plants must be cultivated or managed and used by people for food, medicinal purposes and/or aesthetic gratification. The funding you receive could assist in purchasing the tools and equipment needed for proper cultivation of crops or support an increased marketing effort.

The USDA provides a sample list of plants considered to be specialty crops (hops are included), as well as a list of ineligible crops. To apply for this grant, applications must be submitted to your State Department of Agriculture. Applications are gathered only for a certain time period every year, which can vary by state, but the collection usually takes place at the beginning of each calendar year.

     2. Farmers Market Promotion Program

If you are an agricultural entrepreneur who wants to increase consumers’ access to locally grown produce or develop agritourism programs that generate consumer awareness and education, funding through the Farmers Market Promotion Program (FMPP) might be right for you. Grants dispersed through the FMPP are meant to help improve and expand farmers markets, community supported agriculture (CSA) programs and other agritourism efforts. They can also assist in developing, expanding, and supporting new producer-to-consumer marketing opportunities. Applicants must be domestic entities that are owned, operated and located within the 50 United States or the District of Columbia, American Samoa, Guam, the Commonwealth of the Northern Mariana Islands, the Commonwealth of Puerto Rico, or the U.S. Virgin Islands. Like the SCBGP, applications are open at the beginning of each calendar year.

     3. Organic Cost Share Program

If you are already a certified organic producer or handler, and live in a participating state, then you may be able to take advantage of one of the two available Organic Certification Cost Share Programs (OCCSP). As an agricultural entrepreneur, being able to market you product as organic will likely have a positive financial impact on your balance sheet. But in order to take advantage of the highly sought-after organic label, you must complete the USDA organic certification program, The National Organic Program, which has a high cost and takes many years to complete. The first program option is the National Organic Certification Cost Share Program (NOCCSP), which provides financial assistance to organic producers and handlers who are obtaining or renewing their organic certification. You could receive up to 75% of certification costs through this program.

The other program option is the Agricultural Management Assistance (AMA) Organic Certification Cost Share Program. This program can help agricultural entrepreneurs provide sustainable care for their land and crops by facilitating funding to address water management, water quality and erosion issues. Program participants can receive up to 75% of the cost of installing conservation practices on their operation, and additional funding is possible if you are a member of a historically underserved producer group.

OCCSP applications are accepted on a rolling basis through your county’s Farm Service Agency (FSA) office or your state department of agriculture.

What if I Have More Questions?

If you have additional questions about these programs, the availability of other programs, how to apply, or if your agricultural operation is eligible to receive funding, you should reach out to your local FSA office or county extension office. A program specialist who is familiar with relevant state or county program variations will be able to help any agricultural entrepreneur find the right funding!

For a list of state and local FSA offices, click here: https://www.fsa.usda.gov/state-offices/index

Sarah Phillips, at the time of this blog post, is a second year law student at Penn State’s Dickinson Law. She is from West Amwell, New Jersey and has interests in agricultural, land use and business transactional law. She is currently serving as a Honor Code Representative and a Law Lion Ambassador.

 

Sources:

https://www.usda.gov/topics/farming/grants-and-loans

https://www.ams.usda.gov/services/grants/scbgp

https://www.ams.usda.gov/sites/default/files/media/Combined%20Grants%20Decision%20Trees.pdf

https://www.ams.usda.gov/services/grants/fmpp

https://www.thebalancesmb.com/get-usda-organic-certification-2538057

https://www.ams.usda.gov/services/grants/occsp

https://www.fsa.usda.gov/programs-and-services/occsp/index

https://www.nrcs.usda.gov/wps/portal/nrcs/main/national/programs/financial/ama/

Picture Sources:

https://thrivecarolinas.com/event/farmers-market-creations/attachment/farmers-market/

https://www.thefarmhousebrewery.com/hours

Dynamic Delegation: When to use your accountant versus your attorney

By: Robert Heary*

One of the challenges that entrepreneurs and small business owners face is how to best use their small business attorney and small business accountant. Both small business attorneys and small business accountants are invaluable to entrepreneurs and small business owners and provide a range of overlapping services to their clients. However, these services come with different costs and benefits. In particular, attorneys cost more but come with the benefit of legal expertise, while accountants cost less but lack a legal background. This post will explain what accountants and attorneys do, the similarities and differences between them, and advice on how to best use each.

What Accountants do

Accountants are numbers oriented, and they mostly focus backward in time. An accountant helps to track and record the income and expenses of a business. They record what a business has done in the past and can use that information to plan for the future. Their primary goal is to help you make your business as profitable as possible.  They are able to prepare tax returns and financial statements and make budgets for businesses.

What Attorneys do

Attorneys are law oriented and focus mostly forwards in time. Attorneys understand how laws and regulations affect a business. They identify the risks and liabilities a business may face and use that information to avoid or minimize those risk and liabilities. Their first goal is to keep you out of court and out of jail, with profitability being a close second. Attorneys are able to negotiate, write, and review documents and advise clients on legal issues.

Overlaps

The biggest area of overlap of services that accountants and attorneys provide is the area of general business advice. General business advice ranges from whether to run a particular promotional campaign, hire more people, or acquire other businesses or assets. However, an accountant and an attorney will advise through different lenses, with the accountant focusing primarily on numbers and the attorney on legal issues. Finally, both an attorney and an accountant, provided the accountant is a Certified Public Accountant, may contact IRS on your behalf.

Differences

Despite the similarities, there are important differences between the accountants and attorneys. The three biggest differences involve attorney-client privilege, legal versus business advice, and preparation of tax returns.

First, attorney-client privilege protects your communications with an attorney. While some states recognize accountant-client privilege, such privilege is often limited and does not apply in federal court. Thus, if you talk to your accountant about issues involving liability or legal issues, those discussions could be admissible in a lawsuit.

Second, the discussion of legal issues brings up the other difference: only attorneys may provide legal advice. While an accountant knows how to identify and understand financial liability and risk, their training does not include identifying or understanding legal liability or risks. Because of their lack of legal training, it is illegal for accountants to give legal advice or practice law. The practice of law includes preparing and filing documents.

Third, accountants specialize in giving tax advice and preparing tax returns. While an attorney may be able to do either of these, it is cheaper to have an accountant do it. If your business requires the expertise of a tax attorney for tax advice or planning, your accountant or attorney will tell you to consult one.

Takeaways

Accountants are excellent at providing advice on business issues that focus on finances or issues that solely involve the business. Examples include deciding whom to target for advertising, how many employees to add, choosing between suppliers, and how much money the business needs to raise for financing. Attorneys may also provide this kind of advice; however, it does come at a higher cost. Because accountants can provide such advice at a lower cost, entrepreneurs and small business owners should think about taking advantage of accountants for these kinds of issues.

Anything that involves legal liability, third parties, or written agreements is for your attorney.  Examples of issues you should consult an attorney for include warnings your advertisements might require, creating an employee handbook, negotiating and drafting supplier contracts, and complying with laws when raising money from investors. Your attorney should handle anything involving start-up documents, non-competes, confidentiality agreements, or protecting intellectual property. Additionally, the more complex an issue or more it could negatively affect your business, the more you should consider consulting your attorney.

Accountants and attorneys often refer clients to each other for assistance or work on issues together.  Both accountants and attorneys are professionals, if one directs you to consult the other; it is because they believe it is in your best interests to do so.

Finally, if you are ever in doubt as to who to ask, go to your attorney, it is better to pay a little more and be safe than to risk losing your business or worse.

* This post was reproduced with permission by author Robert E. Heary.  Original post dated Nov. 16, 2018 can be found here.

Robert Heary, at the time of this post, is a third year law student at Penn State’s Dickinson Law.  He is from Buffalo, New York and has interests in business transactional law.  He is currently serving as the Vice President of the Student Bar Association and the Executive Chair of the Moot Court Board.  A more complete bio can be found here.

Sources:

Accountants vs. Lawyers: Using the Right Tools for the Job

CPA vs. Tax Attorney: What’s the Difference?

Lawyer vs Accountant

Tax Attorney vs. CPA: Why Not Hire A Two-In-One?

What is Accountant-Client Privilege?

Photo source: https://www.pexels.com/photo/silver-and-gold-coins-128867/

Photo source: https://www.pexels.com/photo/abstract-blackboard-bulb-chalk-355948/

What Every Entrepreneur Needs to Know About the GDPR

By: Alana Goycochea

Even American companies that have a website need to comply with the EU’s GDPR laws. The General Data Protection Regulation (GDPR) is the European Union’s new data protection regulation. The GDPR  went into effect in May 2018. The regulation aims to give consumers control over their personal data. American entrepreneurs are probably wondering what an EU regulation has to do with them if their business is located in the US. They have nothing to worry about, right?

Not true.

The GDPR has an expansive scope, with strict compliance standards, and  significant penalties for noncompliance.

Who does the GDPR Apply to?

The GDPR applies to any company that has a website that markets their products online. You are subject to the GDPR even if you are located in Pennsylvania and regardless of if you ever sell a product to someone in the EU. As soon as you collect personal data of an individual that lives in the EU, you are subject to the stringent requirements of the GDPR.

What is “personal data”?

Personal data is any information relating to a person, including the person’s name, email address, photo, banking information, cookie ID, social media information, and even an IP address.

How to Comply With GDPR?

To comply with the requirements of GDPR, your business must consider what data it needs from customers, obtain affirmative consent for that data collection, update the company website, respect the rights of consumers that want to be forgotten, and inform customers of any data breaches.

   a. How to Determine What Data to Collect?

The determination of what data to collect is extremely company specific. First, figure out how you will use any data collected before deciding what data you should collect. As part of formulating a data strategy, you should create a company policy for data disposal. Under the GDPR, it is unlawful to keep data for an infinite time frame. Your policy must consider the useful lifetime of the data and weigh that against the consumer’s need for data protection.

   b. How to Obtain Affirmative Consent?

 Providing your site’s privacy policy is not enough. EU consumers must affirmatively consent to your data collection. Amongst other requirements, you must inform EU consumers of who your company is, why your company needs their data, the legal justification for processing their data, how long the data will be kept, who can and will receive their data, as well as an explanation of their legal rights regarding the data. After informing the consumer of these required disclosures, you must have them consent to this collection.

   c. How to Update the Company Website?

The UK has recently also passed a Cookie Law, requiring websites to inform consumers regarding any cookies on your site and how to opt out or change their cookie settings. Your cookie policy should also explain what cookies are active on your site, what data they track, and what the purpose is of the data collected.

   d. How to Respect the Right to Erasure?

 If you have been following the headlines, you may have seen some articles about a right to be forgotten. When the GDPR was adopted, the phrase changed to the right to erasure. Essentially, EU consumers have a right to opt out of data collection at any time. Your company must respect these requests and delete the data off the system. Remember to stop using the data for any other company purpose.

   e. How to Inform Consumers of a Data Breach?

The best practice is to notify impacted consumers via email or mail with a description of the nature of the data breach, the likely consequences of the breach, the contact information for the company’s Data Protection Officer or other contact person, and information regarding how the company plans to address the breach.

What is the penalty for not complying?

If a company has infringed on the GDPR, it could face a temporary or definitive ban on processing data.  In addition, a fine could be assessed up to €20 million (approximately 22.7 million US dollars) or 4% of the company’s total annual worldwide turnover.  If a company has likely infringed on the GDPR, a warning may be issued.

Lasting Impact of GDPR on American Companies

Many international companies have adopted the privacy standards established by the GDPR. As a result, some have labeled this as the “Brussels effect,” a phenomenon in which European regulations become a global baseline.  This impact has led to much speculation that American legislators will pass similar legislation. At the time of this blog post, the US federal government is yet to pass similar legislation, however, California recently passed a bill similar to the GDPR. Companies should be mindful that more states may pass privacy bills in the future. While some companies have circumvented the GDPR by blocking all EU traffic from their site, all companies should consider creating a data policy.

*This post was authored on November 11, 2018.

Alana Goycochea, at the time of this post, is a second year law student at Penn State’s Dickinson Law. She is from Southern California and is interested in entrepreneurship law. Alana is currently serving as President of the Women’s Law Caucus.

 

Sources:

Photo servers: https://pxhere.com/en/photo/1241325

Photo GDPR: https://pxhere.com/en/photo/1435307

Photo Keyboard & Gavel: https://www.maxpixel.net/Privacy-Policy-Keyboard-Sure-Security-Secure-510739

https://ec.europa.eu/info/law/law-topic/data-protection/reform/rules-business-and-organisations_en

https://www.forbes.com/sites/forbestechcouncil/2017/12/04/yes-the-gdpr-will-affect-your-u-s-based-business/#233b92816ff2

https://www.codeinwp.com/blog/gdpr-compliance/

https://techcrunch.com/2018/05/05/unroll-me-to-close-to-eu-users-saying-it-cant-comply-with-gdpr/

https://www.techradar.com/news/how-to-make-a-website-gdpr-compliant

The Health Care Entrepreneur’s Guide to Important Laws: Part 1

By: Anahita Anvari

Health Care Entrepreneurs need to know about The Anti-Kickback Statute and Stark Law.  At a recent event, “Health Law 101: Key Legal Issues for Health Care Companies,” speakers identified the top five legal and regulatory issues for health care entrepreneurs to be aware of: The Anti-Kickback Statute, Stark Law, False Claims Act, Qui Tam Provisions, and HIPAA.

This post aims to provide a general overview of the first two laws: The Anti-Kickback Statute and Stark Law, although it is appropriate to flag that violations of either of these laws can form the basis of a False Claims Act violation as well.

What is the Anti-Kickback Statute (AKS) and What Does It Mean for Me?

The AKS is a criminal statute intended to protect against health care fraud and abuse. The law makes it illegal to offer, pay, solicit, or receive a remuneration to induce a referral or generate business of a federal health care program. Therefore, you may not give or receive, or attempt to give or receive, anything of value in return for such referrals or business.

a.  Are There Any Exceptions to the AKS?

The AKS includes several “safe harbor” exceptions. Not meeting a safe harbor does not mean that an arrangement automatically violates the AKS. However, a business arrangement will not be an AKS violation if it meets all the requirements of a safe harbor. Therefore, you should consult with an attorney to determine whether your business arrangement falls squarely within a safe harbor, or how to structure future business arrangements so that they do fall within the safe harbor.

b. What Are Some Examples of AKS Violations?

Examples of kickbacks that may violate the AKS include: cash payments, free meals or gifts provided to physicians, and certain arrangements where payments to a physician exceed the fair market value. This list is not exhaustive and other arrangements may be an AKS violation.

What is the Physician Self-Referral (Stark) Law and What Does It Mean for Me?

 The Stark Law prohibits physicians from referring patients to receive designated health services (DHS), payable by Medicare or Medicaid, from an entity in which the physician or immediate family member has a financial relationship. A list of DHS’ can be found here.

Defined broadly, a “financial relationship” means an ownership or investment interest in an entity, or a compensation arrangement between a physician and an entity. For example, such investment interest could be through ownership of shares in the entity providing the DHS, or an interest in a different entity that holds an ownership or investment interest in the entity providing the DHS. More information about financial arrangements can be found here.

There is no intent requirement to violate the Stark Law.  This means that you may be in violation of the Stark Law even if you did not know of the violation or it was by accident. Therefore, you should consult with an attorney to determine if your business arrangement complies with the Stark Law.

a. Are There Any Exceptions to the Stark Law?

The Stark Law provides over thirty general exceptions, such as referring a patient to another doctor in the same practice group, certain rentals of office space or equipment, and ownership of some publicly traded securities and mutual funds. You should consult with an attorney to determine if your business arrangement meets a Stark Law exception.

b. What Are Some Examples of a Stark Law Violation?

Examples of Stark Law violations include referring patients to a facility in which you have a financial interest, retention of Medicare or Medicaid overpayments, miscoding health care claims to obtain greater reimbursement, billing Medicare of Medicaid for services that did not occur, referring patients for medically unnecessary procedures, and paying physician salaries and bonuses far above the fair market value. This list is not exhaustive and other arrangements may be a Stark Law violation.

What are the consequences of violating the AKS or Stark law?

A violation of the AKS can lead to criminal penalties and administrative sanctions, including imprisonment, civil monetary penalties of potentially $50,000 for each violation, and exclusion from further participation in federal health care programs. A violation of the Stark Law can lead to additional penalties. Depending on the situation, these penalties may be up to $15,000 for each improper claim billed to Medicare or Medicaid, or up to $100,000 for each arrangement.

For example, a Pennsylvania hospital and a regional cardiology group were recently involved in a lawsuit for submitting claims to Medicare and Medicaid that violated the AKS and Stark Law. The claims were based on impermissible referrals from the cardiology group to the hospital. The companies agreed to a settlement totaling $20.75 million.

How Do I Comply with the AKS and Stark Law?

You should take appropriate steps to comply with the AKS and Stark Law by implementing and maintaining an effective compliance program. The Office of the Inspector General (OIG) of the Department of Health and Human Services has identified seven essential elements to create an effective compliance program:

  1. Implementing written policies, procedures, and standards of conduct.
  2. Designating a compliance officer and compliance committee.
  3. Conducting effective training and education.
  4. Developing effective lines of communication.
  5. Conducting internal monitoring and auditing.
  6. Enforcing standards through well-publicized disciplinary guidelines.
  7. Responding promptly to detected offenses and taking corrective action.

While OIG has noted that compliance programs are not “one size fits all,” businesses should put forward a meaningful effort to ensure adequate compliance. Implementing these seven elements into your business’ compliance program can help guarantee your compliance.

As a final note, be aware that some states have their own anti-kickback and self-referral laws. These state laws may be stricter than the federal laws, and may include business arrangements involving private health insurers, rather than just federal health care programs. You should consult with an attorney regarding the laws in your state.

*This post was authored on October 31, 2018.

Anahita Anvari, at the time of this post, is a second-year law student at Penn State’s Dickinson Law. She is from Southern California and is interested in health care law. Anahita founded the Health Law and Policy Society and is currently serving as an Associate Editor of the Dickinson Law Review.

 

Sources: