​By Mercedes DeFeo

Don’t give your hard-earned business equity away to your employees like candy to trick-or-treaters! There is another way to compensate them for their contributions.  Phantom shares may sound spooky, but it is really the opposite.

Interest in a corporation is identified by “stock” or “shares,” while interest in an LLC is called “units” or “interest.”  For purposes of this article, Phantom Shares mean both corporate stock and LLC interests.  All business owners have certain rights, so if you give away equity, you are giving up some control in your business.

Phantom shares, also known as phantom stock or phantom units, are a way to compensate employees based on the overall value and performance of your business (normally, the profits), similar to how shareholders and LLC members are compensated via distributions and dividends. Phantom shareholders differ from regular shareholders because they are not given any of the rights a business owner would have.

Phantom Shares are awarded via a Phantom Award Agreement. Sometimes there might be a Phantom Share Plan if you wanted to set up a uniform system for awarding phantom shares to multiple employees in the company.  The Plan outlines the rules for distributing phantom shares to participants, such as eligibility, how the phantom share value will be determined, and how the shares vest. Depending on the plan, phantom shares may be considered deferred compensation, so it's important to involve your CPA.

Through the plan, you can specify a minimum number of days employed before an employee can participate, if value of phantom shares is based on the date your employee starts participating or if value appreciates as the company grows, whether the vesting of phantom shares is based upon continued employment with the company or if termination impacts payout, etc.  If you give an employee equity, you can’t take it back if their employment terminates...you have to buy it back!  Now that’s scary!

Phantom shares are a great way to create motivation and drive in your employees to give their all towards the success of your business, without you being haunted by the idea of losing control over it.

Happy Halloween from Jesson & Rains!

By Attorney Edward Jesson

Being located in Charlotte, North Carolina, many of our clients end up doing business in both North and South Carolina. This often leads to the question, do I need to register my business with the South Carolina Secretary of State? 

The answer is dependent on the facts of each situation. South Carolina law states that an out of state business must register to do business in South Carolina if that businesses’ activities in South Carolina are substantial, continuous, and regular. For example, in instances where a business has a physical location in South Carolina, has employees who work in South Carolina, or performs ongoing business in South Carolina, the answer is most likely “yes,” you do need to register your business with the South Carolina Secretary of State. On the other hand, if you are just doing a one-off business transaction in South Carolina, shipping items to South Carolina, or using independent contractors that are located in South Carolina, your North Carolina business likely does not need to register with the South Carolina Secretary of State.

If your business does need to register in South Carolina, you must file paperwork with the South Carolina Secretary of State in order to obtain your “Certificate of Authority.” You must also appoint a registered agent who is physically located in South Carolina who can accept official documents from the state (and service of process if you were to get sued in South Carolina).

Various municipalities in South Carolina also require your business to obtain a business license—the process and cost of which varies greatly from city to city and town to town.

If you are thinking about transacting business in South Carolina with your North Carolina business (or vice versa), the attorneys at Jesson & Rains can assist in making sure you are doing so legally and complying with various different rules that apply when you are doing business across state lines.

By Senior Associate Jeneva A. Vazquez

As estate planning attorneys, we often receive calls from the family members of small business owners after the owner has become incapacitated or passed away. These conversations are emotional and stressful, and without proper planning, a business can quickly become tangled in legal red tape, disrupting operations and harming its value.

If you are a solopreneur or small business owner, estate planning isn’t just personal—it’s a business necessity.  If you are suddenly unable to run your business due to illness or injury, business operations can come to a halt in a matter of days.  Without a valid power of attorney in place, no one—not your spouse, family, or team—has the legal authority to access business bank accounts, sign contracts, or make payroll.  Incapacitation can jeopardize your employees’ paychecks, your clients’ trust, and your company’s survival. With a plan in place, you can designate someone you trust to step in and keep things running smoothly if you're ever unable to do so.

Another common issue arises when trying to prove business ownership after death. Unfortunately, family members are oftentimes left with documentation that rarely provides the level of detail needed to prove actual ownership.

Sometimes when people form an LLC, the Articles of Organization filed with the Secretary of State’s office will list out all the owners, but not always, and in those cases where they are not all listed, an operating agreement is needed.  However, if your business is a corporation, the owners are NEVER listed on the Articles of Incorporation.  The business must issue share certificates or the owners must enter into a shareholder agreement to show ownership, and we find that frequently does not happen.  Without formal documentation of ownership, survivors may struggle to access accounts or make critical decisions.

Additionally, these same formal business documents help protect you during your lifetime from business liabilities, so it’s really important that businesses are set up properly.

Finally, as a business owner, meeting with an estate planning attorney is important in order to help keep your business interests out of probate when you pass away.  Probate can delay business continuity for months or longer. During that time, no one may have the authority to access business funds or formally transfer ownership.  Probate is also a public process, meaning sensitive business information can become part of the court record. Using trusts can allow your business interests to bypass probate and ensure a quicker, more private transition in line with your wishes.

At our firm, we help business owners like you create custom estate plans that reflect your goals and protect what you’ve worked so hard to build. We also help you proactively set up the legal foundation of your business.  Contact Jesson & Rains to help you secure your business, your legacy, and your peace of mind.  While You Build, We Protect.® 

​By Attorney Edward Jesson

After completing the numerous steps to form a business, business owners frequently forget (despite the friendly reminders from the Secretary of State’s Office) that they have to file annual reports with the North Carolina Secretary of State to keep their business active.

The Annual Report is used to keep the business records up to date with the Secretary of State. Most businesses formalized with the Secretary of State’s Office need to file an Annual Report, such as Business Corporations, Limited Liability Companies (LLC), Limited Liability Partnerships (LLP), and Limited Liability Limited Partnerships (LLLP). Non-Profits, Limited Partnerships, Professional Corporations (PCs), and Professional Limited Liability Companies (PLLC’s) do not have to file an Annual Report. There is also a filing fee due with the Annual Report. For LLC’s and partnerships, the fee is $200, and for corporations, the fee is $25.

The due date for your business’s annual report depends upon the type of business, but generally April 15th is the deadline for most businesses. For corporations and partnerships, the annual report is due to the Secretary of State’s Office the 15th day of the fourth month following the entity’s fiscal year’s end. For example, if your fiscal year ends on December 31, your annual report for that year is due on April 15th.

Jesson & Rains offers a yearly plan for businesses that includes filing the annual report, among other things. This plan helps to ensure your privacy (if your business is ever sued, the lawsuit will be delivered to our office’s address); you will be less likely to fall victim to a scam (we will sort through and destroy junk mail); you will be more organized and have less paper (we will scan and forward your mail immediately to your attention after sorting); and we will ensure that corporate records and Secretary of State records are kept up to date.

We also offer an upgraded yearly plan that includes unlimited telephone access to attorneys throughout the year.

The consequence for not filing an Annual Report and/or paying the fee is that the Secretary of State can administratively dissolve your business. This means that you can lose the liability protection you enjoy by being a business, and a creditor may be able to come after your personal assets. You may also have to pay higher fees to reinstate your business once it has been dissolved by the Secretary of State’s Office.

If you have questions about filing your Annual Report or want to learn more about the annual plan services offered by our firm, you can click HERE, or feel free to reach out to Jesson & Rains directly!

​By Attorney Kelly Jesson

As you know, we’ve been back and forth numerous times on whether or not business owners in the United States have to file a Beneficial Owner Information Report (BOIR) with FinCen as part of the Corporate Transparency Act (CTA).

The Treasury Department finally killed it on Sunday.  On March 2, 2025, the U.S. Department of the Treasury announced that it will be issuing a new rule making the BOIR reporting requirements apply to foreign companies only.  The Treasury Department also announced that it will not enforce any penalties or fines for failing to file the BOIR pending the implementation of the new rule.

We’re pretty confident this signals the death of the BOIR rule.  If you have any questions about this, please contact Jesson & Rains for more information.