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What is Equity Compensation and How Does It Work?

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If you are a business owner in North Carolina, you have probably considered extending equity in your company to your employees. Before doing so, it is important to understand the different types of equity compensation and how they work. 

Here, we provide a high-level overview of common types of equity compensation. Please note, however, that you should always seek the advice of an experienced attorney before making a decision particular to your business. 

What Is Equity Compensation?

At its most basic level, equity compensation is essentially a means of offering employees an ownership interest in a business. Depending on your business’s structure (e.g., corporation vs. LLC), your options for offering equity interests will vary. 

Equity compensation is offered as a way of attracting and retaining quality employees. In addition to a standard compensation package, equity compensation encourages loyalty and gives employees an incentive to stay with the company for the long-term or at least until their stock options vest. 

While there are numerous types of equity compensation, each with their own nuances, here we will discuss a few common ones: corporation stock options, corporation restricted stock, LLC capital interests, and LLC profits interests.

Stock Options 

Stock options give employees the right to purchase stock in a company, at a set price, in the future. The price is determined when the options are granted, meaning if the shares of stock increase in the future, employees will have the option to purchase the stock at a lower price. Employees can choose not to exercise their option to purchase the stock in the future if the stock price decreases in value (or for any other reason). 

Businesses usually issue stock options through something called an employee stock option plan. Under this plan, a company will typically identify a vesting period (usually three to five years) in which the employee has the right to exercise his stock options. If the employee leaves before the vesting period ends, the employee gives up the right to purchase any stock options that have not yet vested, as well as any that have vested but that the employee has not yet exercised. 

Restricted Stock 

Unlike stock options, which vest over time and therefore do not grant an ownership interest in the company until a future date (and even then, only if the employee chooses to exercise his option to purchase), restricted stock is an immediate ownership interest in a business. This type of equity compensation is generally only offered to executives and directors of a company. 

Restricted stock is “restricted” precisely because it carries certain conditions: this type of stock is non-transferable and can only be traded in accordance with SEC regulations. As such, if you are considering issuing or transferring restricted stock, be sure to consult with legal counsel before doing so. 

LLC Capital Interests

If your company is an LLC, you cannot grant stock options or restricted stock. However, you can still grant equity interests in your business to your employees. 

The first common type of LLC equity interest is a capital interest. This entitles a holder to a percentage of the LLC’s capital at the time of the grant. For example, if you receive a grant of a 1% capital interest in an LLC that is valued at $500,000, your interest on the date of the grant would be worth $5,000. 

As with all types of equity compensation, there are potential tax consequences to both the business and the employee who receives the grant, so you should consult an attorney who specializes in business law to discuss the best approach for your business. 

Profits Interest in an LLC

The second type of equity compensation for an LLC is a profits interest. This type of equity compensation entitles a grantee to a share of the LLC’s future income and appreciation of its assets. 

For example, if an employee is granted a profits interest in an LLC equal to 1%, the employee will have the right to 1% of the LLC’s profits after the date he received the profits interest. This is their right to all future income of the business. In addition, the employee will have a 1% right to any appreciation in the LLC’s value. In other words, if the company was valued at $500,000 on the date the employee received the profits interest and a year later the LLC is purchased for $1,000,000, the employee would be entitled to 1% of the appreciation in value or 1% of $500,000 ($5,000). 

Pros and Cons of Offering Equity Compensation 

Equity compensation is an excellent tool for businesses looking to reward, retain, and incentivize employees. In addition to standard salaries, equity compensation allows a company to offer a more robust compensation package to its employees while conserving cash flow for other business purposes. Equity-based compensation packages also align employees’ interests with that of the business, thus incentivizing employees to be invested in the company’s future and to maintain a strong connection with the company.

Benefits notwithstanding, before offering any type of equity compensation, businesses should remember that they are giving away a piece of the ownership of their company when they do so. Equity is limited and as such, caution is warranted in parting with too much. Business owners should also be sure only to give ownership, which at times comes with certain voting rights in the business, to the most trustworthy employees. 

Equity compensation is complex. Not only are you granting ownership in a portion of your business to others, but it carries substantial tax, accounting, and legal implications. As such, it is extremely important to consult your advisors before granting any type of equity compensation. At Wilson Ratledge, we specialize in advising small businesses with deciding whether and what kind of equity compensation plan is right for their business. Contact us today to discuss your business needs and see how we can help set you and your employees up for success. 

Tax Planning for 2021: What to Consider

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2020 has been full of the unexpected, but this doesn’t mean you should neglect to plan for the New Year. On the contrary, now is a better time than ever to turn your attention to finances, particularly if you (like many others) suffered some financial setbacks this past year. The start of the new decade has also brought substantial financial aid to businesses and employees alike, from the Administration’s stimulus package to PPP loans and forbearance on collecting student loan interest payments. Not to mention, mortgage rates have reached a historic low, and remote work setups have slashed overhead costs for businesses and families alike. As such, it is worth taking stock of both your gains and your losses so that you know where you stand come Tax Day.

Here are eight tips to help you prepare. Please note that this does not substitute for the advice of a qualified financial professional, accountant, or tax attorney. Nonetheless, these tips can serve as a springboard for your conversations with those individuals, as well as some inspiration to start reframing how you think about your finances.

#1: Carefully review your earnings. 

Last year, the Trump Administration enacted the Tax Cuts and Jobs Act, which brought monumental changes to the tax code. Among these changes, the Act revised the withholding tables. As such, you may need to confirm what you owe the IRS and ensure you are not withholding too much – or too little – from your current paychecks. To determine whether you are withholding the proper amount, consult the IRS tax withholding estimator or check with your tax preparer. This is particularly important if you made a significant transition this past year, for instance, if you gained, lost, or changed a job, or if you launched a new business. 

#2: Find your tax preparer.  

Even if TurboTax was just fine in past years, consider whether this may be a good year to bring in the professionals. Particularly with the economic turmoil caused by the pandemic, it may be wise to engage the help of a seasoned expert rather than trying to tackle your taxes yourself. Keep in mind, however, that accountants get busier (and more expensive!) as the tax season approaches, so it is best to reach out well in advance of the year’s end to ensure you are locked in.

#3: Max out your retirement contributions.

As always, bulking up your retirement accounts in the final quarter of the year will reduce your taxable income, and thus, your tax liability. For 2020, the maximum IRA contribution limit is $6,000. Other items to note:

  • The catch-up contribution limit is $1,000 for those 50 and older. 
  • 401(k) participants with incomes below $75,000 ($124,000 for couples) are eligible to make traditional IRA contributions as well.
  • The Roth IRA income limit is $139,000 for individuals and $206,000 for couples. 

Those aged 49 and younger can max out a traditional IRA by saving $500 per month or by making a lump sum deposit before the 2020 contribution deadline, which is April 15, 2021. Consider these rules in determining how to divert any extra income at the end of the year.

#4: Protect yourself from scams.

You may have noticed an increase in scam calls from companies claiming to be the IRS. However, a government agency will rarely contact you via phone. As such, beware of these arbitrary contact attempts via phone, text, and email. To protect yourself further, consider setting up certain safeguards, like making your tax payments online or by consulting the IRS list of registered preparers to ensure yours is legitimate before divulging your personally-identifying information. 

#5: Confirm your standard deduction.

The IRS has issued its annual inflation adjustments for 2021, and among these adjustments is a change in the standard deductions. The new standard deduction for married couples filing jointly in 2021 is $25,100 – a $300 increase from this past year. For single taxpayers and married individuals filing separately, it is increasing to $12,550, and for heads of households, the standard deduction will increase to $18,800. Make sure you consider these changes when creating your financial plans for the New Year.

#6: Review your medical expenses. 

If you faced substantial medical expenses this past year, you may be entitled to deduct certain out-of-pocket expenses related to your treatment, such as transportation, lodging, and home healthcare related to your condition. Be sure to consult your accountant or tax attorney to determine whether these deductions apply to you. 

#7: Take stock.

If you benefitted personally from the stimulus package, a PPP loan, or another component of the federal CARES act, take some time to figure out how – and if – this impacted your financial standing. This includes not only looking at your gains but also taking inventory of your debt obligations and other liabilities and determining where you stand. Keep in mind that just because you may be permitted to hit “pause” on making certain payments does not mean you are off the hook permanently. If you are in a period of forbearance, create a feasible plan for when and how you will resume your payments and how this will impact your overall repayment timeline.

#8: Plan ahead. 

If 2020 taught us anything, it is to expect the unexpected. To ensure you are fully organized for the next tax year and prepared to face any contingencies, start a habit of tracking your finances more closely. Start by compiling all of your W2s, 1099s, medical expense receipts, charitable donations records, previous tax returns, and other financial records so that you are prepared in the event of an audit. While it is a good practice to keep these records for at least three years, you may consider keeping them even longer.  

Experienced Tax Attorneys

At Wilson Ratledge, we assist our clients in financial and tax planning. There are numerous factors to consider before making significant financial decisions. Our experienced tax attorneys can discuss your options and help you decide how to manage your money wisely in 2021 and beyond.

How To Protect Your Startup’s Tech IP

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As we move deeper into the 2000s, “smart” devices are only getting smarter. From phones to homes, vehicles, and fitness devices, we are surrounded by a veritable web of constantly engaged devices. While a decade ago, these devices simply provided us with new levels of convenience, now, they can do even more: they can connect and “talk” with each other, unlocking entirely new levels of efficiency. Consumers and businesses alike rely on this connectivity for convenience, accessibility, and automation across platforms.

Enter: the “Internet of Things (IoT),” a virtual web of the devices that connect and communicate with each other via the Internet. From data storage and retrieval methods to remote workspace management and corporate process improvement, the IoT increases efficiency in all aspects of life. 

Understandably, this can all seem extremely vague. What, exactly, is the IoT? Who (other than maybe Al Gore) invented it? Is it safe? And who, if anyone, regulates it? In the paragraphs that follow, we provide a basic overview of the IoT, from what it does, to who regulates it and the legal issues it can generate.

What, Exactly, Is the IoT?

While it seems like a nebulous concept, the IoT is nothing other than a network of devices that are equipped to exchange data. Once upon a time, the IoT was limited to computers, fax machines, and eventually cell phones. But now, kitchen appliances, cars, light fixtures, thermostats, cameras, and televisions can communicate through the Internet.

Current estimates suggest that the IoT is made up of more than seven billion devices. However, with new devices introduced to the market constantly, the IoT is expected to grow by more than twenty billion in just five years. Several companies, like Amazon and Google, have developed hubs for consumers to manage and control all their connected devices in one place. 

For consumers, cell phones are the most common access point to the IoT. Currently, the IoT is the avenue by which smartphones connect and provide remote access to the Internet, household appliances, personal computers, vehicles, and more. 

Other examples of how consumers interact with the IoT are:

  • Vehicle-to-vehicle communication 
  • Municipal grids designed to increase energy efficiency and reduce waste
  • Insurance companies seeking to record location and operation data in real-time
  • Smart home connectivity
  • The use of health and fitness devices
  • Cloud storage methods like the G-suite and Dropbox

Legal Concerns 

The IoT presents legal risks, however. With this level of connectivity, privacy, data security, and intellectual property concerns are inevitable. Such an extensive and ever-expanding web of devices will likely generate unforeseen legal issues in the coming years and decades. Currently, however, some of the most common legal issues are:

Security Breaches

The IoT allows data to be shared with minimal human interaction (a convenience factor, especially in the corporate context). However, because these devices are almost constantly switched “on,” there are risks associated with recording sensitive personal information, security breaches, data scraping, and hacking. 

Issues for Manufacturers

The creators of devices that work within the IoT can face liability if the devices lack adequate safety measures, most especially, data security capabilities. 

Intellectual Property (IP) Disputes

When data is freely shared and exchanged, issues of ownership can become murky. In many cases, companies may struggle to claim ownership over information that is shared across devices and platforms.  

Antitrust Violations

Should information be shared between competitors to create market power or other illegal market conduct, an aggrieved party can raise an antitrust violation claim.

Who Regulates the IoT?

The issue of regulation can be murky. Generally, the IoT sees minimal government regulation, as the FTC has declined to issue overarching guidance on its use. Some international laws, like the European General Data Protection Regulation (GDPR) and the ePrivacy regulation, impact the IoT by speaking to data privacy and the protection of personal information. Additionally, the FCC does regulate the Internet and issues recommendations for companies that provide home, wearable, or other personal devices. However, the agency asks device manufacturers to incorporate security features into their designs. 

However, even the best security is not risk-free. Privacy and cybersecurity concerns, particularly data breaches and intellectual property (IP) issues, continue to plague the IoT. Rather than relying on built-in safety tools and user settings, businesses and consumers must incorporate additional safety measures to ensure their information is secure and their devices are safe. 

The Significance of the IoT

The IoT is not just making consumer lives easier by connecting every device they need with remote access in one place. Industries from healthcare to manufacturing rely on the IoT for improving efficiency for better productivity. And while there are risks inherent in having so much technology connected as it is through the IoT, the continued advancements, economic benefits, and reduced need for human involvement provided by the IoT connections are saving companies money, increasing efficiency, and improving quality of life.

Nonetheless, the IoT is still new terrain and as such, there are still numerous unresolved issues regarding its use and regulation. In all cases, consumers and businesses alike should take caution in choosing to share or disseminate sensitive information.

At Wilson Ratledge, we assist business founders in taking steps that keep their businesses – and their personal assets – safe. In our digital age, this inevitably includes the Internet of Things. We help our clients in setting up appropriate legal protections for the IP they develop and help structure their businesses to address potential pitfalls down the road. For assistance or to learn more, contact one of our experienced North Carolina business attorneys today at 919-980-4082 or via our contact form below. 

What Does It Mean to “Pierce the Corporate Veil?”

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As a business owner, one of the key considerations in selecting a specific business entity is how much liability you are willing to take on. Corporations are viewed as individuals under liability laws, which generally means that you, the business owner, are not personally liable for the debts or legal obligations of your business. 

Nonetheless, exceptions apply. In some situations, a business owner can be held personally liable for business debts or other obligations that would ordinarily fall within the business’ responsibilities. Through a process known in legalese as “piercing the corporate veil,” a creditor or individual may sue the business owner personally for the transgressions of the business. This would expose your personal assets, like your home, your vehicle, and your bank accounts to a civil judgment. 

So, how is the corporate veil pierced and what can you do to protect yourself and your business?  Here, we discuss the basics you need to know about the liability shield known as the corporate veil and how to strengthen it to protect yourself and your assets from personal liability. 

What is the “corporate veil?”

The “corporate veil” is a term used to refer to the liability shield established when a corporate entity is created. By operating as a corporation rather than a sole proprietorship, the business owner is generally shielded from personal liability for actions or debts of the business. Should a creditor or individual harmed by the business file suit for the debt or injury, only the business and business assets would be at risk. The business owner and his or her personal assets are protected from liability. 

In other words, the corporate veil separates the business and the business owner, ensuring both are treated as separate legal entities.      

How is the corporate veil pierced?

If the court determines there is an insufficient separation between the business and business owner for the two entities to be treated independently, a creditor or individual can file a legal action to “pierce” the corporate veil, that is, sue the business owner personally for one of the business’ transgressions. Upon piercing the corporate veil, the legal protections previously afforded to the business owner through the creation of the entity disappears, exposing his or her personal property to a civil judgment.

To pierce the corporate veil, the creditor or injured party must prove that the business was not functioning as a separate entity and that the lines between the business and its owner were blurred. This is often called the “alter ego” theory; that is, the business was operating as an alter ego of the business owner himself. In these cases, creditors can attempt to hold the business owner responsible for the debt or injury. In North Carolina, the creditor or injured party seeking to hold the business owner liable by piercing the corporate veil must prove that the business owner had so much control over the business that the business did not have a “separate mind, will, or existence of its own.”

As in most states, North Carolina law generally does not favor the practice of piercing the corporate veil and trumping the liability protection afforded to business owners. Therefore, the individual seeking to hold the business owner personally liable must allege and prove serious misconduct to overcome the liability protection. 

Courts examine several factors in discerning whether a company truly has established an independent existence from its owners. Some of these factors include:

  • Whether the company was adequately capitalized;
  • Whether the company’s directors, shareholders, officers, members, or managers compiled with corporate formalities in running the business;
  • Whether the company was solvent; 
  • Whether the company was fragmented into multiple “shell” entities;
  • Whether the individual owner at issue siphoned funds from the company to pay his or her personal expenses or debts; and
  • Whether the company maintained proper corporate records.

Can I avoid personal liability?

The simplest way to maintain the protection of your liability shield is to make sure that your business operates in a fair, honest, and accurate manner following applicable rules and complying with business standards. 

Your attorney can advise you on how to do so. However, generally, business owners seeking to maintain substantial liability protection tend to do the following:

  • They do not commingle finances. They keep business accounts and personal accounts separate. They do not use corporate accounts or other business funds to pay personal expenses. 
  • They follow the rules. Corporations must create and comply with bylaws, pay corporate taxes, and satisfy meeting requirements. There are strict formalities that corporations must follow, and LLCs are advised to comply with the same requirements. 
  • They maintain proper records. Business decisions and meetings should be documented, and the records should be kept for at least seven years. Businesses that maintain a strong liability shield ensure minutes are recorded for significant meetings such as board meetings and shareholder meetings. All their records are accurate, consistent, and stored in a secure location.
  • The adequately fund the business. You need money to start a business. Whether you use your own money, have investors, or obtain a business loan, you must have adequate funds to purchase the equipment and inventory you need to open the business and maintain operations. 
  • They properly convey their business status. Whether you are a corporation or LLC, make sure that your business status is apparent, and you do not present yourself as a sole proprietor. Invoices, contracts, business cards, and other business-related documents should address the business as an entity separate and apart from you and your assets.

An experienced business attorney can assist you with structuring your business and managing business transactions to protect you from personal liability. Whether you need assistance getting your business started or have questions about your liability based on current practices, our team has the knowledge and advice you need to operate a successful business with a strong veil to shield you from personal liability.

Top Estate Planning FAQs Answered

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Whether you are young and in perfect health or aging with health concerns, estate planning is necessary. An estate plan allows you to decide who will manage your estate after you die or if you become incapacitated. Through an estate plan, you not only name the person responsible for making sure your wishes are honored, but an effective estate plan also details your preferences for everything from healthcare to finances and property distribution.

Estate planning can be complex and involves a lot of difficult decisions, so it is important to recruit an appropriate team of professionals to help you navigate the best options for your circumstances. An estate planning attorney and financial advisor or accountant are vital members of your estate planning team.  

How important is an estate plan? What components do you need? We address these and other frequently asked estate planning questions in the paragraphs that follow.

Do I need a will? What happens if I die without one?

Yes! If you care how your property is distributed, who will care for your minor children when you are unable to do so yourself, or if you just want to make sure your loved ones have the financial means to get by after you are gone, you need a will. A will allows you to transfer assets to beneficiaries, select guardians for minor children, and choose an executor to manage your estate upon your death. 

If you do not have a will, your assets will pass through the state-sanctioned intestacy scheme. This means state law will determine how your estate is distributed. Unfortunately, this means everything from your personal property to your children goes to whomever the state law determines is appropriate regardless of what you may desire. 

What are the benefits of proper estate planning?

Having an estate plan does more than just offer peace of mind that your assets will be distributed per your wishes. The taxes associated with settling an estate can be costly. An effective estate plan can reduce or eliminate estate taxes. Additionally, your estate plan can be used to protect your property now, upon your death, and long after you are gone in the event of post-mortem litigation against your estate or divorce.

A clear estate plan provides the guidance your loved ones need when you become incapacitated or die. Difficult decisions about life-sustaining measures or arguments about who should get a beloved family heirloom only add stress to an already emotional time. Proper estate planning removes the burden of settling your estate from your family.

What are the elements of an effective estate plan? 

Every estate plan looks different and varies in complexity based on the needs and assets of the individual. However, while there are many components of an effective estate plan, four main elements are found in all effective estate plans: the will, living will or advance directive, a power of attorney, and a trust.

  • Your will protects your estate from the complications of probate or intestate distributions. 
  • A living will or advance directive is also necessary because it allows you to make decisions about your medical care in the event you become incapacitated, terminally ill, or otherwise unable to communicate your desires. Your feelings about being placed on life support or receiving other life-sustaining medical interventions will not matter if you do not have an advance directive. Medical providers will make these decisions for you or your family will face the difficult burden of deciding what to do. 
  • A power of attorney allows you to name the individual responsible for making decisions when you are unable to do so for yourself. 
  • A trust protects the specific distribution of your assets, such as ensuring your child receives the benefits of your assets regularly throughout their life, all at once upon a certain life event like marriage, or other stipulations. Whether or not you need a trust depends on the size of your estate and/or the necessity for oversight in ensuring your heirs properly manage your assets upon your death such as minor children or elderly parents in need of long-term care. However, everyone needs a living will or advance directive and a power of attorney, regardless of the size of your estate or family situation.

How often do I need to update my will?

Generally, you should review your will and all components of your estate plan at least every three years to five years. However, any significant life event should also trigger a review of your estate plan. This includes events like marriage, divorce, a new child, or even a change in jobs or income. Failure to review and update your estate plan timely can lead to problems when intended heirs being unavailable, or due to other administrative flaws.

When is the best time to plan my estate?

Now. There is no such thing as creating an estate plan too early, but if you are waiting for some life event to do so, like a specific birth date or terminal diagnosis, that event could come after it is too late. You must be of sound mind to create a valid estate plan. 

How can an estate planning attorney help me?

The laws regarding estate planning are intricate and complicated, full of technicalities and nuances that make drafting an effective estate plan tricky. Can you write your own will and it be valid? Sure. However, a simple typographical error or missing signature could not only nullify the document’s validity, it could change the entire meaning of your document to directly contradict your intentions. 

An experienced attorney is not only skilled at applying the law to make sure your documents hold up in court should someone decide to challenge them, but can also make suggestions to address matters you might not otherwise think to plan for. 

At Wilson Ratledge, we assist our clients in setting up estate plans that give them the peace of mind in knowing that their assets and loved ones will be adequately protected. Contact one of our experienced North Carolina estate planning attorneys today at 919-787-7711 or via our contact form below.

What North Carolina Companies Need to Know About the GDPR

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Since it became effective on May 25, 2018, the General Data Protection Regulation, or GDPR, has bound U.S. companies in matters of privacy and data security. Specifically, the regulation requires companies to take certain measures to protect personal data when clients or customers hail from the European Union. You might be wondering why a North Carolina company needs to know anything about an EU law. It turns out that the regulation applies not just to EU companies, but also to those outside of the EU. 

Here, we provide a brief overview of the GDPR, discuss how North Carolina companies can collect consumer data while still complying with the regulation, and note the potential consequences of violating the regulation. Finally, we will briefly discuss how an attorney specializing in data privacy can help your company comply with the GDPR. 

What Is the GDPR?

The GDPR is a regulation that controls the collection and use of personal data of EU users. It was enacted to prevent the misuse of personal data and give EU citizens and those living in the EU control over how their data is used. 

The GDPR defines personal data as information belonging to an identifiable person (i.e., not anonymous) that a company collects from EU users. Personal data includes (but is not limited to) information such as:

  • Name
  • Age
  • Email address
  • Physical address 
  • Identification number
  • Telephone number 
  • Financial information
  • IP address 
  • Gender, race, political, or religious information 

Does My North Carolina Company Have to Comply With the GDPR?

The short answer is that, yes, most North Carolina businesses have to comply with the GDPR. While the GDPR is a European regulation, it applies to any company that offers goods or services to EU users or that collects data from EU users. 

It is important to note that “EU users” are not just EU citizens. The definition includes all individuals who are physically located in the EU and any EU citizens, no matter their location. This means that if your company sells physical products online, sells services online, or otherwise collects information from customers on the web, it will need to comply with the GDPR, as it is likely that EU users will visit the company website and enter their information. 

No matter the type of company or the size, if you gather any personal data at all, the GDPR applies. This means that if you collect consumer information on your website via a lead magnet or opt-in (where you collect a user’s name and email address), for example, you must comply with the GDPR. 

How to Comply 

There are a few steps companies that collect personal data can take to stay compliant with the GDPR. 

While each company is different and should certainly consult an attorney to ensure that its specific practices are GDPR-compliant, at a minimum, companies should consider the following measures:

  1. Obtain users’ consent: If you plan to collect and keep personal data, you must specifically request the data from the user. Translate this request into clear, concise language so that website visitors understand their data is being collected. 
  • Provide users access to their own personal data: You must provide a user access to your company’s records of their personal data that you collected and stored. This must be free of charge and include an explanation of how the company uses the data. 
  • Delete personal information when requested: If a user requests that his or her personal data be deleted, you must do so. Users can ask this of a company at any time, and you are obligated to respect those wishes.
  • Provide notice of a data breach: If a data breach occurs, you have 72 hours to report the breach to a reporting agency and to any customers who were potentially impacted.

Steps to Take to Keep Consumer Data Safe

While the GDPR may at first sound overwhelming, there are practical steps companies can take to keep consumer data safe. 

If your company is large and collects substantial amounts of personal data, consider hiring a person to fill this role. It would be this person’s responsibility to learn the requirements of data collection and use so that any user requests (such as deleting personal information) and breaches can be dealt with by this person. Clearly inform users on your website who is responsible for GDPR compliance and direct them to this person for any requests, questions, or concerns. 

Second, spend time developing an online presence that takes into account the requirements of the GDPR. The more time you spend up-front, the fewer issues you will have in the future. This will likely include placing clear language on your website, developing easily accessible policies, and providing users with information on how they can contact the company and inquire about their data use. 

Consequences of Non-Compliance

The potential penalties for non-compliance with the GDPR are staggering. Depending on the nature of the non-compliance (such as how long the violation lasted, what types of personal data was involved, and what steps were taken to fix the issue), businesses can face fines of the greater of $20 million or four percent of the company’s annual revenue. 

While it is unclear how EU regulators would collect fines from a North Carolina business with no ties to the EU (other than EU customers or website visitors), business owners should be aware of these potential monetary consequences and do all they can to comply with the GDPR.

How a Data Privacy Attorney Can Help Your Company 

An attorney specializing in data privacy issues can assist your company with developing privacy policies, reviewing your online security processes, and more, to ensure you comply with the GDPR. 

Whether you are a one-person startup or a fast-growing North Carolina business, contact our data privacy attorneys today to learn how we can assist you. At Wilson Ratledge, our attorneys regularly advise our clients on issues of data privacy and keeping consumer information secure. For questions or assistance, reach out to us by calling 919-787-7711 or via our contact form below.