Business Protection: Formation & Transactions

Business Protection: Formation & Transactions

Estate and Business Succession Planning

Protect your business

Whether you’re in the planning stages of setting up a new business, running a successful and established business, or somewhere in between, Woods Law Group can help. We’ll guide you through properly setting up your business contracts, records, and processes in order to minimize risk and ensure you’re legally protected and operating with confidence.

There are many important legal decisions that must be made to protect your business from future litigation and other costly problems. Many of these problems can be avoided or reduced by preparing for those eventualities before the problems occur. Memorializing these decisions into legally binding documents can offer significant advantages in the long run for your business. Some of the key legal considerations for businesses include:

  • Business Formation

    What type of legal business entity you choose is extremely important to the success and future of your business. If you do not specifically select and form a specific business entity, you may end up being involved in a sole proprietorship or even a partnership by default. But those two types of business entities might not offer the liability protections that your business really needs. An attorney can help you to understand the legal risks inherent in your specific business and can recommend which type of business entity might be the best for you and your business.

    Corporations can offer a high degree of liability protection for their owners and can be a great option for a growth business which needs to raise capital and accommodate many owners. But corporations can be more onerous to maintain and are typically subject to double taxation. Limited Liability Companies (LLCs), on the other hand, are often easier to set up and maintain than a corporation, offer similar liability protections for their owners, and are not subject to double taxation like corporations can be.

    Making the correct business entity decision is an important early choice for every business owner or potential business owner to make. Not making the right choice here can be very costly for your business. In addition, the wrong choice in business entity can result in you being personally liable when things go wrong.

  • Ownership Agreements

    Closely related to the selection of a legal business entity, who the owners are and what the arrangement is between them is a critical business decision that should be clarified and documented as soon as possible. Many small businesses can get themselves into serious trouble early on by not making these arrangements clear. It may seem surprising, but there are many business problems which occur because the owners failed to clearly answer the below questions early on:

    • What are the roles and duties of each of the owners?
    • When a person contributes money to the business, is that money a loan, a gift, or equity in the ownership of the business?
    • How much cash or assets will each owner contribute to the business?
    • What is the percentage ownership in the business among the various owners?
    • Which important business decisions require a vote or unanimous decision among the owners?
    • How will disputes among owners be resolved?
    • What is the mission and vision for your business?
    • What happens when an owner is not fulfilling his or her duties?
    • How will the owners ultimately exit from the business?

    Answering questions such as these can help to identify areas where there may be disagreement among owners and to address those problems before they occur. How these questions will be addressed can then be documented into corporate bylaws, operating agreements, or partnership agreements.

  • Business Succession

    How a business owner leaves the business or how the business will operate in absence of the owner are also important issues to address before those events occur. The unexpected death or disability of an owner can leave a business in a state of dysfunction. How will an owner who wants to retire be able to transfer its business interests to another? Will another person at the firm be able to adequately fill the role of the exiting owner? If not, how can the business find or train an adequate replacement? Business succession questions should be addressed in various estate planning documents as well as founding business documents.

  • Securities Laws

    The Securities Exchange Act of 1934 imposes requirements upon businesses when they sell securities (such as stocks). Failure to meet these requirements could result in costly penalties or even criminal charges. What many business owners fail to realize is that in some circumstances, selling an ownership interest in an LLC or partnership could also constitute a sale of a security that could subject your business to the requirements of this law. It is important for a business to consult with an attorney before considering such a purchase to ensure compliance.

  • Business Contracts

    Is your business adequately protected in its own contracts? Legal problems may arise in your business relationship with vendors, suppliers, employees and contractors. Many of these legal problems can be avoided or simplified with appropriately drafted contracts. Having these contracts helps to ensure that the relationship is transparent and that both parties understand the arrangement and obligations.

    When considering employment contracts, it can be useful to consider whether a non-compete provision might be useful. Non-compete clauses can be written in a variety of ways but some non-compete provisions might not be enforceable in court. Another important consideration in an employment agreement is an employment “at will” provision or the terms involved with severing the employment relationship. Many employment contracts will also protect against the disclosure of important company information with others.

    Important to nearly every business is the protection of its intellectual property. Is your business trade name unique and properly protected? Do you have adequate protection for the content that you make available on your website? Are you certain that you are not infringing upon the intellectual property rights of others?

  • Legal Counsel

    To address the above concerns and others, it is important to have an experienced business attorney. Your attorney should be familiar with these issues and able to help you to assess your situation and to help draft appropriate legal documents to protect your business against these potential legal problems. Failure to prepare for these situations could result in costly and potentially catastrophic results for your business, while preparing these documents properly ahead of time may help your business to be more profitable and run more smoothly in the long run.

Some of Our Services

  • LLC, partnership, and corporation formation
  • Operating agreements
  • Contracts, agreements, and negotiations
  • Business disputes
  • FFL formation and guidance
  • Succession planning
  • Legal compliance review for recordkeeping and business operations
  • Legal compliance training

Many business operations include paperwork, records, and/or processes that must be completed without any errors. Minor, innocent mistakes or oversights can lead to disastrous problems and even shut down a successful business. It’s important to have the right documents and processes in place, and crucial that employees always follow the proper protocol. Legal compliance training is an effective way to educate employees and get them familiar with following proper processes. Contact us to schedule a legal compliance training session for your employees.

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