Legal Planning For Your Business 
It is important to review legal matters and address outstanding issues. There are several steps you can take to protect your business and minimize disruptions. A significant part of legal planning involves staying organized and documenting agreements.
- Keep Your Eye on the Prize. Most business owners eventually sell their businesses. Incorporate provisions in your contracts that will facilitate the sale of your business. It takes time to prepare your business for sale. Start now by documenting policies and procedures for running your business.
- Change Your Business Structure. In many cases, small businesses begin as a sole proprietorship (one owner) or general partnership (multiple owners). It may be time to incorporate or form a limited liability company in order to protect your personal assets and enjoy added flexibility and potential savings on your taxes. Banks, investors and customers prefer working with an entity rather than an individual and, in most cases, you will get more value for your business when you sell it.
- Articulate Owners’ Rights and Obligations. To save time, money and misunderstandings, owners of a business should adopt agreements that govern their rights and obligations. It is very disruptive when an owner leaves a business. A buy-sell agreement specifies how the remaining owners will buy out an owner who leaves the business.
- Business Records. Be sure your company’s organizational documents are in order. Document major company transactions, such as loans, leases, purchases and agreements. Proper documentation of major transactions increases your ability to get the best price for your business when you decide to sell it.
- Relocating and Expanding. If you are moving to another state, you may need to relocate your business to that state as well. If you have started doing business in another state, you may need to register as a foreign entity in that state.
- Terminate Inactive Ventures. Officially close any business ventures that are no longer active. There are specific steps you need to go through to dissolve an LLC or a corporation. Be sure to also terminate any associated licenses or permits, otherwise, you are still required to file annual reports and pay annual taxes and fees for your business.
- Protect Intellectual Property. Intellectual property can be a valuable company asset. Employee and independent contractor agreements should specify that any work product they develop is owed by the company. Adopt policies protecting your confidential information. Require employees and independent contractors sign confidentiality agreements. Trademark your business name.
- Determine Proper Characterization of Your Workers. Your business may be liable for significant fines and penalties if you have mis-characterized any of your workers as independent contractors when they should be characterized as employees.
- Office Leases. When you enter into or renew a lease, be sure to review the provisions concerning subletting or assignment so you have options if your business grows or contracts, or if you sell your business. Understand your obligations under the lease, including how rent is calculated and other amounts you owe, the lease term and options for renewal, permitted uses, how repairs and maintenance will be handled, whether you can make improvements, dedicated parking spaces, signage restrictions, insurance requirements, personal guarantees, and termination provisions.
- Avoid Litigation. Try to anticipate possible litigious issues and address them before they happen. Litigation can be very costly and distracting to running your business. Document important agreements in writing. Review your contracts to be sure they give your business flexibility and protection. Among other things, your business agreements should (i) clearly describe the services or products your business is providing, (ii) address any issues that frequently come up in your business, (iii) allow you to terminate the agreement, (iv) specify how disputes will be resolved, and (iv) ensure that your business will be paid.
- Prepare a Will. All business owners should have a will.
For more information on these and other business legal matters, please contact Kathy Tremmel at Tremmel Law, PLLC at (512) 539-0317 or kathy@tremmellaw.com.
Copyright 2016 Tremmel Law, PLLC. All rights reserved.
