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A Legal Tune-Up for your Business

ITIPress.org - Gerald S. Duty / Attorney at Law

Those of us who are small business owners, in the midst of our daily routines and our countless responsibilities, such as satisfying clients, paying the bills and opening new markets, we do not often realize that our business is craving a legal “tune-up.” Herein you will find various legal issues which should be reviewed from time to time. Doing such should assist you in reaching your business goals more efficiently and in protecting your business from common dangers.

Employment Agreements. Generally speaking, many small businesses, when they first open their doors, have a strong nucleus of employees dedicated to the business. As they expand and grow, most companies find they begin hiring workers that necessarily have less commitment and interest in the success of the business. As such, it is important that each employee know what is expected of him or her and what the consequences are of not complying with such expectations. An employee manual, along with other employment documents can set the tone of the workplace atmosphere and help avoid employment disputes ending up in court. Most businesses should have an employee manual that creates standards and avoids employment-related legal problems. At the same time, such a manual should take precautions to not create responsibilities for the employer that it cannot fully maintain.

Preparing a Business for Its Sale.
Taking time to plan for an eventual sale of a business gives the owners more leverage in negotiations and facilitates the experience. Adequate preparations may increase the offer amount the business is able to attract, assist the owners in obtaining better legal and business terms and minimize the amount of taxes paid in an eventual sale. Even for those who are not actively planning to sell their businesses, it is beneficial to plan as sometimes offers arrive that make one reconsider his or her plans.

The Assets. In some cases, it is beneficial to separate the assets from the operations of a business, placing each into different entities. Such helps protect the assets of a business from unforeseen liabilities and may create opportunities to open new business relationships.

The Contracts. Many times, a company negotiates an important contract, the business relationship flourishes and both parties continue to provide services after the contract term expires without negotiating an extension. A review of a company’s contracts may avoid future disputes and create opportunities for negotiating better terms for contract extensions.

Buy-Sell Agreements. It is important to clarify the way in which a shareholder may transfer or sell his or her shares in the company in the case of unforeseen circumstances, such as death, illness or retirement. Such an agreement should protect a company, for example, from a shareholder who wishes to sell his shares to a competitor. Without such an agreement, a shareholder may one day find himself the partner of family members of a recently deceased shareholder or member. It is better to consider such possibilities before the unexpected occurs.

The Owners. Many small businesses have not adequately documented the relationship between the shareholders, partners or members. Sometimes such businesses have not issued share certificates. Due to the frequency of partnership disagreements that turn into lawsuits, it is advisable to document all the terms of these relationships. Such details are also necessary in order to sell or otherwise successfully take the company to the next level.

Expansion of the Business. Sometimes the business that one starts, over time and with new opportunities, expands and evolves into a business of broader scope than originally envisioned. In such cases, it makes sense to reexamine the company’s structure and make changes to legally separate distinct activities and assets from one another. This helps insulate each activity and avoids negative occurrences in one part of the business from affecting otherwise healthy aspects of the business.

Key Employees. The majority of businesses have a small number of key employees. It is important to protect the company from the potential damage such employees may cause. Many times such can be effected with the use of non-compete and confidentiality agreements.

"The act of taking the first step is what separates the winners from the losers." – Brian Tracy

 

 

 

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