shenandoahlawfirm

Premarital, Post marital and Separation Agreements: What is Required to win in the courtroom?

Sat, 02 May 2020 01:09:00 GMT

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Divorce Litigation and the Family Business: What a Divorcing Spouse Needs to Know About the Family Cash Cow.

Sat, 02 May 2020 01:00:39 GMT

Divorce Litigation and the Family Business: What a Divorcing Spouse Needs to Know About the Family Cash Cow.

Without Legal Considerations, a Business Dream Can Become a Business Nightmare!

Sat, 02 May 2020 00:44:31 GMT

To keep your business dream from turning into a nightmare, you really do need to consult with an experienced attorney to start a business.

This will be the first of an ongoing series regarding three legal considerations in the starting of a business. Creating your own company in and of itself is a monumental task. It involves the creativity and execution behind an idea, whether that idea is virtual or a brick and mortar store. It entails long hours planning, researching, growing, and executing something abstract. With so much on your mind bringing a dream to reality, the last thing you should be worried about are topics like liability, taxation, and protecting your ideas. The realities of operating in a complicated world should not dissuade you from creating something for yourself. It’s best to discuss these topics with people who see it everyday so that you can focus on your idea, and not the baggage that comes along with operation. Today’s topic is just an overview/couple of points regarding of the life cycle of a business; from its beginning to its end or sale.

It is imperative that you write up a business plan. It will be instrumental in sharing your idea to other potential interested parties such as family members, co-owners, employees, investors, attorneys, and banks. The business plan will help decide what kind of business to form. Most will form a Limited Liability Company or Corporation which both carry distinct advantage and disadvantages. More importantly, these registered entities work to shield the owner/operators from liability, and grant them their own tax status/number. Remember, corporations are more or less seen as people under the law! The most important founding document (which is amendable) will be the Operating Agreement, which is the internal rules for the entity. Rarely do co-founders see eye-to-eye throughout the entirety of the life of their startup, and too many times do those founders come through the door arguing about something that should have been agreed upon before they even began work.

Funding is the lifeblood of any startup since most businesses don’t turn a profit in their first year. So how can you fund your project? There are friends and family, crowdfunding, venture capitalists, angel networks, venture debt, scientific research grants, and just bootstrapping the project yourself. There are many different options all with advantages and disadvantages like flexibility, and varying control of your business that come attached with outside funding.

Are you hiring other people to help realize your dream? It is important to note the distinction between independent contractors and agents when it comes to your company’s liability for their actions. Also, by inviting people to help build your idea, you are exposing yourself to what you’ve built to be stolen, copied, or damaged. It is important to have non-disclosure agreements, non-compete agreements, with people who will be working closely with you. Will your source of income be an invention? You need a patent. Have a brand? Trademark it. Protection of your assets, especially in the digital space, is imperative so you don’t hit any snags while you grow. Handling private data of clients should be handled with extreme caution. Will you be dealing with third parties? Most likely if you’re wanting to generate any cash flow. Drafting professional contracts that protect you, and laying out explicitly what is expected of both parties will be of importance in the operation and evolution of your business.

The last, and commonly least thought about during the creation of a business, is the exit strategy. Will your exit strategy involve and asset sale or a stock sale? The organization you created at the beginning will impact what the best exit strategy is. Certain types of business entities will be attracted to other specific types of organization for tax purposes, and you don’t want to have to deal with a costly reorganization right before presenting your business to a potential buyer.

Many factors are to be considered, managed, and drafted when building a business, especially a family-owned business. Many business owners start a business so they can do what they love, but in reality, all of these things in addition to marketing, accounting, management, and others all come into play and the business owner must be a jack of all trades. I would recommend getting some help from an attorney specializing in family law and the selling or buying of a family-owned business with the necessary, boring side of your business so you can focus on building something great.