Business Law
Incorporation
According to the Small Business Administration, small businesses make 99.9% of US businesses. These businesses are organized in a variety of incorporate and unincorporated entities. The most common incorporated entities include corporations, limited liability companies (LLCs), and partnerships. However, millions of businesses still operate as incorporated entities such as sole proprietorships or general partnerships. The requirements and risks of the various types of businesses are different and no one choice is right for every business. The key is understanding the protections, tax consequences, and operating requirements offered by each type of legal entity.
Agreements
From the inception of a business to its last day operating, a business requires a number of agreements. Some of the most common agreements businesses encounter include:
Nondisclosure Agreements – Nondisclosure agreements (known commonly as “NDAs”) are agreement designed to protect information and assets which are proprietary to a business. This commonly includes customer information, manufacturing processes, marketing and other business strategies, pricing, and other information which would not otherwise be generally known or available to the public.
Partnership Agreements – when two or more partners engage in a business venture, it is necessary to have documents which govern the powers and responsibilities of the partners. This can cover both day-to-day operating decisions as well as more substantial decisions such as whether to sell the business, merge the business or even dissolve the business.
Employment contacts – Defining the nature of a working arrangement as an employee or an independent contractor as well as the terms of the working arrangement are critical. This includes defining the amount of compensation, duration of the work engagement, conditions of employment, and conditions for termination.
Customer and Vendor Agreements – Often a business will have key vendors and customers which are critical to the business. In these cases, it is helpful for both parties to have a clear understanding of the relationship and what circumstances can end the relationship.
Minimizing Litigation
The ultimate goal of a business is to be successful and profitable. A key aspect of this is avoiding litigation which can disrupt a business and impact its profitability. Having a well-structured business with the relevant agreements in place (and current) is the best way to minimize the chances of litigation.