truesdale-law

What Every Business Owner Should Ask Their Business Attorney in 2022

hello@tekkii.com (David Jackson) — Thu, 12 May 2022 20:11:17 GMT

Running a business involves much more than coming up with a great idea and following it through. There are a lot of legal questions and issues that will come up as you go along. But to get you started, we have listed some questions you should ask your business attorney today. We’ve included some answers plus some tips that you can put into place right away.

Do I have adequate corporate formalities in place?

This issue here is whether you are adequately protecting your personal interests. When you start a company, it’s important that you legally separate yourself (as the owner) from your business. If you don’t and find yourself in a sticky situation like business bankruptcy, you risk having your important personal assets being taken away from you as collateral. And no one wants that.

Should I create separate company bank accounts?

If you haven’t already, you need to open a separate business bank account for your business. Not only will it help you better track your cash flow, but you can save a lot of time when tax season rolls around. Having a separate bank account solely for your business will also make your accountant or bookkeeper’s job much easier.

As your business grows, it will be harder and even more time-consuming to separate your personal expenses and your business expenses. Also, if you ever need to apply for a loan or want to sell your business, having a separate business bank account will be essential. Set yourself up for future success by setting up that account now.

From a tax liability standpoint, you’ll also be able to identify tax deductions much more easily.

Am I required to hold an annual meeting?

If your company is organized as a corporation, the short answer here is “almost certainly.” Before we jump into the specifics, be aware that different states have different laws regarding annual meetings. This is another reason why you need to work with a competent business attorney who is aware of your particular state’s laws.

If your company is organized as an LLC, technically you probably won’t be required to hold an annual meeting, (unless it’s stipulated in your business’s Operating Agreement), but it is almost always a good idea.

In most states, if you forget to hold an annual meeting each year, you should just have the meeting as soon as possible. However, your company’s bylaws will usually have a section in regard to annual meetings, and there may be a specific date set forth there. Make sure to read it carefully.

If you are organized as a corporation, you will typically have both a shareholders’ annual meeting and a board of directors’ annual meeting on the same date. In those meetings, you will likely talk about:

The company’s annual state filing and tax reporting.
The election of the board of directors.
Any major business decisions the shareholders need to vote on.
Any major business decisions the directors need to vote on.

You should always have a written record or meeting minutes. This is a written record of what happened at the meeting. Before the meetings, discuss what needs to be discussed at the meetings with your attorney. After the meetings, send your minutes to your business attorney so that they can review it and keep it with any other important corporate documents they have on file for you. This can help if there’s ever a discrepancy about what was agreed on at the annual meeting.

What is an annual report? Am I required to submit one?

All statutory business entities are generally required to file an annual report to the business entity filing office in the state that they do business in. This includes corporations, non-profits, LLCs, limited partnerships (LPs), and limited liability partnerships (LLPs). If you operate several states, you’ll generally be required to do the same in each state in which you do business.

The annual report filing is meant to provide the public, any investors, and applicable government entities specific information about your business. In a very few states, you will not be required to file an annual report with the state. Your business attorney will be able to tell you the specifics of what your state requires in order for your company to remain compliant.

How should I document major business decisions?

You don’t need to document every decision you make in your business. For example, shareholders and the IRS most likely don’t care about the new carpet you installed in your office. However, there are other, much more important decisions that should always be recorded. These can include:

The company annual meeting’s minutes.
When stock is issued.
When real estate is purchased.
Information about any loans or credits issued.
When a new stock or retirement plan is adopted.
Any important tax decisions.

When you document important business decisions, you protect yourself from any future issues. Just like setting up a separate bank account, taking these steps will help to protect your personal assets from anything that may come up with your company. Also, if there are ever any issues with the IRS or creditors, you’ll have the documentation to back you up. Remember to always send your business attorney copies of all your major business decisions!

Do I have adequate succession/exit and disaster recovery plans in place?

This issue is what would happen if you were no longer able to run your business. This may happen because you die or become disabled, a natural disaster or cyberattack wipes out your infrastructure, or when you decide to sell your company.

One thing we need to clear up is the difference between a continuity plan and a succession plan.

A continuity plan ensures that your business will continue to run in the face of a catastrophe. It’s about making sure that your clients will continue to be served if you die or become disabled and are otherwise no longer able to run your company. It’s a bit morbid to think about, but you know what they say about not being prepared.

A succession plan is a bit different. It ensures that not only will your clients continue to be served if you’re suddenly not around, but that you will be replaced by a competent individual (or individuals) who will take on leadership in the company. Think of it like a very detailed exit plan. Even if nothing happens to you, a good succession plan ensures there will be a smooth transition of the ownership of the business to your heirs or to the buyer of your business.

What can I do to get ready to sell my business?

It may feel odd to prepare to exit your business, but you should always begin with the end in mind. When you are ready to sell, it will make the actual selling process a lot more straightforward. Here are some things to keep in mind:

Always think of new ways you can increase your profits and cut your costs. Obvious, but it needs to be mentioned!
Document in writing any processes or systems that you have in place. This will help make potential buyers feel more at ease because they will have a road map in place for running the company once you’re out of there. Most people want to buy a business, not a job, so make sure that you’re implementing processes and systems that will help your company run without you.
Make your company a great place to work. Buyers won’t want to take on a business with a high employee turnover rate.
Know your business’s assets, both physical and non-tangible. These assets will help determine the sale price of your company.
Put yourself in the buyer's shoes: Would you want to buy your business? If yes, great. If no, why not?

What is keyman insurance? Do I need it?

Keyman insurance is an insurance policy that’s directed at small businesses. These policies are designed to compensate the company if a “key” person dies, becomes disabled, or is no longer able to carry out their role. This could include an owner, member of the board, or a highly specialized employee.

Having a keyman insurance policy in place can help make sure that day-to-day operations continue, any outstanding debts are paid, and will pay for any expenses required to find a suitable replacement person.

So, do you need it? Think of keyman insurance as another risk management tool. You’ll be happy you have it in the face of a disaster or death. At the end of the day, it’s a judgment call, so it’s up to you to decide if you need it or not.

What happens if I want to sell my business to a family member?

If you’d like to keep your business in the family by selling it to a family member, the process is a lot like selling to a third-party. Training the next generation and financing the purchase can be tricky, however, which is why it is important to have in place a good succession and training. So don’t wait. Put that succession plan in place now and stick with it. And don’t forget to keep your business attorney (and probably your financial planner too) in the loop at all times.

Do my contracts adequately protect my company’s interests?

This is another area where your business attorney can really come in handy. He or she can work with you to review and revise, as needed:

Your employee and independent contract agreements.
Your service provider contracts.
Your building lease agreement.

Your business attorney can also help you review your company’s formation documents, including your articles of incorporation and your bylaws, meeting minutes, and corporate filing, and help you resolve any ongoing or anticipated stockholder or ownership disputes.

Your business contracts, if properly drafted, will go a long way toward protecting your company’s interests as well as your own. Long gone are the days of cementing a deal with a verbal agreement and a handshake. You need to get any important decisions and agreements down on paper and make sure they are crafted with the knowledge your business attorney can provide.

Should I put my business contracts in my name or the company’s?

Along the same lines of separating your personal bank account from your business’s, you should always make sure that your business contracts are in your company’s full, legal entity name. That includes adding LLC, LLP, Inc., or Corp. where necessary.

How do I ensure there are confidentiality provisions in my business contracts to protect my secret sauce?

One great way to help you protect confidential information related to your business (AKA your secret sauce) is to make sure that you put in place confidentiality agreements. You may have heard it referred to as a non-disclosure agreement. If you ever disclose confidential information (with say, an employee or service provider), you should always have them sign one. You can ask your business attorney to draw one up for you.

If a SaaS company has access to my data, who owns that data?

Software as a Service (SaaS) companies are popping up everywhere. You may be wondering about the nitty gritty details of the agreements you enter into with these types of companies. In most cases, probably, although you upload your data into the SaaS’s cloud, there is a good chance you will probably still own that data. However, you should always make sure. Your contract with the SaaS company should clearly state that you retain ownership of the data you share with them. Again, your business attorney can help you look over the SaaS agreement before you sign.

What vendor or sales agreements will automatically renew this year?

Some of your vendor, sales, and other agreements may automatically renew, thus putting you on the hook to pay for another year of service without your knowledge. This can be great convenient if you’re happy with your vendor or service provider and their pricing. It can backfire, though, when you aren’t happy and want to move on once the agreement has run its course.

So, when a contract, always read it through very carefully. Your business attorney probably reads these types of agreements all day, so make sure to bring them in before you commit.

Also, even if you’re happy with your current contract, contract renewal time can be just the time to negotiate better pricing. So, set up ticklers to remind yourself when each of your contracts ends or automatically renews so you don’t miss these opportunities.

What’s an assignable contract?

Assignable contracts contain provisions to allow the contract holder to transfer or “assign” the rights (and obligations) of the agreement to someone else. This can be a nice feature to have, especially when you are selling your business. Keep this in mind when signing a vendor or sales agreement.

Do I have adequate Intellectual Property protections in place in my business?

Your Intellectual Property (IP) includes not only your patents, trademarks, and copyrights, but also your ideas, inventions, designs, and color schemes you may use in your business. It can (and should) be protected at all times. Some steps you can take to put adequate IP protections in place are to :

Trademark your name and logo.

Have your employees and vendors sign a confidentiality agreement.

Pun in place non-solicitation and non-compete agreements.

Researched to see if proprietary processes are patentable.

Never underestimate the power and value of your intellectual property rights!

Do I have adequate data security processes in place?

Employment regulations are complicated and there are a lot of them. Again, consider a few important questions:

Does your company have an employee handbook? Is it current? Have all of your employees signed it?

Are your onboarding processes compliant with state and federal regulations?

Do you have written sexual harassment policies ? What are they? Do you follow them consistently? Do you have the documentation to back it up?

A business attorney will be able to help you navigate the maze of employment regulations and help you remain compliant.

Am I in compliance with all applicable online regulations?

Am I in compliance with all applicable state and local business regulations?

We touched briefly on this already, but all states have different business laws and regulations. Things can get complicated if you open your business in one state and operate in another state (i.e., a “foreign” state). You need to make sure that you’re compliant with the laws in each state where you do business. It’s also important to comply with local business regulations.

A good business attorney can help you stay compliant with all of these laws.

Summing it all up.

At the end of the day, a good business attorney will simply make your life as a business owner easier.

If you’re on the hunt for a business attorney, we’d be happy to accompany you on your legal journey. One of our specialties is translating legal jargon into terms that you understand. Sounds good, doesn’t it? Click here to learn more or set up a call with one of our experienced attorneys today.

This blog post is not legal advice and does not create an attorney-client relationship.

What Should I Ask My Business Attorney If I Am Selling My Business With A Commercial Lease?

hello@tekkii.com (David Jackson) — Thu, 24 Feb 2022 22:30:03 GMT

The first thing you should ask your attorney is: " Can we sell a business with a commercial lease? " The second question should be the following: " What obstacles do we need to know about and how can we overcome those potential obstacles? "

Questions regarding your commercial lease should be answered by a legal professional. Legal advice is highly recommended before making any major business decisions or signing any type of agreement.

What Are the Obstacles Involved With the Buyer?

Does The Buyer Want To Assume All Obligations and Space?

Even if the buyer will not take over your lease, they still may want to "take possession" of the space. If this is the case you should work to negotiate a deal with them that provides for termination or sublease provisions that are favorable towards you. This usually comes in the form of either terminating early or subleasing at a discounted rate.

What Obstacles Will the Seller Face With The Landlord?

Business owners who lease their property shouldn't expect potential purchasers to take on these existing leases without careful consideration. At best they'll present unnecessary obstacles; at worst they'll turn away interest entirely. This is true even when the lease in question is an operating lease, which doesn't provide the new owner with any rights to use or possess the property beyond what is spelled out in the agreement.

Have you taken any action that is a violation of your lease obligations?

The first thing a seller needs to do is carefully go over his/her lease and determine whether or not they have been in breach of it. This can be a rather complex process that requires the assistance of an experienced commercial real estate attorney who understands all your business's obligations under the leases.

Also, it would be helpful for you to obtain any copies of the late payment notifications that may have been sent by your landlord. Keep in mind that if you are sued by your landlord for breaching the lease(s) before the sale transaction closes, this could cause your buyer to back out of their contract commitment.

Obstacles Regarding Lease Negotiations

Can I change anything about my lease before selling my business?

No, you cannot modify the lease before selling your business unless Landlord gives its consent. This will be done through an assignment and sublease agreement ("A&S") between Seller, Buyer, and Landlord. The A&S does not affect any of the terms in Seller's original lease; it just adds an additional party (Buyer) to the existing lease agreement.

Are your lease payments higher, lower, or about the same as what a new lessee could lease the space for today? If your lease payments are “above market,” will the Landlord renegotiate the rate with the Buyer?

This may be obvious, but doing some research to see if your Rent is still comparable to new businesses popping up on your block is very important. You’ll want to be able to easily convince the buyer to take over the lease and continue by knowing you have a good deal on monthly rent.

If you can ask local businesses the cost of their rent this may be the easiest option instead of reaching out directly to a broker or real estate agent. Sometimes they may not always be transparent with all the information up front. If you find you need to be more competitive with your lease then you may want to consider hiring a lawyer to negotiate the price for the Buyer.

What Types Of Contracts Should A Lawyer Supervise?

hello@tekkii.com (David Jackson) — Wed, 26 Jan 2022 23:11:37 GMT

In a broad sense, all contracts should be supervised by a lawyer. However, there are two main reasons for this: one is to ensure the contract includes sufficient detail and is enforceable by law, and the other is to identify additional risks not obvious from a quick review of the contract. The first reason requires the lawyer to have expertise both in business matters as well as legal matters , whereas the second reason can be fulfilled by any professional.

What Could Happen If A Contract Was Not Reviewed By A Lawyer?

A lawyer should supervise contracts because it is important to make sure the contract is legally enforceable and will not put their client in a bad position later on. Without a contract, both parties could end up in a dispute over what they agreed to do or did not agree to do.

For example, if one party breaks or does not follow through on the deal after signing, there is no way for them to be held accountable without a signed contract. Also, what happens if there are multiple versions of the same contract with different terms for each version? They could all be legally valid because there was no proof that anyone had agreed to any specific terms before certain ones were changed. Lastly, what if the business hires someone who has malicious intent? They could bring the company to ruin by not following the terms of the contract.

When Is A Person Reluctant To Have A Contract Reviewed By An Attorney?

Some people might be reluctant to have their contracts checked for legality and enforceability because they feel like the lawyer will take too much time and charge too much money. If a contract takes a long time to draft, then it should be checked thoroughly by the business' employees before it is given to the other party for their signature. Also, if there's any part of the contract that you don't understand fully, ask your lawyer before signing it. Lawyers are more than willing to spend as much time as necessary meeting with clients and creating custom documents, but make sure you're clear on what each type of service entails and how many hours each one requires so that you can budget appropriately.

How Has Technology Changed The Way Contracts Are Created And Reviewed Today?

Technology has made it possible for people from all over the world to create contracts without ever meeting or having any direct contact. The Internet is a powerful tool that has transformed how contracts are created and reviewed today. In fact, there are millions of websites dedicated to contract creation and review. Moreover, this technology has redefined how a contract is verified as well.

In the past, a lawyer was needed to verify a contract. In fact, many businesses still rely on lawyers as part of their contract drafting team. However, modern technology has transformed what it means to be a “contract verification” lawyer. Nowadays, all that is needed is access to an internet connection in order to begin using online contract review platforms . Furthermore, this online tool makes it much easier for writers and lawyers alike to find what they need when reviewing contracts from any location at any time. Additionally, these tools have made contract review faster and more efficient than ever before.

Can Any Lawyer Review A Contract?

Any lawyer can review a contract. There is no requirement to be a lawyer with specializations in certain areas of law (e.g., contracts) - anyone can take a look at one and make sure it has been drafted correctly and that the terms are not contradictory or illegal. Many companies use their internal legal departments to do this, as there tends to be little cost involved, but may also hire outside lawyers as well.

If you want to hire an attorney as your agent, make sure they have experience in reviewing/drafting similar types of contracts; someone who only drafts patents will likely not be able to help you out much with real estate contracts, for example. If you want a lawyer well versed in all things business law and contracts, contact Ralph F Munyan today!

Internet and Technology Law

hello@tekkii.com (David Jackson) — Thu, 30 Dec 2021 16:52:07 GMT

There is no specific internet law. Rather, there are several laws that relate to the internet and technology as a whole. The main legal issues regarding the internet pertain to: intellectual property, such as patents and copyrights; freedom of expression and personal rights, such as free speech and privacy protection; online commerce and data protection.

What is intellectual property?

Intellectual property (also known as "IP"), is a term that refers to creations of the mind, such as inventions; literary and artistic works; designs; and symbols, names and images used in commerce. This category also covers things like semiconductor topographies, integrated circuits and even business methods.

What laws cover intellectual property?

The laws regarding IP are generally found in the following documents: World Trade Organization Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS), which sets minimum standards for all members of WTO. TRIPS provides protection for copyrights, trademarks, geographical indications, industrial design rights and patents.

The agreement prohibits unfair commercial use of undisclosed information obtained through reverse engineering or independent invention without the patentee's consent. The Berne Convention for the Protection of Literary and Artistic Works, which establishes international copyright protection. The Paris Convention for the Protection of Industrial Property, which provides a framework for the protection of intellectual property in industrial sectors.

What is copyright?

Copyright is a legal right that gives the creator of an original work exclusive control over its use and distribution for a certain period of time. Copyright protects expressions, but not ideas or facts.

The creator of an original work is usually the owner of the copyright in that work. However, there are some exceptions, such as when a work is created by an employee within the scope of their employment.

What is freedom of speech on the internet?

Freedom of speech on the internet is the right to express your opinion publicly without censorship or restraint by the government. This includes speech that is hateful, offensive, or otherwise objectionable. The First Amendment to the United States Constitution protects freedom of speech, which means that the government cannot censor or restrict your speech unless it poses a clear and present danger to public safety.

Some examples of free speech on the internet include posting comments on news articles, forums, and social media platforms; writing blogs and articles; and sharing memes and videos. You can also express your opinions freely on websites like Craigslist and Backpage. However, there are some types of speech that are not protected by the First Amendment and may still be regulated by the government.

Online commerce and data protection law?

The internet has brought about a new era of commerce. Not only can businesses reach a global market at the click of a mouse, but customers can purchase products and services with the same ease. However, this new frontier also brings with it new legal challenges. For example, online businesses must comply with data protection laws when collecting and storing personal information.

There are several key aspects to online commerce law. These include:

The use of digital signatures and other electronic methods of authentication;
The use of contracts and other legal agreements;
The governing law of transactions;
Dispute resolution mechanisms.

What is the Digital Millennium Copyright Act?

The Digital Millennium Copyright Act (DMCA) is a US law that protects copyrighted content online. It prohibits the distribution of copyrighted material without permission from the copyright owner. The DMCA also allows copyright holders to request that infringing content be removed from websites and search engines.

Should I consult a lawyer for my new website?

If you are starting a website with the intent to sell products, you should consult an attorney who specializes in internet and technology law. There are various laws that may apply to your business, such as the Federal Trade Commission Act, which prohibits unfair or deceptive practices in commerce. Ralph F. Munyan can help ensure that your website is in compliance with all applicable laws and can provide advice on how to protect your business from potential legal issues.

What Happens To Contracts In A Merger

hello@tekkii.com (David Jackson) — Fri, 19 Nov 2021 20:51:55 GMT

Businesses merge for a variety of reasons. Business owners might choose to combine their companies in order to grow faster, increase market share, or just for the thrill of taking over a new business. A merger typically involves two different businesses merging into one larger company; after all, if you're combining your operation with another business, why not go all the way and make it bigger? This type of merger requires two very important things: parties that are willing to agree on terms (specifically how they'll split the pie), and contracts (which lay out exactly how everyone will do what they say they'll do). It cannot be emphasized enough how important these agreements are between parties--without them, there's little hope of anything actually getting done.

So, we have two businesses merging and we have contracts that will help guide them in this process. Unfortunately, sometimes one or both of these businesses will go out of business before the merger is complete.

What happens to these contracts then? Can they be saved?

Unfortunately for most parties involved, no. A contract cannot survive the death of either party unless it's assigned under a corporate agreement (such as stock purchase agreements)--which has its own set of issues--or if the contract is supported by consideration produced before the termination. This rule does not apply, however, to consumer contracts; they're typically controlled by state law and can thus continue after one party dies (or even both parties). Typically, there isn't a whole lot of consumer contracts going around between businesses, but keep it in mind if you're ever thinking about merging with another business.

So What Can You Do In A Merger?

Well, the contracts may still die alongside the company that wrote them which leaves us with no protection and without recourse against the other party. However, unless we entered into some kind of merger agreement ahead of time which outlined how our contract would be dealt with if one or both parties died. A " survival clause " is a common feature found in merger agreements; this states that certain terms and conditions survive and continue even after one or both parties have died (or otherwise terminated). If there's not such a clause included here, we're much out of luck and cannot recover damages or enforce our agreement.

That said, there may be a few ways to go about this if your contract isn't the only thing that died in this merger. If one of the parties did not fulfill all of its responsibilities following the merger's completion, then you may be able to base an argument on breach of contract. You might also have grounds for relief if another party claimed it didn't actually know about the terms and conditions set out in your agreement (constructive knowledge). Again, however, these are typically unavailing so it would be wise to consult with an attorney who is familiar with commercial law before trying either option. As mentioned earlier, you should at least check state laws surrounding consumer contracts; if one or both parties are consumers, the contract may continue even if all other business contracts are extinguished.

There's no way to save your agreement in a merger--and that's quite unfortunate since it puts you at a disadvantage. The best thing you can do is be aware of this possibility ahead of time and include a contingency clause in your merger agreement before it happens. If that doesn't work out for you, see if there are any statutory exceptions available so you have some legal recourse afterwards.

Should I Consult An Attorney About Mergers?

Before signing an agreement, check state law on successor liability and mergers, this is not an easy task so consult a trusted attorney. Ralph Munyan can assist in all aspects of Business and Tech Law, as well as general legal counsel for everyday needs. Considering all possibilities is a job for a professional, Contact Us today !

This post is not legal advice. Contact an attorney today.

Ready to Start Your LLC in Missouri

hello@tekkii.com (David Jackson) — Fri, 12 Nov 2021 23:55:21 GMT

Great! Here are a few legal items to put (and check off) your list:

a. File your Articles of Organization online with the Missouri Secretary of State. Once you file your Articles, your LLC is officially created. (rb.gy/uacz1n)
b. Draft and adopt your Operating Agreement. Your Operating Agreement dictates how your LLC will operate and be managed. FYI, Missouri requires all LLCs to have an Operating Agreement.
c. Apply online with the IRS for an Employer Identification Number (EIN). (rb.gy/oyglye)
d. With your Operating Agreement and EIN in hand, open a bank account in the name of your LLC. Best practice is to run all business revenue through the company bank account.

You may have to complete other requirements too, depending upon the size of your business, your industry, your location, etc. These can include:

a. Registering your LLC only with the MO Department of Revenue to pay sales tax, withholding tax, unemployment tax, and others: (rb.gy/qfyk6c) .
b. Filing for Workers Compensation Insurance (rb.gy/wmfa1z) .
c. Obtaining a local business license. Is your business in KCMO? (rb.gy/wmr2td)

*Source: rb.gy/uacz1n

There is more to running a successful LLC than just checking off these boxes, of course. Talk with your professional advisors and talk with as many successful business owners as you can. Each of them will have an amazing story.

This post is not legal advice.