Why You Should Get It In Writing

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Why You Should Get It In Writing

These may be the four most important words for an entrepreneur or small-business owner who often operates on a “handshake” principle: Get it in writing.

The challenge and excitement of starting a new business can lead to entering business agreements haphazardly or with complete trust of the other party, especially if it is with a family member. Your business contracts should protect your own business interests first.

Written business agreements and contracts accomplish the following:

Defines the Relationship

Business agreements and contracts provide the details of the expectations of each party. If everyone knows what they are supposed to do and what happens if they don’t, issues, when they arise (and they will arise), can be resolved much easier.

Reduces Potential Costs From A Dispute and/or Litigation

The reason that verbal contracts can cause problems is that parties change, memory fades, and details get fuzzy. Without a written agreement, a judge or jury will have a hard time determining which party is right. It becomes a “he said/she said” scenario. A well-written business agreement or contract with parties that you do business with i.e. customers, suppliers, contractors, partners, shareholders, co-members of an LLC, and investors, is a basic best business practice and one that you should not ignore.

“Get it in writing” may be the best business advice you can receive, but also keep in mind that just writing down an agreement is not the same as having an enforceable contract to protect your business. That is why it is important to seek an experienced attorney’s advice when entering into a business agreement. It is well worth the investment as the cost of misunderstandings or disputes could be much more costly in the long run.

Are you ready to have legal documents that protect you and your business?

Protect Your Business With Confidentiality Agreements

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Protect Your Business With Confidentiality Agreements

Some small business owners have created an idea or product that contains a new business model, invention, or other trade secrets. Far too often, these same business owners don’t take into consideration how important it is to have documents in place to protect their ideas. Perhaps they are consumed with the hectic operations of growing their business or they rely on the faith that everyone will honor some unwritten rule of “what happens at work stays at work.”

Have you taken the necessary steps to protect your business?

Confidentiality Agreements can help to protect you by providing a contractual agreement allowing you to file suit against investors or employees who violate your confidences. This provides you with more protection when sharing your proprietary information with others.

When running your business, the fact is, in order to get funding or necessary loans for growth, you must share your idea or product with investors. You must also share information with employees simply to get things done. Many times, a confidentiality agreement for an employee may extend beyond the time of their employment. This helps protect you from a disgruntled employee leaving and revealing your privileged information to a competitor.

Implied contracts for maintaining private company information or proprietary ideas is very difficult to prove in a court of law. To protect your growing business, make preparations early and consult with an expert to draft your confidentiality agreements, then implement a process to have them signed before making key transactions.

Are you ready to have legal documents that protect you and your business?

Do Online Templates Really Save You Money?

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Do Online Templates Really Save You Money?

Small business owners know there is simply no way around legal paperwork. Legal documents constitute the very framework of your business, minimize your risks and help protect your interests.

You can find plenty of legal templates online, whether you’re forming an LLC, buying a business, bringing on a new partner or hiring a new employee.

Though it may initially save time and money, the use of canned templates could expose you and your company to liability in the future.

Employment issues, intellectual property issues, corporate issues and partnerships can get complex. In the long run, it could cost you much more than what you would invest in paying an attorney to draw up the paperwork. A change in one clause in an agreement will require additional changes elsewhere, and failure to make such changes can leave the business owner with ambiguous and/or contradictory clauses — or worse — an unenforceable agreement.

True, you or your CPA could just as easily form an LLC or a corporation on the state’s website as an attorney can. But, do you truly understand the details that are required on the form? Do you know the difference between member managed and manager managed, or why you may want to choose one over the other? I’ve had people come to me requesting that I fix what they have done online because they discovered their documents do not reflect what they originally intended.

The biggest issue I see arising is bylaws and operating agreements that aren’t set up correctly or not set up at all. Anything off the internet for bylaws or operating agreements is very generic and often isn’t even focused on Missouri law.

When a generic operating agreement is used, you risk unclear instructions, or it may even say something totally opposite than what was agreed to in the beginning. That is horrible because those are the situations that could actually end up in lawsuits.

Even when things are going right for your business, your operating agreement is important. If you seek a loan for business expansion and do not have your operating agreement in order, you risk being denied for the bank loan. Banks look at operating agreements carefully.

The internet is a great resource, but it cannot take the place of a client-attorney relationship. An experienced attorney will understand your specific opportunities and risks and work with you to achieve your business goals.

Are you ready to have legal documents that protect you and your business?

Should My Business Have a Succession Plan?

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Should My Business Have A Succession Plan?

You’ve been in business for a while. You are working hard to continue to grow and prosper, but have you given much thought as to whom you’ll eventually pass the keys to your business?

In ideal situations, you should have a succession plan in place before you open the doors of your business. In reality, few small businesses have one.

Unlike large companies, small businesses and partnerships often fail without a solid succession plan when the owner or a senior-level partner retires, becomes incapacitated or dies. Problems can also arise when partners decide to part ways.

Unfortunately, there are many instances where successors inherit a healthy business and then are forced into bankruptcy because they lack the available liquidity to pay debts and taxes. Proper planning helps avoid many of the problems associated with succession and transfer of ownership.

If you don’t have a succession plan for your business, perhaps it’s time to draft one. Remember, it’s not a “one size fits all” process, so consider the following tips:

  • Include the succession planning strategy in your business plan
  • Don’t wait too long to begin
  • Evaluate your retirement savings and insurance
  • Assemble a team of legal and financial advisers
  • Identify and train a successor
  • Discuss succession plans openly with clients, potential customers, and employees
  • Revisit the plan periodically and update when necessary

Although no one can know for certain what the future will look like for your small business, creating and implementing an effective business succession plan will result in financial benefits, tax advantages, and emotional satisfaction regardless of what the future brings.

Are you ready to start building your solid succession plan?

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