Small Business Legal Checklist

Small Business Legal Checklist

As a small business owner, you must wear a lot of hats! Unfortunately, one of the hats that is difficult to wear is the one involving legal matters. Whether you are just starting a business, are making changes in your current business structure, or are exiting a business, getting small business legal advice can be crucial. In an ideal world, you want to protect all you’ve built as much as you can and avoid any missteps along the way. Use this small business legal checklist to get your legal matters in order to prevent feeling overwhelmed or anxious about missing an important step.  

Legal Help for Starting a Business

Starting a business often requires the most attention and legal advice since there are many different things to consider, such as: 

Choose Your Business Structure

During business formation, you will need to select from a variety of legal structures for your company. This should be one of the first items on your small business legal checklist. Each type of business provides distinct organizational possibilities, each with its own set of tax and liability concerns. Prior to making a selection, you should extensively examine each legal structure and speak with an attorney and an accountant. These business types include:

  • Sole Proprietorship
  • LLC
  • Partnership
  • Corporation

Forming Contracts Between Owners

A contract is a legally binding agreement between two or more parties. If you own your business with other parties, it is important to have sound contracts stating the parameters of ownership – you can think of it as a prenup agreement for your business. Contracts are meant to protect your business and resources, as well as your personal assets, if they are correctly constructed. Unfortunately, faulty contracts may do the opposite. 

Contracts with Third Parties

As a small business owner, you will likely have contracts with customers, vendors, employees, contractors, and other individuals or businesses. While some business owners still rely on handshakes to confirm an agreement, in the legal realm, the one who has everything written down is usually the winner, especially if the terms are clear and concise. Always acquire a written confirmation, especially when the agreement involves the exchange of money or intellectual property. 

Legal Help For An Existing Business

Even if you have already been in business for many years, you still may encounter situations where you need legal advice, such as:

Signing A New Lease 

Throughout the life of your business, you may lease several different office spaces, whether it is for relocation or an additional location. The laws surrounding a commercial lease vary from state to state. When entering into a commercial lease in Colorado, consider factors such as what is prohibited on the property, how rent is calculated, if the rent will increase over time, and what obligations you have as a renter. Being a commercial renter is extremely different from residential so make sure you know what you are getting into before you sign a commercial lease.

Employment Law

Once your business has been up and running for a while, you may find that it’s time to start hiring employees. Both Colorado and federal employment laws aim to identify and defend the rights of employers and workers in the context of a commercial relationship. The objective is to guarantee that all parties are treated fairly by each other and the courts if required. There are subtle differences between employees and contractors that a small business lawyer can help you sort through. 

Legal Help When Ending a Business

The process of exiting, dissolving, or selling a business can be tedious and require consulting with an attorney with experience in this area and matter such as:

Closing a Business Without Selling

Before you can close the doors on a business for good, a lengthy number of processes must be completed. These frequently involve legal procedures that involve the help of a business attorney. In some cases, in addition to the lawyer, an accountant is required to dissolve the firm. While a legal representative can verify that legal paperwork is completed appropriately, an accountant can examine revenue, income, and all outbound transactions to ensure that everything is lawful and that the books are free of any questionable activity. Depending on the reasons why the business is closing, you may also need the help of other professionals which your attorney or accountant can recommend based on your circumstances.

Transferring A Business To A Successor 

When the owner or a senior-level partner retires, becomes disabled, or dies, small firms and partnerships without sound succession plans often collapse. Family companies, in particular, require proper succession planning because they must either identify family members who are suited for leadership roles or consider other possibilities outside the family and consider tax implications for transfer of the business to the next generation. The keys to a successful hand-off include planning ahead of time, basing decisions on business needs while also managing family expectations for family businesses, knowing the current state of tax law, and reviewing the plan as conditions change. 

Selling Your Business To A New Owner

There are several factors to consider when selling a business, such as the business’s value, what portion of the company will be sold, and when the sale will take place. It is crucial when drawing up a purchase agreement that a business attorney with experience in business sales or acquisitions takes the time to thoroughly review all documents. 

Elizabeth Lewis, MS, JD Is Your Denver Small Business Lawyer

Regardless of what stage your business is in, this small business legal checklist should help you identify areas where you may require legal advice. Law Office of E.C. Lewis, P.C. understands that the laws governing these areas are always changing, so even if you’ve run a Denver small business for decades, it’s a good idea to keep in touch with a Colorado business attorney on a regular basis to discuss any recent changes. Schedule a consultation today!

Will Corona virus affect your business?

Will Corona virus affect your business?

Even though I am a business attorney, I worry like most business owners about current events. Recently, the news and the markets have been rattled by the outbreak of the corona virus. Like me, you are probably wondering how the virus could affect your business and how to mitigate any damages that could be caused by it.

 

For companies that manufacture products (or have products manufactured for them by third parties), the biggest area of concern is where your products are manufactured and where the raw materials to manufacture them come from. If you use manufacturers in China or other areas where the corona virus has shut down factories, you should be looking at securing other manufacturers. Legally, entering into contracts with these manufacturers earlier rather than later may help you against competition that hasn’t done so.

For companies that provide retail or hospitality services, ensuring that you have enough staff to cover for sick employees could be essential. While you may not want to hire additional employees, you can reach out to companies that have different hours or, if your employees are mostly part-time, to companies that also have mostly part-time employees. You can have an agreement with these companies that if either of you are short staffed, you can call the other company to use their employees while they aren’t working for them. Of course, you would want to discuss this with your business lawyer or employment lawyer before you do so to find out the best way to structure the arrangement.

For companies that can offer it, having employees work from home can help mitigate the spread of any disease and keep your business up and running. Essential personnel can still report to the office, but by having less employees at the office, your essential staff can try to maintain CDC recommended distances from each other. Prior to allowing employees to work from home, it is important to contact your insurance company to see if there are any issues with this arrangement. You will also want your business attorney to write agreements for employees to sign if they are going to take any company property home with them, such as a laptop, cell phone, or printer.

Lastly, ensuring that sick employees do not come to work is key. While this is a good policy anyway, with the spread of the flu and potentially the corona virus, it is extremely important. One sick employee at work could easily create a situation where ten employees are out a few days later.

If you need help with any of the agreements listed above, contact me, Elizabeth Lewis, at the Law Office of E.C. Lewis, P.C., home of your Denver Business Attorney. Phone: 720-258-6647. Email: elizabeth.lewis@eclewis.com

Contact Us Today

Law Office of E.C. Lewis, P.C.
Your Denver Business Attorney

Mailing Address:

501 S. Cherry Street, Suite 1100
Denver, CO 80246
720-258-6647
Elizabeth.Lewis@eclewis.com

Online at:

We are still screaming over ice cream!

Several years ago, I wrote a blog about ice cream trucks. Multiple incidents throughout the past year were highlighted, including the dispute between Sno Cone Joe pushed Mr. Ding a Ling.

Well according to CNN, this was only the tip of the ice cream and things have stayed icy for ice cream truck businesses. CNN reported that over 45 ice cream trucks have been seized by the city. The reasons included summons of 22,000 citations for traffic violations resulting in at $4.5 million in fines. However, it gets better. The ice cream truck owners are accused of creating shell companies to avoid the fines.

If you buy ice cream from a truck this summer, make sure to tip well! This is a dangerous business.

If you are thinking about starting an ice cream business, or any other business, call me, your Denver small business attorney, Elizabeth Lewis today at 720-258-6647.

Yes, you do need business insurance if you work from home!

Someone on NextDoor.com asked how bad flooding could be in the Denver area. Here are some pictures of the flooding over the years. I think the one in 2013 was a water main break, but it gives you an idea of what the area looked like before the water receded in the 2015 flood. The 2015 flood pictures (all of the cars) just show the aftermath of of the rainstorm we had. The area has flooded a couple of other times as well, unfortunately I didn’t take pictures the other times. The cars are all of the sidewalk (or wherever they ended up) because of the force of the water. The water reached up to the front door (and probably further inside) in the picture with the cab if memory serves me right. This is right at 14th and Kearney/Krameria behind Mayfair Liquors for reference. Just another good reason to make sure you have business insurance – and especially a rider for business equipment if you work from home as your home owner’s insurance may not cover business property in your house without a rider.

 

Essentials, Elements, and Errors in Contract Law

Essentials, Elements, and Errors in Contract Law

Essentials, Elements, and Errors in Contract Law

As a small business owner, you are constantly faced with contracts. A contract is an agreement between two or more parties in which there is a promise to do something in return for a valuable benefit. You may have contracts with customers, vendors, employees, contractors, and other individuals or businesses. Oral agreements are sometimes used, but formal written contracts provide legal documentation. Contracts are legally enforceable and should be used to safeguard your resources. Small or new businesses may be more susceptible to mistakes when it comes to the numerous types and complex legal terms of contracts. The Law Office of EC Lewis PC can help create contracts, clarify existing or new contracts and agreements, and provide protection before or after you enter into any binding contract, making sure you understand the essentials, elements, and common errors in contract law. This post will cover contracts that are essential to the success of your small business, the elements of a solid contract, and the most common errors made in business contracts.

1. Essential Contracts

Contracts help to build relationships and protect your business. With the right legal documents, you will protect your property (intellectual and actual), avoid contract disputes, and limit your liability. Here are some contracts that are essential to your small business.

Service Contract – outlines exactly what you will provide or be provided by another company
Employment Agreement/Employment Offer Letter – specifies the rights and obligations of every full time or salaried employee; an employment offer letter should include all of the components of the employment agreement
Independent Contractor Agreement – signed agreements should be in place for every consultant or short-term employee
Equipment Lease – use this contract to lease equipment or lease out your own equipment
Business Lease – the lease for your office or retail space should fit your needs, have a sufficient lease term, clearly spell out the landlord’s obligations, and limit the amount of rent/tax increases allowable
Confidentiality or Non-Disclosure Agreement – potential employees should sign this before interviews, so your proprietary information does not leave the building
Non-Compete Agreement – prevent a former employee or business partner from competing against you while they are employed and for a specified period of time after leaving your company
Software or Website Terms of Use Agreement – understand and comply with the terms of software licensing and website use agreements to avoid violations and potential fines or litigation

All of these contracts need to be carefully thought out, crafted, and reviewed. A small business attorney will help you through this process and represent you in the event of a dispute or litigation.

2. Elements of a Solid Contract

Entering into contracts with customers or clients for the sale of your products or services is an integral part of your small business. There are key elements every contract should contain. Without them, your contracts may be invalid.

Offer – an offer is an invitation or putting the word out that you are accepting contracts, like an advertisement in a store window
Acceptance – the customer accepts by taking you up on your offer; details of offer and acceptance will vary
Capacity – those who enter into contracts must be of mental, physical, and legal capacity to do so
Undue Influence – negative influence or coercion to enter into the contract is not permitted
Intention – both parties must intend for the contract to have legal consequences
Legality – certain formalities must be followed to make a contract legal; the purpose of the agreement must not be illegal

When key elements are omitted or one party does not comply with the terms, a contract has been breached. Whether you are allegedly at fault or the one who has been offended, a small business attorney will help you through your contract issue(s).

3. Errors Most Often Made in Contracts

Negotiating contracts is daunting, but it means you are in business. It also means you have to make decisions that have real legal implications. One poorly drafted or neglected contract can have devastating results for your business. You can avoid some of the most common mistakes before it is too late.

Not Having a Contract – do not allow the small or intimate nature of your business to leave you unprotected; contracts are necessary regardless of your business structure or employee relationships
Not Recognizing a Breach – have a clear process in place for dealing with a failure to pay, a product not delivered as expected, poor quality, or bad behavior
Not Providing an Opportunity for Termination – think beyond the breach; every business contract should have a way for both parties to exit the contract
Not Thinking About Dispute Resolution – consider mediation or arbitration before litigation; these are far less costly options
Not Specifying That a Contract Can be Assigned – make sure every contract can be assigned in the event of a merger, sale, or purchase of the company if an acquisition is the goal
Not Considering Intellectual Property – from day one, have everyone in the company sign a contract that assigns the intellectual property to the company

Before you commit any of these errors, a small business attorney can create, review, or revise your business contracts from startup contracts to ongoing contracts and specialty agreements.

If you need help with essentials, elements, and errors in contract law, contact me, Elizabeth Lewis, at the Law Office of E.C. Lewis, P.C., home of your Denver Business Attorney. Phone: 720-258-6647. Email: elizabeth.lewis@eclewis.com

Contact Us Today

Law Office of E.C. Lewis, P.C.
Your Denver Business Attorney

Mailing Address:

501 S. Cherry Street, Suite 1100
Denver, CO 80246
720-258-6647
Elizabeth.Lewis@eclewis.com

Online at: