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
501 S. Cherry St., Suite 1100
Denver, CO 80264
720-258-6647
Elizabeth.Lewis@eclewis.com

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10 Ways to De-Stress Your Business Tax Time

10 Ways to De-Stress Your Business Tax Time

As a small business owner, tax time can be very stressful, especially if you wait until the last minute to try to organize a year’s worth of paperwork. In order to ease the stress and avoid potential trouble with the Colorado Department of Revenue or Internal Revenue Service (IRS), start thinking about tax time as all year round. There are steps you can take throughout the year to make a big difference in your total income and tax liability when it comes time to file. A small business attorney can give you tax advice on the right business structure and paying the right taxes on time as well as provide representation in the event of an audit or penalty. This post will cover 10 keys to getting organized and keeping accurate records to eliminate the anxiety of tax season.

Getting Your Taxes Organized

  1. Appoint time each month to reconcile your receipts, bank slips, statements, invoices, etc. By dedicating just a couple of hours every month to basic bookkeeping, you will avoid dealing with 12 months’ worth of accumulation all at once. You can make a list of steps to be prepared and add important deadlines, dates, and digital reminders to your calendar.
  2. Create a simple filing system for your paperwork. Keep everything in one place, and clearly label or name your folders. Both paper and electronic bookkeeping can be organized by month and type of record.
  3. Separate business and personal finances. Not only will separate bank and credit card accounts for your business make it easier to manage your books, it will enable you to produce legitimate business documents in the event of an audit.
  4. Review your business reports and records even if you have a bookkeeper or an accountant. It is your business and liability on the line, so it is vital to know what is going on. If you are looking to hire someone to do your taxes, the IRS suggests a list of questions to ask the prospective tax preparer.
  5. Prepare for next year as soon as you have filed for the current year. Make a list of steps and possible improvements for the following tax season while the success and/or struggle of the current one is still fresh on your mind.
  6. Keeping Accurate Tax Records

  7. Understand your business structure and how it impacts your taxes. As your business grows and changes, it is important to reevaluate whether your current structure still works for you.
  8. Know how to claim your home office on your taxes. Whether you rent or own, you can claim a space that is designated for your business. It can be a partial space, rather than the whole room, and it must not be used for any other purpose. Once you have measured the space, you may be able to deduct a portion of expenses, like your mortgage interest, insurance, and utilities. The IRS has a home office deduction page with instructions.
  9. Record your mileage and car expenses if you use your car for business. There are two methods for calculating this deduction – one is based on your standard mileage rate, and the other is based on actual car expenses, like gas, repairs, and insurance. Whichever formula you choose, you will need documentation, including dates, mileage, tolls, parking fees, and the reason for your trip.
  10. Remember to save receipts from meals, travel, entertainment, and gifts. While you can deduct 50% of business-related meals, the cost of travel is 100% deductible. Most client entertainment expenses fall under the 50% deduction limit, while a direct gift to a client or employee is 100% deductible (up to $25 per person per year).
  11. Deduct office supplies even if you do not take the home office deduction. Furniture and other equipment, software/subscriptions, and telephone charges are also tax-deductible.

There are endless tips on how to streamline your business tax process as well as how to avoid a business tax audit. From starting a retirement plan, donating, and deferring income to not hiring too many independent contractors and limiting your business loss claims, the possibilities are seemingly endless. A small business attorney will help you sift through the checklists and keep prepared for each new tax season.

If you need help with your business taxes, or just need to find ways to de-stress business tax time tasks for your small business, contact me, Elizabeth Lewis, at the Law Office of E.C. Lewis, P.C., home of your Denver Small Business Lawyer. Phone: 720-258-6647. Email: elizabeth.lewis@eclewis.com

Contact Us Today

Law Office of E.C. Lewis, P.C.
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501 S. Cherry St., Suite 1100
Denver, CO 80264
720-258-6647
Elizabeth.Lewis@eclewis.com

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Niche Retail in Denver – The Key to Your Small Retail Store Success?

Niche Retail in Denver – The Key to Your Small Retail Store Success?

You have decided to relocate or open a niche retail store in Denver. There is an established market for your product. Financial and business plans are in place. You are honing in on your desired location, then you learn more about Colorado’s business environment. A recent 7 News Denver story (May 31, 2017) reports that retailers with a significant Colorado presence could be closing stores, citing overbuilding and a shift in consumer spending habits. Consumers have been spending more money online while moving away from traditional brick and mortar businesses. What was once considered a niche market on a product has become over-saturated. Despite this, you know Denver is the place for your retail store. A small business attorney in conjunction with a tenant-focused leasing agent can help you find the right location for your product as well as guide you toward the right channels for doing business. This post will cover some key information on location, product, and delivery.

  1. Deciding on Denver for your niche retail business
  2. Finding your niche market in Colorado
  3. Going omnichannel to expand your niche retail reach

1. Deciding On Denver For Your Niche Retail Business

With its distinctive retail districts, community-centric shopping centers, and a vibrant downtown, Denver caters to an eclectic consumer palate. Young families, artists, entrepreneurs, and active seniors alike call this pulsating metropolis home. Denver has long been ranked as one of America’s best cities and is rapidly becoming one of the hottest retail destinations. U.S. News and World Report recently ranked it #2 out of 100 best cities to live in, based on being a desirable place to live and having a strong job market and high quality of life. This all translates into confidence that you have picked the right place for your retail store. As you narrow your neighborhood search, it is important to know the zoning laws associated with any prospective location, even if you plan to operate, in any part, from a home-based business. It is also essential to know your business neighbors and protect your business from potential ones that can harm your business. A small business attorney will safeguard you and your business by helping you decipher zoning and other mandatory licensing laws as well as reviewing any contracts, such as a lease, before you sign.

2. Finding Your Niche Market In Colorado

A niche market is defined as the subset of the market on which a specific product is focused. It is a targetable portion of a particular market that other businesses may have neglected or overlooked altogether. There may be several shops in the area selling artisanal foods and craft beers – a good example of what was once niche market becoming more mainstream – but, you can further establish your niche by using only locally sourced ingredients or offering additional means of obtaining your products/services, like delivery or a “product of the month” club. You could even focus on a subset of potential customers, like catering to seniors. One local brewery got very clever with their customer base and decide to cater to cyclist who love beer by opening a craft brewery where you can have your bike repaired!

Having established that your product is unique, desirable, and available, your focus will turn to marketing. Location, business structure, and ability to reach your target customers will further determine the success of your niche market business. A small business attorney will see you through each phase of opening and operating your retail store.

3. Going Omnichannel To Expand Your Niche Retail Reach

An omnichannel approach can keep you at the top of your niche market. Broadly defined as a multichannel business approach to maximizing customer experience, omnichannel marketing merges at-home, in-store, and mobile shopping into one seamless experience. It is not enough to grab the attention of potential customers or clients; you must hold onto it. How do you do this in a way that is not a deterrent and that is effective and natural to their everyday lives? According to a Forbes article, you need to track consumer behavior, deliver relevant messages, and manage your customer relationships in real time. A true omnichannel customer experience integrates all of the various channels completely. As a small retail business owner, you may not be able to broaden your presence through all of the same methods as a large corporation, but there are options, including social media advertising, in-bound marketing, Google Exchange Network advertising, and online as well as brick and mortar storefronts to name a few. A small business attorney will be there for you as you navigate the various contracts you may be presented with once you decide to expand into advertising and/or marketing your products online.

If you need help finding the key to your small retail store success, contact me, Elizabeth Lewis, at the Law Office of E.C. Lewis, P.C., home of your Denver Small 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
501 S. Cherry St., Suite 1100
Denver, CO 80264
720-258-6647
Elizabeth.Lewis@eclewis.com

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Employee References – How to Tell the Truth and Avoid a Lawsuit

Employee References – How to Tell the Truth and Avoid a Lawsuit

As a small business owner, you are likely the boss and human resources (HR) department all in one. This means the unfortunate task of firing an employee is yours. Once the dreadful termination is done, you are relieved and ready to move forward. Then, a month later, you get a call from a prospective employer asking for a reference for the employee you fired. Before you panic, decline, or say too much, know your rights.

Employee Job Performance, Skills, and Abilities

In Colorado, employers cannot be sued for providing information about former employees unless the information given is false. In many cases, you are protected from liability for certain types of information you give out, like the employee’s job performance, including work-related skills, abilities, habits, suitability for reemployment, and reasons for separation. However, you should not give any of this information out without talking to a small business lawyer about your specific situation as you could be liable for even giving out this information. There are enough bad cases and an endless number of potential circumstances that can leave you feeling vulnerable. A small business attorney will help ensure you stay compliant with Colorado state employment laws, from hiring your first employee to increasing your workforce to deciding to let someone go.

A Fortune article compares employment references to a legal hornet’s nest. Most business owners are well aware that they can be sued for defamation for badmouthing someone in a reference, but not many realize that you can be sued for giving a raving reference that does not match up to the employee’s performance in their new position. It is no wonder some employers shut down any requests for references.

Until you speak with a small business attorney, you should only answering the “who, what, and when” (i.e. job title, salary, and dates) of a former employee’s history. If you feel you need to answer more, for example because there are details that may be critical for a potential employer, speak with an attorney. What if you fired the person for frequent absence, poor performance, or grave misconduct? If you are reluctant to disclose such details, you can use a general comment like “I would really prefer not to say”.

Former Employees and Written Records

Some states have enacted service letter laws that require employers to provide former employees with basic written information about their employment – however, Colorado law does not affirmatively require it. Visit the Colorado Department of Labor and Employment for information on state labor laws that outline what employers can disclose about their former employees.

Hopefully, if you have had to fire an employee, you maintained documentation of the employee’s history with your business, particularly the details leading up to their termination. Despite your best efforts, they may blame you for their inability to obtain a new job, claiming slander or libel from your reference (or lack thereof). By speaking to a business lawyer before speaking to a potential employer, you can avoid or protect yourself from a lawsuit. Here are some precautions you can take.

Make a company reference policy. Be sure all of your employees are aware of the policy. If there are other staff members who are responsible for HR, make sure they know the policy well.
Keep it short. Do not volunteer extra or unsolicited information. It is best to keep your references short and to the point.
Provide only the facts. Keep your references as factual as possible. The truth is your best defense against defamation claims.
Designate who can give references. Select the most discrete and trustworthy employee, other than yourself, to give references. The more experience the person has with giving references, the less likely they are to say something wrong.
Create a reference request form. Include a statement about the possible disadvantages that are inherent to the reference process. This will provide you with another level of protection from liability. Requiring employees to review and fill out the form will supply you with detailed documentation as well as the right to decline a reference request if the employee did not fill out the form.

Employment Law is Complex

Employee references are just one small part of the large area of employment law. With its complex regulations and compliance requirements, employment law covers vast topics, such as contracts, hiring, and working with employees. The U.S. Department of Labor publishes an employment law guide for small businesses to develop employer policies on wages, benefits, safety and health, nondiscrimination and disclosure. For more on Colorado employment law essentials, see 7 New Business Essentials in Colorado Employment Law.

If you need help with employee references or employment law in general, contact me, Elizabeth Lewis, at the Law Office of E.C. Lewis, P.C., home of your Denver Business Lawyer. Phone: 720-258-6647. Email: elizabeth.lewis@eclewis.com

Contact Us Today

Law Office of E.C. Lewis, P.C.
Your Denver Business Attorney
501 S. Cherry St., Suite 1100
Denver, CO 80264
720-258-6647
Elizabeth.Lewis@eclewis.com

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The Five C’s of Software Licensing

The Five C’s of Software Licensing

Software licensing can be a daunting combination where the perplexing realm of technology meets legal jargon. Defined as legal documents or contracts that govern the use and distribution of software, these licenses provide necessary protection for your business. Without proper licensing, you may be prone to someone stealing your intellectual property, or you may unwittingly commit copyright infringement. As a small business owner, it is essential to understand the importance of software licensing in order to protect your business’s brand or product and to avoid illegally using someone else’s. When the terms and contracts are beyond an IT issue, Attorney Elizabeth Lewis will help you work through it. Here are 5 essential areas of software licensing.

  1. Copyright
  2. Contracts
  3. Codes
  4. Confidentiality
  5. Compliance

1. Copyright

Whether you are a mom and pop store or an expanding enterprise, your intellectual property is as valuable as your merchandise. A lot of work goes into creating marketing concepts, a logo, a business plan, and overall operations/procedures. If you neglect to protect these assets through software copyright, you will be defenseless against others profiting from what you created. Registering your software copyright with the U.S. copyright office reinforces your copyrights, especially if you ever have to take someone to court. A small business attorney will help you determine what aspects of your business – a website, a product, or an idea – need to be protected by a software license.

2. Contracts

No one hires a disgruntled employee, but people can become dissatisfied over time and want to damage your business. There are contracts to safeguard your company from any employees who may try to exploit the knowledge they have accessed while working for you. Non-compete agreements are clauses under which employees cannot create businesses like yours while you employ them or start a similar one for a determined amount of time after they leave your employment; however they are only allowed in certain situations in Colorado so it is important to know if one will really protect you or if you need to use other means as well. Other employment agreements state simply that you own any work that your employees do for you. Confidentiality agreements protect your trade secrets and prohibit others from giving damaging insight into the operations of your business. An attorney will
help you take all of the necessary precautions to protect your intellectual property and represent you in the event of these types of theft.

3. Codes

Open source code licenses allow anyone to use, modify, and share your licensed software. You may not be able to govern every single user’s actions, but you are still protected as the original creator and are entitled to credit for your contributions. These licenses can make it easy for others to share, contribute, and build upon your project without having to obtain special permission. Issues with noncompliance and proper licensing can arise when using open source code licenses. An attorney will help you with these issues as well as any open-source versus proprietary software dilemmas.

4. Confidentiality

Your business’s success depends on your competitive advantage, something you can maintain by protecting your intellectual property. Keeping your trade secrets a secret takes measures, including confidentiality agreements and nondisclosure agreements. Software licenses keep some of your most valuable information – ideas, practices, applications, websites – safely guarded.

5. Compliance

We have all scrolled rapidly to the end of the terms of an agreement and clicked “I agree” without necessarily comprehending or even reading all of the words. As a software user, it is crucial to obtain your software through legal means, know precisely who is allowed to use it and how many copies are covered by the license, and read and understand the license agreement. Many small business owners do not purchase enough copies of software, thinking they can use one copy for everyone. This will inevitably lead to consequences from having your software disabled to facing huge fines or litigation. A small business attorney will ensure you have taken the necessary precautions and represent you in the event of a software licensing violation.

If you need help with software licensing, 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
501 S. Cherry St., Suite 1100
Denver, CO 80264
720-258-6647
Elizabeth.Lewis@eclewis.com

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