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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Accessing Your Colorado Tax Record with Revenue Online

Accessing Your Colorado Tax Record with Revenue Online

Colorado small businesses benefit from a variety of initiatives aimed at making it easy to fuel the entrepreneurial fire, such as the easy to use website for the Colorado Secretary of State, where you can accomplish a huge variety of business startup tasks with just a few clicks of your mouse!

Another excellent resource for individuals operating small businesses in the state of Colorado is called Revenue Online – a website managed by the taxation division of the Colorado Department of Revenue. Since this year’s first quarter tax filings are in the rear view mirror, this is a good time to think about looking ahead and making access to our Colorado tax records easier. How? Once you have filed your first tax return in the State of Colorado, you should consider signing up for an account to gain easy access to your tax records and a broad variety of services.

Things You Can Do with a Colorado Revenue Online Account

This is just a partial list; visit the Revenue Online site to see all of the tasks and information you can access with an account:

For Individuals
Taxpayers who create a Login ID will have access to their Colorado tax accounts. Taxpayers will have the ability to view their return history, view previous correspondence sent by the Department, and make electronic payments. You can also:

  • Amend a Return
  • Change Your Address
  • File a Protest
  • View Account Balances
  • View Your Payments
  • View Your Letters
  • View and Print Your Returns

For Businesses
Businesses that create a Login ID will be able to file and pay a variety of taxes including Sales Tax, Withholding Tax and Corporate Income Tax. Plus

  • File or Amend a Return
  • Change Your Address
  • File a Protest
  • View Account Balances
  • View Your Payments
  • View Your Letters

Signing Up for a Colorado Revenue Online Account

For the most part, gaining access to your tax account via Revenue Online is a simple process, however, you need to be aware of an exception with regard to individual income tax accounts. For security reasons, you cannot obtain access to individual income tax accounts until you first acquire what is called a Letter ID number. The Letter ID number is exactly what it sounds like – an ID number associated with a letter from the Colorado Department of Revenue. If you have a recent letter from the Department, you can simply use the Letter ID number located in the upper right corner the letter – it doesn’t matter what the topic of the letter is.

If you do not have a recent letter, you may request a Letter ID number on the Revenue Online website under “Additional Services” and “Request a Letter ID” (see image below).

Revenue Online Services screenshot

A letter containing the “Letter ID” number will be sent by postal mail to the address on record with the Department (so make sure yours is current before you submit the request!).

It might take up to 10 business days to receive the “Letter ID” letter, but once you have it, you will be able to create a Revenue Online account for your individual income tax account, which is important if you are a single member Limited Liability Company because as such you will have filed your business taxes as part of your personal return.

When you are ready to go, visit Revenue Online in your computer Web browser at www.Colorado.gov/RevenueOnline. To sign up for you account, you will need:

  • Taxpayer or Business Name
  • Tax ID Number, such as Social Security Number or ITIN from the IRS; Federal Employer ID Number (FEIN) or a Colorado Account Number (CAN) assigned by the Department
  • Address associated with your tax account

Once you have completed the registration process, you will receive an email that tells you whether you were able to get access to the account. Make sure to check your Junk email folder if you do not see the email in your Inbox – the email Subject line will say: Colorado Department of Revenue – Revenue Online Account Access Complete and will contain an Authorization Code that you will use the first time you log in, after which you will create your own password for the account.

If you need help with your business taxes or business tax planning, 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.
Your Denver Business Attorney
501 S. Cherry St., Suite 1100
Denver, CO 80264
720-258-6647
Elizabeth.Lewis@eclewis.com

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5 Crucial Areas of Commercial Real Estate Law for Colorado Businesses

Real estate law is a broad and complicated legal area. Colorado is no exception with a tangled mass of statutes on everything from discloser and zoning laws to insurance and contract laws. Whether you lease or own your business location, you will likely encounter a property law issue at some point. Attorney Elizabeth Lewis, MS, JD can help guide you through real estate law at every level before it affects your business. The following post will discuss five crucial areas of commercial real estate law for Colorado businesses.

  • Landlord/Tennant Laws
  • Disclosure Laws
  • Zoning and Land Use Laws
  • Contract Law
  • Insurance Laws

Landlord/Tennant Laws

Whether you own or rent your business space, landlord/tenant laws are designed to protect the rights of both sides who have entered into a rental or leasing agreement. There are numerous areas within these laws, including taxation, right of privacy, payment of rental fees, disclosures, duration of agreements, and right to terminate agreements. As a Colorado business owner, it is essential to comply with state laws in order to prevent violations. It’s a good idea to hire a Colorado-based attorney to advise you on all of your real estate and leasing issues from initial set up to lease/contract review to protecting your assets.

Disclosure Laws

Before you buy or rent a business space, you want to know everything you are getting into. Are there any toxic substances, like asbestos or lead paint? Does the building have energy use restrictions or accessibility inspections? You may have found the perfect location, nestled in the bustling heart of downtown Denver, but it is important to know what you may not readily see. Like other real estate laws, discloser laws vary from state to state and deal with the location, condition, and restrictions of the property. Furthermore, a commercial lease and residential lease differ greatly and are subject to different laws. A small business attorney will review and advise you on existing or potential factors before you are ready to lease or buy a retail space.

Zoning and Land Use Laws

Your real estate choice, whether you operate out of a home office or huge warehouse, will affect your business. Commercial real estate can be divided into several categories, including office buildings, industrial, retail, restaurant, multifamily, undeveloped land, and more. Each of these properties are subject to Colorado state zoning and land use regulations.

Besides determining taxation, these laws define and enforce how a property is used. As a business owner, you already have a checklist a mile long when it comes to choosing your location – rent or buy, physical space, length of lease, affordability, renovations, maintenance, competitors, specifications for signs, accessibility, and much more. Learning that you must apply for rezoning to the local board is not something you want to add your list, and it does not guarantee that your application will be accepted. With the expert advice of an attorney, you can navigate through these real estate laws in order to select the perfect location.

Contract Law

After you have decided whether to buy or rent, reviewed the terms of disclosure, and confirmed zoning, you will enter into a contractual agreement. Specifically worded and structured, these legally binding documents are meant to stand up to any challenges by a landlord, tenant, or outside entity. Many savvy business owners have agreed to the terms of a contract only to fall victim to some unforeseen loophole or unintentional breach that leads to litigation. In this event, an attorney will represent you and help protect your business.

Insurance Laws

Based on the space you occupy and the business you operate, you are required to have certain insurance. This is to protect your investment and cover any property loss or liability issues. The type(s) of insurance you purchase depends on your status as lessor or lessee, the number of employees you have, as well as any building ordinance or state laws. In the unfortunate event of an accident, burglary, fire, or other disaster, additional insurance can help to cover the aftermath of damage to your business. A small business attorney can help you decide what coverage is right for you.

If you are a landlord or a tenant who needs help with Colorado commercial real estate, 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.
Your Denver Business Attorney
501 S. Cherry St., Suite 1100
Denver, CO 80264
720-258-6647
Elizabeth.Lewis@eclewis.com

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Eight Important Questions For Your Small Business Attorney

Asking a Colorado small business attorney about these important aspects of your business now can save you a lot of frustration and expense down the road.

Whether you are a Colorado small business just getting started, or an established company with locations throughout the United States (and growing!), it is important that you work with an attorney throughout the life of your business. This post will cover the following list of typical reasons entrepreneurs with new or established businesses should seek out a business attorney:

  • business formation advice and documentation
  • business development and planning consultation
  • creation and/or review of business contracts
  • employment and independent contractor agreements
  • non-disclosure agreements
  • review of leases
  • software licensing contracts
  • website documentation

Business Formation Advice and Documentation

The form your business takes (ex: corporation, s-corporation, or a limited liability company) affects how you pay taxes, and how your personal assets are protected by the law. Business formation also has a role in your record keeping, and document filings. If you are in Colorado, there are some things you can do on your own, but before you get started, speaking to a small business attorney to get business formation advice and documentation instruction for your specific situation can be one of the most important decisions you make. Even if you want to handle some of the paperwork and filing on your own, you should still have an attorney review your situation and make a business form recommendation. Once you have good advice on which form of business to choose, your attorney can help you file the paper work, direct you on how to keep necessary records, or do it for you.

Business Development and Planning Consultation

Even if you are a brand new business, having an experienced small business attorney provide business development and planning consultation is a smart move. No entrepreneur has every skill-set needed to grow a business – you might have fantastic sales skills, but terrible record keeping practices. Let a good business attorney refer you to trusted resources in the areas where you need help.

Consulting with your attorney about gaps in your business plan is a good idea, too. While no attorney enjoys seeing a business fail, a big part of any small business law practice unfortunately involves helping people clean up after a business fails. This puts your small business attorney in an ideal position to advise you about what not to do.

Creating and Reviewing Business Contracts

Just do it! Whether you are a small business writing your first contract, or an established business sending out a contract you have used for years, it is critical that an attorney help with creating and reviewing business contracts. Even if you are familiar with contract law in Colorado, laws change over time, and what was a good contract five years ago may no longer be.

Employment and Independent Contractor Agreements

Employment law is one of the most complicated and confusing aspects of business. It is easy for a small business owner to get tangled up in a bad employment contract, or to set requirements for workers that disqualify them as independent contractors. Without the advice of an attorney, it is fairly easy to break the law unintentionally when it comes to your employment and independent contractor agreements.

Non-disclosure Agreements

If you are not sure if you need non-disclosure agreements in your line of work, ask your attorney. The answer may surprise you. There are many instances an NDA is a good idea, even if you are not discussing an invention or new idea.

Review of Leases

This is another “just do it” recommendation on our list of important questions to ask your Colorado small business attorney. There is no such thing as a “standard” lease agreement. Your attorney can provide a review of leases before you sign them and tell you exactly what you are committing to and how the lease can be terminated (or not!). You do not want to be stuck with a $20k widget that you can’t use and you can’t return. Your attorney can protect you, so let her!

Software Licensing Contracts

Even if you don’t write code or work in technology, it is a good idea to find out whether any of your ideas, practices, applications, or web sites should be protected by software licensing contracts . To do so, you will need the services of a good intellectual property attorney such as myself.

Website Documentation

You probably have a website, but have you properly posted your privacy and copyright policies, terms of service, etc.? If not, you could be placing your business in a precarious position. If you haven’t covered yourself with the correct legal statements, your small business attorney may have a broiler plate recommendation for the website documentation legalese that belongs on your public website.

Whether you have eight important questions for your small business attorney, or just one, the sooner you ask, the better. If you need legal advice about business formation, non-disclosure agreements, website documentation or any other legal advice for your small business, 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 Arrival of Sales Tax on Amazon Purchases in Colorado

A fridge? A best-selling novel? Organic coconut oil?

If you order it on online you can get pretty much anything delivered to your door — maybe even with free shipping. But as of February 1 in Colorado, if it comes from Amazon it will also come with sales tax.

Colorado recently became one of 28 states required to pay sales tax on purchases made on Amazon. The gigantic online retailer used to famously side-step sales taxes, but as needed distribution centers were opened in additional states to fulfill orders and delivery demand, Amazon agreed to apply the tax.

Collecting sales tax on online purchases has been an ongoing legal battle in Colorado fought by the Direct Marketing Association for the past six years. (It made it to the Supreme Court but was recently sent back to the federal court.)

Under federal law, if a retailer doesn’t have a physical presence in the state they can’t be forced to collect the taxes, which triggers a self-reporting requirement by consumers. Yes, buyers in Colorado are supposed to pay taxes to the state when they make an online purchase in the event that sales tax wasn’t added.

State law dictates that online stores keep a record of purchases made by Coloradans and report the sales tax that should have been collected. Those online companies are also obligated to advise the buyers of taxes owed.

Those who support compelling Amazon to collect sales tax in states where it has distribution centers or subsidiaries related to its business say that it has a clear advantage over brick and mortar stores that have no choice but to collect sales tax. Those on the other side of the argument say that states could simply eliminate the tax — and thereby the problem.

The Denver Post described the issue this way:

“DMA [Direct Marketing Association] continues to spearhead a legal challenge to Colorado’s unconstitutional tax and data-collection scheme,” he said. “Requiring out-of-state sellers to disclose private purchase information to the state’s Department of Revenue violates both the Commerce Clause, as well as the privacy of the business-to-customer relationship. DMA has won every argument in this litigation and we are confident the Tenth Circuit will support DMA’s argument and find Colorado’s notice-and-report requirements unconstitutional.

However, on February 23rd, 2016, the Federal 10th Circuit Court of Appeals court upheld the law against the DMA’s challenge. The judge posited that overturning it would result in a statewide “tax shelter” for online retailers. As a result, the decision could lead to a re-energized push for internet sales tax nationwide.

If you need legal help, don’t hesitate to contact me 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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