Small Business Legal Checklist

Small Business Legal Checklist

by | Sep 21, 2021 | Business News

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!

Making Apologies as a Small Business Owner

by | Dec 14, 2016 | Business News

Making Apologies as a Small Business Owner

After Wells Fargo CEO and Chairman John Stumpf stepped down following news of two million bogus accounts opened by employees under pressure to meet sales goals, a new CEO was culled from the ranks and put in charge. One of Tim Sloan’s first tasks as the new CEO of Wells Fargo was to reassure his employees and customers that things were going to get better. One thing is certain – before offering up his apology and presenting his plans to turn things around, he had legal advice. You may never face a televised congressional hearing evaluating your business practices, but you may someday find yourself making apologies as a small business owner. Here are three tips for getting the apology right, and some thoughts on when you may need legal advice.

1. Fix the Problem

This may seem obvious, but your apology will not have clout if the situation that allowed the problem to occur in the first place still exists. In Tim Sloan’s case, try to imagine that how effective his apology would be if his employees and the public knew customers were still being sold products they didn’t want, need, or authorize. You may need to make difficult choices to make sure you’ve fixed the root cause of the problem that lead to the need for an apology, choices which could include letting people go, changing the structure of your business, or altering your sales practices. If so, make sure you obtain legal advice before you fix the problem. If it’s a simple issue that can be resolved with simple changes to procedure, you may not need to talk to an attorney. But if your solution includes a major change to policy or practice, or a remedy that could expose you to risk, you should consider legal advice.

2. Make Sure Your Employees and Customers Know They Are Valuable

Regardless of what went wrong, even if the mistake that was made was an honest or unintended one, your customers and employees may be wondering if you value them. In the case of outright mistreatment – such as Wells Fargo employees being fired for reporting unethical behavior, or outright fraud – such as Wells Fargo opening unauthorized accounts for their customers – employees and customers will feel used and distrustful. But even if you simply made a mistake, or are facing a situation out of your control, people may wonder if you care about them, or if you carelessly “let this happen.” Make sure your apology includes a confirmation of caring that goes beyond your words if possible. Put yourself in the shoes of those who feel harmed. Is there anything that could make it better? What ever your solution involves, make sure you employees and customers know they are valuable to you and to your business.

This is another good point to consider legal advice. You need to make sure that what you offer in the way of making things right does not expose you to unintended legal consequences. Find a business attorney in Colorado and check in. This is one of those times when legal help in advance can make a big difference.

3. Listen to Employees and Customers

Advising you to listen to employees and customers who are impacted may seem like the first step, but I’ve placed it at the end because this is a two part listening practice:

  • You need to listen to all parties to understand what went wrong and why they are upset. Understanding why they are upset is as important as knowing what went wrong. When you make your apology, and you explain your steps to correct the problem, it is essential that you also be able to apologize to people about how they were made to feel. Do people feel they may no longer be able to trust you to keep promises? Are employees afraid you’re not paying attention to issues that could impact their livelihood? Don’t assume you know what they are feeling. Ask, and listen.
  • You also need to listen to feedback on your solution before you present it. Find a small group of key individuals and ask for their input as you formulate a solution and before you present it. Their feedback will be crucial to understanding the impact of your apology and how your solution might be viewed by those who are counting on you to make things better.

One final note on listening: make sure your listening process offers anonymity. Some people may not want to tell you what they knew about the problems in your organization before and after they surfaced – they may look at Wells Fargo as an example of what could happen and worry they could be fired. You will not be able to come up with the complete picture, and thus a viable solution, if you don’t get the full story.

Making apologies as a small business owner may not be easy, but if you are well prepared, it can make a real difference. If you need helping understanding the legal ramifications of a less than desirable business situation that may require an apology on your part, or crafting a solution that doesn’t compromise you legally, I can help with business coaching, or a business planning consultation to help you move forward. For any type of Colorado small business legal review, 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

LICENSED IN COLORADO AND NORTH CAROLINA

Mailing Address:

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

Online at:

Real Estate Services for Business Owners

Elizabeth Lewis provides the following real estate law services to small and medium sized business owners in Denver and throughout Colorado:

  • Commercial real estate purchases
  • Legal review of commercial real estate leases
  • Protecting your assets

Small Business Fraud in Colorado

by | Oct 26, 2016 | Business News, Misc. Legal Tidbits

Small Business Fraud in Colorado

We hear stories and hope it never happens to us, but when we step back a moment and think about how often small business fraud occurs in Colorado, we quickly realize that we need to be vigilant. As a small business owner, there are a couple of types of fraud you are particularly vulnerable to. I will address a three common types of fraud here, all of which have happened recently in Colorado. I invite you to ask questions about any additional types you’d like me to comment on:

Employee Theft

This is perhaps the most difficult to experience, especially if the employee is a friend, or someone you’ve come to regard as family (or, in the most unfortunate cases, the employee is family). Unfortunately, being regarded as family is a designation deceivers work hard to achieve because of the access it affords them. Staying later, taking on extra duties, and helping out without asking for additional compensation may all be indicators of a bad apple, according to Entrepreneur. It might also just mean you have an employee who is trying to make a good impression, but it is important that you put checks and balances in place in case there is more going on. You can have the employee share responsibilities with someone else – it’s harder to hide deception when there are two people sharing a task. You can also insert an accounting procedure or accountability audit that can be verified by some other means than the employee’s word, for example. Think about how a bank or retailer counts out a cash drawer – there are always two people present and both must sign off on the amount. Come up with a similar means of vetting the work or tasks your most trusted, hardest working employee is engaged in, especially if you are relying exclusively on his or her word to confirm numbers or data being provided to you.

Trusted Advisor Theft

Many of our business advisors have certifications, credentials, and excellent references but those credentials don’t guarantee we will never experience trusted advisor theft. Case in point; a Colorado attorney was recently sentenced to six years in prison for for bilking the company he worked for out of nearly 5 million dollars. A Colorado finance firm owner pocketed fees that were paid to help source loans for his clients. He has been sentenced to prison as well. The prison sentences are reassuring, and hopefully act as a deterrent to would-be thieves, but they don’t erase the stress and financial turmoil these types of thefts cause a business owner. In the instances of employee theft and trusted advisor theft, trust is the door the thief enters through. Jonathan Marks, a partner at Crowe Horwath LLP, provides excellent guidance on observing tell-tale behavior, and reminds us that trust is one side of the coin when deception is the other.

“Fraud is not about obstruction. It is about deception,” Marks said. “In other words, trust is a professional hazard. If you trust someone, you’re at risk of being deceived, so you must verify, verify, verify.”

If your employee or trusted advisor has demonstrated a willingness to deceive, even if it appears the other guy “deserved” it, or if he or she is remarkably arrogant or braggadocios, you may need to do some digging to determine if these behaviors extend to a belief that he or she is “above” the law.

Small Business Credential Theft

By credential theft, I am talking about the credentials you use to access your business banking accounts or business funds, as well as data that could be useful to a thief attempting to pose as you. First and foremost, don’t engage or allow any employee to engage in the Employee Password Worst Practices as outlined in the 2015 Password Workplace Report. The report is worth a read and offers good tips such as requiring complex passwords, and requiring passwords to be changed often. And absolutely make sure that anyone making multiple attempts to access information with the incorrect password is locked out.

If you don’t currently route your company network through a secure collocation data center (or don’t even know what that is) or aren’t sure just what sort of shared access employees have to your computer network (meaning can employee A access the computer of employee B via your network?) you should consider hiring an expert to evaluate your situation. If you don’t know one, I can refer you. If you think you are doing alright with regard to network security, take a moment to read this article with tips on boosting your workplaces network security, just to be certain.

If you need legal help or want to talk over ways of securing your interests against small business fraud, feel free to contact me 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

LICENSED IN COLORADO AND NORTH CAROLINA

Mailing Address:

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

Online at:

Real Estate Services for Business Owners

Elizabeth Lewis provides the following real estate law services to small and medium sized business owners in Denver and throughout Colorado:

  • Commercial real estate purchases
  • Legal review of commercial real estate leases
  • Protecting your assets

Policies and procedures to protect IP.

by | Nov 16, 2009 | IP Law, Online/Social Media Law

What policies and procedures should you have to protect your IP? To answer this question depends on who “you” are. This post goes over two very general types of situations – large companies and small 1-2 person shops. As always, you should consult your attorney to see what specific polices you need.

The Large Company

The large company faces multiple issues – such as dealing with agencies like the SEC, developing employee policies, and following truth in advertising rules. Large companies, especially those that are either publicly traded or thinking about going public, need to worry about publishing information that goes afoul of SEC rules. For instance, having an employee that publishes information regarding profit forecasts on twitter, even if unauthorized, may cause issues for the company. Because of this, large companies also have to worry about what their employees say, both in and out of work. Therefore, it is important to have a written policy on social media and other communications in general.

Although these issues may also be faced by medium sized companies, the large business may have a more difficult time dealing with this issues. One reason is monitoring 20 employees and communicating policies such as what can and cannot be posted on social media sites, and monitoring that employees are following it, is easier than monitoring and communicating policies to 500 employees.

Because of this, large companies need a written employee communication policy that covers both what can be said verbally and electronically. These policies should incorporate social media policies and address and special circumstances (i.e. if there are additional rules imposed by HIPAA or other laws that may apply). Large companies should also have either an in-house counsel or outside counsel that is familiar with SEC and FTC compliance issues to make sure both employees and upper management (i.e. board members) are counseled on what can and cannot be said regarding the company.

The Small Company

Small companies can usually internally ensure that employees, especially if there are only one or two employees, follow the policies that the owner wants. Small companies are also, typically, less concerned with releasing information that may violated the SEC rules (unless of course, small companies are looking to sell shares then it may be an issue). Because of this, depending on the number of employees, small companies may have an informal policy, unlike large companies that need written formalized policies, that is crafted with the help of an attorney to ensure that employees know what they can and cannot talk about (and the owners know too).

However, as small companies typically do not have in-house consul, small companies may have more problems ensuring that they follow advertising rules. Therefore, they need to make sure they have been counseled on what is, and isn’t, deceptive advertising. Depending on the company’s line of business, there may also rules and regulations that the company needs to follow (i.e. insurance, accounting, health, etc). By knowing the rules that govern the type of industry the company is in, a company can help make sure it is compliance with the rules.

If you find that the above post interests you, I invite you to come and listen to the Mile High Social Media Club presentation Thursday, November 19th at Strings in Denver at which myself and two other individuals will be on a panel discussing these types of issues. You can RSVP for the event at http://novembermhsmc.eventbrite.com.

Protect your IP online

by | Nov 14, 2009 | Business News, IP Law

So, how do you protect your IP from being stolen online? Unfortunately, the only way to make sure that someone does not steal it is not to place it online. Once it is online, there are very few, if any, ways to make sure someone does not steal it. Considering for many this isn’t an option (partly because many create IP specifically to put it online in the case of graphic artists and website designers or because people want to show off their work in the case of musicians and writers), there are some best practices for putting things online.

1. Watermark your work. If you are placing something like a drawing, cartoon, or photograph online, you can put a watermark on your picture to make it so that people may be less likely to steal the work (since your watermark will be on it). In addition, if it is stolen, it will be easier to prove (as long as the watermark isn’t removed somehow).
2. Post only part of your work online. If you are placing something like a novel or song online, you can put only part of it online and then send the full work by email (and you can charge for the full work if you are enterprising). Although this won’t guarantee that the work won’t be placed online by someone else equally as enterprising, you will have a record of who received copies and a note with the copy you send them may deter the person from placing the work online (something nice yet professional stating you have a copyright on the work).
3. Place smaller versions of your work online. If you are placing images online, you can put thumbnails online rather than larger files. By doing this, the work may be high enough quality to show your audience what you can do, put low enough resolution that someone else may not want to take it.
4. Read Terms of Services. If you are placing IP anywhere except your website, make sure you know who owns the rights to the IP by placing it on the site. The last thing most artists want is to find out that by placing a photo or article on a site means they have given up rights in that work.

Even if you use best practices for putting things online, if it is something that people want, there is a chance it will be taken and used somewhere else. If you find out your work on a site with a copyright policy, such as Facebook, MySpace, Google, or Yahoo, you should contact the site and ask them to remove it. In any case, if your work is something that is likely to be stolen (i.e. professional photographs, novels), it is a good idea to register your works with the U.S. Copyright Office. (I say this because you may not want to pay for a copyright on every photo you take on that trip to your grandmother’s house, but that is a call you should make with the help of your attorney.) By registering your work, if someone does steal it, it increases the amount of damages you may be eligible for and be able to get attorney fees.
If you find that the above post interests you, I invite you to come and listen to the Mile High Social Media Club presentation Thursday, November 19th at Strings in Denver at which myself and two other individuals will be on a panel discussing these types of issues. You can RSVP for the event at http://novembermhsmc.eventbrite.com.