The good news is that with the right planning and legal precautions, you can safeguard your business from many of these threats. In this blog, we’ll discuss common legal pitfalls business owners face and how proper contracts and entity structuring can protect you, your assets, and your business’s future.

1. Lack of Proper Business Entity Structure

One of the first and most critical decisions you’ll make as a business owner is choosing the right business entity. The structure you select—whether it’s a partnership, limited liability company, corporation, or another form—has far-reaching implications for your business’s operations, tax responsibilities, and legal protection.

Pitfall:

Many new business owners fail to select the right legal structure, often opting for the simplest option, such as a sole proprietorship, without considering the potential risks. In a sole proprietorship, the owner is personally liable for all the debts and obligations of the business. This means if the business is sued, your personal assets—home, savings, etc.—are at risk.

How Proper Entity Structuring Helps:

By forming a structure such as an LLC or corporation – and by maintaining it properly, including keeping good books, records, and meeting minutes, –  you can protect your personal assets from business liabilities. These entities create a legal distinction between the business and the owner(s), limiting personal liability. A well-chosen structure also provides tax benefits and can make it easier to raise capital, sell the business, or transfer ownership.

2. Inadequate Contracts and Agreements

Contracts are the foundation of any business relationship, whether with clients, employees, suppliers, or business partners. Inadequate or poorly drafted contracts can lead to misunderstandings, disputes, and costly litigation.

Pitfall:

Business owners often rely on verbal agreements or generic templates that don’t address the unique needs of their business. This oversight can lead to vague terms, loopholes, and lack of clarity, leaving the business vulnerable to legal challenges.

How Proper Contracts Help:

Well-drafted contracts are essential for protecting your business in all types of transactions. A solid contract should clearly outline the roles, responsibilities, and expectations of all parties involved. Key contracts to consider include:

• Client or Customer Contracts: Ensure that payment terms, deliverables, deadlines, and dispute resolution methods are clearly stated.
• Non-Disclosure Agreements (NDAs): Protect sensitive business information from being disclosed or used by competitors.
• Employment Agreements: Outline the terms of employment, including confidentiality, intellectual property, and termination conditions.
• Supplier and Vendor Contracts: Protect your business interests by specifying pricing, delivery schedules, and quality expectations.

A thorough, enforceable contract helps prevent disputes before they arise and ensures that you have a legal framework to rely on if things go wrong.

3. Failure to Protect Intellectual Property (IP)

In today’s competitive market, intellectual property (IP) is often a business’s most valuable asset. This includes trademarks, copyrights, patents, and trade secrets. Unfortunately, many business owners neglect to protect their IP adequately, leaving it vulnerable to infringement or theft.

Pitfall:

If you don’t register your trademarks or patents, or take steps to protect your trade secrets, you risk losing control over your intellectual property. Competitors could copy your ideas, products, or branding, diminishing your market position and value.

How IP Protection Helps:

Taking the proper steps to register and protect your IP is critical. For example:

• Trademarks: Register your business name, logo, and other branding elements to protect against unauthorized use.
• Patents: If you have a unique product or invention, securing a patent can prevent others from copying it.
• Copyrights: Protect your original creative works (e.g., content, designs, software) from infringement.
• Trade Secrets: Implement safeguards, such as confidentiality agreements, to protect sensitive business information.

By protecting your intellectual property, you not only safeguard your innovations but also enhance the value of your business in the marketplace.

4. Neglecting Employment Law Compliance

As an employer, you’re responsible for adhering to a wide range of federal and state employment laws. Failing to do so can result in costly legal disputes, fines, and damage to your reputation.

Pitfall:

Business owners sometimes overlook important employment laws or fail to update their policies to comply with changes in labor regulations. This can lead to claims of discrimination, wrongful termination, wage violations, or failure to properly classify workers as employees or independent contractors.

How Employment Law Compliance Helps:

To ensure legal compliance and avoid lawsuits:

• Implement clear and up-to-date employee handbooks and policies covering workplace behavior, discrimination, harassment, and more.
• Classify employees and contractors properly, based on their roles and the services they provide.
• Stay on top of labor law changes, including minimum wage adjustments, overtime rules, and health and safety regulations.
• Ensure proper documentation of employment decisions, especially in cases of firing or disciplining employees.

By taking proactive steps to comply with employment laws, you create a safe and fair work environment, minimizing the risk of legal issues.

5. Improper Tax Planning and Record-Keeping

Taxes can be a major concern for business owners, and improper tax planning can lead to penalties, fines, or audits. Without the right structure and strategies in place, businesses often overpay in taxes or miss opportunities for deductions.

Pitfall:

Failing to keep accurate records or misclassifying business expenses can lead to tax issues down the line. Additionally, choosing the wrong tax structure or failing to plan for taxes can result in higher personal liability and tax burdens.

How Proper Tax Planning Helps:

Proper tax planning involves:

• Choosing the right entity structure for optimal tax treatment (LLC vs. corporation, etc.).
• Keeping accurate, detailed records of all business transactions and expenses.
• Working with an accountant or tax professional to take advantage of deductions and credits available to your business.
• Regularly reviewing your tax strategy to ensure you’re compliant and efficient in your approach.

With proper tax planning, you can minimize your business’s tax liability while staying compliant with all regulations.

Conclusion: Protect Your Business Now to Avoid Future Risks

Running a business involves navigating many legal complexities, and overlooking key protections can leave you vulnerable to lawsuits, fines, and other legal risks. By taking the time to establish the right entity structure with appropriate governing documents and agreements, understanding what is required to maintain your limited liability, drafting thorough contracts, protecting intellectual property, complying with employment laws, and planning for taxes, you’re putting your business in the best position for long-term success.

Don’t wait until a legal issue arises—start building a solid legal foundation for your business today. Consult with an experienced business attorney to ensure your business is legally protected, and you can focus on what you do best: running your company.

Ready to protect your business? Contact us today to schedule a consultation and ensure your business is structured properly and legally sound for the future. 918-938-1322 jmillerlawfirmpllc.com

#businessattorney #businessformation #businesspurchase #successionplanning #contracts #llc #corporation

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• Legal advice while your business is temporarily closed
• Help with restructuring amid the current climate
• Online mediation and arbitration to settle a dispute outside of the closed court systems
• Proactive estate planning

I would like to discuss these ideas with you if you’re interested in filling your downtime with a little legal due diligence.

Contact me or schedule an appointment online to learn more!

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The information contained in this video is not specific legal advice. Watching this video does not establish an attorney-client relationship. If you are seeking specific legal advice, please feel free to call me or schedule an appointment online.

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• What if you viewed your attorney differently?
• What if your attorney was your legal partner, helping you to prevent or mitigate risks in your business?
• What if your attorney knew your business, employees and was available to you to help navigate ongoing business decisions?

I would like to discuss these ideas with you if you’re interested in gaining a partner in the legal field.

Contact me or schedule an appointment online to learn more!

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The information contained in this video is not specific legal advice. Watching this video does not establish an attorney-client relationship. If you are seeking specific legal advice, please feel free to call me or schedule an appointment online.

The post Attorney-Client Relationship | Video first appeared on Jamie Miller Law | Tulsa Business Lawyer.

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The information contained in this video is not specific legal advice. Watching this video does not establish an attorney-client relationship. If you are seeking specific legal advice, please feel free to call me or schedule an appointment online.

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Forming a Business Partnership: Hire An Attorney

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The information contained in this video is not specific legal advice. Watching this video does not establish an attorney-client relationship. If you are seeking specific legal advice, please feel free to call me or schedule an appointment online.

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Cover Your New Business Bases: Hire A Business Attorney

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If you have ever dreamed of starting a business or buying an existing business, I would encourage you to do so but think it through carefully, and start it the right way. By starting it the right way, I mean don’t shortcut the steps you need to take. Starting a business from scratch, or buying an existing business are important decisions, and missing steps or making decisions you later regret can have serious legal and tax consequences.

Steps to Consider if you are Starting a Business

Create a thorough business plan AND budget

Having a thorough business plan (and budget) in place is something that often gets overlooked in the initial excitement. I am also a mentor and subject matter expert for SCORE in Tulsa, and there are free resources for business plans available through SCORE, as well as other entities. Just like with anything else though – don’t use just anything you find on the internet. These decisions are too important to take lightly. A link to SCORE business planning resources can be found here:  https://www.score.org/business-plans-startup-assistance-resources. 

Decide how you will structure your business

You also need to decide on a formalized structure for your business, such as a corporation or a limited liability company. This is a conversation I would encourage you to have with an attorney as well as your tax advisor, working together. The Secretary of State website is a great place to start for resources/forms, but submitting that filing is not the end of the process. Depending on the structure you choose, you will also want to have governing documents professionally drafted, such as an operating agreement, partnership agreement, or bylaws, as well as buy-sell agreements if there are multiple owners. 

File for licenses or permits

Depending on the type of business, there may be licenses or permits needed, as well as additional registrations for tax purposes, such as the Oklahoma Tax Commission if you will be selling taxable goods and/or services. 

Hire employees or contract independent vendors

The conversation about employees versus independent contractors is also important, and there are many factors that go into that decision. Misclassifying workers as contractors when they are actually employees can have serious consequences. Again, consult with an attorney about these issues, and your tax professional should be in the loop as well.

Draft contracts for vendors, clients, customers, contractors, and employees

Every business needs solid written contracts in place. These may be contracts with vendors, clients, customers, contractors, and occasionally employees. It is often less expensive for preventative legal services such as contract drafting and negotiation than trying to fix a bad contract later or litigate it after there is a problem.

These are just a few of the steps involved in starting a business.  Having a solid business plan in place, as well as professionals to guide you through the process can help to make it manageable and get you up and running smoothly. 

If I can help you with starting a business 2020, I would love to hear from you!  To schedule a consultation:  918-938-1322 or jamie@jmillerlawfirmpllc.com.

The post Starting a Business in 2020 first appeared on Jamie Miller Law | Tulsa Business Lawyer.

I often work with clients as well as #SCORE mentees who are starting businesses or buying an existing business, and one thing that is often overlooked at that stage is what do they want to happen to the business if something happens to them? This question gets more complicated if you are in a business with one or more partners, particularly if that person is not your spouse, or if that spouse is not regularly engaged in the business. If you are not careful, you could easily find yourself in business with a former partner’s spouse or their estate. That is probably not the plan you envisioned for running your business.

Another issue is if you are in a specialized industry or one that requires a license such as attorney, certified public accountant, doctor, insurance agent, realtor, etc. – there may be restrictions on who can take over your business affairs if you cannot.

Your business has ongoing needs that will need addressed, whether it is a situation where you are in the hospital for a few weeks and can’t respond to clients or get bills paid, or you are deceased and decisions need to be made on whether the business continues, is sold, or closes.

The answers to what your business succession plan is are personal to you and your business, and the specifics depend on your corporate structure, your governing documents (if you don’t have these –that is another conversation), whether you have business partners, your business goals, and your overall estate plan. 

If you would like to talk about your plans and how I can help you, feel free to contact me at jamie@jmillerlawfirmpllc.com or 918-770-7810. 

The post What Is Your Business (Succession) Plan? first appeared on Jamie Miller Law | Tulsa Business Lawyer.

The best time to come to an arrangement with your business partners is at the beginning.  When you are starting your business and everyone is getting along, it is typically much easier to come to a clear consensus on how you want to handle situations down the road.  If you do not create such an agreement, and you come to an impasse, you can still try to come to an agreement but it can be more difficult after disagreements have already occurred and tempers may be high. In the absence of a written contract, your options are limited to the Oklahoma statutes regarding your particular corporate structure (such as a corporation or a limited liability corporation) which may include going to court to get a resolution, which can include additional time and expense.

If you would like to discuss creating an agreement for your business or have an issue with a business partner, feel free to contact me at 918-770-7810 or jamie@jmillerlawfirmpllc.com.

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As part of that process, I encourage you to take time for review and reflection as well.  If you have estate planning documents – do you know where those documents are, and have you reviewed them in the last few years?   With life changes such as marriages, divorce, moves, additional or growing children, and unfortunately the passing of loved ones, it is important to review your existing plan documents.  This can be adding a codicil to a will, amending a revocable trust, revoking or changing a power of attorney, etc.  It is also an opportune time to review your accounts and insurance policies not only to make sure you have the coverage and policies in place that you want but also that your beneficiaries are correctly identified.

If you haven’t created any of these documents yet, please consider checking that off your list.

Below is a sample list of items to review or consider.

Estate Planning

• Know location of existing documents
• Review documents for changes
  • Personal Representatives/Trustees/Power of Attorney
  • Guardians for minor children
  • Property changes
  • Deed changes
  • If you have a revocable Trust, have you correctly transferred property and assets into the name of the Trust?
• Accounts and Insurance Policies
  • Review coverage and beneficiaries

If you have a business, have you met your business planning goals for the year, and what changes do you want to make?  What would happen to your business if something happened to you?  Have you reviewed your contracts with vendors and customers?  Do you have employee policies in place?  An ongoing relationship with an attorney can help you plan to meet your goals, make changes, review and update your documents or draft new ones, and plan for the future.  Below is a sample list of business planning items to review or consider.

Business Planning

• File annual paperwork for corporate structures
• Review or create corporate structure and keep records updated
• Revise or create contracts with vendors, customers, clients
• Revise or create employee handbooks and policies
• Review your insurance policies
• End of year bookkeeping and tax planning

Maybe you have a dream about starting a business or buying a business?  An attorney can help you work through those steps even when you are in the planning phase.  Some considerations are pros and cons to the distinct types of corporate entities, operating documents, and licenses that may be needed.

Planning Ahead for 2018

In 2018, I plan to expand my work with business owners and am able to offer affordable and flexible options for ongoing legal services.  I take a proactive approach with my clients to solve problems, minimize risks, and find the best method to resolve disputes for clients.  I also have a large network of other trusted professionals I can connect with clients to meet other needs, such as insurance, accountants, realtors, administrative support, and more.

I also plan to continue providing free speaking engagements on topics such as estate planning, business legal services, and mediation/alternative dispute resolution.

I am blessed with wonderful family, friends, and clients.   Wherever you are in life, I would encourage you to take some time to review your plans and goals.  I would love to help you in that process.

Contact us for your estate planning needs. Follow us on Facebook and Google+.

Blog Disclaimer:  This blog is made available for general information and educational purposes only and does not constitute specific legal advice.  By reading this blog you understand there is no attorney-client relationship created between you and J. Miller Law Firm, P.L.L.C.  This blog is not legal advice and you should not act upon this information without seeking advice from a lawyer licensed in your own state or jurisdiction.  Your use of the blog is at your own risk as the materials presented may not reflect the most current legal developments, and may be changed, improved or updated without notice.  J. Miller Law Firm, P.L.L.C. is not responsible for any errors or omissions in the content of this blog or for damages arising from the use or performance of this blog under any circumstances.

The post Review, Reflection and Business Planning first appeared on Jamie Miller Law | Tulsa Business Lawyer.