What Can A Business Law Client Expect At An Initial Consultation?
The vast majority of people who come to me to start a business are looking for input on what type of business entity they should choose. They are usually far enough along in their business planning process that I am able to help them quickly identify which type of business entity is right for them. First off, I will ask them what type of business they’re going to be in. If it’s a service business where they’ll be working with customers in person, then that’s something I want to know. If it’s a service business where they’ll be dealing with customers only remotely (over the phone, through email or through some other sort of electronic media), that’s also important to know. This is because the types of legal claims that are likely to arise against their business would be different in each of those cases, and will have a bearing on which type of business entity is appropriate for them.
The vast majority of my clients start as small businesses and intend to stay small (no more than 20 employees, and usually far fewer). In those cases, a limited liability company is likely going to be the best fit for them. That way, they can focus on their business and not on the administrative technicalities that are required with a corporation. The limited liability company also gives them some protection of their personal assets if the company ever ends up being liable for damages.
Initially, clients just need to bring me their notes or ideas about how they want to start their business. If they have a business plan in place, that’s great. If they have talked to their business partner about how they expect to split profits and make decisions, then I will need all of that information in order to appropriately document everything.
How Common Are Business Disputes In The Area That You Work In?
If I were to base the answer solely on my own experiences, then I would say that business disputes are very common. People aren’t going to call a lawyer when everything is going great; they’re going to call a lawyer when there’s a problem. My knowledge about how common they are mostly comes from other research and reading that I’ve done on the subject. From my own personal experience, it seems like there are a lot of business disputes, but I know that’s not true. Most people run their businesses and never have to call a lawyer. From my personal experience with clients who I have helped form a business, I would say that less than 10 percent of them have called me back about a business dispute that they’re in. Most of them just go on their way and handle the day-to-day business operations without ever needing a lawyer.
The important thing to remember about business disputes is not necessarily how frequent they are or how likely they are to happen, but how important it is to plan for them in the event that they do happen. If you don’t plan for disputes by having appropriate insurance in place or by setting aside a certain amount of your business income to cover attorney’s fees, then even a small business dispute can end up bankrupting your business. To me, the most important question about business disputes is whether or not you are ready for one to occur.
What Are Some Important Factors To Consider When Buying Or Selling A Business?
The first thing that you would want to know in buying or selling a business is whether you are buying the business entity. For example, if it’s a corporation, are you buying all the shares of the corporation from the people who currently own it or are you simply buying the assets of the business? If you are buying the business itself (or in this example, all the shares of the corporation), then you get not only the assets of the business, but also the liabilities. For example, let’s say a small construction company does paving and has a few pieces of equipment and an asphalt mixer. That construction company would have the option of just selling those assets to the buyer, or the whole company could be sold. The assets can be physical assets or intangible assets, such as the name of the company and its reputation in the community.
Buying the assets of a business and buying an actual business entity can both accomplish the same general purpose—that is, the business would start running under new ownership. However, the price the buyer would pay may be different and the documentation would certainly be different. The primary issue that everyone should always look out for when buying a business is the debts of the former business. You might look at a business and say, “They are bringing in $300,000 a year and they have a $150,000 a year of payroll, so this would be $150,000 positive cash flow for me every year.” However, if they have a line of credit that they owe $100,000 on and they haven’t disclosed it to you, then all of a sudden what you thought was going to be $150,000 of profit may become only $50,000 that first year.
In addition to the actual debts that are documented in some sort of contract, there might also be potential claims or lawsuits that you would want to know about. If the business that you’re buying has been sued, that would certainly make a difference. Alternatively, the seller may be aware of a situation that may lead to a lawsuit, even though the lawsuit hasn’t been filed yet. All of these details would need to be disclosed so that the potential buyer of the business would know exactly what they’re buying and could negotiate how those various risks could be allocated between the buyer and the seller of the business.
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