Archive for the ‘ Business Law ’ Category

Can A Shareholder Be Removed From A Business?

Posted on: March 18, 2019 by in Business Law
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Shareholders do not always work out. When a corporation or a business needs to remove a shareholder, what steps must be taken? Will the shareholders who remove another shareholder face legal challenges? How can a business law firm in Florida help?

Removing a shareholder is complicated, but if the other shareholders take the right steps, a shareholder can be removed without any violation of the law. This is a brief discussion of the steps that shareholders must take to remove another shareholder from their corporation.

STEP #1: READ AND UNDERSTAND THE SHAREHOLDER’S AGREEMENT

A shareholders’ agreement spells out the obligations and rights of a corporation’s shareholders. It ensures that shareholders are treated and represented fairly and equally. The agreement should spell out in the most precise language possible exactly how to cut company ties to a shareholder.

If the language in the shareholders’ agreement is clear and precise regarding when and how a shareholder may be removed, the removal process will be much easier.

business partners in a meeting

Shareholders without the control of a business can typically be removed by the controlling shareholders for any violation of the company’s bylaws or the shareholders’ agreement.

WHAT ABOUT MAJORITY SHAREHOLDERS?

However, even someone who owns more than fifty percent of a company’s outstanding shares can be removed if there has been an explicit violation of the terms and provisions of the shareholders’ agreement or the company’s bylaws.

If a shareholder also has an employment contract with the company, the contract will have to be closely scrutinized to avoid any unanticipated legal difficulties.

A buyout provision should also be a part of every shareholders’ agreement. Corporate shareholders in this state should have their shareholders’ agreement drafted by an experienced Daytona Beach business attorney.

WHAT SHOULD BE INCLUDED IN A SHAREHOLDERS’ AGREEMENT?

When you create a shareholder’s agreement, you will need to include a number of precise items about the company, such as:

  • a capitalization table
  • the number of shares that will be issued
  • directions for transferring shares
  • the rights of shareholders to acquire company shares
  • how shareholders are paid if the business is sold

If you need to remove a shareholder, having the details as complete and as accurate as possible in a shareholders’ agreement can make the removal process significantly easier.

business partners and disputes

If you already have a shareholders’ agreement established, allow your business attorney to review the current agreement to ensure that it’s fair, enforceable, and that it meets the company’s current needs.

STEP #2: TO REMOVE A SHAREHOLDER, HAVE RELIABLE LEGAL ADVICE

When a shareholder needs to be removed, it is important to consult as early as possible with a reliable and skilled business lawyer. Your business lawyer may be able to help you negotiate a voluntary buyout and avoid legal action by the targeted shareholder.

A business lawyer will review the pertinent documents, apprise you of your company’s legal rights and options, and help you move forward with the removal process in the most effective and legally appropriate manner.

STEP #3: CREATE A REMOVAL RESOLUTION

With almost no exceptions, there must be some violation of the company’s bylaws or its shareholders’ agreement when a shareholder is being forcibly removed from the company.

shareholder agreements

When you understand your shareholders’ agreement and have reliable legal guidance, a shareholder removal resolution may be the best next step to take in the removal of a shareholder. Have your business attorney review or help you draft the removal resolution.

You may need to present the resolution to your corporate board of directors or to specific shareholders. It should accurately explain the cause for the removal, and it should additionally include a buyout request.

STEP #4: BE PREPARED TO NEGOTIATE AND COMPENSATE

If the shareholders have no compelling legal reason for a stockholder’s removal, they may still offer to buy the individual’s shares and to negotiate a fair price that both sides can agree upon.

It is important to understand that a former shareholder’s shares must be transferred or gifted to another shareholder. It doesn’t matter why a shareholder leaves or is removed. Your company cannot have shares that are unallocated.

Transferring the ownership of shares can be accomplished through their sale or through the gifting of the shares to others by completing a stock transfer form.

WHAT CAN HAPPEN IF NEGOTIATION ISN’T POSSIBLE?

However, if the shareholder who is being removed will not negotiate, and if you cannot compel that shareholder’s removal – if there has been no obvious violation of the shareholders’ agreement or company bylaws – a good business lawyer may be able to suggest other options.

For example, if your shareholders’ agreement does not spell out how to remove a shareholder, state law will apply. Every state has laws that allow corporations and businesses to remove shareholders. An experienced business attorney will know what steps to take.

When a shareholder is removed involuntarily, even if the shareholders have acted cautiously and have had sound legal advice, there is always the possibility that the removal attempt will trigger a legal dispute. The most serious disputes can bring businesses to a grinding halt.

disagreements in a business

The right business attorney may be able to help you resolve disputes with shareholders – and other potential legal disputes – before those disputes reach a courtroom or damage your business. An experienced Daytona Beach business attorney will be an aggressive advocate on your behalf.

IN WHAT OTHER WAYS WILL A GOOD BUSINESS LAW FIRM HELP YOU?

Along with a shareholder’s agreement, your business lawyer can draft or review your company’s articles of incorporation, bylaws, operating agreements, employment agreements, contracts, policies, and procedures.

When you form a business in Florida, putting an accomplished business attorney on your team is one of the first steps to take. As the business grows, your attorney will be able to advise and represent you and your company on a wide variety of matters that a business will face over time.

Do not wait until you need an attorney. In too many cases, that will be too late. Let a qualified business lawyer put solutions in place for your business now that will keep small disagreements and difficulties from turning into serious and costly legal disputes in the future.

A business owner needs an attorney who will offer trustworthy legal advice, who will ensure that your company is entirely compliant with the law, and who will aggressively represent you if you’re involved in a legal dispute. If you own a business, a good attorney’s help is your right.

Top 10 Tax Deductions That Business Owners Need To Know

Posted on: February 16, 2019 by in Business Law
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business owner doing finances

Owning a business can be rewarding and deeply satisfying in a number of ways – and especially if your business is prospering. The IRS offers several tax breaks that can help Florida business owners make their businesses flourish, but some of these tax breaks can be easily overlooked.

If you own a business in this state, our Daytona Beach business lawyers can help. Listed below are ten of the tax breaks that even experienced business owners sometimes overlook.

#1: THE NEW TWENTY PERCENT DEDUCTION

The Tax Cuts and Jobs Act of 2017 established new tax rates for businesses. The corporate tax rate for the largest companies was dropped from 35 to 21 percent.

Some pass-through businesses – partnerships, sole proprietorships, S corporations, and single-member limited liability companies – will now qualify to receive a deduction of 20 percent of their net income.

business owners

This break is for business owners with an income that “passes through” to their own Form 1040 and other tax forms. In businesses like finance, law, and accounting, an owner’s deduction is reduced if his or her income exceeds particular limits. If you earn too much, you may have no deduction.

#2: THE HOME OFFICE DEDUCTION

Employees who previously wrote off a “home office” no longer have that deduction under the Tax Cuts and Jobs Act, but a deduction for a home office is still offered to taxpayers who use the Schedule C. Sole proprietors who report a profit may take the deduction for a home office.

In order to claim the deduction, a home office must be space that is devoted to your business and nothing else.

The deduction isn’t limited to a full room. Your home office can be part of a room. Measure the work area, divide it by your home’s square footage, and that figure is the part of your residential expenses – rent or mortgage, insurance, and utilities – that you may claim.

There’s a simplified method for claiming a deduction for a home office. You should consider both methods for writing off a home office and use the method that’s best in your own situation.

#3: THE RENT DEDUCTION FOR BUSINESS PROPERTY

The expense of renting business space – whether you are renting office space, a storefront, a factory, or any other type of facility for your business – is fully deductible.

#4: THE OFFICE SUPPLY DEDUCTION

Whether or not you take advantage of the deduction for a home office, you may deduct any office or business supplies that you purchase.

office supplies

The advice that you’ve always heard – about keeping all of your receipts for office supplies – is important, because those purchases help to offset your taxable income.

#5: THE OFFICE EQUIPMENT AND FURNITURE DEDUCTION

Under the Tax Cuts and Jobs Act, a business owner may deduct up to $1 million worth of equipment and office furniture purchases. Previously, owners could only deduct for equipment and office furniture purchases up to $500,000.

Owners may deduct the full purchase price of qualified equipment from their gross income, provided they capped such expenditures at $2.5 million for qualified equipment financed or purchased in 2018. The 2017 spending cap was $2 million.

On some assets, a depreciation deduction of 100 percent is available which covers both new and used equipment. Prior to the Tax Cuts and Jobs Act, this deduction was available exclusively for new equipment. Assets that qualify include:

  • equipment or machines for business use
  • office furniture
  • particular interior improvements to commercial properties
  • pickup trucks, SUVs, and vans that weigh more than three tons

#6: THE ELECTRONICS AND SOFTWARE DEDUCTION

Electronics purchases like software, tablets, laptops, and smartphones may be written off. Devices costing $2,500 or less may be expensed the year they are purchased instead of depreciated over several years. Items costing over $2,500 must be depreciated.

computer for work

New software may be completely expensed the same year it is purchased provided that the software is “off-the-shelf,” not proprietary or custom-designed, and is commercially available to anyone.

#7: DEDUCTIONS FOR TRAVEL AND MEALS

The Tax Cuts and Jobs Act did away with most deductions for “entertainment, amusement or recreation,” but several deductions for meals and travel were retained.

Meals, for example, are deductible up to 50 percent provided that the meal isn’t “lavish or extravagant.” For instance, if you invite a client to a sports event, you can’t deduct the ticket prices, but if the hot dogs, burgers, and beverages are on you, you may deduct half of their cost.

#8: THE DEDUCTION FOR INSURANCE PREMIUMS

If you’re a business owner or self-employed and you pay for your own health insurance, the costs may or may not be deductible. You cannot take the deduction if you qualified for other coverage, such as healthcare coverage offered through a working spouse’s healthcare plan.

It’s a tax break that mostly benefits sole proprietors, and the deduction cannot exceed the net profit of your business. You may be able to include some of the premiums that you pay for healthcare coverage for your spouse and dependents.

#9: THE DEDUCTION FOR SOCIAL SECURITY CONTRIBUTIONS

When you’re self-employed, you pay double to Social Security what you would pay as someone else’s employee. Under federal law, employers pay 50 percent, and employees pay the other half, but if you’re self-employed, you pay both halves.

That amount should total 15.3 percent of your net profits, but you can deduct half of your contribution to Social Security on your Form 1040.

#10: DEDUCTIONS FOR SALARIES, WAGES, AND CONTRACT LABOR

Salaries, wages, commissions, bonuses, and taxable benefits are deductible expenses. Payments to freelancers and independent contractors are also deductible. Payments to a sole proprietor, a partner, or an LLC member aren’t deductible since these owners are not employees.

business paperwork

You must send a Form 1099-MISC to independent contractors who earn $600 or more in the tax year. If you use a payroll service, in most cases the service will send a Form 1099-K to contractors. Still, sending your own 1099-MISC – to protect yourself – is a smart idea.

WHERE CAN FLORIDA BUSINESS OWNERS OBTAIN SOUND LEGAL ADVICE?

Today’s marketplace is global. Business owners are concerned about taxes and a number of other legal matters that directly affect their businesses and the business environment. Having a skilled Florida business attorney on your team is imperative.

Along with financial concerns, business owners today deal with discrimination and injury claims; legal obstacles in the hiring process; and intellectual property protection. The most basic decisions often seem to require a law degree, a business degree, and a great deal of wisdom.

An experienced Daytona Beac business attorney will provide the legal guidance, insights, and if necessary, the representation that a business owner in Florida will – at some point – inevitably need.

With a reliable business lawyer working on your behalf, a business owner in Florida can put effective solutions in place before legal problems emerge. An attorney’s help might be the best investment that you can make for your business and its future.

Protecting Your Business From These Common Legal Issues

Posted on: January 18, 2019 by in Business Law
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If you own a business – in Florida or any other state – you probably already know that every business owner is a target for lawsuits. The largest companies, in fact, keep full-time business attorneys on staff to deal with the numerous lawsuits that are routinely filed against those companies.

If you own a business in the state of Florida, what kinds of lawsuits can you expect to face? Are there ways that you can prevent legal trouble before it starts? And who can you rely on to provide the legal help that a business owner is inevitably going to need?

The most common lawsuits that business owners here in Florida are likely to face will be:

  • lawsuits that deal with intellectual property disputes
  • premises liability lawsuits when someone claims to have been injured on your property
  • employee lawsuits that charge you with discrimination or wage-and-hour violations
  • product liability lawsuits charging you with producing hazardous, defective merchandise

HOW SHOULD YOU HANDLE AN INTELLECTUAL PROPERTY LAWSUIT?

Intellectual property or “IP” law deals with the protection of patents, copyrights, trademarks, and trade secrets.

If you are accused of stealing – or of using without permission – another company’s intellectual property, you’ll probably be targeted by a lawsuit, and you’ll need a good business attorney working in your defense.

settling out of court

Intellectual property cases can usually be settled out of court – especially if you are not actually guilty of IP theft or if the whole incident was the result of a mistake or a misunderstanding.

If you believe that someone has stolen your company’s intellectual property – or that someone is using your intellectual property without your consent – consult a Daytona Beach business attorney to discuss your legal options.

Your business attorney can also help you obtain patents and copyrights, register your trademarks, and protect your company’s intellectual property in the future.

HOW SHOULD YOU HANDLE A PREMISES LIABILITY LAWSUIT?

Property owners are obligated to maintain a relatively safe environment so that people who come onto the property do not suffer injuries. This responsibility is known as “premises liability,” which holds property owners liable for accidents and injuries that occur on their property.

Exactly what you are liable for depends on factors including but not limited to who the visitor was and the nature of the hazard that injured the visitor. If someone is injured, you may be found liable for their medical costs, lost wages, pain and suffering, and even their attorney’s fees.

injuries on property

Stay on top of property maintenance, and purchase adequate liability insurance to protect your business and premises. If you own a smaller business, general liability coverage protects both your personal assets and your business from being seized if a judgment is made against you.

HOW SHOULD YOU HANDLE EMPLOYEE LAWSUITS?

Ignoring complaints about discrimination, harassment, or wage-and-hour issues is an easy way to trigger a lawsuit. Establish anti-discrimination and anti-harassment policies for your business, and set a tone that discourages discrimination and harassment. A good business lawyer can help.

A business which can prove that it takes discrimination and harassment seriously has a much stronger case if an employee takes you to court. You may even want to include clauses in your employment contracts that clarify your policies regarding harassment and discrimination.

Workers who believe that they have not been paid properly, who claim that they have been denied breaks, or who claim that they have been forced to work off the clock may pursue alleged violations of state and federal labor laws with wage-and-hour lawsuits.

Keeping accurate and comprehensive records is the best way to protect your business against a wage-and-hour lawsuit. A casual or lackadaisical approach to keeping records and to staying abreast of details is an open invitation to anyone who wants to file a lawsuit against you.

HOW SHOULD YOU HANDLE A PRODUCT LIABILITY LAWSUIT?

If your business sells any kind of consumer products to the general public, the design and the manufacturing of those products must be closely monitored and supervised so that the product does not pose a hazard to consumers when it is used properly and as intended.

Product liability law is exceedingly complicated, so you must have an experienced business attorney’s help as soon as possible if you are targeted with a product liability lawsuit.

legal gavel

Your attorney will investigate a product liability claim against you and look for weaknesses, flaws, inconsistencies, or outright falsehoods in the complaint.

WHAT ELSE CAN YOU DO TO PROTECT YOUR BUSINESS?

Business owners should consider requiring formal employment contracts that include nondisclosure and non-compete agreements. You should have your business lawyer explain the advantages of employment contracts and draft those contracts for you in the future.

In fact, you should have an experienced Central Florida business attorney review all of your business contracts and other important documents. Never sign a business agreement or contract unless and until you know precisely what you are agreeing to.

singing personnel paperwork

As your business expands, it is going to need appropriate personnel and human resource policies. The right personnel policies put solutions in place before personnel problems can become legal problems.

As you may know, most business disputes are resolved out-of-court by the attorneys for both sides in private negotiations. The right practices and policies will provide quick solutions and will prevent costly, unnecessary lawsuits from being filed against you.

HOW CAN A BUSINESS LAW FIRM IN DAYTONA BEACH HELP?

A reliable business attorney can help you draft a business plan, an employee handbook, and all of the additional documents that you’ll need to protect your business and keep small difficulties from becoming big legal problems.

A business attorney can also offer training and legal advice to your supervisors and managers regarding discrimination and harassment laws and policies. You will receive the sound legal advice, representation, and services that every business owner in the state of Florida needs.

When you own a business, you need quick, out-of-court resolutions that let you focus on business instead of problems. You’ve worked hard to create and maintain your business. Protect it.

Let a reliable business lawyer review all of your potential legal risks and help you implement practical solutions to potential legal problems before those problems can do damage to your business.

Top 5 Mistakes Small Business Owners Need To Avoid

Posted on: December 15, 2018 by in Business Law
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If you own a small business in the state of Florida, you already know that you’ll sometimes need a lawyer’s advice and services to grow your business and to keep it compliant with the law.

Business lawyers in Daytona Beach help business owners resolve both simple and complicated legal matters. They can also help business owners avoid the mistakes that can hurt your business.

HOW CAN A GOOD BUSINESS LAWYER HELP YOU?

A qualified business lawyer can help you put solutions in place before disputes arise. When a dispute does arise, your attorney can help you keep a minor conflict from becoming a major courtroom battle.

avoiding courtroom battles

What are some of the most common and easy-to-avoid mistakes that small business owners make?

1. the failure to have everything put in writing
2. the failure to plan for the future of the business
3. the failure to use effective employment agreements
4. the failure to properly classify workers as contractors or as employees
5. the failure to use effective restrictive covenants

MISTAKE #1: THE FAILURE TO HAVE EVERYTHING PUT IN WRITING

It’s a serious mistake when a small business owner fails to have everything put in writing. Whether it’s a lease, a purchase order, a storage agreement, or an employment contract, get it in writing.

Yes, it’s inconvenient to get everything in writing every time, but successful, long-time business owners know how important it can be to have every understanding, agreement, and transaction on paper and in black and white. Over time, a casual approach to details hurts a business.

When you have everything in writing, if a dispute arises, you may already have the evidence that you need to prevail. If you don’t have everything in writing, and a dispute arises, you could be stuck with no evidence to prove your side of the dispute.

It’s also never a bad idea to let your business attorney review any contract or any other document that might affect your best interests.

MISTAKE #2: THE FAILURE TO PLAN FOR THE FUTURE OF THE BUSINESS

Businesses inevitably change. People come and go. So do business trends. You can’t wait for a difficult situation to become a legal problem. You need to get “in front of” a difficult situation before it becomes a problem.

What can happen if a co-owner of your business gets married, gets divorced, dies, disappears, declares bankruptcy, is convicted of a crime, or is declared incompetent by a court? What if your business partner simply can’t get along with you any longer?

drafting business plans

Unless your business is a sole proprietorship, one or more of these situations – or something very similar – is almost certain to happen at some point in the future. You need to have a carefully drafted business plan, by-laws, or operating agreement that adequately addresses these scenarios.

If you’re a sole owner, you need written provisions that spell out what happens if you sell your business or retire. Let a Daytona Beach business attorney help you plan for the future, draft the documents you need, and review your current business plan and other pertinent documents.

MISTAKE #3: THE FAILURE TO USE EFFECTIVE EMPLOYMENT AGREEMENTS

Hiring and dealing with employees is one of a business owner’s biggest legal challenges. To protect yourself, offer your new employees an agreement that precisely spells out the duties of the job, the compensation, and any other benefits.

Business owners who are hiring employees on an at-will basis cannot imply in any way that the employment is open-ended. A good Florida business lawyer can create employment agreements that provide you with full legal protection while meeting your specific needs.

Some business owners may also need confidentiality or non-disclosure agreements, especially if you have exclusive trade secrets or customer lists that might be valuable to others.

A business attorney can draft confidentiality agreements and restrictive covenants that will, if necessary, be enforceable by a court. Below, you’ll read and learn more about restrictive covenants.

MISTAKE #4: THE FAILURE TO PROPERLY CLASSIFY WORKERS

Who are your employees and who are independent contractors? Properly classifying anyone who works for you is imperative.

For business owners, classifying a worker as a contractor can mean tax savings, partial exemptions from some labor laws, less liability, and relief from providing employee benefits.

classifying employees

These are substantial advantages, but you don’t want someone that you classified as an independent contractor to claim employee status and sue you for any additional compensation or benefits that come with that status.

So who is a contractor and who is an employee? The more control an employer has, the more likely it is that a court will find that a worker is legally an employee. If you have a concern about a specific situation or worker, have an experienced business lawyer review the situation for you.

MISTAKE #5: THE FAILURE TO USE EFFECTIVE RESTRICTIVE COVENANTS

A restrictive covenant may be part of an employment contract, a consulting contract, a purchase order, or a non-disclosure agreement. You may already require your contractors and employees to sign restrictive covenants, but if it’s not enforceable, a restrictive covenant can’t help you.

Florida law spells out a “legitimate business interest” test that the courts must use to evaluate restrictive covenants. Florida courts generally presume that for a former employee, contractor, or agent, a restraint of six months or less is reasonable but a restraint longer than two years is not.

Trade secrets receive additional protection. Where trade secrets are concerned, Florida courts generally presume that a restraint of five years or less is reasonable, but a restraint longer than ten years is not.

Restrictive covenants should clearly specify the legal action that a business owner will take if a breach occurs.

You must establish a restrictive covenant before you share any intellectual property owned by your business. A good business attorney will help you with the precise language necessary for enforceable restrictive covenants that meet your needs.

WHAT MIGHT BE THE BIGGEST MISTAKE BUSINESS OWNERS MAKE?

Probably the biggest and costliest mistake that a small business owner can make is having no legal advice or representation at all. A good business lawyer can help you in numerous ways to avoid most of the other mistakes that business owners sometimes make.

getting a business attorney

If you own a small business in Florida, you must have a reliable business attorney on your team and ready to work on your behalf. That is your right. The future of your business could depend on it.

Things To Legally Consider For Mergers And Acquisitions In The U.S.

Posted on: November 17, 2018 by in Business Law
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Buying or selling a business can be a complicated process in Florida. If you are buying or selling a business in this state, keep reading. The right legal help is imperative for negotiating an appropriate price and for preventing and managing risks on both sides of a major transaction.

Large, important transactions must be structured on the clearest, most favorable terms and provide full legal protection to all parties involved. The failure to be advised by an experienced business lawyer often results in subsequent legal disputes that could easily have been avoided.

HOW ARE MERGERS AND ACQUISITIONS DEFINED?

This is a brief look at the legal side of mergers and acquisitions, the problems that you may encounter with a merger or with an acquisition, and the solutions to those problems.

A merger happens when two or more distinct businesses combine to create one company. A merger of equals happens when neither business is designated as acquiring the other business. The stockholders of both companies trade in their shares for shares from the new company.

WHAT ARE THE WAYS A BUSINESS MAY BE ACQUIRED?

When one company directly purchases another company, it’s an acquisition. Acquisitions can happen in two ways – through purchases of stock or through asset purchases:

  1. Stock purchases: The acquiring company buys the shares of the target company from its shareholders and gains all of the target company’s assets and liabilities. The complexity of a stock acquisition often depends on the target company’s number of shareholders.
  2. Asset purchases: The acquiring company buys the assets of the target company including equipment, stock, inventory, and facilities. The purchaser chooses which assets to acquire, so asset purchases are often considered more advantageous than stock purchases.

HOW WILL A GOOD BUSINESS ATTORNEY HELP YOU?

A qualified Florida business lawyer can help you understand what the advantages and disadvantages are of an asset purchase vs. a stock purchase in any particular potential business acquisition.

If you are a selling a business in this state, you must see to it that you are not making any false or exaggerated representations that will come back to haunt you. If you are a purchaser, you must make sure that the selling party will stand by its representations about the business.

A business lawyer can ensure that the documents involved in a Florida business merger or acquisition are complete, accurate, and reflect your expectations as a buyer or seller. A good business attorney can also help you with and advise you regarding:

  1. debt and equity financing agreements
  2. corporate reorganization or consolidation
  3. partnership and shareholder agreements

It is essential to conduct due diligence before you initiate any transaction such as the merger of two or more companies, the purchase of a business, or any related activity. You will need a skilled, diligent attorney who has substantial contract, acquisition, and merger experience.

WHAT IS REQUIRED TO BUY OR SELL A BUSINESS IN FLORIDA?

Listed here are the steps you will need to take prior to selling a business in Florida. Go through these items with your business attorney to ensure that you have met all of your obligations and that you have adequately protected your long-term interests:

  1. If you are leasing business space, determine how the lease can be reassigned to the buyer. Landlords need to know that your buyer will continue the operation – and the rent payments.
  2. Determine if your licenses can be reassigned or if your buyer must obtain new licenses.
  3. Have your business lawyer review your contracts with clients, service providers, and vendors to ascertain what your responsibilities are to those parties when you sell the business.
  4. Conduct a lien search. If liens are outstanding, satisfy them or arrange for the payment. If you do not disclose outstanding liens against the business, you will probably be violating the sales agreement.
  5. Have all of the appropriate financial papers, statements, and disclosures ready in advance for the buyer.

WHAT IF THERE ARE COMPLICATIONS WITH A BUSINESS ACQUISITION?

If you are the buyer, realize that purchasing someone else’s business might obligate you to take on a variety of responsibilities and to handle a number of unresolved matters.

Have your business attorney ensure that everything about the purchase is legal and legitimate. If there are complications, your attorney can explain them to you and possibly even clear up those complications for you.

WHAT MUST BE CONSIDERED IN ANY MAJOR TRANSACTION?

The top consideration in either a merger or an acquisition is how the transaction is structured. A number of conditions typically must be met before a merger or acquisition can proceed. Those conditions could involve loans, liens, stock, employee contracts, or almost any related matter.

A company’s financial issues, sales, debts, services and/or products, intellectual property, and customer relations all must be considered. Have your attorney help you review the documents, performance, and finances of a company before you merge with or acquire that company.

The key to successfully completing a business acquisition, merger, or sale is to avoid unexpected complications by closely scrutinizing the details. A skilled Florida business lawyer will help you attend to those details and will help you avoid unexpected obstacles or complications.

WHAT SHOULD YOU AVOID IN A TRANSACTION?

Speaking frankly, one of the most common problems with mergers and acquisitions is the use of improper forms downloaded from online legal document companies.

Standard contracts cannot take unique situations into account. Signing the wrong contract could leave you at risk, so avoid using any standardized forms – especially in a major transaction.

A reliable business attorney can draft – or review – all of your merger or acquisition contracts and documents to guarantee that your goals are accomplished and that your interests are protected.

WHAT ABOUT THE FUTURE?

When the transaction is complete, your lawyer can help you plan for the future of your company, help you avoid legal disputes, and keep your business running smoothly by ensuring that you have policies and documents in place to deal with any unexpected complication or circumstance.

No business owner likes taking time off to handle legal matters. If you are a business owner in Florida, this is the right time to arrange a consultation with an experienced central Florida business attorney. It may be the best business investment you make.

What To Consider When Drafting Employee Contracts

Posted on: October 13, 2018 by in Business Law
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In 2018, the economy is booming, and employers everywhere are hiring. Here in Florida, most workers are “at will” employees, which means that they work without an employment contract, and they may be legally fired without cause.

But if you own a business in the state of Florida and you need to have one or more – or all – of your employees sign an employment contract, what will need to be considered? Can a business law firm in Daytona Beach help?

WHAT SHOULD BE INCLUDED IN AN EMPLOYMENT CONTRACT?

Legally speaking, it is a good idea for employers to offer their employees a written agreement which sets forth the terms and conditions of their employment. The document should include specific details about the nature of the work, the compensation, and any additional benefits.

An employment contract spells out precisely what is expected of an employee, and in return, it also specifies what the employee may expect from the employer.

If you own a business in this state, an experienced business attorney can draft the employment contracts that meet your precise needs and give you full legal protection. And as you might imagine, anyone doing business these days needs full legal protection.

A reliable business lawyer can also provide the legal advice and additional legal services that your business needs.

WHAT DO EMPLOYERS WANT EMPLOYMENT CONTRACTS TO ACCOMPLISH?

For employers in Florida, generally speaking, here is what needs to be addressed in an employment contract – and what needs to be kept in mind as the contract is drafted:

1. Retaining the employee: Employment contracts should stipulate the minimum amount of time an employee must remain with an employer. A contract may also stipulate that the employee must give the employer sufficient notice to find an appropriate replacement.

2. Setting goals and standards. An employment contract should include the employer’s expected standards, performance goals, and other productivity measures for the employee.

3. Protecting intellectual property: If the employee has access to confidential information, you must set some guidelines regarding what may and may not be disclosed.

4. Providing security for both employee and employer: With a properly drafted contract, both sides understand the other side’s expectations, and both enjoy certain legal protections.

WHAT SPECIFICS MUST BE ADDRESSED IN AN EMPLOYMENT CONTRACT?

The specifics that must be addressed in almost any employment contract include:

1. the employee’s responsibilities
2. the pay and pay schedule, benefits, and commissions or bonuses
3. leave and how to request it
4. profit-sharing and stock options
5. mileage and travel expenses
6. rules for the use of company property
7. rules and processes for employee discipline and termination

The last point above needs elaboration. An employment contract should spell out exactly what steps an employer must take in order to terminate the employee legally. This provision will help to protect an employer from a possible lawsuit for wrongful termination.

An employer may also want to include clauses in an employment contract that clarify employer policies regarding matters such as harassment and discrimination. It’s a good idea.

WHAT ABOUT NON-COMPETE AND CONFIDENTIALITY AGREEMENTS?

Some employers in Florida should also have their employees sign non-compete agreements. Employers in our state have only a limited legal ability to keep ex-employees from competing against them – and for only a specific length of time and in a certain geographical location.

Still, a good business lawyer can help you draft the best possible non-compete agreements. The right business attorney can also help you draft confidentiality agreements that Florida courts, if necessary, will enforce.

Employment contracts are legally binding and enforceable. If one party to a contract fails to meet its contractual obligations, the other party has the right to take legal action.

Contract dispute resolution is handled through the state courts, so Florida employers need to work with a business attorney who has substantial experience handling contract dispute cases in this state.

WHY SHOULD YOU AVOID PRE-PRINTED CONTRACT FORMS?

Every word that is printed in an employment contract counts. Every line is important. Employers absolutely must avoid using the pre-printed, blank contract forms that you can buy at an office supply store or download from the internet.

Instead, as an employer, you need precisely-written contracts drafted exclusively for your own company’s needs. A business attorney can protect an employer by drafting easily-understood employment contracts that cannot be misconstrued or misinterpreted.

Employers who wish to hire employees on an at-will basis, for instance, must avoid any language in an employment contract that leads an employee to believe that the period of employment will be indefinite.

Additionally, employers who wish to bind employees to particular terms and conditions must ensure that the language in an employment contract will hold up and will protect their interests if challenged in court.

WHAT’S THE BEST WAY FOR EMPLOYERS TO AVOID LEGAL PROBLEMS?

Deciding to retain a business attorney is the smart step that every Florida employer should take to avoid most legal problems and to deal constructively with any legal problems that may become unavoidable.

A good business attorney will help you draft, interpret, and enforce employment contracts, and if necessary, will guide you through the legal process if you are sued over an employment contract – or if you need to have an employment contract enforced.

Employers routinely sign a variety of contracts. It’s an almost daily part of doing business. However, there’s no such thing as a “simple” business contract, and if you own a business, you should never sign a contract without the advice of a good business attorney.

WHEN SHOULD YOU CONTACT A FLORIDA BUSINESS ATTORNEY?

Employers should have a business attorney review every line and every word of every contract they sign or use in their business on a regular basis.

A good business attorney should also sign off on any modifications, deletions, or additions to any business contract. The advice of a good business lawyer is invaluable, and the slight cost can save a business owner immeasurably in the long run.

Choose to protect yourself and your Florida business starting today. If you do not already have the services of an experienced business attorney, make the call immediately. Protecting yourself and your business is always the right thing to do.

The Importance Of Choosing The Right Business Structure

Posted on: September 16, 2018 by in Business Law
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When starting up a new business, choosing the business structure that is most compatible with the goals of your company is imperative. If you are forming a new business here in Florida, or even if you are already a business owner in this state, a Central Florida business attorney can help.

What follows is a brief description of the various business structures and some tips on how to choose the structure that is right for you and your company. Generally speaking, businesses in Florida conform to one of these four basic business structures:

1. sole proprietorships
2. general or limited partnerships
3. S or C corporations
4. limited liability companies (LLCs)

WHAT DO SOLE PROPRIETORSHIPS OFFER?

The sole proprietorship is the most popular and most traditional business structure. More than 17 million sole proprietorships currently operate in the United States.

To start up a sole proprietorship, what you’ll need is a basic business license, any special permits (such as a liquor license or a contractor’s license) that your particular business may require, and a Social Security number.

A sole proprietorship is the simplest business structure to start up. If you are the only owner and your business is not incorporated, you are a sole proprietor. However, sole proprietorship provides a business owner with very little legal protection.

WHAT IS THE BIGGEST RISK WITH SOLE PROPRIETORSHIPS?

Your income as a sole proprietor is taxed only once, because you and your company are considered the same “legal entity.”

Thus, one of the negatives to a sole proprietorship is that when the business is at risk, the owner’s personal assets may also be at risk.

If your sole proprietorship cannot pay its debts, creditors may pursue – and in some cases seize – your personal assets as well as your business assets.

A sole proprietorship, therefore, requires discipline – it is not for everybody – because the complete responsibility for the business falls on one person.

WHAT DO PARTNERSHIPS OFFER?

Partnerships are another quite popular business structure. Partnerships are established when at least two persons do business together. Much like a sole proprietorship, a partnership is relatively easy to start up.

The state of Florida allows both “general” partnerships and “limited” partnerships. A general partnership, like a sole proprietorship, provides the owners with only the minimal legal protection.

HOW ARE “LIMITED” PARTNERSHIPS DIFFERENT?

A limited partnership in Florida must have at least one general partner managing the business and assuming liability for its debts, but a limited partnership must also have a “limited” partner – at least one investor who brings capital to the business but is not involved in management.

If they do not participate in the company’s management, a partnership’s limited partners are not liable for the debts of the company.

WHAT DO CORPORATIONS OFFER?

A corporation is a business structure that is a separate legal entity with multiple owners. As a legal entity, a corporation has legal “rights.” When a corporation is sued, the owners in most cases are legally insulated from personal liability (with several exceptions explained below).

Corporations appoint directors, routinely conduct corporate meetings, and record the minutes of those meetings. A corporation’s ownership can change through the transfer or sale of the corporation’s stock.

Corporations are stringently regulated. The IRS closely scrutinizes a corporation’s financial conduct.

IN WHAT SITUATIONS ARE A CORPORATION’S STOCKHOLDERS LIABLE?

Although shareholders are generally protected from personal liability, if a corporation’s creditors can demonstrate that business and personal funds were “commingled,” a corporation’s shareholders may become personally liable for its debts.

A corporation’s creditors may also pursue a shareholder’s personal assets if they can prove that the corporation was created simply and only to protect its shareholders. Proving such an allegation is called “piercing the corporate veil.”

WHAT ARE “S” CORPORATIONS AND “C” CORPORATIONS?

The two main types of corporations in the U.S. are “S” corporations and “C” corporations.

C corporations are taxable entities taxed at the standard corporate tax rate, but an S corporation’s losses and income are divided among the shareholders and transfer or “pass through” to the shareholder’s personal taxes.

A limited liability company has the limited liability that a corporation offers. An LLC’s owner may be a sole owner, a trust, a corporation, or another LLC. Depending on how they are established, LLCs may be taxed like partnerships or like corporations.

With some rather extensive paperwork and a good business attorney’s help, an LLC can be taxed like a partnership, but otherwise, an LLC will be taxed like a corporation.

WHAT’S BEST FOR YOUR BUSINESS?

You will have to choose one of these four basic business structures when you start up a business in Florida. The choice you make will determine how much paperwork you must submit, the way you will be taxed (and the tax rate), and your personal liability.

Your choice of a business structure has long-term implications. When you decide to start up a new business in Florida, the smartest move you can make is consulting with a Daytona Beach business attorney regarding the structure of your business.

Every business will require the help of an accountant and a business lawyer. The right business attorney can provide assistance with concerns including taxes, zoning, copyrights, trademarks, and compliance with employment and hiring laws.

HOW CAN A FLORIDA BUSINESS LAWYER HELP YOU?

All businesses are governed by federal, state, and local laws and regulations. A business lawyer can help you establish the business policies and practices that will protect you from lawsuits and other legal problems.

Business owners – almost daily – face a number of legal issues that directly affect their businesses: personal injury claims, discrimination claims, intellectual property protection, environmental concerns, advertising regulations, and of course, taxes.

If you’re starting up a new business in Florida, a business lawyer will also assist you with drafting the legal documents you will need, including but not limited to:

1. by-laws
2. articles of incorporation
3. shareholder agreements
4. operations agreements
5. any other contracts, agreements, and policies

WHY IS LEGAL HELP SO VITAL FOR BUSINESS OWNERS TODAY?

Even routine, everyday business decisions – like hiring decisions – can open the door to potential legal difficulties. Business owners in the 21st century need legal help now more than ever before.

Do not let a legal dispute bring your business to a standstill. If you are a business owner in Florida, develop a long-term relationship with an experienced Central Florida business attorney.

Make the call to a business lawyer today. It’s the best business investment you can make.

The 3 Major Pitfalls That Small Businesses Encounter

Posted on: August 16, 2018 by in Business Law
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Independent, small and mid-sized businesses are the foundation of Florida’s economy. Whether you’ve been a business owner for years or if you are just now starting up your first business venture, you need sound legal advice and reliable legal services.

When you work with an experienced Daytona Beach business attorney, your attorney will focus on the many legal issues and concerns that business owners face every day, including but not limited to:

1. hiring and discrimination matters
2. liability concerns
3. taxes
4. compliance with zoning, advertising, and environmental regulations

WHAT ARE THE TOUGHEST LEGAL PROBLEMS BUSINESS OWNERS FACE?

A business attorney can handle a number of business and legal matters on a business owner’s behalf, including three of the trickiest legal problems that business owners encounter:

1. contracts
2. hiring and employment discrimination laws
3. personnel policies

A business owner must have everything in writing, without exception. This includes contracts for services, leases, other real estate documents, storage agreements, and employment contracts.

HOW CAN A LAWYER HELP YOU WITH CONTRACTS?

Have a business lawyer review all of your business contracts and other important documents, and never sign a business contract or agreement unless and until you know precisely what you are agreeing to.

Business owners routinely sign contracts. Contracts, in fact, are so common in business that you can download blank contract forms from a number of websites or you can buy pre-printed blank business forms at office supply stores.

WHY SHOULD YOU AVOID PRE-PRINTED CONTRACTS?

Every line counts in business contracts. Avoid using blank and pre-printed contract forms.

Pre-printed contract forms with vague language and broad generalizations may not be enforceable. If you are a business owner, you need precisely-written contracts drafted strictly and specifically for your business needs.

That is just one of the many reasons why the services of a trustworthy business lawyer are so imperative. Your lawyer will protect your interests by drafting easily understood, legally valid and enforceable contracts that meet your business needs and can’t be misunderstood.

WHAT LAWS GOVERN HIRING AND LEAVE RIGHTS?

For thousands of workers in Florida, the protections offered under federal law by the Civil Rights Act of 1964, the Americans with Disabilities Act of 1990 (ADA), the Pregnancy Discrimination Act of 1978 (PDA), and the Family and Medical Leave Act of 1993 (FMLA) are essential.

Under the ADA, disabled persons are a legally protected class. If someone can perform the job, it is illegal for an employer to fire, refuse to hire or promote, or discriminate in any other way against someone because that person is physically or mentally handicapped or disabled.

The Family and Medical Leave Act requires businesses with fifty or more employees to provide unpaid, job-protected family and medical leave, without interruption of group health insurance coverage, for twelve weeks for qualified medical and family reasons.

The Pregnancy Discrimination Act requires any business with fifteen or more employees to treat pregnant employees exactly like other employees are treated based on their capacity or incapacity to perform the job.

WHEN CAN A LEGAL PROBLEM ARISE?

Whenever a business hires – or does not hire – a job applicant, a legal challenge could arise.

Any misunderstanding or misstep regarding hiring and employment laws could put a small business owner on the wrong end of a hiring or employment discrimination suit.

If you are a business owner in Florida and you have any questions or concerns about any aspect of the federal employment laws, or if you’re being sued for hiring or employment discrimination, speak at once to a skilled business lawyer – and get the legal help you need.

A qualified business lawyer will help you stay compliant with hiring and employment laws and with the multitude of other confusing and overlapping state, federal, and local laws and regulations that govern businesses.

WHAT IS A PROPER PERSONNEL POLICY?

Beyond hiring and employment discrimination claims, as your company grows, it will need appropriate personnel and human resource policies. The right personnel policies put solutions in place before personnel problems can become legal problems.

A good business attorney will help a Florida business owner create, establish, and enforce the personnel policies that fit your business requirements.

A good business lawyer will also recommend – and will help a business owner draft – an employee handbook that precisely explains your company’s personnel procedures and policies.

If you need to conduct an internal investigation of your business, or if you need legal advice or representation regarding any employer-employee dispute, a good business lawyer can help.

A business lawyer will also provide training and legal advice to your supervisors and managers regarding personnel policies. You will receive the sound legal advice, representation, and services that every business owner in the state of Florida needs.

HOW ARE MOST BUSINESS CONFLICTS RESOLVED?

As you probably know, the majority of business disputes are resolved privately and outside of the courtroom. The right personnel policies provide quick solutions and deter costly, unnecessary lawsuits.

And that is what you need when you own a business; quick, out-of-court solutions that let you focus on business rather than problems.

As your operation grows over time, you must have consistent, trustworthy, reliable legal counsel. The right business lawyer will help you make the changes that need to be made and will help you to remain compliant with the scores of laws that regulate and govern your business.

WHAT DOES EVERY BUSINESS OWNER NEED?

In the 21st century, every business owner needs guidance through the maze of employment and hiring laws and the endless list of zoning, tax, environmental, and advertising regulations.

You need an advocate who can fight aggressively on your behalf if your business is cited by the government or sued by an individual or another business. You also need a lawyer who will safeguard your intellectual property and act as your corporate registered agent.

In today’s litigious business environment, you simply cannot do business effectively without the advice of a reputable business lawyer.

Put a reliable business attorney on your team – now, or from the very beginning. That way, you’ll be working with someone who already understands you and your business when legal needs arise or when legal matters need serious attention.

If you do not already have the services and advice of a Florida business attorney, now is the time to reach out for the legal help that you and your business need.

What Are The Four Major Business Formation Types?

Posted on: July 20, 2018 by in Business Law
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The economy is booming. There has perhaps never been a better time to start up a new business in the state of Florida.

Starting up a new business usually requires making some tough decisions. You will encounter a variety of unanticipated obstacles and dilemmas. For example, you’ll have to choose exactly what kind of business entity is best for you and is most compatible with your goals. This is where a Daytona Beach business formation attorney can help.

WHAT ARE THE FOUR TYPES OF BUSINESS ENTITIES?

The four types of business entities – that is, the four ways to form and structure a new business – are:

1. Sole Proprietorships
2. Partnerships
3. Corporations
4. Limited Liability Companies (LLCs)

But however you choose to set up your business, you will need to have the advice, insights, and services of a business attorney.

Your attorney can make certain that you’ve covered all the bases, filed all of the required forms, met all of the deadlines, and paid all of the fees. Your business attorney can also help you avoid legal problems in the future by helping you put solutions in place now – before problems arise.

HOW DOES A SOLE PROPRIETORSHIP WORK?

Sole proprietorships are the simplest business entities. A sole proprietorship has one owner. All you need to start a sole proprietorship is a Social Security number and the basic business licenses and permits.

Simplicity is one of the benefits of a sole proprietorship. Taxes are another. The income of the owner and business is taxed once – rather than twice, first as a company and then as an individual.

What are a sole proprietorship’s other advantages? You won’t have any conflicts with partners when you are a sole proprietor, and if you need to dissolve the business, it can be easily done.

Prospective sole proprietors should understand that the law actually does not distinguish between the owner and the business. Hence, one disadvantage of a sole proprietorship is that the owner’s assets can be imperiled if the business suffers difficulties.

Sole proprietorships are not for everyone. It takes talent and discipline to operate a sole proprietorship successfully and to take full responsibility for every decision.

HOW DOES A PARTNERSHIP WORK?

When two or more owners agree to operate the same business together, that business is a partnership.

Partnerships are similar to sole proprietorships in that they are relatively inexpensive and easy to form. Partnerships, however, have unique liability and tax issues.

One advantage of a partnership is the shared responsibility for decision making and management. A disadvantage is that unresolved conflicts can put the business at risk. Another disadvantage is that one partner’s legal or financial mistakes can put the entire operation in danger.

HOW DOES A CORPORATION WORK?

The advantage of a corporation is that it’s the most adaptable and flexible business form. Corporations are chartered by the state and have legal rights like a person.

A big advantage of corporations is the limited liability enjoyed by the owners because corporations are considered separate legal entities. If the business is sued, owners are protected from personal liability.

Corporations are subject to scores of regulations, and their financial activity is carefully scrutinized by tax authorities.

A corporation must appoint directors, conduct regular meetings, and record the minutes of those meetings. Ownership of a corporation can be easily changed through the sale or transfer of stock.

HOW DOES A “C” CORPORATION DIFFER FROM AN “S” CORPORATION?

A C corporation is considered a separate taxable entity by the IRS, is taxed at the standard corporate tax level, and is then in effect taxed again at the personal income tax level when dividends (or payments) are made to the shareholders.

An S corporation is not taxed at the corporate level. Instead, the income and losses are divided among shareholders and “pass through” to their personal income taxes.

An S corporation cannot have over one hundred shareholders, and they must be U.S. citizens or lawful permanent residents. C corporations face no similar restrictions.

C corporations may issue different classes of stock. S corporations may issue only one class of stock, so all shareholders have the same voting rights.

Finally, banks, insurance companies, and several other types of businesses do not qualify to become S corporations.

HOW DOES A LIMITED LIABILITY COMPANY (LLC) WORK?

An LLC has many of the advantages of a corporation, and along with the limited liability it provides, an LLC may be owned by an individual, a trust, another LLC, or a corporation.

With some paperwork and a business attorney’s help, an LLC can be taxed like a partnership, but otherwise, an LLC will be taxed like a corporation.

An LLC’s members and managers are not required to conduct regular meetings, so an LLC’s paperwork and legal restrictions are less burdensome than a corporation’s.

WHY IS A BUSINESS LAWYER’S HELP SO IMPORTANT?

Although these are the four basic types of business entities, the rules that govern the formation and management of these business types differ slightly from one state to another.

That’s why it is imperative if you are starting up a business here in the Sunshine State, to work with a skilled business attorney from the very beginning.

The right business attorney will help you determine which business entity is the best fit for your own goals and circumstances. A business lawyer will also help you draft whatever legal documents your new business requires, including:

1. by-laws
2. articles of incorporation
3. shareholder agreements
4. operating agreements
5. all other agreements, contracts, and policies

WHAT ELSE WILL A BUSINESS ATTORNEY DO ON YOUR BEHALF?

Florida law also requires business owners to name a registered agent to act on behalf of your business. Your business attorney should serve as your registered agent.

If you are served with a lawsuit, a summons, or any other official documents, a registered agent must be available and authorized to receive and sign for such documents.

When you are starting up a business in this state, having the services of an experienced business attorney is imperative. As your business grows, your attorney will be able to advise you on a variety of matters – from zoning to employment law to taxes.

Get the legal help you need – from the start – to make your new Florida business a success. It’s the very first investment your company should make.

Equity And Startups – How Does It Work?

Posted on: June 20, 2018 by in Business Law
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The economy is booming in 2018, and scores of entrepreneurs in Florida are starting up new business enterprises this year. Many of these startup businesses will recognize their first employees for taking a chance with a new company by rewarding them with some equity.

However, a company may choose to do it, issuing equity to employees is a complicated procedure. It can raise a number of complicated tax and legal issues. This is where a business formation attorney comes in.

WHY WILL A NEW BUSINESS NEED AN ATTORNEY’S HELP?

Startups are not easy. If you are an entrepreneur who is starting up a business in Florida, you will face a number of questions, issues, and expenses that must be handled the right way.

Any time that someone starts up a new company, the number of details to remember and decisions to make can feel almost overwhelming.

There is no easy way to manage everything that a new business owner will be responsible for, but in this state, it will be imperative for that new business owner to have the guidance of an experienced Central Florida business attorney.

Every business is unique. If you are starting up a business anywhere in Florida in 2018 or beyond, you are going to need the personalized services, insights, and sound legal advice that a reputable and trustworthy business lawyer will provide.

An attorney who has substantial experience advising and representing business owners can ensure that the best interests of your company and your employees are fully legally protected.

WHAT’S THE BEST WAY FOR A COMPANY TO ISSUE EQUITY TO EMPLOYEES?

How a Florida business owner should handle the issuance of equity to a company’s first employees will hinge on the company’s particular circumstances and the answers to the following three questions.

Below, you will learn how the answers to these questions will affect the way that a business issues equity:

1. What are the long-term goals of the business?
2. How old (or young) is the business?
3. What is the business worth?

WHAT ARE THE LONG-TERM GOALS OF THE BUSINESS?

Is your business on track for rapid growth and an IPO? Or will it stay private and grow slowly and incrementally? The answer needs to be taken into account when you determine how to provide equity to your earliest employees.

The options available for issuing equity compensation will depend on whether your business is a limited liability company (LLC), a C corporation, or an S corporation. Corporations more often issue equity to their employees, but LLCs also have ways to issue equity.

Corporations usually provide equity through stock options or restricted stock. With both methods, there are usually restrictions on how the stock may be transferred or sold. Of course, when the company is sold or goes public, employees may then sell their shares.

HOW DO LLCs SHARE EQUITY?

Obviously, in a limited liability company, other arrangements for issuing equity have to be made. Limited liability company owners often reward employees with some type of profit-sharing.

The most common approach to sharing equity in an LLC is to share “profits interests.” A profits interest is comparable to a stock appreciation right.

While it is not precisely a profit share, a profits interest is instead a share of the rise in the value of the LLC over a specified period of time.

Equity compensation is more common in corporations, so the answers to the next two questions will focus on how (and when) a corporation should issue equity to employees

HOW OLD (OR YOUNG) IS THE BUSINESS?

How well-established is the company? When you decide what type of stock compensation to issue, you should take into account whether the business just started or if it has already been in operation for several years.

In a company’s earliest stages, the least expensive and easiest way to issue equity is with restricted stock.

When you are still building your company with the original personnel, restricted stock is superior to stock options as a motivational tool.

Restricted stock makes the holder an owner of the business when the stock vests, unlike stock options that do not entitle the holder to ownership until the option is exercised at a future date.

However, if your company is well-established, has revenue, or has raised significant investment money, you may decide to go with stock options when you reward your employees.

WHAT IS THE BUSINESS WORTH?

As your business increases in its value, using restricted stock to reward employees becomes a less attractive option. For a flourishing company that is making good profits, establishing an option pool is the most common choice for issuing equity to employees.

To create an option pool, the business sets aside fifteen or twenty percent of its outstanding shares so that those shares may be issued to employees in the future as part of a stock option plan.

If you are the founder and owner of a startup in Florida, offering equity to your first employees can be a superlative motivational tool. But you must take into account the advantages and disadvantages of the various ways that equity can be distributed.

However you choose to do it, there will be considerable tax consequences for both yourself and your employees. You must be careful to adhere to all of the state and federal financial laws and regulations, or you – and potentially even your employees – could face tax penalties.

IS IT IMPORTANT TO HAVE A WRITTEN BUSINESS PLAN?

If you plan to start up a business in Florida, creating a business plan in writing – before you do anything else – could be a genuine key to success. A proper plan defines your business, its mission, its goals, and its operating procedures.

A business attorney can help you draft a workable business plan that satisfies your goals and protects your interests.

With a trustworthy business attorney representing you and your business, you can know that your company’s legal matters are handled properly.

IN WHAT OTHER WAYS CAN A BUSINESS LAWYER HELP?

A good business attorney will protect your company’s intellectual property, help you draft and negotiate contracts, and represent you as your corporate registered agent.

As a business owner, you already know that you must have reliable legal advice from an experienced business lawyer who can help you put solutions in place before legal problems arise.

Your business isn’t a hobby. Get the legal advice that you need. It’s only a phone call away.