“Oh, we don’t really need a partnership agreement; we’re great friends.”
“We’ve been best friends since childhood, so we know how to resolve arguments.”
“He mah bess frenn.”
These are words that strike fear and anxiety into a corporate lawyer’s heart. Granted, our perception may be slightly skewed given that we always see what happens when things go horribly wrong. Still, if you want to maintain the friendship, putting together some sort of partnership agreement is the best way to do so.
A business partnership is a lot like a marriage. Therefore, a partnership breakup is a lot like a divorce. An operating/shareholder/partnership* agreement is like a prenuptial agreement but it’s not nearly as awkward to discuss.
For so many reasons, it is imperative to put one of these owners’
Continue reading Going into Business with a Friend?
A few weeks back I was a coach for Startup Weekend. Basically it works like this: a bunch of entrepreneurs get together Friday night and each has a chance to pitch his or her idea. The group as a whole narrows the field to about a dozen ideas and the people whose ideas were not chosen redistribute themselves among teams. Then the teams work tirelessly over the next 52 hours to develop the idea into a working prototype which they then pitch, as a group, to a panel of judges. The judges can include venture capitalists, consultants, and angel investors. The team that won last year just garnered about $750,000 in funding. So this is a big deal.
Over the course of the weekend, the same
Continue reading Who Owns a Group Project?
Are you a sole proprietor who wants to incorporate because your buzzkill lawyer friends have scared the bejeezus out of you with horror stories of getting your personal finances wiped out after a lawsuit that really involves your business? Good. That’s one of those skills we learn in law school and hone while practicing and seeing what happens when things go horribly, terribly wrong.
Anyway, so you’re ready to incorporate, but you have been operating properly as a sole proprietor. You have licenses, a tax permit, etc. How do you change into an LLC or corporation?
In Nevada, there is no way to simply change from operating as a sole proprietor to an LLC or corporation. To operate as an entity, you are required to file Articles of Organization or
Continue reading Changing Sole Proprietor to LLC or Corporation
December 6, 2012 The Nevada Secretary of State just today issued a press release warning businesses about crowdfunding. Simply stated, crowdfunding describes the method by which an organization can raise money from a pool of contributors, each of whom pony up a small amount of dough, often through crowdfunding sites on the internet. Small businesses are excited about this idea because current securities* laws make it incredibly difficult for small businesses to raise money because they require a whole host of legal documents that really only lawyers can prepare. Not just any lawyer, either. You really need a securities lawyer to handle this type of thing and, because their malpractice insurance premiums are so high for this area of law, the work doesn’t come cheap. Small
Continue reading No Crowdfunding, Not Yet
I often get calls from people wanting to incorporate in Nevada because they’ve been told that Nevada allows anonymity for business owners, usually through what’s called a nominee service.
Because this is a HUGE risk for businesses, I need to clear this up.
Nevada does not provide anonymity for business owners. When you form an entity, you are required to disclose the names of the manager or members if an LLC or officers if a corporation. This information is published on the Nevada Secretary of State’s website.
Some companies will provide what’s called “nominee service” where the company lists itself as the manager/member/officer to provide the actual business owners with privacy. Notably, no law firm that I can find will provide this service.
Continue reading Nominee Service and Anonymous Owners
At the risk of attempting to sound like a salty veteran, I’ve reviewed a number of commercial lease agreements in my day. While I do my best to control my instincts that turn me into an overprotective mama bear for my clients (usually the tenants), sometimes I just have to stomp my feet and say NO, you’re NOT signing that. Now go to your room. I mean…ahem…nevermind.
Last week a client presented me with an Exclusivity Agreement she received from her prospective landlord. My client wanted to open a nail and skin care salon in a shopping center that already had a hair salon as a tenant. In short, the exclusivity agreement between the landlord and the existing tenant said that the landlord could not lease to another tenant whose
Continue reading Exclusivity Agreements in Commercial Leases
This is audio of an interview I did with Dave Hall, CPA, about the importance of having a lawyer when starting or running a small business.
Gryphon Valuation Consultants, Inc. www.BizVals.com 702-870-VALU (8258)
Buy/Sell Agreements provide a blueprint for the transfer of business interests, allowing business owners to control and protect their investment in an organized and prescribed manner. Think of the Buy/Sell Agreement as a prenuptial between business partners.
Buy/Sell Agreements address certain triggering events such as death, divorce and the departure of business owners and should be an integral part of every business planning process – ideally, very early in the process. A well-constructed Buy/Sell Agreement serves five crucial functions:
Creates a ready-made market for a company’s shares or membership interests upon the occurrence of a triggering event or other predefined transfer scenario; Defines the price (value) at which the shares or membership interests will be transferred and the terms of the facilitating transaction
Continue reading Buy/Sell Agreements: A Business Valuation Perspective
My client had hired LegalZoom to form his LLC last November. When he called me last week for help with getting his local licenses, I discovered the Initial List of Members (which was due 30 days after the Articles of Organization were filed) had never been filed. Therefore, his entity had been in default for almost the entire first year. Luckily, he hadn’t started operating yet so he hadn’t been refused an account by a supplier, merchant services company, or bank.
To make things worse, he had to pay $175 in late fees to the state.
If you’re going to have LegalZoom form your entity, make sure they finish the process, or that you know where their services end.
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