Managers and company owners fear a few items more than litigation.  Legal actions against a corporation can potentially damage an otherwise sterling reputation, create disputes, and of course result in the loss of large sums of money and staff talent.  It has been said and could be argued that we live in a litigious society.  Fortunately, with every new legal issue that can arise, there are just as many ways savvy business owners can protect their company, assets, and interests.  Ideally even the most negative situation can be spun into a win-win situation where owners, staff, and customers are given a positive outcome when a potential violation or lawsuit could arise.

Avoiding the Courts and Protecting Yourself

Did you know that corporations pay out more than 20 billion dollars a year to litigation attorneys?  This alarming figure does not account for lost money due to settlements, or perhaps more importantly lost business-related relationships that were once mutually beneficial.  There are countless potential risks and legal issues that can arise.  We want to highlight some common situations and potential strategies that can be implemented to avoid the court system should a misunderstanding or disagreement come forth.

Disputes between Partners

Every company starts out a little differently.  Some begin as a simple sole proprietorship, other times successful business owners combine their resources and make a corporation.  Regardless of how a company starts, it is important to make necessary changes along the way you grow, add new resources, and bring on new employees.  One of the most efficient ways for partners to reconcile differences is to draft a partnership agreement that outlines certain protocols.  Primarily a dispute resolution clause is guidelines that can be agreed to beforehand to help avoid courts and possible legal ramifications.

Keep Terms in Writing

Contracts are essential for any business to outlines terms between employees, contractors, vendors, and customers.  It is a sound investment to have any contract drafted, reviewed, and altered by a business consultation law firm.  This will help ensure that terms are properly outlined, risks are assessed and most importantly, the contract is legally binding in your jurisdiction.  Valid contracts can act as an important reference point, clarify misunderstandings, and provide legal protection should a disagreement arise.

Take Action Before Things Escalate

As a general rule of thumb, ignoring an issue won’t make it go away, and it could lead to the issue becoming worse.  By taking swift action you can help alleviate negativities and prevent issues before they get out of hand.  As time goes on people tend to become entrenched in certain ways of thinking and small issues can grow into bitter situations.  Ensure that management and staff members are trained to see potential risks as they arise and know what company policies should take place to alleviate the issue.  It is a good idea to make certain that employees understand what actions to take and feel comfortable bringing an issue, glitch, or mistake up to management so it can be dealt with.  Please consult with a business-risk assessment attorney to learn more about how you can protect your company and assets.

Protecting your assets is a sub-set of business and estate planning. All estate plans should integrate a protection plan to maintain custody of your assets when unforeseen situations arise in the future. It is essential to work with the right legal team to help you properly organize assets and safeguard them against potential risks they may otherwise be subject to. These items generally include materials such as rental or real estate properties, commercial properties, business materials such as tools and equipment, motor vehicles, individually owned bank accounts, stocks and bonds, and many more items. Although there are many potential risks, this article addresses three common situations where protection is needed.

3 common areas of asset protection

1. Protecting assets from a lawsuit. One of the most concerning areas for a business or a company owner is what they should do if they ever get sued by an individual.
2. Protecting your income from being overly taxed. A common concern is if all tax deductions are being used in the correct way that your company is legally eligible for.
3. Finally, how are you going to protect your retirement funds from market risks and the potential ups and downs that can come from running a business?

Understanding assets protection strategies

It is vital that companies work with professional entities that have tried and tested strategies when it comes to asset protection and estate planning. Although there is no such thing as a one-size-fits-all approach, there are common strategies that can be discussed with a legal professional. This includes creating elaborate barriers that add layers of protection against opposi8ng parties that may be looking to pursue them as part of legal action. This can mean planning your assets in a business entity, maintaining the right insurance plans for your needs, and placing funds in trust accounts.

It is always a good idea to prepare for the worst while things are going well. By creating and implementing an asset protection strategy early you can ensure that plans are properly implemented and executed. If you live or run a business in Utah, California, New York, Florida or Tennessee consider calling the professionals at Bowen Law Professional Group to speak with a legal professional and learn more about what we can do for you.

Would it surprise you to know that roughly 90 percent of all businesses in America are family-owned?  Perhaps even more surprising is the fact that only 30 percent of them are passed on the next generation within the family.  Of that small 30 percent, less than half make it to a third generation.  It is a shame that so many family businesses get lost, absorbed or simply abandoned once the original creator dies or retires.  One way that can greatly protect a business for generations is creating and implementing a succession plan.  This article is going to cover some key aspects of a succession plan and questions that should be answered as part of creating this document.

Why a succession plan doesn’t always happen

One of the largest reasons a succession plan is not created when it should be is simply because planning for the future can be difficult.  Ideally, a succession plan should be created when an owner and entrepreneur is young so they can mentor the next generation to take over the business.  This is true whether the apprentice is a family member, a trusted employee or a partner.  Many owners find it difficult to face the reality that they may one day have to pass the torch to another.  Many companies arise from years of hard work, dedication, and sacrifice.  It is therefore important to find peace of mind by knowing that a succession plan addresses who will be in control of the business, and how it will be operated in the future.

Questions this plan should address

Who will take over when the owner/operator is gone?

Ideally, this will only happen once an owner is ready to retire and can comfortably pass control when they are ready.  As we all know, life can be hard to predict and unexpected tragedy can strike.  Succession plans should address who should take over if the owner dies from an accident or unforeseen health concern.

How much control would you like to retain?

One key item to consider is certain gifting strategies that will business owners to transfer portions of a business into a trust account for beneficiaries and children to protect wealth for future generations.  You can implement these trusts while still maintaining as much or as little control over the business as you would like.  Certain estate planning documents will address if your children will one day take over the business, and how they will gain the necessary management experience to do so successfully.

Contact Bowen Law Professional Group for any questions or concerns regarding a business succession plan.  This is true whether you need one, or have one that is in need of modification.  Our experienced staff can help you address key items such as income streams, tax considerations, capital gains, and many other financial planning items along with the general planning tasks mentioned above.

Setting up a limited liability company (LLC) is a popular choice when establishing a business structure for startup and growing businesses.  There are several options that can be selected based on the type of entity that you will be forming.  As with most business decisions, there are perspective advantages and potential disadvantages.  This article is aimed towards addressing key items to consider when deciding if an LLC formation is the right choice for you, your business and your investments.

Items to Consider When Forming an LLC

One of the key items to address when forming an LLC is to ensure that it is formed in accordance with the rules and regulations of a particular state.  In a majority of instances, this will be the state where the business is operated and headquartered.  If your business will be operating in several states you may be required to register in all of these states.

Filing the LLC Articles of Organization

An LLC cannot be officially formed until an “Articles of Organization” is prepared and filed (keep in mind this document can be referred to something else in certain states.)  This document addresses key items such as whom the registered agent for the LLC will be.  This is the person who will receive legal documents related to the business.  Examples include items such as service of process, complaints, subpoenas and so forth.  You will also need to include a statement of the purpose of the LLC.

Keep Current with Required Filings

Most states require some form of annual report filing.  If a business misses this deadline for such filings they may be faced with potential late fees and in some cases a suspension or dissolution of the LLC.  Procedures and filings will differ based on state jurisdictions.  This is why it is important to understand and comply with the standards established in the state in which your limited liability company is established.

Advantages of an LLC

Tax flexibility: This is referred to as flow-through taxation.  The IRS does not tax the LLC directly.  Rather, profits are distributed to the members who are then taxed on profits at their personal tax level.  This avoids double taxation.

Limited Liability:  As the name implies, an LLC provides its members with protection from liability.  This important shield protects members in ways that a sole proprietorship or traditional partnership does not.  Members are not personally liable for debts and often court judgments and creditors.