The Inside-out Legal way starts with introducing you to legal concepts, your legal risks, and how you can minimize those risks. You don’t need to be a legal expert. You just need to be aware of these things.
Structure Your Business
Choose the best business structure when you’re starting up. It might be a sole proprietorship, limited liability company, or a corporation. Adapt your structure as your business grows. You might want to form another LLC to hold valuable assets.
Create and follow the governing documents for your business. Create intercompany agreements, if necessary. And transfer assets to your LLC.
Set up and Manage Your LLC
If you have employees, a partner, contracts, or valuable assets, then form an LLC with the state of Alaska. Enter into an operating agreement that accounts for how many owners your business has, your management structure, your tax election, the right buy-sell provisions, and everything else you need to govern your LLC.
Protect Your Trademarks
Choose a strong trademark for your products and services that doesn’t violate someone else’s trademark rights. Consider registering your trademark with the United States Patent and Trademark Office, then protect it.
Get a Good Lease
If you lease space, get a good lease. Take the time to allocate the duties and liabilities fairly between you and the landlord. Make sure everyone understands each other’s expectations going into the lease, then follow it. Don’t just file it away and forget about it. If you do these things, you’ll go a long way to avoiding nasty landlord/tenant disputes.
Manage Your Employees
Avoid the legal pitfalls surrounding your employees by correctly categorizing your independent contractors, correctly designating your employees as hourly or salaried, implementing and following an employee handbook, protecting your employee’s right to privacy, following wage and hour laws, preventing illegal discrimination, keeping your employees safe, and much more.
Enter into a Buy/Sell Agreement
The unfortunate truth of any business is that it will experience its tragedies. There might be death, disability, bankruptcy, or divorce to disrupt life. Sometimes owners want out of the business or a group of owners may want to force one of the owners out.
The members or shareholders can plan for these possibilities with agreements such as a right-of-first-refusal, a forced sale, or an option to purchase. The plan includes a mechanism to set the purchase price and a way to fund a purchase. Without these plans, the members or shareholders may end up with unwanted partners, the inability to buy-out a member, or the inability to sell their interest in the business.
Negotiate the Sale or Purchase of a Business
One of these days you’ll realize that your business is all grown up. You’ll need to decide what you want to do with the business. Do you want to sell it? Do you want to transfer it to your children? Do you want to close it? Do you want to merge it? You need to think through these things to prepare for them.
The typical sale involves an exchange of information under a confidentiality agreement, an investigation of the company, sometimes a letter of intent, then negotiation of the business sale agreement and the final closing.
The Most Important Thing
Yes, there is the most important thing. Your children don’t bring you pride by merely being in compliance with the law. They bring you pride when they adopt the values and lessons you teach them. You want them to have a good reputation. If they have a great reputation, that’s all the better.
Make sure you transfer your standards and values to your business and employees, then live up to them. Convey them to your employees. Write them down in a code and teach the code to your employees. Provide a mechanism that allows for reports about chinks in your armor so that you can fix them. It’s all about integrity.