Top 10 Business Law Mistakes and Ways to Avoid Them!
Form a Kentucky Entity If you will be doing business in Kentucky, you should consider forming a Kentucky entity. Do not form the entity in another state just because that particular state does not impose business taxes. If you are doing business in Kentucky, you will be assessed business taxes regardless of where your business is incorporated. In addition, you will have to register the company as a foreign entity in Kentucky and pay the additional costs associated with that filing.
Get Your Documents in Order Prepare bylaws, operating agreements, partnership agreements, stock certificates and organizational consents as soon as the company is formed. Don't put it off until you need the document for banking or other business purposes. If you get all your documents in order initially, you will save time and money when you are asked to provide them ... and you probably will be asked to provide them.
Business Lawyer to Prepare a Shareholder Agreement Have your business lawyer prepare a shareholder agreement for you. If a shareholder dies and his or her spouse inherits the shares, it's too late. Maybe a shareholder decides to sell shares to a competitor. A good shareholder agreement avoids both of those unwanted events.
Understand all the Terms Make sure you understand and agree to all of the terms of every document you sign. If you don't want to read all the fine print or if you don't understand it, call the attorneys at Sutton Law to help. Your business lawyer should make sure you understand exactly what you are agreeing to.
Contracts and Other Documents Must Be Tailored to Your Business Avoid the temptation to cut and paste internet documents together when you need a document. Contracts and other documents must have consistent terms, must reflect the specifics terms and conditions of your agreement, and must meet your particular business situation.
Create an Entity for Each Business If you have more than 1 business, it is usually best to create an entity for each of them. If one company has difficulties or incurs liabilities, you do not want those liabilities to spill over into the other companies.
Change in the Name or Address of the Company Make sure you notify the Kentucky Secretary of State of any change in the name or address of the registered agent. Check the Kentucky Secretary of State's website every now and then to make sure your company is current and in good standing.
Alternative Voting Rights or Unequal Ownership Interests Consider alternative voting rights or unequal ownership interests for any company with 2 or more owners. If 2 people with equal voting rights and equal ownership of a company disagree as to the direction the company should be going, the company goes nowhere. Always discuss voting rights with your business lawyer.
Sign all Business Documents Make sure you properly sign all business documents. If you are the officer of the company, add the officer title ("President", "Secretary", "Treasurer") after your name. Otherwise, you may be held liable for company obligations.
Effective Means of Collection If you are a building contractor and have not been paid for a job, consult your business attorney as soon as you suspect there may be a payment problem. There are ways to collect unpaid invoices, short of litigation. Attorney for Business Legal Decisions Lastly, remember that while many of the situations described in this article can be solved, all can be avoided. Protect your business. Involve your attorney in your business legal decisions.