Category: Business Law Blog

Protect Your Business with a Business “Prenup”

If your business has two or more owners, you need a Buy-Sell Agreement.

A buy-sell agreement is simply a contract between two or more business owners that formally documents contingency plans if a life changing event occurs.  Some people refer to these agreements as “prenups” for business owners. In the agreement, the business owners agree upon what happens to the ownership structure of the company in the event of one owner’s death, divorce, disability, retirement or other life changing events.

Many business owners don’t realize until it is too late the importance of a buy-sell agreement.  For example, if an owner gets divorced, the business may become hostage to the marital dispute. Or if an owner dies, the surviving business owner(s) may inherit heirs for business partners, who care little about whether the business survives.

Without a buy-sell in place, you are opening yourself and your business up for unknown risks.  Protect yourself and your business from the unknown future with a buy-sell agreement. Ensuring that critical events are properly covered is essential to the long-term survival of your business.

Business Owners: There’s No Time Like the Present

The biggest asset for many small business owners is the value of their business and they count on it for retirement funds. However, most of those owners do not actually know the value of the business. How will they know when they can stop working or what to expect in retirement?

Having the information needed to prepare adequately for retirement is just one of the many benefits to a business valuation. Here are several others:

  • Increase value. In life, what is measured improves – this applies equally to business valuation.
  • Capital infusion. To raise money on the right terms you need to know your value.
  • Mergers & Acquisitions. You need certainty on your value to properly negotiate a deal.
  • Exit of an Owner. The more you understand the value, the more likely you will be to reach an amicable split.
  • Too often people guess or estimate and one side or the other losses.
  • Tax strategies. Good tax and financial planning requires beginning with good data. The best plan in the world won’t do you much good if the initial assumptions about value of your assets was wrong.
  • Employee incentive programs. Companies with employee incentive plans may want or need to share value information each year with employees.
  • Insurance planning. Many small businesses do not have adequate insurance coverage. In order to get adequate coverage, you need to know how much value you are covering.

Many business owners avoid valuation because traditionally it has involved an extensive, expensive, and invasive process. Epiphany Law is different and our technology has changed the process. Now we can provide a valuation report that costs a fraction of the traditional model and takes a fraction of the time.

To get started on your business valuation, simply go to https://epiphanylaw.bizequity.com/.

 

Ambiguity is the Fertile Soil of Litigation

Don’t ever think that a comma is not powerful.  Recently a court in Maine found wording of Maine’s overtime rules ambiguous due to the lack of that humble oxford comma. That ambiguity cost a company millions in overtime pay.

Ambiguity is the fertile soil of litigation.  A former law school professor used to say, “Words are the tools of our trade.”  She would make us chant it with her.  When we use language that leaves itself open to interpretation, we are inviting people to challenge us as to what our words actually mean.  In the context of a contract, that challenge can put us and our businesses in a very bad place.  That is what we saw in this highly publicized case with the Oxford, or Serial, Comma.  For the record, I love the Oxford Comma, and I have no idea how it became something that people felt was optional.  Some examples of problems that arise from misunderstandings that spring from lack of an Oxford Comma:

The Book Dedication:  To my parents, Ayn Rand and God.

You get the idea.  While there are other ways to edit that list to make it clear, the Oxford Comma should/could have been used to clarify.  A mastery of language is not just a legal vocabulary, but also a grasp of grammar and basic words and grammar and stuff…  Did I say that right?

In the end, how you use the comma isn’t the issue.  If your contract doesn’t use the Oxford Comma, but is otherwise clear and concise, then you don’t have the same problem this company did.  The big problem here is that a missing comma could have such an impact on a company’s liability.  When you hire a lawyer to protect your business, make sure they know how to use their tools properly.

Avoid Piercing the Corporate Veil

Piercing the Corporate Veil

A corporate veil is like a “bubble” that will surround an LLC or Corporation and protect its owners from being personally liable for the company’s actions. The veil is normally very secure; however, there are times when that “bubble” can be popped and owners of a company become personal avenues for law suits normally reserved for the LLC or corporation.

Tips to avoid personal liability: Continue reading “Avoid Piercing the Corporate Veil”

Exit Planning: It Takes a Team

Exit Planning is very comprehensive.  Accordingly, several key players must be involved including your financial advisor, CPA, banker, insurance professional, business broker, or investment banker and attorney.  When selecting your team of advisors it is important to identify players that will work well together and will be able to help with any of the issues in a comprehensive plan.  No one person or advisor has the expertise to design a comprehensive plan.

Continue reading “Exit Planning: It Takes a Team”

Exit Planning vs. Succession Planning?

Often times the terms Succession Planning and Exit Planning are used interchangeably but they should not be.  Both Succession Planning and Exit Planning should be addressed as separate plans.

Succession Planning is planning for leadership continuity.  It identifies and fosters the next generation of leaders within a business. It’s a process because it requires a company to develop internal people with the potential to fill key positions within an organization. With a proper Succession Plan, a business will seamlessly transition leadership.

Continue reading “Exit Planning vs. Succession Planning?”

Employee Policies and Procedures: Costly if Not Monitored

There’s been a lot in the news lately about huge settlements that big companies have made for employment law issues. Whether it be for misclassification of workers or violation of wage and overtime laws, businesses continue to pay large fines for not following employment laws. For example, Uber drivers recently filed a class action lawsuit claiming they have been misclassified as independent contractors and are entitled to be reimbursed by Uber for expenses such as gas and vehicle maintenance. This lawsuit was costly. Uber agreed to pay $100 million to settle independent contractor misclassification claims.

Continue reading “Employee Policies and Procedures: Costly if Not Monitored”

Buying and selling real estate. Do I need an attorney?

The process of buying and selling real estate can be complex and it often represents one of the most substantial investments made by an individual or a business. Although using an attorney to assist with the process will not be free, the fees are a minor expense in relation to the significance of the transaction, and is certainly money well spent.

Handling a real estate transaction without an attorney may complicate the process in the short-term and increase risks and expenses long-term.

So, how can an attorney assist you in the buying or selling process?

  • Attorneys are able to negotiate the terms of the real estate purchase agreement to ensure your interests are protected, whether you are buying or selling.
  • Attorneys are able to structure the transaction in a way to minimize present and future tax liability and limit personal liability for matters relating to the real estate.
  • Attorneys are able to prepare agreements between partners in a real estate investment, as well as lease agreements with potential tenants.
  • Attorneys are able to conduct due diligence with respect to the real estate, to help you fully understand what you are buying and identify issues ahead of time. This includes reviewing the title work relevant to the property.
  • Attorneys are able to coordinate with other parties to the transaction, including real estate brokers and title companies, to ensure that the closing happens in a timely and efficient manner.

In summary, if you are buying or selling real estate, a real estate attorney will work for you to ensure you get the most out of your investment.

New Overtime Guidelines – Mitigate Penalties and Employee Lawsuits

We’ve all probably read about the new overtime guidelines for “white collar” workers that the Department of Labor released on May 18, 2016.  But do you know what your business needs to do to be compliant with the new rules by December 1, 2016?  First, you need to understand the new rules. Information about the new rules can be found on the Department of Labor’s website: https://www.dol.gov/WHD/overtime/final2016/faq.htm#8.   These rules can seem overwhelming, but an attorney at Epiphany Law can verify that you are interpreting the law correctly.

Secondly, employers must understand how the changes will affect their current workforce and understand their options if an employee is subject to and does not meet the salary threshold. For example, in response to the new rules, employers way want to make changes to how they pay employees.

To avoid penalties or even worse, a lawsuit, we suggest you consult your Epiphany Law employment attorney before implementing any changes. The attorneys at Epiphany Law will review your classification of employees, overtime procedures and employee handbook to ensure your risk for penalties and employee lawsuits is mitigated.

Trademarks: Selecting the Right Name

Trademarks: Selecting the Right Name

One legal topic we at Epiphany Law often advise businesses on – whether a New London startup, or a Neenah multi-national company – is trademark protection. Trademarks are one of the “big three”( intellectual property rights, along with copyrights and patents.) A trademark is a brand name. Trademarks include any word, name, symbol or device used to identify and distinguish the goods/services of one business from those of another. In other words, a trademark indicates the source of goods/services (such as your Appleton, Wisconsin headquarters!). Many businesses rely heavily on their brand name, because it signifies the quality, reputation, or other characteristics of the business and its products or services. It is important for these businesses to ensure their trademarks are on solid legal ground.

The best time for a business to seek legal advice regarding the strength of a potential trademark is before the trademark is used. The relatively small upfront investment in researching a trademark is worth the peace of mind in knowing that your trademark is protectable and not already being used by someone else. Litigation and disputes about trademarks once already used in commerce can be a very expensive distraction.

Although there are many nuances involved in analyzing a trademark, the two most crucial factors are (1) likelihood of confusion and (2) distinctiveness. The likelihood of confusion essentially means that a trademark cannot be too similar to an existing trademark that is in use by another company for a similar set of goods and services. Distinctiveness means that a trademark cannot be too generic. For example, a Kaukauna bakery named “The Good Bakery” would not receive much, if any, trademark protection.

Some trademark rights can be automatically “earned” simply by using the mark. However, those rights are generally limited. For example, if your business only does business in Menasha, it likely won’t have rights in Little Chute, Kimberly or Waupaca. In order to secure stronger protection your trademark should be registered with the United States Patent and Trademark Office (USPTO.) Start by searching the Trademark Electronic Search System (TESS) on the USPTO.gov website to determine the viability of your trademark. Then contact Epiphany Law to assist with your registration. Using a knowledgeable law firm will ensure success and keep costs at a reasonable level (generally $1,000-$2,000 per trademark).