Reduce Risk of Personal Liability with Corporate Formalities.

Below are some suggestions for reducing the risk of personal liability for Shareholders and Directors of your corporation:

Here is the “Do” list:

Schedule, Give Notice of and Hold Shareholder and Director Meetings:

• Read and know the provisions set forth in your corporate By-Laws.  I know it is not the most exciting reading, but it is important to know and comply with the "rules" of your corporate organization.
• Your corporate By-Laws should set forth the date for your annual Shareholders' meeting.
• Your corporate By-laws should require an annual Board of Directors meeting to be held on a date relatively soon after the annual shareholders' meeting.

Schedule, Give Notice of and Hold Special Meetings of the Board of Directors for important matters, for example:

• Changing an officer’s salary;
• Opening a new bank account;
• Offering to enter or entering into a new lease or option to lease;
• Applying for or entering into a funding commitment for a substantial sum;
• Making an offer concerning a substantial agreement or entering into any other significant contractual agreement ;
• Filling a vacancy on the Board of Directors (Note, Shareholders typically elect Directors) or appointing a new officer;
• Broadening the purpose of the business and/or the business activities which the corporation will be involved (e.g. entering a new industry);
• Considering the sale, in whole or in part, of the assets or the dissolution of the business (Note, Shareholders typically have to approve, on this subject as well).

Create and maintain good corporate records.

• Record minutes of all shareholder and director meetings;
• Maintain accurate corporate record book.
• Create and maintain good financial records.

Act in best interest of shareholders; Keep corporate information confidential.

• Directors owe a fiduciary duty to the shareholders of the corporation, meaning that they must act in the best interest of the corporate shareholders.
• Keep matters that come before the Board of Directors as confidential as possible.

Develop a Review and Analysis Plan:

• Review, analyze and revise goals (6 month goals, 1 year goals, 5 year goals, 10 year goals and 20 year goals).
• Review and revise budget at least every six months.
• During the first and last month of each fiscal year, review each year's business activities.
• Review business operations with your attorney.
• Review business operations with your CPA.

Authorized Signatories should sign all contracts in their corporate capacity (e.g. as President of xyz, inc.).  Otherwise, the signatory could be exposed to personal liability for the contents of the signed document.

•  Corporation should have a resolution authorizing certain officer(s) to sign certain documents.
• All purchases for corporate should be made in the name of the corporation (name of corporation should be on all invoices, purchase orders, etc.)
• Maintain separate corporate bank account for corporate funds, assuring that such funds are not comingled with any other funds.
• Obtain and maintain liability insurance policy with limits not less than industry standard, for the corporation and directors.
• Fund the corporation at the time of incorporation with enough funds to maintain the corporation until supplemental influx of revenue.
• Always comply with provisions set forth in the By-Laws, Articles of Incorporation and other controlling corporate or contract documents.

 

Here is the short “Don’t” list.

Don’t fail to do the “Do’s.”

 

Click here to discuss your corporate matters with an experienced Boston Business Lawyer / Maine Business Lawyer. (Free Telephone Consultation)

 

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Who Drafted YOUR Contract?

Generic contracts may have an attractive price tag; however, they can prove to be very costly and can cause serious problems for businesses. Consider that general provisions can determine the enforceability or non-enforceability of a contract and the enforceability or non-enforceability of the remedies available to the parties. 

Some of the dangers that may lurk in general contracts are as follows:  you may be personally liable for the contract instead of benefiting from liability protection of the business entity; one seemingly innocuous phrase, can destroy liability protection; some contracts need several due dates and commencement dates and these can be easily overlooked or drafted poorly rendering it ineffective; and, if one clause is missing or poorly drafted, you may have to pay for “nothing.”

Want to discuss you business contract issues with an experienced Boston business lawyer or Maine business lawyer?  Click here for a free telephone consultation with Michelle L. Grenier, Esq., an experienced Boston business lawyer and Maine business lawyer.

 

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What do I need to do to start my business?

The most common question I hear from new clients is, "what do I need to do to start my business?"  Here is a summary of the most common tasks for new businesses:

1. Joint Venture Agreement: Enter a joint venture agreement for all founders, that describes the duties, responsibilities and expectations of each party.

2. Establish a Separate Entity.  Establish a corporation or limited liability company [LLC], to protect the personal assets of each owner of the business.

3. Open a separate bank account for the corporation or LLC and refrain from co-mingling personal funds with business funds.

4. Find out what licenses you will need for your project.

5. Make sure that your commercial lease protects your interests, not just the landlord's interests.

6. Find out if your preferred is available for use and registration and then register your trademarks with the USPTO.

7.  Make sure that your website is in compliance with proper terms of use, privacy policy, copyright notices, etc.

8. Require all those privy to trade secrets, execute a comprehensive nondisclosure and confidentiality agreement.

9. Require employees and independent contractors to enter into comprehensive agreements.

Want to discuss you legal issues with an experienced Boston Business Lawyer?  Click here for a free telephone consultation.

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Is your "trademark" really a trade name without trademark protection?

Are you using your term as a trade name or trademark?  The USPTO may find that the term for which you would like to obtain trademark registration, is used as a trade name and not a trademark.  The Trademark Act does not provide for registration of trade names.  For example, the name of a business or company is a trade name and the Trademark Act and the USPTO distinguishes trademarks from trade names.  A trademark is used to identify and distinguish the trademark owner’s products/goods from those sold or manufactured by others and to indicate the source of the products/goods.  As defined by the Trademark Act, the terms “trade name” and “commercial name” mean any name used by a person to identify its/her/his business or vocation.

Note, that use of the term in a stylized manner may help your argument that the term is used as a trademark (in addition to being used as a trade name). 

In addition, you will need to submit a Specimen evincing use of the mark in commerce, in association with the goods applied for.  With the specimen you will also be required to submit and certify the date of your first use in commerce of the mark and the Specimen.

Should you wish to discuss your business endeavor and corresponding legal issues with an experienced Business Lawyer, click here to schedule a free telephone consultation or contact Michelle L. Grenier, Esq. directly at 617-728-9800 or michelle@contactmylawyer.com

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There is no "Standard" Commercial Lease: Commercial Leasing

     A commercial lease is different than residential leases with regard to many issues. Commercial tenants are presumed to be sophisticated and not requiring as much protection from the law, and thus, rights given to residential tenants often do not apply to commercial tenants. In addition, Landlord's typically have the leverage in the commercial lease situation, hence the importance of commercial tenant taking steps to protect her/his/its interests. 

     Here is a summary of steps that typically apply to commercial leasing:

1. Hire a competent real estate agent to help you find property that is right for you.   Make sure you and the agent are clear on who will be paying the broker.

2.  Have an inspection of the premises. 

3.  Obtain advice of experienced business lawyer, to review the commercial lease and to provide you with information so that you may have a good understanding of the terms of the lease.  Note, generally, with a commercial lease, if its not in writing its not part of the deal.

4.     Use the preventative approach versus the remedial approach, as it is much more expensive to fix a problem than to avoid one. 

For more information, click here:  Commercial lease

Ready to discuss your business issues with a Business Lawyer?

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So You Want to Start Your Own Business! Congratulations!

Congratulations!  Deciding to tackle such a endeavor is half the battle. Now for the other half of the battle. This article provides some helpful tips for starting a business. 

In addition to the basics, such as educating yourself in the field or industry of interest and creating a business plan, there are several legal issues that should be addressed when starting a business. 

• If there is more than one person starting the business, a well-drafted Joint Venture Agreement is essential for success and avoidance of misunderstandings.  Your Joint Venture Agreement should clearly set forth each participant's role, expectations, duties and responsibilities.  The JV Agreement should also set forth what will happen if a participant no longer complies with the JV Agreement, voluntariliy or involuntarily (e.g., disability or death).

 

• Next, establish a separate legal entity, such as a Limited Liability Company [LLC], to protect the personal assets of the participants from activities of the business.  Open a separate bank account for the LLC and make sure you do not co-mingle personal funds with LLC funds, as this is a means for dissolving the LLC protection. 

 

• All contracts should be entered into by the LLC and not you personally, to avoid personal liability.  In addition, you must sign all contracts in your capacity as a Manager or Officer of the LLC, e.g, "John Doe, as Manager of ABC, LLC," otherwise, you could be personally liable for the contract.

 

• If you have employees, make sure you have all employer posters required by the Federal and State government. Also, hiring a payroll service to do your payroll, may be a good idea.  Note, if only the owners are working for the LLC, you may not be required to run payroll.

 

• Register your Trademark to protect use of your mark by others.  Register the copyrights to your web site and other marketing material for the same reason.

 

• Make sure you have proper web site content, to reduce the risk of liability.

 

• Make sure you are in compliance with all laws, including, obtaining all applicable licenses and record keeping related to immigration law compliance. 

 

• Protect your business interests by utilizing comprehensive confidentiality agreements, non-circumvention agreements, non-compete agreements, employee agreement, independent contractor agreements, and other well drafted comprehensive agreements specific to your business.

Congratulations again; you are on your way! 

You will only pass this way once . . . do it right!

Ready to discuss your issues with a Boston Business Lawyer or Maine Business Lawyer? Click here to schedule a Free Telephone Consultation.

Joint Venture Agreement Checklist

The key to operating a successful joint venture is to determine the duties, responsibilities and expectations of the founders, before starting operations. These and other important issues are best addressed in writing through a Joint Venture Agreement. 

•  Identify the Parties of the Joint Venture Project.       

•  Identify or Define the Purpose of the Joint Venture.

•  Determine the type of Joint Venture Entity (LLC, Corporation, etc.) 

•  Determine exit strategies.

• Determine what will happen in event of deadlock.

• Clearly describe each Party's level of commitment, duties, responsibilities and expectations.

Include other important issues specific to your circumstances. 

Ready to get the ball rolling and discuss your issues with a Boston Business Lawyer or Maine Business Lawyer ?  For a more information on Joint Ventures click here or schedule Free Telephone Consultation today.

*This is not an exclusive list, but instead a tool to facilitate discussions. These materials have been prepared by Grenier Law Offices, PC for informational purposes only and are not legal advice. This information is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. Readers should not act upon this information without seeking direct legal counsel.

Starting a Service Business?

  The following is a basic checklist concerning legal tasks related starting a service business:

• Establish a corporation or Limited Liability Company. Obtain Federal ID number and all Corporate and LLC documents necessary to comply with applicable laws.  
• Apply for trademark registration.
• Obtain a license to operate the business, if applicable and research other requirments and limitations that may apply.
• Enter into commercial lease after having lease reviewed by an attorney. 
• Enter into comprehensive Client/Customer Agreements for services. 

You may also find the information on the following link helpful:

Protect your personal assets.

If you are ready to GET THE BALL ROLLING, schedule a Free Telephone Consultation with an Experienced Boston Business Lawyer / Maine Business Lawyer today.

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Starting a Business is like Building a Home

 

     Before starting a business, obtain advice from professionals and consider this thought-provoking analogy. 

     Building a business is like building a home.  You would not use drywall to support a home, because , amongst other things, it would not survive the elements (rain, storm, etc.) and such would result in a loss of substantial investment.  Similarly, with your startup, contracts are support beams for businesses.  If you don't utilize solid comprehensive business contracts, your business investment will be at substantial risk.

     In addition, proper entity establishment and maintenance is the "foundation" of a business, just as cement is typically the foundation of a home.  You would not invest in a home that lacks a proper foundation.  Consider the risks involved in investing in a business that lacks a proper entity foundation and/or fails to properly maintain such entity.

     Furthermore, if you must "skimp" with regard to the home, skimping on the decor is less risky than skimping on the foundation or the supporting structure.  In a business, if you must skimp, then skimp on the something other than the establishment or maintenance of the entity or the supporting contracts.

    Moreover, it is important for Homeowners to protect their property.  So too is it important for businesses to effectively protect the intellectual and proprietary property of the business, for example, Trademark Registration, Copyright Registration, Copyright Notices, Patent Registration, proper methods and efforts to maintain Trade Secret protection, etc. 

    Finally, to successfully build a home, a general contractor typically works with a team of experts, e.g., the architect, engineer, cement contractor, window specialist, painters, zoning attorney, etc.  New businesses should also bring together a team of experts, e.g., legal, tax, etc.

Knowledge + Informed Decisions + Proper Implementation =  Business Success

Ready to GET THE BALL ROLLING? Schedule a Free Telephone Consultation with an Experienced Boston Business Lawyer or Maine Business Lawyer today.