People start businesses for many different reasons. Sometimes its because a hobby expands. Sometimes its because an idea for a product or service joins up with a need. Sometimes it follows years of planning. Sometimes, the opportunity arises quickly.
Whatever the reason and whatever the circumstances, the creation of a business needs thought and structure. Whether you are a one-person business or whether you and one or more people are joining together to form the business, you should consider carefully how to structure your business. We can help you with this process.
Here are some of the many questions and issues to consider:
* Should your business be a corporation? Should it be a limited liability company? What about a partnership? Under what circumstances would it be OK for a one-person business to be a sole proprietorship?>
* Does the business need a separate federal tax identification number, or can it operate under my personal Social Security number? Why does that matter?
* If the business needs more start-up money than I have, how do I raise the money to obtain the space I need and to purchase the materials I need?
* How can I be sure that the name I want to use is not “owned” by another company? How can I protect the business name I want so that nobody else can copy it? How can I protect my logo or design for my business or business name?
* If something goes wrong and my business does not succeed financially, will it wipe out my savings? Will I lose my home? How can I protect my personal assets?
* If there are a cluster of key people in the creation and operation of the business, what happens to the business if one of them gets a divorce or dies? What if we have a business disagreement and one of the key people withdraws from the business? Can that person start up a new business just down the street and take away our customers?
As these questions illustrate, there are many issues to think about when you form your own business. Lee Lattimore and Steve Little understand how these complicated issues work and have the knowledge and experience to help you work your way through the preliminary steps to create your business and get it off to a good start.
BUYING A BUSINESS
If you are buying an existing business, there are several matters you need to consider:
* The first very important detail to know is whether the business you are buying is a sole proprietorship or a partnership or a limited liability company or a corporation.
* If it is a proprietorship, the spouse of the seller must sign all the relevant documents for the sale, even if he or she is not actively involved in the business.
* If it is a partnership, the spouse of the seller does not have to sign ... unless the spouse is also a partner.
* If it is a corporation, are you buying the entire corporation (including all the shares of stock in the existing business) or are you buying the only the assets of the corporation without buying the stock? (A buyer who is not sure of the answer to this question, or who does not know why this question is important, definitely needs legal advice on how to proceed with the purchase, because this is extremely important.)
* Have you considered the implications of environmental rules or zoning? For some businesses, these are not issues. For others, these can be critical issues.
* Is real estate a part of what you are buying? If so, careful consideration should be given as to whether the real property should be owned in the name of your new business ... or whether you should form an S type corporation or an LLC to own the real property. The facts and circumstances help determine which is better for you. The long term legal implications could make a huge difference down the road.
* Are there any federal tax liens or state tax liens that are involved in the business you want to buy? Getting these paid – and allowing adequate time for the arrangements to be completed – are of the highest importance. These don’t happen quickly!
* Are you protected if the seller decides after a few months to open a new business just down the street and try to get back his previous customers? Your contract with the seller must cover this topic with adequate, legal details in order for you to have any protection at all!
Steve Little and Lee Lattimore can give you proper legal advice on these vital issues involved in the purchase of a business.
SELLING A BUSINESS
If you have a business that you want to sell, what steps do you need to take? The answer depends on whether your business is a proprietorship, a partnership, a corporation or a limited liability company.
Some issues that you should be prepared to deal with include these:
* Do you owe any back taxes ... county, state or federal? Completing arrangements with the county tax office is a great deal easier and faster than working out the details with either the North Carolina Department of Revenue or the Internal Revenue Service. Allow plenty of time to work out arrangements for any overdue amounts owed to either the state and federal tax collectors. You don’t want a lien to be filed at the eleventh hour just before the closing of the sale transaction, since that might scare away the buyer.
* Are you selling any real estate as a part of the sale, or just the business? If your business is incorporated, are you selling the corporate stock or just the assets? (Do you know why this matters?) If real estate is not part of the sale, do you have a lease for the location where the business operates? Is the existing lease assignable to a buyer?
* Have you or any other co-owners made loans to the business that need to be re-paid as a part of the sale transaction?
* Have you already made an itemized listing of the equipment, furniture and other assets that are being sold? Is the list current and accurate? Does it include the value for all assets? If inventory or stock in trade is included in the assets, when will it be counted and valued? How is the value of the inventory/stock in trade to be treated? Retail? Discounted retail? Your purchase cost? How is this to be calculated and presented to the buyer?
* Have you or any of the other owners signed to guarantee payment to a bank for any amount borrowed by the company? Don’t assume the bank that loaned money to you will allow the note to be assigned to a buyer. But even if it will, don’t assume that your obligation is over. Normally, it won’t be. It is quite rare for a bank to eliminate a personal guarantee on a previous loan.
There are a basketful of issues to consider when starting, buying or selling a business. Steve Little and Lee Lattimore are experienced in these areas and can provide you with guidance that fits your particular situation.
OTHER BUSINESS ISSUES
Do you need help understanding all the language (the ever important “fine print”) in a contract that someone has brought to you? (Come see us before you sign ... that’s when we can help you the most!) Sometimes, certain words or phrases in contracts have special legal meanings. Generally, if you sign without understanding everything in the document, you are stuck!
Do you need help preparing a contract for work or products someone wants to hire you to provide? If so, we can help with that.
Do you need a lease prepared? Generally, a lease needs to be custom-written to fit the particular circumstances. You might be protected if you do it yourself using a form obtained over the internet ... but then you might not. How will you know which terms to use? If the document you get from the internet was prepared for businesses in anther state, it might not be valid in North Carolina. If the wrong terms and provisions are used in a do-it-yourself lease (or contract), you might be stuck with no options.
With our knowledge, experience and expertise, Steve Little and Lee Lattimore can help you and your business deal with a great many issues and topics. You will probably find that the cost for our legal services will be more reasonable than you expected.