What Does Your Business Entity Own?

By | Business Contracts, Business Lawyer | No Comments

If you set up a limited liability company (LLC) or corporation for your existing business, what does the new entity own?

Too often, the answer is nothing.

How does that happen?

Your sole proprietorship or partnership never gets around to actually transferring the business assets to the new entity.

So, you’re really still running the business as before while pretending there’s a corporate liability shield in place to protect you as the owner.

Unfortunately, a hollow entity (without assets) isn’t going to protect you personally.

Naturally this means you’ll want to transfer the assets to the entity so that it can operate as intended for tax and liability purposes.

An experienced business lawyer can help you use the right contracts and assets transfer paperwork in a way that makes sense for your business model. Because if you’re going to set up a corporation or LLC, you might as well take advantage of it.

Business Contracts – Why Customized Agreements Are Better Than Legal Forms

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A contract is a legally binding agreement between two or more people or business entities that creates obligations for each party to perform. Some people prefer to go the “cheap” route by picking a form randomly off the Internet and plugging in details trying to customize the form without having the legal knowledge to do it right. When things go wrong, as they often will, if the completed form is enforceable at all the court’s interpretation of what it means can come as an unpleasant surprise to the nonlawyers who signed it.

If you’re going to get legal forms, get them directly from a competent lawyer instead of trying to pick something and make it fit to your situation without knowing what needs to be included to protect your legal rights.

A better course of action is to have your attorney actually draft a customized agreement that reflects your needs. Most business deals contain unique characteristics. In the long run, the extra you pay for a customized contract now can save you lots of legal fees later.

Buy-Sell Agreements Can Protect Ownership of Your Business

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A buy-sell agreement, also known as a buy-and-sell agreement, allows business owners to make arrangements by contract for surviving owners to buy out the interest of a co-owner who dies or decides to leave the company. Whether your business operates as a partnership, a corporation, or a limited liability company, a buy-sell agreement can help you plan for the future.
This type of contract can provide for mandatory or optional purchases of an owner’s interest upon death, divorce, bankruptcy, retirement, and other events. Because you, your co-owners, and your company operate under unique circumstances, a one-size-fits-all approach usually doesn’t cut it when creating a buy-sell agreement.

You should prepare to make the best of all circumstances that can trigger a buyout so that your business continues operating and each owner benefits from the advance planning made in the buy-sell agreement.

And because circumstances often change both on a business and personal level, it is important to have any existing buy-sell agreement reviewed on a regular basis with your lawyer to ensure that it still accurately reflects what you want.

How The Federal Trade Commission Can Destroy Your Online Business

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You can obtain a free copy of the entire book “How The Federal Trade Commission Can Destroy Your Online Business ” in Adobe Acrobat (PDF) format to download and read by clicking this link.

If not, you can read parts on this blog under the Federal Trade Commission category. Now the related disclaimers.

DISCLAIMERS

Information in this book is general in nature and should not be construed to be formal legal advice or the formation of a lawyer/client relationship. Consult an attorney to address specific legal issues.

This book makes reference to the U.S. Federal Trade Commission, other government agencies, and various businesses. All references are made solely for editorial purposes. The Author, as both author and as publisher, does not make any commercial claims to their use, and is not affiliated with the FTC in any way. All marks are the property of their respective owners.

Unless otherwise expressly noted, none of the agencies, individuals, or business entities mentioned herein have endorsed the contents of this Federal Trade Commission-related book.

This book contains hypertext links to websites and other information created and maintained by other individuals and organizations. These links are only provided for your convenience. I do not control or guarantee the accuracy, completeness, relevance, or timeliness of any information or privacy policies posted on these linked websites. You should know that these websites may track visitor viewing habits.