If you are looking to venture into an innovation, speak to one of our attorneys, to explore the legal aspects of the startup. Legal needs for startup businesses include:
Structuring the type ownership: A business can be structured in four ways: sole proprietorship, limited liability, partnership, and corporation. Every form has its own set of guidelines, risks, and income as well as tax liabilities.
Sole proprietorship: A sole proprietorship has one owner. The owner has all rights to the company and receives all the profits. The individual is also responsible for all taxes and any liability concerning the business.
Even though the owner of the business gets to receive all profits, their assets are not protected from business creditors. In case they fail to pay back a loan, the creditor can easily possess their personal property, which may include their home or vehicle.
Another challenge for a sole proprietorship is that options for raising capital are limited compared to those of other types of businesses.
Partnership: A partnership has one or more owners. All owners share the profits or losses, as well as, responsibilities that may arise. Depending on the objectives of the owners, as well as, requirements of the State of Michigan, there are different types of partnerships, such as:
- Limited Liability
- Limited companies
Corporation: A corporation is a formal type of business where a group of people have the authorization to operate as a single entity. Even though a corporation is a business started by multiple people, the number of shares determines ownership. The party with the majority of shares has more control of the business. A corporation can be recognized as a professional corporation, a ‘C’ corporation, or an ‘S’ corporation.
Limited Liability Company: A Limited Liability Company and a corporation are similar. The only difference is that a Limited Liability Company is taxed differently. Just like in a corporation, the owners of a limited liability company are not personally responsible for the liabilities or debts of the company. This type of business combines the characteristics of a partnership with those of a corporation.
Whatever type of business you choose to venture into, we are here to assist you.
Drafting of Agreements/Contracts
Contracts are the lifeblood of a business. Without them, a company cannot run. Our experienced attorneys will help you draft a contract so that you can avoid any future conflicts with other businesses or employees. We are here to help you draft the appropriate agreement; whether that includes a founder agreement, investment agreement, employment agreement, operating agreement, or licensing contract.
Assignments of Intellectual Property
It is always best to assign all relevant Intellectual Property (IP) to the company by using an agreement. Intellectual Property refers to all the methods, techniques, ideas, and every aspect that makes a business what it is. It also includes trade secrets, the logo or trademark of the company.
To save your business from future lawsuits, it is important to have an attorney review your lease contract. Just like any other contract, a lease is an important document. During the review, you may notice some aspects that require fixing. The good thing is – you can negotiate any changes you want the property owner to make before signing the lease.
Most leases favor the landlord, which is why you need to review them carefully before signing. Our legal team can help you evaluate the document so that you can avoid legal trouble in the future.
Our attorneys will explain to you the workings of some of the provisions in the lease and also identify any illegal elements of the contract. In the case of unfavorable provisions, our attorneys can advise you on the best alternatives or other aspects that may need to be included in the lease.
You must also consider the duration of the lease. Most leases run for one year. However, some run on a month to month basis, thus offering both the landlord and the tenant flexibility. If you are anticipating occupying a site for only a short time, then a month-by-month lease is best. This also works when you are new to a particular area and want to see whether the location is ideal for your business.
You also need to find out whether or not the lease allows you to use the property for a home business. There are some leases, which do not allow tenants to use the premises for a home business. It is also essential to find out what will happen in case you do not move out on time as stipulated in the lease contract.
Other factors that you should consider include the number of people allowed to occupy the premises, whether or not the lease allows you to live there with pets and the provisions of ending the contract.
When it comes to commercial leasing, every promise must be put in writing. Therefore, make sure the landlord puts their commitment in writing. If you are a landlord, ensure that the tenant agrees to your terms by putting it in writing, with each party signing.
Review of Franchise Documents
Before you buy a franchise or sign the franchise agreement, be sure the franchisor provides you with the franchise disclosure document (FDD). This should be presented to you at least two weeks prior to signing your contract which seals the franchise relationship.
The FDD is a crucial franchise document that is required by law. The FDD contains other legal documents you may need to sign before you become a franchisee.
Help Raise Capital
Once you have addressed the necessary legal issues, your next step is to raise funds for your business. Our attorneys can represent your company in loan transactions, after helping you understand the terms and the conditions of the financial transactions. Other sources of capital for startups include venture capitalists, angel investors, and initial public offering (IPO).
Compliance and Regulatory Issues
Compliance refers to a company’s adherence to the regulations, laws, specifications, as well as the guidelines that are relevant to each type of business. You must know all regulations and laws applying to the kind of startup you are planning to venture into. This will help you avoid getting into legal problems later. Failure to comply with the regulations and laws means you are violating laws. Legal punishment for violations may include payment of legal fees.
Tax compliance, or failure to comply with tax regulations, is one of the most troublesome areas for businesses. Individuals and companies are taxed differently. This is why corporations are taxed separately from the way an individual is taxed. Some of the factors that influence taxation include whether or not you travel every day to work, the size of your office, and whether or not you have a side job. All these factors affect your income tax filing.
Besides helping our clients handle the various financial transactions involved in corporate startups, our attorneys are experienced in defending clients whenever they get involved in any dispute. We have competent attorneys to handle various commercial litigations that range from business torts, breach of contracts, corporate governance, as well as other legal matters that affect your business.
Whether you are operating in real estate, manufacturing, retail, finance, technology, and construction, you can be sure to get the assistance you need. We have handled legal matters including, fraud and unfair business practice, corporate governance, foreclosure and receiverships, disruptions, cost overruns, and management disputes.