Businesses are fluid entities, the needs of which change over time. Just as a business has to adapt and change its strategy to meet market or competitive challenges, its supporting legal framework needs to be adapted to keep unexpected risk from derailing its success. Each phase of the life cycle of a business, from start-up, through growth, maintenance and succession, has its unique opportunities, and associated risks, from which it needs protection.
Starting or acquiring a business is a busy time in any entrepreneur’s life. As the new owner focuses on the business tasks at hand, it is easy to overlook critical steps until well into the startup or acquisition process. The goal is to have a solid legal foundation for the business so that the business owner can focus on growing the business.
Every relationship a business owner has is contractual in nature. Whether the relationship is with its customers, suppliers, vendors, landlords, employees or business partners, contracts govern the rights, duties and obligations of that relationship.
There are many reasons for a business to change ownership – retirement of the original owners, sale, or financial hardship. Integrating the transition of a business with estate planning is critical, as is ensuring that any on-going liability for former owners is eliminated in a sale or closure of a business.
Title to some properties includes easements that legally grant other designated people or entities specific types of rights in your property. Many of these have existed in the chain of title throughout the course of many owners. Rather than be taken by surprise by these situations, it’s best to know about them in advance.
Selecting the correct entity type for the business is a critical first step; the second is taking the appropriate actions to maintain the integrity of that entity over time.
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