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Legal Nuggets for Businesses

If you are running a business or just starting out, you probably already know there is legal minefield out there. To overcome it, it helps to have some practical insight. Here are a few tips you might want to keep in mind.

1. Shareholders vs Members – In a limited liability company, there are no shareholders. They are called members instead.

2. Operating Agreement vs Bylaws – There are no bylaws for a limited liability company as found in a corporation. The Operating Agreement serves the function of the bylaws.

3. Written Agreement Jurisdiction – When negotiating a contract, make sure to look at the jurisdiction clause. You want it to be in your town or city. Otherwise, you may have to travel across the country to defend yourself in a lawsuit.

4. Business and Friends – When starting a business, there is a tendency to get friends involved. Generally, this is a bad idea. Different views can lead to the end of friendships.

5. Enthusiastic Legal Representation – Your attorney has a duty to enthusiastically represent you, but not make final decisions on your behalf. He or she will make recommendations, but the final decision is yours.

6. Business Ownership Planning – At the outset of a business start up, it is hard to image worrying about owners leaving. Well, you need to sit down and plan out scenarios with the owners. It is easier to negotiate difficult subjects before revenues are made.

7. Avoid General Partnerships – Never form a general partnership unless you have to. This business form leaves all partners open to joint and several liability. This means everyone is entirely responsible for the debts of the business.

8. Business Failure Rates – Roughly 80 percent of businesses fail in the first two years. Plan as much as you can before starting the business to increase your chances of making it.

9. Going Ecommerce? – Most startups don’t think about going online before opening a brick and mortar office or shop. If you can get the hang of web design, it is much cheaper to start online.

10. Discovery in Lawsuits – During a lawsuit, much of the time will be spent on discovery. Discovery is the process of learning information through depositions, document requests and so on.

As with all legal information, keep in mind the above may or may not apply to your specific situation. Much of the law is factually oriented, meaning it applies in different ways to different situations.

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