Not all contributions to a business are financial. For example, John and Jill might form a business. John contributes $50,000 but Jill does all the work. After two years, the business is now worth $150,000, a three-fold increase in value—all thanks to the sweat of Jill’s brow. Sweat equity is the increase in a business’ value thanks to hard work. If you don’t have the funds to contribute to a business, you can contribute in other ways. But you will want a legal document that protects your right to equity. For help drafting or negotiating a sweat equity agreement, please contact BrewerLong today. Our Florida business attorneys can help you with your agreement today. The Difference Between Sweat Equity and Labor Anyone who works for a business contributes to its value (unless they are terrible at their job). For this reason, a company’s employees might increase the equity of the business. But you don’t need a sweat equity agreement for your employees for one simple reason—they aren’t owners and you don’t intend to make them owners. That’s where the “equity” portion of sweat equity comes in. The term refers to an ownership stake in the business, and a sweat equity agreement is only necessary if you want to grant an ownership stake to someone who doesn’t have capital to buy their way in. When You Need a Sweat Equity Agreement If you are forming a partnership, then you probably need a sweat equity agreement. A partnership is an agreement between at least two people to run a venture jointly. Partnerships bind each partner to each other and make them personally liable for business debts. When you form a partnership, each partner brings something to the arrangement, usually start-up capital as well as their labor. You need a written sweat equity agreement in this situation. You might also need a sweat equity agreement if you are forming a different business structure with someone who wants to earn equity by working. This person might not have any capital to contribute or they have some but want to own more equity than they can buy. If you are unsure about whether you need a sweat equity agreement, meet with an attorney to discuss your case. You need to get these documents nailed down before starting your business, so schedule a consultation. What Goes into a Sweat Equity Agreement? You need an equity agreement that is clear and is written with future contingencies in mind. Generally, an equity agreement should contain the following: The total amount of equity that may be earned. For example, you might want to limit it to 50% if you have a two-person partnership. Larger companies often set the limit much lower. You might also want to set a minimum amount. The rate at which equity accrues. One option is to use the person’s salary or rate of pay to calculate equity. If the person is paid $30,000 a year, then they could have this much equity at the end of the year in lieu of a salary. Conversion rates. Will the sweat convert to equity every month? Every two months? Six months? This can matter if the person is gaining voting rights. Vesting period. You might not want the person to immediately start gaining equity, especially if they are new to the business. You could set a six-month vesting period during which their labor will be compensated in cash and then, after vesting begins, they begin to earn equity. Type of equity. Some companies have different tiers of stock. You should identify the type and the quantity the person is earning. Performance criteria. Be very clear about the responsibilities for each partner, which is vital if a partner tackles several roles at once. You also need a section on separation criteria. Unfortunately, business owners jump around, and you can’t expect someone to stay with the business forever. Sometimes, businesses need to eliminate roles against your wishes. You need to spell out in advance what happens to equity in the event of separation. These are only some of the items that should be in a sweat equity agreement. There are many other helpful terms, depending on your situation. Work closely with a Florida business lawyer to draft a sweat equity agreement that works for you. Should You Offer Equity? You don’t have to offer an ownership stake. Instead, you could make someone an employee and pay a salary or wage. Before deciding to grant someone equity, consider the following: How committed is the person to the business? Have they participated enthusiastically in early discussions of the business? If you suspect a person won’t stick around, you might want to forgo giving them equity. Can the person truly increase the value of the business? If not, then they are probably replaceable and should probably be an ordinary employee. Do see eye to eye? A business will flounder if owners disagree on fundamental issues, like the immediate direction of the company and the preferred rate of expansion. Your answers to these questions will also drive the content of your sweat equity agreement. For example, if you are unsure about someone’s passion or commitment, you might have a lengthy vesting period to protect yourself. Experienced Business Lawyers If you are forming a business, or if you are taking on a new owner, you should carefully cross all your T’s and dot all your I’s. The proper legal documents can help minimize disputes later, which can save your business time and money. Contact BrewerLong today. Our Florida business lawyers have drafted or negotiated many sweat equity agreements. We will identify what you hope to accomplish with this agreement and then tailor it to fit your needs. You can contact us or, call 407-660-2964 for a free introductory phone call.
Businesses take a lot of elbow grease to get up and running. After years of promotion and providing quality work, you might find that you grow so successful that you suddenly are in the cross hairs of some very unsavory people. Many businesses can go decades without confronting serious legal issues, but many eventually find themselves the targets of attacks on their reputations. When an individual is lied about and suffers injury, they might have a legal claim for defamation. Businesses that are lied about also have legal rights, and in Florida they can bring a lawsuit for business disparagement. Also called commercial disparagement, business disparagement cases are complicated and very difficult to bring successfully, requiring detailed evidence of what was said about your business and how it has harmed you. For more information, please contact a business law attorney to begin building your case. What is Business Disparagement? You can’t bring a lawsuit for business disparagement simply because you are unhappy about what a competitor or a member of the public has said about you. Instead, you need to prove the following elements: The statement was false. The person making the statement intends for you to suffer financial loss and your business does suffer loss. The person making the statement knew it was false or did not have any concern whether it was true. For example, a competitor might claim that you hire illegal immigrants as workers, which makes you the focus of negative press stories. Customers might also leave you, costing you money. If the competitor made the claim knowing this would hurt you financially, and if the statement is false, then you might have a legal claim. Defenses to Business Disparagement Based on the elements listed above, you can tell when you will not have a commercial disparagement case. For example, if the statements made about your business are true, you don’t have a case. Only false statements are actionable. Also, an opinion is probably protected as well. Someone can write on a Yelp review, “I thought the food was terrible” and that is not disparagement because it is an opinion not a statement of fact. By contrast, if someone claims to have found an insect in their food when there wasn’t one, then this is an obvious lie. Second, your business actually has to suffer financial losses. Many negative things are said about businesses all the time and the public just overlook them. A negative statement might hurt your feelings as a business owner, but you need to suffer real losses to bring a lawsuit. The person making the statement also had to intend for you to lose or business or have known that the statement would reasonably cause you to lose business. Third, the person making the statements either must know they were a lie or couldn’t be bothered to check their veracity. This requirement protects someone who tries to confirm the statement before publishing it, such as a journalist who does research to confirm the truth. Even if the statement is false, the journalist didn’t know it was false or recklessly publish it, so the defendant probably has a defense. How Much Compensation Can a Business Receive? If your business has been disparaged, you can bring a lawsuit for compensation. This money should make up for your losses and put you in the position you would have been in had the false statements never been made. Keep careful record of lost sales or lost business contracts. Typically, you need detailed proof of the amount of money that you have lost, otherwise you will receive only nominal damages. You might also be able to receive money for loss of your reputation. Work with an attorney for help documenting everything. Has a Competitor Lied about You? Contact a Business Lawyer Today The marketplace is cutthroat, and competitors sometimes make false statements that they later regret. They can try to get an unfair advantage by outright lying about your business in the hopes of persuading people to not do business with you. If you have been victimized by commercial disparagement, contact BrewerLong today. Our Florida business lawyers have years of experience in this area of law and know how to bring a successful claim. For a free introductory phone call, please reach out to us at 407-660-2964.
Trademarks, like other intellectual property, are very valuable. Today, much of a business’ value is tied up in intellectual property as opposed to goods or other physical assets. When someone uses your trademark without permission, they are illegally trying to gain the benefit of being associated with your company. Illegal use of a trademark is called “infringement” and you can sue to protect your rights. If you win, you can receive compensation from the infringing party, and you can block them from using your trademark in the future. Businesses have rights in trademarks whether they are registered or unregistered. (Though you should certainly register trademarks for added protection.) But if someone is infringing, you should contact a Florida intellectual property lawyer to protect yourself. What are Statutes of Limitations Anyway? You will find statutes of limitations throughout the law. Basically, they set out how much time a person or business has to sue if their rights have been violated. Courts have an interest in deciding cases with fresh evidence, and they don’t want injured parties taking forever and sitting around instead of bringing a lawsuit. Statutes of limitations operate to make sure that injured parties file lawsuits promptly. If you wait too long to sue, then a judge will throw your case out of court. This means no lawsuit, no compensation, and potentially more infringement of your trademark. What is the Trademark Infringement Statute of Limitations? Most trademark cases are brought under federal law, specifically the Lanham Act. Suing under the federal law allows a business to get into federal court, which has some definite advantages. You can also tack on state law claims if you want. Most interestingly, the Lanham Act does not have a statute of limitations written into it. This means that judges must determine an appropriate amount of time to give injured parties to sue. They do this by applying a concept called “laches.” This is an equitable concept that will prevent a lawsuit where it would be unfair to require a defendant to mount a defense given the amount of time that has passed. For example, it is completely unfair to let a business create a product, market it extensively, and build a business around the product only to have a competitor come in and file a lawsuit which could destroy the business. When deciding whether to apply laches, federal courts look to similar state law claims and check their statute of limitations. For example, one district court has looked at state unfair competition claims as an analogue to trademark infringement. A Florida unfair competition claim has a four-year statute of limitations, so a court will expect an injured party to file a lawsuit within that window of time. Under the law, the clock will start running once you have a valid claim for infringement. This means that there is a likelihood of confusion in the marketplace caused by the similar trademark—which might be later than when you first discover the mark. How to Build a Case for Trademark Infringement As soon as you notice infringement, you should document the unauthorized use of your trademark and contact a Florida intellectual property attorney. For example, if you see a trademark very similar to yours used on a product, then buy the product and keep the receipt to show the date you purchased it. If you see a trademark on a website, then print off the website and note the date. Your attorney will want to see the extent of the use, which can help in an investigation. You also should move quickly. Technically, as explained above, the statute of limitations period does not start until your claim for infringement has ripened because consumers might be confused by your competitor’s mark. This means that if your competitor has no market presence, then there probably is no confusion yet. However, you need an attorney’s advice about when is the correct time to sue. One of the worst mistakes you can make is to delay taking legal action because you don’t think your company is being injured. It is better to be safe than sorry. Contact a Florida Intellectual Property Attorney Now You have worked hard to increase the value of your brand, and your trademarks are a key part. If you learn that another business is using a similar mark as yours, you might need to sue to stop its use. Contact BrewerLong today. Our Florida business lawyers have decades of combined experience in this area of law, and we are anxious to help you protect your business. You can reach us today for a free introductory phone call by dialing 407-660-2964.
When a business or an individual has an idea that they want to protect from being used by others without their permission, it is best to seek legal protection of that intellectual property. By seeking property rights over your intellectual property — property that is a creation of the mind, such as an invention, symbol, or even a name. You establish rightful ownership and prevent the unlawful use of your property. What’s more, establishing intellectual property rights can help to fuel the economy and stimulate further innovation. There are four main types of intellectual property protections, reviewed below. Work with an experienced intellectual property attorney to learn more about steps to take to secure the necessary protection for your intellectual property. Four Types of Intellectual Property Protections There are four types of intellectual property rights and protections (although multiple types of intellectual property itself). Securing the correct protection for your property is important, which is why consulting with a lawyer is a must. The four categories of intellectual property protections include: Trade Secrets Trade secrets refer to specific, private information that is important to a business because it gives the business a competitive advantage in its marketplace. If a trade secret is acquired by another company, it could harm the original holder. Examples of trade secrets include recipes for certain foods and beverages (like Mrs. Fields’ cookies or Sprite), new inventions, software, processes, and even different marketing strategies. When a person or business holds a trade secret protection, others cannot copy or steal the idea. In order to establish information as a “trade secret,” and to incur the legal protections associated with trade secrets, businesses must actively behave in a manner that demonstrates their desire to protect the information. Trade secrets are protected without official registration; however, an owner of a trade secret whose rights are breached–i.e. someone steals their trade secret–may ask a court to ask against that individual and prevent them from using the trade secret. Patents As defined by the U.S. Patent and Trademark Office (USPTO), a patent is a type of limited-duration protection that can be used to protect inventions (or discoveries) that are new, non-obvious, and useful, such a new process, machine, article of manufacture, or composition of matter. When a property owner holds a patent, others are prevented, under law, from offering for sale, making, or using the product. Copyrights Copyrights and patents are not the same things, although they are often confused. A copyright is a type of intellectual property protection that protects original works of authorship, which might include literary works, music, art, and more. Today, copyrights also protect computer software and architecture. Copyright protections are automatic; once you create something, it is yours. However, if your rights under copyright protections are infringed and you wish to file a lawsuit, then registration of your copyright will be necessary. Trademarks Finally, the fourth type of intellectual property protection is a trademark protection. Remember, patents are used to protect inventions and discoveries and copyrights are used to protect expressions of ideas and creations, like art and writing. Trademarks, then, refer to phrases, words, or symbols that distinguish the source of a product or services of one party from another. For example, the Nike symbol–which nearly all could easily recognize and identify–is a type of trademark. While patents and copyrights can expire, trademark rights come from the use of the trademark, and therefore can be held indefinitely. Like a copyright, registration of a trademark is not required, but registering can offer additional advantages. Consult with an Intellectual Property Attorney to Learn More Understanding the different types of intellectual property and the four categories of intellectual property protections can be confusing, and actually registering for those protections can be overwhelming. Indeed, businesses often have more to worry about that the particulars of a patent or other intellectual property protection requirement. When you call our intellectual property attorneys at the offices of BrewerLong, we will handle all of the elements associated with your intellectual property protection, ranging from identifying the type of intellectual property protection you need to be managing all documentation and paperwork to secure that protection. We can also help your business to take action if you believe that another party has breached your intellectual property rights. To schedule a consultation with our lawyers, please call us directly or send us a message. Our Florida business lawyers are ready to start advising your business on its intellectual property rights today.
All businesses rely on contracts with other parties in order to operate smoothly and efficiently, as well as to grow and protect business interests. From contracts with sellers to employees, other businesses to third parties, contracts are essential to business operations. While contracts are legally-binding agreements that require all parties named in a contract to act in accordance with the provisions of the contract, sometimes, contracts are breached. When a breach of contract occurs, a business may maintain the right to bring forth a tortious interference claim against a third party whose actions caused the breach. If you think that you have a claim for tortious interference, Florida business dispute lawyers at the office at BrewerLong can provide you with aggressive representation and advise you of your rights and options. Call our law firm today to get started. What Is Tortious Interference? As defined by the Legal Information Institute of Cornell Law School, tortious interference refers to a type of common law tort that allows a party to bring forth a claim for damages against another that has “wrongfully interfered with the plaintiff’s contractual or business relationships.” A such, there are actually two types of tortious interference claims: tortious interference with a contract, and tortious interference with a business relationship. A tortious interference claim is not a criminal act, and a party named in a suit will face no criminal penalties; rather, if the plaintiff’s tortious interference suit is successful, the defendant will have to pay damages to the plaintiff. Examples of Tortious Interference When one party (a defendant in a tortious interference case) intentionally interrupts, disrupts, or interferes with the contractual relationship that one party holds with another, a claim for tortious interference may exist. A few examples of tortious interference include: A vendor offering unreasonably low prices to a buyer, resulting in the buyer breaching a contract with another business; A third-party blackmailing a business or another party; and Refusing to perform a duty or obligation (such as the delivery of goods) that impairs the plaintiff’s (business’s) ability to satisfy its own contractual obligation. The above are just a handful of tortious interference examples; tortious interference occurs any time that a third party interferes with the relationship or contract that exists between two other parties. What Are the Elements of a Tortious Interference Case? In order to bring forth a successful tortious interference Florida case, each of the elements of tortious interference must be established. Our lawyers will guide you through each element and be responsible for gathering evidence to satisfy each. These elements include: A contractual business relationship or an advantageous business relationship existed between the plaintiff and another party; The defendant (third party) knew of the contact or the relationship; The defendant acted intentionally to disrupt the relationship or/and induce one party to breach the contract with the other; The defendant’s actions were unjustified; and The plaintiff suffered damages as a direct result of the interference. Further, it is critical that the plaintiff can establish causation – that the breach of contract or disruption of advantageous business relationship would not have occurred but for the intentional and unjustifiable interference of the third party. Damages Available through a Tortious Interference Claim Following tortious interference, Florida businesses who have been affected maintain the right to seek damages from the defendant. These damages will be economic in nature and are intended to compensate the plaintiff for the losses suffered that would not have been incurred but for the defendant’s tortious interference. Damages are calculated based on actual losses, and therefore vary on a case-by-case basis. Statute of Limitations If you think that you may have a tortious interference claim, Florida law requires that you bring forth your suit within four years from the date of cause of action. However, it is best to bring forth your claim as soon as possible, as evidence can be destroyed, and facts can be blurred after too much time has passed. How Can a Business Attorney Help? If you believe that your business has a tortious interference claim, working with a skilled attorney is absolutely essential. An attorney can review your case, advise your business of its rights and what steps to take, gather evidence on your behalf, analyze contract language and any breaches of contract, negotiate a settlement, and more. Failing to work with a skilled attorney is an oversight that your business cannot afford. To schedule a consultation with our Florida business and tortious interference lawyers at the law offices of BrewerLong, please call our legal team directly or send us a message. We have the experience and skill set that your company requires.
Businesses profit, gain, and grow as a result of the exchange of monies, ideas, products, services, or a combination of the above with other parties. Often times, these exchanges are specified in contractual terms – i.e. a seller provides a product to a buyer in exchange for monetary compensation. While the terms of a contract and an exchange are typically carried out in a manner that is just and fair, if not beneficial, for all parties involved in the exchange, sometimes unjust enrichment occurs. When one party believes that they have an unjust enrichment claim, they maintain the right to seek remedy from the other party in a civil action. Our unjust enrichment lawyers in Florida at the law office of BrewerLong can assist you in understanding the elements of an unjust enrichment claim and how to bring forth a successful claim. What Is Unjust Enrichment in Florida? When one party benefits at the expense of another, they may have a claim for unjust enrichment. Florida unjust enrichment occurs when one party “confers a benefit upon” another party without “receiving the proper restitution required by law,” as defined by the Legal Information Institute of Cornell Law School. It is important that unjust enrichment is distinguished from a gift, which is where one party gives something to another without the expectation of restitution or compensation. When a gift is given, the party who receives the gift has no legal obligation to give something in return. According to the same source cited above, unjust enrichment typically occurs when one party fulfills their obligations in a contract and the other party fails to fulfill their obligation. For example, if a contract exists between Party A and Party B that specifies that Party A will deliver goods to Party B, and in exchange, Party B will pay Party A a specified sum, unjust enrichment occurs when Party A delivers the goods, but Party B fails to offer Party A the amount of money stated in the contract. However, a contract does not have to exist for an unjust enrichment claim to be brought forth. Proving Unjust Enrichment – Florida Civil Law An unjust enrichment action is not a type of criminal claim, and therefore, there are rarely criminal consequences imposed on a party who benefits at the expense of another. Instead, unjust enrichment is a type of civil action, and therefore, a party who files an unjust enrichment claim does so for the purpose of recovering civil damages (restitution in the form of monetary damages). In order to win a claim of unjust enrichment, the plaintiff, who has the burden of proof, must demonstrate that the defendant benefited–was “unjustly enriched” –at the plaintiff’s expense. The elements that must be established to prove this include: The plaintiff conferred a benefit on the defendant; The defendant either accepted the benefit voluntarily without coercion or requested the benefit; The defendant did not pay or otherwise offer the plaintiff compensation for the benefit conferred; and The flow of benefit to the defendant without recompense to the plaintiff is deemed inequitable. Again, an unjust enrichment claim does not exist if the plaintiff bestowed the benefit on the defendant as a gift. Another bar to an unjust enrichment claim exists in the event that the defendant did not have a choice or option to reject the benefit. Unjust Enrichment Florida Statute of Limitations If you believe that you have an unjust enrichment claim in Florida, it is important that you consult with a qualified attorney as soon as possible and that you bring forth your action within the statute of limitations. The statute of limitations for an action of unjust enrichment in Florida is four years. Speak with a Knowledgeable Lawyer Today If you provide a benefit, service, or product to another party, you maintain the right to be compensated fairly and equitably for that benefit. If you are wrongfully denied the benefit that you deserve, you may have an unjust enrichment claim. Our unjust enrichment Florida lawyers at the office of BrewerLong are prepared to build your case and represent you in your claim for restitution. Please contact us online or by phone to schedule a consultation and learn more about how we can be of service.
Establishing and operating a business is something that not only demands hard work, intellect, and creativity. Also, it requires adherence to various laws, business regulations, and best practices. For many businesses, establishing a fictitious name is one such step that a business may take in order to protect their best interests. Establishing a fictitious name, though, is a legal process that a business must take care in performing. At the law offices of BrewerLong, our Florida business lawyers can guide you through fictitious names in Florida, as well as how to cancel a fictitious name in Florida. Please contact our lawyers today to learn more. What Is a Fictitious Name? As found in Florida Statutes Section 865.09, a “fictitious name” is defined as any name under which a person transacts business in this state, other than the person’s legal name. For businesses, operating under a fictitious name is very common, and is known as “doing business as,” or DBA, another name. For example, if Jane Doe establishes a bakery, rather than operating as “Jane Doe,” she may decide to operate as “Sweets and Treats.” This means that Jane Doe is doing business as “Sweets and Treats,” and that she has established a fictitious name as such. Registering for a Fictitious Name in Florida Most businesses, even sole proprietors, want to establish a fictitious name – this is a common practice. In order to establish a fictitious name in Florida, registration with the Florida Division of Corporations is required. The process for registration is straightforward, and can be done online or by mail. All of the instructions for fictitious name registration can be obtained online. How to Cancel a Fictitious Name in Florida For a range of reasons, a business owner may wish to change or cancel their fictitious name at some point, perhaps because they wish to do business in their actual legal name, because they want to change the name to something else, or because they are dissolving their business. In any case, it is important that the business owner understand the requirements for properly canceling a fictitious name in the state. In order to change or cancel a fictitious name, use the Fictitious Name Registration application (accessible online). According to the Florida Division of Corporations, completing sections one through four of the application can simultaneously cancel and re-register a fictitious name. These sections include questions about the fictitious name of the business, the business’ mailing address, the FEI number of the business, the registrant’s name and address, and a signature. For cancellations only, only section four of the form must be completed. This section clearly states that the registrant is canceling the fictitious name – the registrant must provide the date that the fictitious name was originally registered and the assigned registration number. In addition to the cancelation form, a fee of $50 must be paid. Additional fees may be paid for a certificate of status or a certified copy. Working with a Lawyer When Establishing or Canceling a Fictitious Name If your business wants to establish or cancel a fictitious name in Florida, working with a lawyer is strongly recommended. The benefits of working with an attorney are numerous, including: Ensuring that you register for a name that is not already in use; Ensuring that all paperwork related to the registration of a fictitious name is filled out accurately and in full; Managing all filing of paperwork and the payment of applicable fees; Guiding your business through the benefits of fictitious name change or cancelation; and Managing the re-registration/renewal of a fictitious name. As a business owner, there are numerous things that you must deal with on a daily basis to ensure the smooth operation of your company. When you hire a skilled attorney to manage things such as fictitious name registration and cancellation, you have one less thing to worry about that demands your personal attention. This allows you to focus your efforts on other important elements of running your company and provides peace of mind that legal elements are being handled properly. Call Our Florida Business Lawyers Today Most business owners choose to register a fictitious name rather than do business in their own, personal legal name. However, there may come a point when a business wishes to cancel or change their fictitious name. Whether you need assistance in registering for, canceling, or changing your business’ fictitious name, our business lawyers in Florida are ready to assist you. We have been providing legal services to businesses throughout the state for years and are knowledgeable in all areas of business law and the many requirements that businesses in our state are bound by. To schedule a consultation with our Florida business lawyers, please call us directly or send us a message. We help to protect your best interests.
If you are thinking about starting a business in Florida, it is important to understand the distinctions among the different types of business structures. Also, it’s important to learn more about how a limited liability company, or LLC, may be able to benefit you. There are many different types of small businesses and companies in Florida, and those entities use several different types of business structures. There are pros and cons to each type of business structure, and it is important to work with a Florida business law attorney to better determine which type of business is best suited to your needs. At BrewerLong, we are committed to helping business owners in Florida with a wide variety of business law matters. We want to say more about the benefits of an LLC in Florida. What is an LLC? In order to understand the benefits of an LLC, it is important to understand what this business structure is and why it is used. As the U.S. Small Business Administration (SBA) explains, an LLC has some elements of both corporations and partnerships. One of the reasons that many people choose an LLC when starting a business is that, in this type of business structure, owners are not personally liable when an LLC files for bankruptcy or faces a lawsuit. To be clear, the business owner’s personal assets, including bank accounts, house, and other assets, are not at risk because the LLC is at risk. Flexibility of LLCs in Florida In Florida, LLCs are relatively easy to set up under the Florida Revised Limited Liability Company Act, and Florida law does not place any restrictions on the number of members in the LLC. To be sure, a single person can form an LLC in Florida, which is not true in all states. Flexibility of LLCs in Florida also allows business owners to choose whether to manage the business themselves or to hire managers who are not owners of the business. Taxation Benefits Another Benefit of LLCs is that they are “pass-through entities,” which means that all business owners receive profits from the business without the profits facing business taxes. Then, anyone who receives profits from the LLC includes those profits on a personal income tax return. Yet claiming these profits on a personal income tax return is still favorable to the person receiving the profits because those profits are not classified as earned income. Accordingly, the LLC member does not have to pay self-employment tax on those profits. Personal Asset Protection One of the most important benefits of an LLC is the personal asset protection we mentioned above. One or more people can form an LLC in Florida to start a small business without being concerned about whether their personal assets are subject to liability. However, it is important to make clear that asset protection for single-member LLCs may be limited in Florida due to a relatively recent Florida Supreme Court case. In Shaun Olmstead, et. al v. Federal Trade Commission (2010), the Florida Supreme Court ruled that single-member LLCs only are entitled to limited personal asset protection. In that case, the court determined that Florida law “permits a court to order a judgment debtor to surrender all right, title, and interest in the debtor’s single-member limited liability company to satisfy an outstanding judgment.” The case suggests that multiple-member LLCs are not subject to the same limited asset protection. Discuss Your Options with a Florida Business Formation Lawyer If you are thinking about starting a business and have questions about whether an LLC is right for you, you should speak with a Florida business formation attorney as soon as you can. An advocate at our firm can discuss the benefits of an LLC with you and can help you to learn more about the business structure that is best for your needs. Contact BrewerLong for more information.
Are you considering opening a small business in Florida, or starting a company with partners? No matter what type of business you are thinking about, you will most likely need a commercial space from which to run your business. Renting a commercial space can feel daunting, and understanding the terms of a commercial lease can be complicated, particularly if you are new to Florida’s nonresidential landlord-tenant law. To be clear, while residential and commercial leases do have some similarities, these documents also have a lot of differences. When you are drafting and reviewing a commercial lease, it is important to understand the distinctions between residential and nonresidential lease agreements, and to be sure that your lease provides the protections you need. At BrewerLong, we can assist you with all aspects of your company, from initial business formation through dissolving a business. An experienced Florida business lawyer at our firm can speak with you today about drafting and reviewing a commercial lease agreement. Learning More About Distinctions Between Commercial and Residential Leases The first step in learning how to review a commercial lease agreement is to understand the distinctions between commercial and residential leases or, as they are defined under Florida law, nonresidential and residential lease agreements. The following are some important distinctions that you should know: Fewer Legal Protections The same consumer protection laws do not apply to commercial lease agreements. When you enter into a residential lease agreement, there are often a variety of consumer protection laws that prevent a landlord from engaging in certain actions or behaviors with regard to a tenant or the property. Florida law concerning nonresidential lease agreements, similar to other states, does not provide the same level of consumer protection associated with residential lease agreements. Lack of Standardization Many residential lease agreements use standard forms that have language many tenants have come to understand as a result of renting homes or apartments in Florida. Differently, most commercial lease agreements do not rely on standard forms largely because the needs of business tenants and commercial real estate owners vary widely. Accordingly, when you are drafting, negotiating, and signing a commercial lease agreement, it is extremely important to be sure that you understand each and every term in the lease and how it will apply to you. Negotiation While most residential lease agreements do not involve a significant amount of—if any—negotiation between the landlord and the tenant, commercial lease agreements are much different. To be sure, negotiation of terms is typical in commercial lease agreements. You should know that it is common to negotiate terms, such as the amount of rent, how and when rent increases will occur, the length of the lease term, and many other issues. Length of Lease In most situations, residential leases are for a one-year period. This is different for commercial leases, which typically last for more than one year (and may in fact have a lease length of several years). Binding Nature While a residential tenant may be able to include a clause in a lease that allows that tenant to terminate with a particular amount of notice (such as 60 days, for example), most commercial leases are more binding. Further, if you terminate a commercial lease early as a tenant, you may face significant financial costs. Commercial Lease Agreement Checklist When you are negotiating the terms of a commercial lease agreement, what kinds of terms do you want to ensure will be included in the contract? Since the terms of commercial leases vary widely depending upon the needs of both the landlord and the tenant, it is important to make sure that the terms of your commercial lease fit the needs of your business. For example, is the space what you need in order to set up your business? Are you permitted to install signs and other fixtures that are necessary for your company to attract customers? Is the lease term appropriate if you are just starting out and are not yet certain about the best type of space for your business? As you think about the types of lease terms you need, you should consider the following commercial lease agreement checklist: Lease term; Renewal options for the lease; Rent amount; Rent increases, or escalations, including when and how those will be calculated; Inclusion of insurance, property taxes, and other maintenance costs in your lease (or will you need to pay for these things yourself?); Amount of the security deposit; How and when the security deposit will be returned; Details of all of the space you are leasing (including, for example, rest rooms or hallways); Terms for improvements of the space made by the landlord; Modifications that are permitted; Whether and where you can hang signs; Who is responsible for paying for improvements or modifications; Accessibility issues (if you will be employing more than 15 people, the Americans with Disabilities Act (ADA) requires your business to be accessible to persons with disabilities, which may require improvements or modifications like ramps or wider doorways); Whether subleasing is permitted; Option to renew the lease; Termination of lease (e.g., notice requirements, penalties); and How disputes will be handled (e.g., mediation, arbitration). Contact a Business Law Attorney in Florida If you need assistance with a commercial lease, a Florida business law attorney at our firm can assist you. Contact BrewerLong to get started.
There are many reasons that you might decide to close a business. In some situations, the business is not profitable, and you realize that it is time to close the business. On a related note, your business may be filing for Chapter 7 bankruptcy, necessitating its closure. In other cases, however, you may have a dispute with your business partners, or you may simply want out of the business for personal reasons. Depending upon the type of business you have and your current business structure, you may not be able to simply close the business doors without attending to specific closure or dissolution requirements under Florida law. In particular, if you have a partnership, it is essential to know more about how a partnership dissolution agreement works, and what the law requires in dissolving a business partnership. Let our Orlando business lawyers assist you with your partnership agreement. What is a Partnership? If you want to end a partnership, it is extremely important to have a partnership agreement that outlines terms for dissolving the partnership. Yet in order to understand the need for a partnership agreement, you will need to know more about how a partnership work. The U.S. Small Business Administration explains that a partnership is the “simplest structure for two or more people to own a business together.” In general, there are two different kinds of partnerships, including limited partnerships (LPs) and limited liability partnerships (LLPs). In a limited partnership, one of the partners has unlimited liability while the others have limited liability. The partners with limited liability tend to have less control over the business. In a limited liability partnership, all partners have limited liability—both in relation to the business itself, as well as in relation to the actions of the other partners, according to the SBA. A partnership is a “pass-through entity,” which means that profits pass through to owners and are listed on personal income tax returns. However, in a limited partnership, the general partner with unlimited liability is required to pay self-employment taxes. Drafting a Partnership Agreement with an Eye Toward Dissolution As we mentioned, there are numerous reasons that partners pay want to get out of a partnership. Sometimes the partnership will be dissolved, while in other situations one or more partners may buy out the partner who wants to leave the business. When you start the business, it is extremely important to have a partnership agreement that outlines the type of partnership—a limited partnership or limited liability partnership—and the roles and responsibilities of each partner. In a partnership agreement, you can also make clear whether one partner can be bought out, or whether the business will need to dissolve if one partner leaves. This is often known as a “buy-sell agreement.” A partnership agreement can also clarify who is permitted to buy into the business as a new partner, and what will happen if one of the partners needs to leave the business as a result of divorce, death, or another reason. Having a partnership agreement in place from the beginning can make the process of dissolution much clearer, especially if other partners want to remain in the business and to keep it running even if one partner wants to leave. A partnership agreement can also outline the terms for dissolving a partnership altogether, but in some situation’s partnership dissolutions are handled through a separate agreement known as a partnership dissolution agreement. Dissolving a Business Altogether with a Dissolution Agreement When all partners in the business want out of the business—in other words, no partners want to remain, and the business will close—it is time to move onto a partnership dissolution agreement. This is distinct from any clauses in a partnership agreement that outline how one or more partners will be bought out or removed from the partnership while the other partners remain. A partnership dissolution agreement is essential when the business will end and the original partnership agreement did not provide clear information about how to dissolve the business. What should go into a partnership dissolution agreement? You should consider the following: Each partner’s duties with regard to dissolution; Timetable for dissolution process; How business debts will be settled; and Distribution of business assets. You can work with an experienced business lawyer in Florida to draft a statement of dissolution, ensuring that you meet all requirements under Florida law. Contact a Florida Business Lawyer If you need assistance drafting a partnership agreement or a partnership dissolution agreement, an experienced Florida business lawyer can assist you. Contact BrewerLong today to work with a business advocate.