When Can You Sue A Business Partner

When you start your business partnership, you and your partner may have the same goals. However, unexpectedly, relationships may sour. Perhaps your partner undertook actions that undermined the company’s reputation and damaged business. In some situations, the only resolution to the conflict is suing your business partner. Consult with an experienced business lawyer to determine how to sue your business partner.  “Business relationships are often like marriages. It is oftentimes much easier to get into a business relationship with your partner than to get out of it.” Business & Litigation Attorney Michael Long There are various grounds for suing a business partner. The underlying purpose of partnership lawsuits is to remedy damage to the business caused by things like breach of contract, negligence,  abandonment, and more. Common Grounds for Suing a Business Partner There are many reasons you may need to sue a business partner. However, the following are some of the most common you may encounter. Breach of Partnership Agreement Business partners typically share in business decisions. However, if one business partner breaches a partnership agreement, its effects may be disastrous. If you sue your business partner for breach of a partnership agreement, various elements must exist for your claim. These elements include the following:  A valid, enforceable partnership agreement exists;  Your business partner has breached a term or terms of the contract; and You or your business has suffered damages resulting from the breach. If the above elements are present, a valid claim for breach of partnership agreement exists, and you may have grounds for suing your business partner. A strong partnership agreement provides clauses addressing courses of action regarding contract breaches. For example, the partnership agreement may provide your partner with a certain number of days to cure the breach. If included in your partnership agreement, and your partner fixes the breach, you may avoid a lawsuit. If your partner refuses to fix the breach, you may have grounds to sue a business partner.  Abandonment You may wonder whether you can sue your business partner for abandonment. Abandonment occurs when the business partner leaves the partnership. In some situations, the business partner may continue to collect a paycheck despite not actively working. Abandonment constitutes grounds for suing a business partner as it may be considered a breach of fiduciary duty. All partners owe the other a duty to place the interests of the business above their own. If a business partner abandons the partnership to pursue opportunities for themselves, this may constitute a breach of fiduciary duty.  Negligence A negligence claim might exist against your business partner if their actions harmed the partnership. The following elements must exist for a negligence claim:  Duty. Your business partner owes you and the partnership a duty of care. This duty of care requires business partners to make decisions in good faith.  Breach. Your business partner acted negligently when acting on behalf of the partnership.  Causation. The breach of duty caused harm to the partnership. Consult with a business law attorney to determine whether you have a negligence claim against your business partner.  Violation of Intellectual Property Rights A violation of intellectual property rights belonging to the partnership may also give you grounds to sue your business partner. A partnership agreement may provide that all copyrights, patents, and trademarks are the partnership’s property. However, if your business partner has used this intellectual property for personal gain, their misuse may give you grounds to sue them.  Criminal Activity by Your Business Partner Sometimes a business partner engages in criminal activity, such as fraud or theft. Criminal acts may include stealing money from the partnership or stealing money from a customer. These activities can both cost your business financially and undermine its reputation. Therefore, they can provide valid grounds to sue your business partner. Alternatives to Suing Your Business Partner  If you would prefer to explore options for settling disagreements outside of court, alternatives to a lawsuit exist.  Settlement You may consider negotiating with your business partner to determine terms of settlement to which you both agree. Settlement may mean the termination of your partnership and repayment of any losses by your business partner. Saving on litigation costs by pursuing avenues other than a lawsuit may serve your partnership’s best interests. Consult with an experienced business law attorney to explore possible terms of settlement for your situation.  Mediation Additionally, mediation may be another alternative to resolving conflicts. Rather than engaging in a lawsuit for months or even years, mediation may provide a more efficient result. However, mediation requires the cooperation of both parties. There is no point in engaging in the mediation process if neither party wishes to work with the other. If mediation is not an option, your best option moving forward is suing your business partner.  Arbitration Does your partnership agreement include an arbitration clause? An arbitration clause in your partnership agreement may apply to specific situations. Consult with a business law attorney to review your partnership agreement. If an arbitration clause applies to your situation, you may be able to avoid suing your business partner while still obtaining a legally binding resolution to your situation. Arbitration allows parties to settle their disputes out of court while obtaining legally enforceable decisions. Contact Us  Considering whether to sue your business partner is a difficult decision. A decision to sue will undoubtedly damage the relationship between you and your business partner. The attorneys at BrewerLong have over a decade of experience providing high-quality, tailored legal services to all clients. Hiring a lawyer to assess difficult business decisions mitigates the risk of legal disputes in the future. BrewerLong attorneys ensure each client receives personal attention and meaningful communication. Our team at BrewerLong possesses a thorough understanding of the time, energy, and effort it takes to run a business. We invest in the future of your business. Contact us today to discuss grounds for suing a business partner. 

Can You Remove a Shareholder From Your Business

If a relationship with a shareholder fails to work out, the removal of that shareholder from your business or corporation is possible. Complications may arise when undertaking the removal of a shareholder.  “Removing a shareholder from a corporation is often contentious. Even when a shareholder agreement can be removed, doing so can give rise to lawsuits.” Business & Litigation Attorney Michael Long Consult with an experienced business law attorney to determine whether the shareholder can be removed.   Review Shareholder Agreement  The most critical first step in planning for the removal of a shareholder is a review of your shareholder agreement. Your shareholder agreement may provide the proper procedure for the removal of a shareholder.  A shareholder agreement operates as a type of contract, providing guidelines for proper shareholder conduct. If a shareholder fails to adhere to conduct guidelines within a shareholder agreement, the removal of the shareholder for misconduct is easier.  It can be more difficult to remove a majority shareholder absent a shareholder agreement. Since a majority shareholder holds more than 50% of the voting rights of a company, whether a majority shareholder can be removed becomes substantially more difficult, if not impossible. Therefore, when attempting to remove a majority shareholder, provisions within a shareholder agreement may help. If a majority shareholder violates any rules of conduct within the shareholder agreement, basing the majority shareholder’s removal on that violation simplifies the removal process.  However, the involuntary removal of a shareholder opens up the possibility for future legal disputes.  Shareholder agreements also provide information about the number of issued shares, restrictions on transferring shares, rights of current shareholders to purchase shares, and details regarding the sale of shares.  Some shareholder agreements do not provide for proper removal procedures. If no shareholder agreement exists or there has been no violation of an existing shareholder agreement, consult with a business lawyer to determine removal options for your company.   If a shareholder is also an employee, you may wonder whether you can fire a minority shareholder. While it is possible to terminate a shareholder’s employment, carefully review your employment contract. Consult with an attorney to anticipate any potential legal issues with termination of employment.    Other Ways to Get Rid of a Troublesome Shareholder Available removal avenues may fail for various reasons. Perhaps you don’t have a shareholder agreement or can’t show that it was violated. Or maybe you have been unable to get sufficient support to vote out the shareholder. If you are unable to directly remove a shareholder, there are other options to encourage them to leave the company. Sell Shares One option to consider is negotiating with the minority shareholder to sell their shares. While you can technically force a shareholder out, negotiation prevents the opportunity for legal issues down the road. It is always possible to negotiate with the shareholder regarding the purchase of the minority shareholder’s stake. While it is common to discount sales of minority shares, presenting a reasonable offer may encourage the shareholder to accept.  It’s important not to engage in any activity constituting minority shareholder oppression. Minority shareholder oppression examples include the following: Withholding information from the shareholder;  Withholding profits or dividends;  Violating minority shareholder rights; and  Going against specific provisions in the shareholder agreement.  Pursuing any of these courses of action could result in legal action by the shareholder for this conduct. Permissible conduct which may encourage a minority shareholder to sell their shares includes: Termination of shareholder employment. If undertaking this avenue, carefully review termination procedures in your employment agreement. Reduction of shareholder authority. Voting to reduce the minority shareholder’s decision-making power may encourage the shareholder to sell their shares. While this conduct is generally permissible, consult with a business attorney to prevent any opportunity for future legal disputes down the road. Buyout Shareholder Even if the shareholder fails to violate terms of the shareholder agreement, removal may still be possible. For example, your shareholder agreement may provide for a buyout clause. A buyout clause allows for purchase of a minority share for an agreed-upon price. A buyout clause prevents minority shareholders who cannot be voted out from refusing to surrender their shares.  Contact Us When determining whether a majority or minority shareholder can be removed, consult with the qualified business attorneys at BrewerLong to guide you in the right direction. Despite the removal of a shareholder, ensure your company continues operations smoothly and without interruption. BrewerLong attorneys work to limit any opportunities for future legal disputes with removed shareholders. With over a decade of experience, the attorneys at BrewerLong work to create excellent experiences through helping, listening, and collaborating with all clients. Contact us today to discuss whether a shareholder can be removed from your company. 

5 Things to Know About Florida Asset Purchase Agreements

Purchasing a new business can be an exciting prospect. However, it is also a complicated one. “The Asset Purchase Agreement is the most important tool for making sure a business buyer not only gets the assets to operate the business but also gets protection against undisclosed surprises that might affect the business’s value.” Business Attorney Trevor Brewer If you are considering a business purchase, it’s a good idea to consult with an experienced mergers and acquisitions lawyer. They can advise you in seeking a business to purchase, negotiating the purchase agreement, and getting your business up and running. In the meantime, here are some basic things you should understand about Florida purchase agreements to buy a business. 1. What Is an Asset Purchase Agreement? An asset purchase agreement is a contract for the sale of a business or specific business assets. These are complex business agreements that can take time to negotiate and finalize. Typically, parties to a business asset purchase agreement in Florida engage attorneys to negotiate on their behalf. 2. What Does the Asset Purchase Process Look Like? When purchasing a new business, there are several steps to complete. Your purchase agreement will typically provide deadlines for completing each of these tasks. Purchase Agreement The first step is to negotiate your asset purchase agreement. This can involve several offers and counteroffers. Your attorney can help you negotiate the finer points of the agreement. We discuss many of these in further detail below.  Earnest Money Typically, the buyer will need to deliver earnest money immediately after signing the asset purchase agreement. Earnest money is typically 5–10% of the purchase price. But the parties can agree in the contract to any fixed amount or percentage. Seller Disclosures Soon after finalizing the agreement, the seller typically must provide disclosures regarding important aspects of the business, such as: Business assets and real property; Intellectual property rights; Stockholders; Subsidiaries; Employees and employee benefit policies; Insurance policies; Outstanding debts; Ongoing legal action; Permits and licenses; Past business performance; and Financial operations. Further, the seller must warrant that the representations are true. Due Diligence Next, the buyer has an opportunity to perform due diligence. This allows the buyer to investigate the claims and disclosures the seller has made. They also have the chance to ask any questions and perform physical inspections of property, equipment, and other assets. Financing If the buyer does not rescind the agreement after receiving the disclosures and completing due diligence, the sale can move forward. If the buyer will be financing the purchase, they will then have some period of time to obtain a loan commitment from their lender. Closing With financing secure, the parties can now schedule a time to close on the purchase agreement. At closing, the buyer will deliver the agreed funds to the buyer. The buyer will deliver any necessary documents, keys, and property to the seller. 3. What Are the Essential Terms of an Asset Purchase Agreement in Florida? Every asset purchase agreement in Florida should specify: The parties to the agreement; The purchase price; What assets are included in the sale; What assets are excluded from the sale; Representations and warranties; and The timeline for completing individual tasks as well as finalizing the agreement. You can find template agreements covering these essential items as well as some boilerplate terms to get you started. However, it’s important to tailor your agreement to your specific needs. Simply filling in the blanks on a generic asset purchase agreement is unlikely to sufficiently protect your interests. 4. What Things Should You Consider Including in Your Business Asset Purchase Agreement? There are a number of important issues you should consider addressing in your asset purchase agreement. Since each business is unique, the terms of your agreement should also be individually crafted to meet your needs. We discuss some common terms below, but your attorney can advise you of additional terms that might be important for you. Non-Compete and Non-Solicitation Agreements If you are buying a business, you will likely want to include non-compete and non-solicitation agreements in the purchase contract. Non-compete agreements must be reasonably limited in time and scope. The agreement should specify: The type of business the seller is restrained from operating; The geographical area of the restriction; and The length of time that the restriction will continue. Florida law presumes that a non-compete restriction against a seller is reasonable if it lasts less than three years. But depending on the circumstances, restrictions lasting as long as seven years may be enforceable. Non-solicitation agreements are also important. They can be drafted to prevent a seller from poaching either your clients or your employees. Without comprehensive and clear non-compete and non-solicitation terms, there are many things the seller can do to undermine your new business. They could start a competing business down the street or lure away your prospective clients, which could ultimately spell the demise of your business. Escrow Hold Back Typically, an asset purchase agreement in Florida will include indemnification provisions. These require the seller to reimburse the buyer for any losses resulting from the seller’s previous operation of the business. For example, if the buyer has to settle a breach of contract claim based on events that occurred while the seller owned the business, the seller would be responsible for the costs of the settlement. When you negotiate your asset purchase agreement, you can request an escrow hold back. This type of provision requires part of the proceeds from the sale to remain in escrow for a particular period of time after the sale is final. If an indemnification claim arises, those funds are then available to compensate the buyer. It helps to guarantee payment from the seller on their indemnification obligations. Seller’s Continued Role in the Business You may want to include terms in your purchase contract relating to the seller’s continued involvement in the business.  In some cases, you may keep the seller on as an employee to operate the business. In that situation,…

How to Close Down an LLC

There are different reasons why an LLC, or limited liability company, would close. Sometimes members may wish to retire and have no desire to continue the LLC. Perhaps market growth has slowed significantly, and it is unprofitable to continue operating the LLC. Whatever the reason, correctly dissolving a state-registered entity like an LLC requires multiple steps. Failing to close an LLC properly may lead to unnecessary administrative costs and increased liability. Avoid confusion and a potential lawsuit by learning how to close an LLC in Florida.  The legal obligations of an LLC can continue for years after an LLC is dissolved, and in some cases the LLC’s members can wind up being responsible for those obligations. LLC members should take a thorough approach to dissolving and liquidating the LLC, to avoid costly surprises in the future. Business Attorney Trevor Brewer When Can You Dissolve an LLC? Typically, the operating agreement for your LLC dicatest the circumstances where you can dissolve the LLC. In many cases, the operating agreement will require a vote among members in favor of dissolution.  If no operating agreement exists, Florida law allows you to dissolve an LLC by unanimous written consent of all members. Additionally, Florida law permits dissolution when the following occurs:  No member exists for the LLC for a period of 90 days or more; An entry of judicial dissolution; or The Department of State files a statement of administrative dissolution. You should preserve a record of all documents in the LLC official files. Steps to Close Down an LLC Officially dissolving an LLC requires you to complete critical tasks. Your LLC operating agreement should provide detailed rules on the procedure of dissolution. If you do not have an operating agreement, the dissolution procedure will be governed by the Florida Revised Limited Liability Company Act. Typically, you should expect to complete the following steps. Agreement First, you should schedule a meeting of the members of the LLC to vote on dissolution. Different LLCs have different requirements for dissolution. Some LLC operating agreements require a unanimous vote. Other LLC operating agreements require a majority vote in favor of dissolution.  When reviewing your operating agreement, it’s essential to determine whether specific procedures exist regarding dissolution. The operating agreement may require advance notice of the meeting and a particular time for members to vote. Be sure to record the vote in the official minutes of the dissolution meeting. Give Notice Provide notice to all creditors and claimants of the LLC. Additionally, provide notice to any employees of the LLC. Notice provides creditors the opportunity to file any lawsuits against the LLC. Although not required in Florida, it does encourage a smoother dissolution process. Settling all creditors’ claims first allows for worry-free distribution of remaining assets to members.  In Florida, written notice to creditors must include the following information: Description of the claim that claimant may assert; Whether the LLC admits that it owes the debt; Mailing address;  Deadline for confirmation of the claim; and A statement that distributions from LLC will be made to members after the passing of the period without notice. There may be claimants unknown to the LLC. Filing or publishing your articles of dissolution ensures that these unknown claimants receive notice that the LLC is closing down.  Engage the services of a qualified business attorney to consult on how to provide proper notice to creditors for existing and future claims. The process can be complicated. You will want to take steps to ensure that you don’t miss any creditors and that you limit the liability of your members after completion of distributions. Financial Review Before distributing remaining LLC assets to members, review the LLC’s finances. Be sure to pay all outstanding debts and obligations of the LLC. Additionally, there may be bills and expenses in the future that are presently unknown to the LLC. Therefore, it’s important to reserve some LLC funds to cover these unforeseen expenses. The LLC must pay creditors before it can make distributions to members. If you distribute funds before paying creditors, members may be held personally liable to the LLC’s creditors. Taxes When you dissolve an LLC, you need to close all its tax accounts, including paying all tax obligations on the state and federal level. Additionally, if your LLC has employees, it’s essential that all payroll withholding and sales taxes are correct.  Filing a final tax return on the federal and state level must be completed before dissolving a Florida LLC. LLC members must also be prepared to show any gains and losses on their tax returns. Since LLCs operate as pass-through entities, members are personally responsible for paying these taxes. Once all these steps are complete, contact the IRS to close your EIN (employer identification number). Wrap Up Business Florida law provides that upon dissolution of an LLC in Florida, the LLC must cease operations in any other states where it conducted business. You also need to be sure to pay any remaining taxes in all those states. Each state requires different filing and fees to cease operations properly. The experienced team of business attorneys at BrewerLong is prepared to assist clients through this process. Dispose of Assets The final step in a Florida LLC dissolution is distribution. Once all creditor claims and tax obligations have been paid and closed, you can distribute any remaining assets. Distributions to LLC members should be made according to the terms of the operating agreement. Distribution will generally reflect each member’s interest in the LLC. File Paperwork Florida law requires a filing of the articles of dissolution with the Florida Secretary of State. These articles provide the following information: The name of the LLC; The date of dissolution; Whether dissolution was agreed upon by vote or written consent of members;  A statement that the LLC’s obligations, debts, and liabilities have been settled and paid; A statement that distribution of the LLC’s remaining assets to the remaining members of the LLC is complete; and A statement that the LLC has no…

Do You Need to Hire a Business Lawyer

Every business will need to consult a lawyer at some point. Whether you are forming a new business, operating an established business, or winding up a business, you can benefit from the advice of an experienced business lawyer. Many business owners wait to consult a lawyer until they are actually involved in a legal dispute. This is a big mistake that can cost you thousands of dollars.  Although business attorneys can help with litigation, their role is primarily preemptive. They can help you identify potential problems and take action to protect your business. Hiring a business lawyer is like creating a business strategy or buying insurance—you do it to anticipate problems, not to react to them. Some of our work involves getting businesses and business owners out of difficult legal situations. But we much rather focus our time and effort on helping our clients avoid those situations in the first place. Business Attorney Trevor Brewer Why Hire a Lawyer? The needs of each business are different. Some small businesses may be able to operate with minimal legal assistance. On the other hand, larger or more complex businesses may need daily legal advice.  Whether you need to hire a business lawyer and how much assistance you need depends on both the type of business you operate and the specific issues it is facing. Here are some of the specific situations where you should consider hiring a business lawyer. Buying or Selling a Business Buying or selling a business is a complex process. It’s also likely that there’s a lot of money at stake in the transaction. There are several ways to determine the value of a business, and a lawyer can help you determine whether you are getting a fair deal. Your lawyer can also help you conduct due diligence. On the seller’s side, due diligence may include: Disclosing hidden defects or liabilities as required by law; Organizing important documentation to support your valuation of the business; Collecting organizational, financial, and other records that the new owner will need; and Resolving liens or outstanding obligations that may decrease the business’s value. On the buyer’s side, it may include: Reviewing the company’s records and organizational documents; Coordinating with an accountant to review the company’s finances; Collecting information about outstanding obligations that the buyer will assume; Obtaining lists of the company’s assets, intellectual property, contracts, insurance, employees, etc.; and Checking for legal issues that could lead to litigation. At the very minimum, it is important to have an attorney review your purchase contract to alert you to any questionable or unfavorable terms.  Starting a New Business Many people starting a small business try to save money by using online forms. However, taking this route can be a game of Russian roulette. The DIY approach can be sufficient for those who get lucky and never face serious conflicts down the line with business partners, employees, suppliers, customers, etc. But for others, it can end up costing them many times more than what they would have spent hiring a business lawyer in the first place. Some important start-up tasks a lawyer can help you with include: Choosing a business name; Determining the appropriate business entity for your needs; Drafting articles of organization; Registering your business with the state; Obtaining tax ID information for your business; Drafting an operating agreement; Drafting partnership or shareholder agreements; Obtaining appropriate insurance; Identifying licensing and permit requirements for your business; and Reviewing leases or other real estate transactions. Getting these tasks right from the start can help your business operate more smoothly and avoid disputes down the line. Protecting Intellectual Property An attorney can also advise you about the best way to protect your intellectual property. This may include filing for a patent, trademark, or copyright. Your attorney can help you understand when each type of filing might be appropriate. Intellectual property also includes trade secrets, such as secret recipes, algorithms, sales methods, training procedures, and any other internal process unique to your business. Your attorney can suggest appropriate methods to guard these secrets, such as nondisclosure agreements. Establishing Employment Procedures If you have employees, hiring a business lawyer can help ensure you comply with all state and federal employment laws. Your attorney can advise you on things such as: Wage and hour requirements; Workers’ compensation and unemployment insurance; Tax withholding; Employment eligibility verification; Discrimination and harassment; Employee benefits; Workplace safety; Required notices;  Record keeping; and Employment policies. It is easy to run afoul of employment laws if you don’t know what the requirements are.  Establishing Compliance Practices In addition to employment requirements, there are various state and federal laws that regulate different types of businesses. Industries that are heavily regulated include: Financial services, Health and pharmaceutical services, Credit services, Restaurants and bars, Utilities, Marketing, Automotive services, and Sales. An attorney can help you understand the laws that apply to your business and establish procedures to ensure compliance. Signing Contracts Any time your business contemplates entering into a contract, you should consult a business lawyer. Common business contracts include: Contracts with customers, Contracts with suppliers, Employment or independent contractor agreements, Confidentiality agreements, Insurance contracts,  Purchase agreements, and Property and equipment leases. Your lawyer can negotiate with other parties so that you can get favorable terms. They can also help you understand any risks or liabilities the contract may expose you to. Addressing Business Disputes It is essential to hire a business lawyer if you become involved in any type of business litigation. Common reasons for business lawsuits include: Partnership or shareholder disputes, Contract disputes, Property disputes, Personal injury, Employment disputes, and Intellectual property infringement. If you need to enforce your rights, a lawyer can advise you of your options. They can also handle all aspects of the litigation, including filing, discovery, negotiation, and court appearances. If you receive a legal complaint stating that someone has filed a lawsuit against you, you should contact a lawyer right away. You have only a limited amount of time to respond to a lawsuit,…

Buying a Business in Florida 5 things to know

If you are considering buying a Florida business, it is important that you do your research. The seller may be required to disclose certain information. However, it is ultimately up to you as the buyer to do your due diligence and make sure the business is a sound investment. Buying a business in Florida can be a complicated endeavor. It is highly advisable that you consult with an attorney who focuses on business acquisitions to protect your interests. But to get you started, here are 5 things you should consider before you buy a business in Florida. Before closing on the purchase of a business, business buyers must have confidence that they have asked every reasonable question about the business and they have gotten a satisfactory answer for those questions. Business Attorney Trevor Brewer 1. What Is Included in the Sale of the Business? When buying a business in Florida, you should make sure everything you will need to operate the business is included in the sale. Perhaps you just want to buy assets, equipment, and inventory that will allow you to start your own new business. Or perhaps it’s actually the name or other intellectual property of the business you are most interested in.  Whatever your intentions, be sure to negotiate for everything you will need. It’s important to discuss your needs with an attorney and have them look over the purchase contract. This way you won’t be taken by surprise later. 2. How Successful Is the Business? In researching the right business to buy, it is necessary that you have a full picture of the business’s past success and income potential.  Perhaps you are hoping to step into a thriving business and earn immediate income, or perhaps you are hoping to get a deal on a struggling business with the hope of turning it around. Whatever your goals, there are several things you will want to know. The Reason the Owner Is Selling This may be something you need to dig into a bit. It could be that the owner just wants to retire or move onto a different business venture. But it could be that the business has other problems such as: It isn’t as profitable as it appears; It will need to incur a large expense in the near future; Running it is unusually difficult;  The demand for the product or service has decreased; or A new competitor in the area has been luring away business. Ask around town or talk to employees or vendors to see if you can learn what’s going on behind the scenes. Whether the Owner Has Been Making a Living If the owner has to rely on other sources of income to make ends meet, this business may not be as solid as it appears. Ask the owner to let your accountant review their financial records. If you feel like the owner isn’t being transparent about the business’s history, that could be a red flag.  How the Business’s Income Is Affected by Seasonality Most businesses have certain times of the year that are busier than others. But for some businesses, seasonality can be extreme. Is the business located in a tourist area where the population changes seasonally? Does it cater to an activity that is more popular during some parts of the year? Seasonality is not necessarily good or bad, but it is something you want to be aware of before you buy a business in Florida. Will you make enough money during the busy season to make up for the off-season? Does operating a business in this way make sense with your lifestyle? Whether Demand for the Business Is Growing, Shrinking, or Staying the Same When buying a Florida business, you need to take a critical look at the local market. Does demand for the product seem pretty stable, or can you see it changing in the near future? Consider things such as: Whether local demographics are shifting; Whether other businesses in the area are opening or closing; How advancing technology may affect the relevance of the product or service;  How likely changing trends are to affect demand for the product or service; and How steady earnings have been over the past several years. Be realistic about the prospects for your business. You want to make sure that there is going to be continuing demand for the business before you invest in it. 3. What Obligations Will You Be Taking on? If you are purchasing a new business, it may come with obligations as well as assets. You may be subject to any number of liabilities, such as: Existing contracts, Pending lawsuits, Loans, Debts, Unpaid taxes, Warranties, Judgments, or  Liens. Be sure to get a comprehensive list of all these liabilities before you buy a business in Florida. An experienced lawyer can be invaluable in helping you identify and understand existing obligations. 4. Is the Asking Price Reasonable? There are various ways to value a business. The most common include: Market approach: comparing what similar businesses are selling for; Income approach: using the business’s past and future income to extrapolate its value; and Asset approach: determining the value of the business’s assets. You should seriously consider obtaining a professional business appraisal before agreeing to a purchase price. 5. What Kind of Licensing or Permits Do You Need? All businesses require some form of registration, licensing, or permits. Depending on the type of business and where it is located, these may include: A general business permit; DBA (doing business as) registration; Business entity registration; Professional and occupational licenses; Building and zoning permits; Health permits; Liquor licenses and food permits; Tax registration and ID numbers; and Environmental permits. It is important to compile a full checklist of which specific permits you will need and their ongoing cost before buying a Florida business. Talk to an Attorney Before buying a business in Florida, talk to the experienced business acquisition attorneys at BrewerLong. We understand how complex this process can be, and we can…

How to Get Out of a Business Partnership

When you started your business partnership, everything was going great. You and your partner had a great working relationship and envisioned the same goals for your business. However, now it appears you and your partner are moving in different directions, and you may be considering getting out of your business partnership. “Ending a business partnership can be as challenging and emotionally difficult as ending a marriage. The best outcomes are possible when both parties to a partnership can negotiate toward an amicable separation. Unfortunately, it’s not always possible.” Business Attorney Michael Long Learn the signs indicating it may be time to leave your partnership. Then read on to learn how to legally get out of a business partnership. It may be possible to preserve the business—and your relationship with your partner. Signs It’s Time to Leave Your Partnership Partnerships can be challenging to endure if you are always at odds with your partner. You may have started your business with a harmonious relationship, but lately, things have soured. It may be difficult to determine when it’s time to leave your partnership. If you haven’t already, review your partnership agreement to determine if your partner is upholding their responsibilities. Additionally, the following topics provide insight into whether it may be time to get out of your business partnership.  Someone Isn’t Carrying Their Weight  If you consistently feel that you are carrying the burden of keeping the partnership afloat, it may be time to end your business partnership. In a partnership, both partners should have equal responsibilities. It may be time to reevaluate your partnership if you are continually working and strategizing a successful path for your business while your partner reaps the benefits of your efforts. Disagreements  Disagreements in planning business strategies are universal. Learning how to compromise and work effectively with your partner provides a clear path forward. Collaborating on a business strategy regarding finances, personnel, and customer service prevent issues that halt productivity. However, if you and your partner are never in agreement and can’t seem to resolve your conflict, it may be time to legally get out of your business partnership. Different Work Ethic When you started your business partnership, you and your partner may have each possessed a strong work ethic. Driven by the excitement of a new business, you both worked around the clock to ensure success. However, business growth is not always immediate. In the meantime, you may feel that your partner has lost the drive they once possessed. Furthermore, you continue to work diligently, staying focused on the ultimate goal of your business.  You may consider discussing your concerns with your partner. But if your conversations have failed to create change and your frustrations continue, it may be time to leave your business partnership.  Steps to End a Business Partnership  There are several steps you need to take to end a business partnership. Review Your Partnership Agreement  Once you’ve decided to leave your business partnership, review your partnership agreement. The agreement may provide a procedure to leave or end the partnership. If your partnership agreement includes these procedures, review them carefully. Consult with an experienced business attorney to ensure you properly adhere to the agreement’s procedures. An attorney can assist you in avoiding opportunities for future legal conflict. Heeding the advice of a business attorney is likely to end the partnership more smoothly. Inform Your Partner of Your Intent to Leave  If the relationship between you and your partner has soured, informing your partner of your intent to leave may be a difficult conversation.  Prepare for the conversation and prevent retaliatory acts by doing the following:  Put a hold on all credit cards associated with the partnership; Move cash to an account that doesn’t permit immediate withdrawals; and  Cap lines of credit on the partnership. While it may seem excessive, this action may preserve the value of your business partnership. Upon dissolution, there may be proceeds remaining to divide between you and your ex-partner.  Consider All Alternatives  If you wish to continue the business without your partner, consider buying out your partner’s interest. Evaluate the financial and operating consequences of a buy-out. Buying out your partner may result in an entity shift from partnership to sole proprietorship. Consider the tax implications of that transformation. In a possible buy-out, be prepared to negotiate your interest and the value of the partnership. Engaging the services of a business attorney unrelated to the business partnership is important.  Tips to End the Partnership Well  Ending your business partnership is never an easy decision. As you navigate your business partnership’s demise, there are various tips for how to move forward smoothly. Limiting the possibility for conflict between you and your partner ensures the business you created may continue to succeed. Additionally, it may be possible to preserve the relationship with your ex-partner without permanent harm. Calm Communication  It’s crucial to communicate with your partner when you are calm and rational. Avoid, to the best of your ability, personal feelings of anger, resentment, or frustration in any conversations. The ability to separate your own feelings from business decisions reduces opportunities for conflict. Determine Priorities  Before any discussions with your partner, determine your priorities. If you wish to buy out your partner’s interest and continue the business, prioritize how best to achieve this goal. Consult with an attorney to identify any unforeseen obstacles or considerations. Presenting your partner with your plan creates a starting point for conversations regarding the future, or end, of the business partnership.  Create a Dissolution Plan  If dissolving the business partnership is the only way forward, create a plan, preferably with your partner, for dissolution.  Determine a timeline for when the formal dissolution will occur.  Hire a professional to appraise the value of your business. Knowing the value of your partnership allows for more productive negotiations during the dissolution process.  Determine the resolution of payments and any obligations. This includes tax obligations as well as payments to vendors, contractors, and employees.  Why Hire a Lawyer Deciding when…

What-You-Need-to-Know-About-Florida-Trademarks

Operating a business encompasses a lot of things and nearly every aspect requires attention. One of the most important is how potential customers view and recognize your business. A trademark is one way to set your business apart from others. Multiple benefits exist upon deciding to undertake a Florida trademark registration. Companies must always be aware of imitators seeking to engage with potential customers and benefit from your hard work. These imitators can detrimentally affect your business’s reputation by producing subpar products or services. Florida trademark registration is a vital step to protect the future of your business. A company’s names, logos, and designs do more than just identify that company–they add value to the company and its products. Protecting these trademarks is just as important as protecting the company’s cash deposits, equipment, and other tangible assets, if not more so. Florida Trademark Attorney Ashley Brewer What Is a Trademark?  According to the United States Patent and Trademark Office (USPTO), a trademark is “a word, phrase, symbol, and/or design that identifies and distinguishes the source of the goods of one party from those of others.” Once registered, trademarks never expire. Trademarks rights arise from actual use. They arise from the date of first use for goods and services. Therefore, as long it is in constant use for products and services, a trademark can last forever. Factors to Consider in Choosing a Trademark  Factors to consider when choosing a Florida trademark include the following: Strength of Mark Trademarks range from weakest to strongest depending on how distinctive they are. Trademarks including words or symbols that are unusual or unrelated to the product they represent are more likely to receive trademark protection. For example, Google is distinctive because the word “Google” has no meaning apart from the company’s name. Likewise, Apple has trademark protection for its name and symbol because apples have nothing to do with computers. On the other hand, it would be difficult to trademark the word “ice cream” in connection with your ice cream business. Ice cream is a generic word identifying your product.  Commonality of Mark Whether a Florida trademark is used commonly by other third parties affects the strength of a mark. For example, the term “gym” and “fitness” about a personal gym are likely widespread. Multiple businesses with the same words in the title likely exist. Therefore, it’s important to research similar businesses in your area. Your business name and symbol should be unique to your business. This assures it does not get confused with similar businesses in the area. Long-Term Goals  Examining the long-term goals of your business is also important. For example, let’s say you name your business, “Orlando Press.” Your business begins to grow exponentially, and you wish to expand nationwide. However, you now feel your Florida trademark pigeonholes you to business within Florida state limits. If you can see your business changing in a way that may affect the desirability of your trademark down the road, you should take that into account. Trademark Search Undertaking an extensive trademark search through the national database is vital to the trademark process. The trademark process is relatively straightforward. However, significant delays can occur if you discover your trademark already exists. A trademark database provides information regarding what businesses were first to use a particular mark. The first business to use a trademark has priority over others. Additionally, if you use someone else’s trademark in your business, they may be able to bring a trademark infringement claim against you. Florida Trademark vs. Federal Trademark  There are a few differences to be aware of between registering your trademark in Florida and registering it with the federal government. Florida Trademark Registration Trademark registration in Florida is governed by the “Registration and Protection Acts.”  Registering in Florida does not afford you the same level of protection as a federal registration. While Florida trademark registration prevents others from using your name or design, those protections are limited to use within the state. In Florida, trademark rights exist from the first use of goods and services in commerce. Trademark registration in Florida is valid for only five years. Trademarks may be renewed so long as renewal fees are paid six months before the five-year expiration.  Federal Trademark Registration Federal trademark registration is governed by the USPTO. As long as federal registration renewals are current, registration for a trademark can also theoretically last forever. In contrast to Florida registration, federal registration of a trademark is required every ten years. Renewal fees must be paid six months before each ten-year expiration. Additionally, between the fifth and sixth year, one must file a Declaration of Use. Between the ninth and tenth year, you must submit a Combined Declaration of Use and Application of Renewal. Missing deadlines may result in your registration’s expiration.   Why Should I Trademark? Recognition Trademarks are an essential part of any business. A business’s name and symbol are the definitive ways it is distinguished from other similar companies.  Trademarks make it easy for customers to find you and your business. A trademark symbol captures customer attention and makes your business stand out. Protection Federal trademark registration creates a legal presumption of ownership over that mark nationwide. A Florida state trademark creates that same legal presumption of ownership statewide.  Registering your trademark gives your business the exclusive right to use the trademark connected with the goods and services identified in your registration. Other businesses are prohibited from using your trademark for financial gain. If you discover unlawful use of your trademark, you may file a lawsuit against that person or business.  Value A trademark is an added value to your business. As your business value grows, so does the value of your trademark. Trademarks may also help pave the way for entry into other industries. Trademarks can be bought or sold. They are an asset to any company. They can also be used as a security interest to secure a business loan.  Permanence As provided above, so long as trademark registration remains…

Business Required to Pay Severence in Florida

Under Florida law, a business is generally not required to pay severance to a terminated employee. The U.S. Department of Labor generally does not require employers to offer severance pay. However, the existence of an agreement outlining severance terms creates a legal obligation to satisfy those terms. What Is Severance Pay? Severance pay is compensation an employer provides to an employee after termination of their employment. Monetary payment is not the only form of severance. Severance may include include extended benefits such as health insurance, retirement accounts, stock options, and assistance in searching for new work. Severance pay in Florida also includes payout of unused accrued “paid time off” or PTO, vacation pay, or sick leave. The months of service or the term of employment typically provides the basis for monetary severance calculations. In Florida, severance pay usually applies when an employee is laid off or retires early—not terminated or fired. Severance pay protects the newly unemployed and is typically viewed as a gesture of goodwill. Severance pay provides a previous employee with support until they secure a new job. However, when the employer has had a dispute with a departing employee, severance pay may be bargained to deter future legal action. Elements of a Valid Severance Agreement A strong severance agreement may protect against any future legal action by the employee. Because employees are only required to be paid severance according to an agreement between employer and employee, it’s important for that agreement to also include the benefits the employer gets in exchange for paying severance to the employee. Employers’ Attorney Kristi Benson Depending on the facts of the termination, an employer may want to include the following terms in a severance agreement. Release of Legal Claims If the potential for future litigation exists, the inclusion of a release of future claims is necessary. A release of general claims requests that the employee also agrees to release the employer from any potential claims they may have against the company. Confidentiality and Non-Compete Restrictions Confidentiality or non-compete restrictions may be a vital element of a severance agreement in Florida. Specificity of confidentiality clauses vary and request that the employee not divulge any proprietary information about the company or the employee’s employment. Non-compete clauses limit the employee’s future employment in a similar business over some time and in a certain geographic area. Non-compete clauses in Florida are enforceable as long as they are reasonable and protect a legitimate business interest. Mutual Non-Disparagement A mutual non-disparagement clause provides both the employer and the employee agree not to speak negatively about the other.  Mutual General Release A mutual general release releases both the employer and the employee from any future legal action. Neutral Reference or Reference Letter Severance agreements may include a neutral reference or reference letter. A neutral reference provides that employers may provide only dates of employment and position to requesting future employers. A reference letter goes further and provides dates of employment, position, and a positive statement. Contact Us If you are contemplating the termination of an employee or need assistance drafting strong severance agreements, contact the experienced Florida business law attorneys at BrewerLong. We are the premier employer’s law firm in Orlando and work tirelessly to protect you and your business from future litigation. Contact us today!

How to Form an S-Corp in Florida

Electing to be treated as an S-corp offers many benefits to both the business and the owner in Florida. An S-corp election may save money for your business especially when business profits are greater than your reasonable salary. Determine whether an S-Corp election is right for you and contact the qualified business attorneys at BrewerLong today! Making an S corporation election is often in the best interest of Florida corporations and LLCs, especially when the owners of the company are also working in company. Business Attorney Trevor Brewer What Is an S-Corp? A Florida S-corporation is a for-profit corporation or limited liability company (LLC) that has requested to be taxed under Subchapter S of the United States Tax Code. A Florida S-corporation reduces its tax burden by passing losses, deductions, income, and credit to its shareholders. S-corps avoid the double taxation of traditional corporations. Eliminating double taxation may potentially save your company hundreds of thousands of dollars. Florida taxes S-corporation income in the same manner as sole proprietorships and partnerships. The income of corporations is passed to shareholders for reporting. Shareholders use their income tax returns to report losses and income. A S-corp in Florida is essentially an election for special tax status. However, the same laws and rules apply to S-corporations as other Florida corporations or LLCs. Why File as an S-Corp? An S-corp offers many advantages to businesses in Florida. These advantages may outweigh any disadvantages or limitations. Pass-Through Taxation Filing as an S-corp provides the formal structure and limited liability of a corporation and pass-through taxation of business profits. There is no income tax imposed at the corporate level. Income is taxed only on shareholder returns. Following federal rules, Florida treats S-corp income as pass-through income. Business losses offset other income on shareholders’ tax returns reducing any income tax paid. This feature is particularly advantageous to start-up businesses with limited initial income. Business Growth An S-corp election in Florida may permit your business to raise capital more efficiently. S-corporation election allows for the issuance and sale of stock as evidence of interest in the corporation. Some financial lenders may require personal guarantees of business owners limiting the financial liability protection of S-corporation shareholders. S-corporations only permit one class of stock. The transfer of stock or change in business ownership is simplified. Simplifying class of stock limits interruptions to business operations and avoids unfavorable tax consequences. Eliminating complex accounting analysis saves on unnecessary business expenses. Limited Liability Each shareholder may lose only as much as they initially invested in the corporation. S-corporations in Florida are treated as a separate entity. Shareholders are not personally liable for any legal judgments, debts, or obligations of the corporation. For example, if a corporation goes bankrupt, creditors may not pursue the personal assets of shareholders to pay business debts. However, shareholders are liable for any crimes committed or corporate regulations violated. In a sole proprietorship or partnership, owners and the business are considered the same, leaving personal assets vulnerable. Benefits to Business Owners S-corporations still enjoy some benefits of a corporation such as insurance benefits, retirement plans, bonuses, and stock option plans. Additionally, there can be a separation of organization and management of a company. The management of the company is not required to hold ownership of the business, in contrast with the structure of partnerships, and sole proprietorships. Credibility Due to the formal commitment to their corporate structure, s-corporations may be viewed as more professional than sole proprietorships or partnerships. Customers and future investors may view your business more favorably, aiding in its success. Disadvantages of an S-Corp The disadvantages to filing as an S-corp in Florida may not align with the goals for your business. Tax Qualification Obligations Mistakes regarding the election of S-corp status, notification, consent of shareholders, stock ownership, and filing requirements may disqualify S-corporation status. Mistakes may be remedied easily, however, consultation with a qualified business attorney ensures these mistakes do not occur. Calendar Year Missing the registration requirement deadline for S-corporation status in Florida results in the failure to receive favorable tax treatment for that calendar year. Saving on tax expenses for your business requires satisfaction of these important deadlines. Stock Ownership Restrictions An S-corporation in Florida may have only one class of stock. Therefore, no varying classes of investors entitled to different dividends or distribution rights exist. Flexibility in Allocation of Income and Loss A traditional corporation easily allocates income and losses to particular shareholders; however, since S-corporations issue only one class of stock, this is more difficult. Allocation of losses and income is governed by stock ownership. Limitations on S-Corp Structure There are limitations on what types of companies may register as an S-corp in Florida. It is not the right choice for every kind of business. S-corps in Florida must be based in the United States. Some businesses, such as financial institutions, insurance companies, or domestic international sales corporations, are not eligible to register as S-corps. Additionally, the business may not have more than 100 shareholders. Only U.S. residents and citizens are permitted to operate as shareholders in Florida. Shareholders may not be other corporations, limited liability companies, partnerships, or certain trusts. Additionally, Florida S-corporations issue only one class of stock. Can An S-Corp Be Reversed? In the event a Florida S-corp is no longer an advantageous option for your business, reversal of your S-corp status is possible. Limitations exist, however. Reversal of the S-corp election may be done only after one year. You must wait for the following tax year before refiling with the IRS to revert to a traditional corporation. Need Help with Your Business? BrewerLong attorneys possess years of dedicated experience in business law matters and can ensure that your company’s formation is correct from the start. Our dedicated attorneys provide clients with knowledgeable legal counsel and answers to your complex legal questions. We understand the complexity of the small business culture and the quality representation smaller businesses require. BrewerLong attorneys are here to provide you with focused consultation and…