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Business

Learning from Bobby Bonilla: Contract Negotiation and Deferred Compensation

 

Learning from Bobby Bonilla: Contract Negotiation and Deferred Compensation

Every year on July 1st you might encounter the phrase “Happy Bobby Bonilla Day” floating around on social media or coming from your favorite sportscaster. It refers to the noteworthy day that the former Major League Baseball player receives yet another annual check of $1,193,248.20 from the New York Mets.  Despite having not played in MLB since 2000, Bonilla will continue to receive this payment each year until 2035 through what is called a deferred payment.

When the Mets bought out his contract in 2000, they provided him the option to receive an annual payment of $1.2 million each year starting on July 1, 2011, for 25 years, with 8% interest. He also did the same with a second contract with payment split between the Mets and Orioles, paying him an additional $500,000.00 annually for 25 years.

Ball players aren’t the only ones with the option to take deferred compensation, as it’s possible you already have this option. Do you have a retirement or a pension plan? If so, you are providing yourself with deferred compensation.

What are the benefits of deferred compensation like that of Bonilla and many other financially savvy professionals?

Security Post-Retirement

As opposed to taking a lump sum and possibly spending like the well will never run dry, taking the deferral ensures you will have funds coming in annually, ensuring that you live more within your means.

Tax Benefits

Deferring payments can allow you to fall into a lower tax bracket because the funds are not taxed until they are paid out each year. Further, the tax rates may be lower when you receive the deferred payments, saving you money in the long run.

Investments on Investments

Some employers will place deferred compensation into an investment option or mutual fund that provides regular interest payments. This can potentially increase the overall value of the initial contract amount, adding to the value of your deferred payments.

Conclusion

Although you might not be in professional sports, you may still get the opportunity for deferred payment in the future. Always make sure to read the terms and conditions of every contract you are presented with, or even better, bring in your legal counsel to break down each of your options and get the best terms available to you.

 

Next Steps

If you would like to learn more about any of the topics mentioned here, please call or text 484-801-0021 or reach out to Cassandra Ortner at cassandra.ortner@peytonlaw.com. We proudly support the nation’s business owners.

*Janelle Peyton is the Managing Partner of Peyton Law, a national boutique law firm providing general counsel and intellectual property legal services to small and mid-sized business owners and entrepreneurs. The firm offers business and brand-building legal strategies; including business entity formation, contract drafting and review, human resources and employee matters, joint venture agreements, trademark and copyright protection, licensing & franchising, business succession planning, and mergers & acquisitions. Peyton Law serves as outsourced general counsel to companies in a wide range of industries. Visit us at peytonlaw.com.

July 6, 2022/0 Comments/by Janelle Peyton
https://peytonlaw.com/wp-content/uploads/2022/07/istockphoto-1241605676-612x612-1.jpg 415 612 Janelle Peyton https://peytonlaw.com/wp-content/uploads/2021/06/Peyton-Law-Main-Logo-1-1030x303.png Janelle Peyton2022-07-06 15:57:062022-07-06 15:57:06Learning from Bobby Bonilla: Contract Negotiation and Deferred Compensation
Business

When Do You Need An Attorney To Review Your Contract?

 

 

When Do You Need An Attorney To Review Your Contract?

A contract is a legally binding document signed between parties entering into an agreement. It imposes certain obligations upon the parties concerning one another. Since contracts are documents that are enforceable in a court of law, it is wise to get them reviewed at various stages by an attorney to fully appreciate what one is agreeing to and to protect one’s rights during the entirety of the contract. Whether you are taking a new job or signing an affiliate business agreement, it is important to understand what risks may be hiding in the document you are about to sign.

 

Before You Sign

It is essential to have the contract vetted by an attorney before putting pen to paper. Pick an attorney based on the type of contract you are entering, as different attorneys may specialize in different fields of law like tax, intellectual property, employment, or business agreements. An attorney will be able to review sensitive clauses important to the validity of the contract that may miss the attention of a layperson, such as what constitutes a material breach, the length of the terms, and whether the contract is in accordance with the laws within your jurisdiction.

 

Protecting Your Rights

Your lawyer may also point out whether or not the contract is fair to you. They will review the fundamental terms of the contract and if a greater number of obligations or penalties are attached to you as compared to the other party, the contract would not be treating both parties equally. A good attorney would demand a revision and alteration of such a contract before signing it.

 

Filing the Correct Documents

Get your contract reviewed to understand if any documents need to be filed or signed in addition to the contract itself, such as a non-disclosure agreement or proof of ownership in contracts involving property. An attorney will help prepare a list of all such documents to be filed and will also make sure that these documents are up to date. In cases where a secondary document, like a non-disclosure agreement (NDA) needs to be signed, the attorney may also go through its term to ensure fairness and avoid any prejudice against you.

 

Modifying the Contract

It is wise to retain the services of an attorney, as you may not feel confident requesting the offeror to modify the terms of the contract. Having an attorney guide you through this process as well as explain the legal ramifications of any adjustment is a good option to have. A review by your attorney at this stage will ensure legal validity as well as protection of your rights that may change through any modification of the agreement. Many make the mistake of having an attorney review a contract after signing because they do not realize they have the opportunity to negotiate. Once you have signed, renegotiation Is difficult. and often unlikely.

 

Breach of Contract

 A breach of contract will occur when any party does not fulfill its contractual obligations. The consequences for a violation are often defined within the contract and may include termination and possibly arbitration or even litigation. A ‘dispute resolution’ clause within the existing contract is generally helpful in resolving any problems between the parties. Having your attorney review the contract at this stage is essential to evaluate whether a breach has taken place from your end or your rights in the agreement have been infringed by the other party. For example, a one-sided litigation clause can sometimes be hiding in the contract, requiring that you pay all attorney’s fees regardless of who wins the litigation. Your reviewing attorney will renegotiate this and other terms, as well as advise the future course of action that will include possible remedies like going to court or settling the dispute internally.

 

Final Words

 It is always prudent to review your contract with an attorney before signing it, as it will help clarify the rights and responsibilities of the parties, and reduce the chances of conflict and breaches later. If the contractual relationship between the parties breaks down or changes, it is also helpful to take an attorney’s advice on what steps are to be taken and how to best protect one’s rights granted by the agreement.

Next Steps

If you would like to learn more about any of the topics mentioned here, please call or text 484-801-0021 or reach out to Cassandra Ortner at cassandra.ortner@peytonlaw.com. We proudly support the nation’s business owners.

*Janelle Peyton is the Managing Partner of Peyton Law, a national boutique law firm providing general counsel and intellectual property legal services to small and mid-sized business owners and entrepreneurs. The firm offers business and brand-building legal strategies; including business entity formation, contract drafting and review, human resources and employee matters, joint venture agreements, trademark and copyright protection, licensing & franchising, business succession planning, and mergers & acquisitions. Peyton Law serves as outsourced general counsel to companies in a wide range of industries. Visit us at peytonlaw.com.

June 16, 2022/0 Comments/by Janelle Peyton
https://peytonlaw.com/wp-content/uploads/2022/06/istockphoto-135385056-170667a.jpg 338 507 Janelle Peyton https://peytonlaw.com/wp-content/uploads/2021/06/Peyton-Law-Main-Logo-1-1030x303.png Janelle Peyton2022-06-16 11:12:092022-06-16 11:12:09When Do You Need An Attorney To Review Your Contract?
Branding, Business

Are you becoming a Member of a Business? Here’s what to look out for.

 

Are you becoming a Member of a Business? Here’s what to look out for.

  1. Confidential information.

Depending on the nature of the business you are becoming a Member of, confidential information could be defined narrowly, as intellectual property such as patents or designs, or it could be as broad as company strategy, client lists, business practices, and other operational information. It is critical that these clauses are clarified, preferably in writing, to ensure that you understand what is confidential when you are operating in your new role as a Member. To ensure you know what is confidential, you can request a further breakdown of what the Company would consider confidential, or a request that information that is considered confidential is labeled as such throughout communications of the specified information. This will help you protect yourself moving forward, both as a Member, and if the relationship terminates and you seek to stay in a similar industry.

2. Time dedication.

In becoming a Member of a Company, you may already be a full-time employee, or you may just be a part-time entrepreneur working with or running a number of businesses. It is critical that you review the time management or time requirement clause to ensure that your expectations align with the Company’s. Further, many times a requirement of full-time dedication is boilerplate language that is also considered a material part of the agreement. This means that if the relationship goes south, the Company could theoretically rely on this clause to show a violation of the agreement and take action to remove you as a Member.

3. Remedies for Breach.

Remedies for breach could range from extremely strict to very lenient. We recommend ensuring there is a clear opportunity to cure, meaning a period of time to right the wrong. Note this opportunity to cure cannot be applied to all breaches, such as legal violations applicable to the business of the Company or dishonesty in financial dealings. Generally, you as a Member join into the LLC with a capital contribution or other exchange that affords you a number of units, or a certain amount of interest in the Company. It is critical to understand what impact your termination or breach has on your interest. For example, if you barely provided any contribution upon joining the Company, and the clause states that simply returning your contribution means that your interest is transferred back to the other Members of the Company, you can be bought out for that minute amount. Alternatively, it is preferable that your interest is purchased from you for the value at the time of your departure.

4. Valuation.

How any interest or assets of the Company is valued directly impacts every Member of the Company. This calculation can change how much an annual distribution is, how much interest is purchased for at the time of a Member’s departure, or how much a Member is paid if the Company is dissolved. Generally, valuation is performed by a certified public accountant (CPA) or accounting firm that is familiar with the business the Company operates in. Something to watch out for is valuation by the Manager alone. There is nothing to ensure that things are valued in realistic terms, especially where the valuation clause is defined by “in the Manager’s discretion.” Such language provides no checks and balances on the Manager to ensure the determination is defined by fair market value.

5. Restrictive Covenants.

One of the final clauses to pay close attention to is any restrictive covenant. These are generally non-compete and non-solicitation clauses in these types of agreements. They can sometimes be intertwined with or hidden in the Confidentiality clause. These may be upheld by a court if contested, but they must have some restrictions on them. These are generally in the form of geographic and time restrictions. For example, a non-compete that covers the entire United States is generally going to be struck because the geographic region is too expansive. Each state also generally has a reasonably approved time constraint, usually falling between 1 and 3 years. These agreements can hinder your ability to start your own company or even apply for new jobs when you leave the current Company. Pay attention to the manner of departure, attorney fees, and compensation for signing the non-compete. It is important to understand your own plans and goals as to how this can impact you in the future.

Remember, you are in a position to negotiate each term in the agreement before signing. It is recommended that you hire counsel to review and work with you on negotiating the terms to make sure you are protected, and your interests are supported in becoming a Company Member.

 

Next Steps

If you would like to learn more about any of the topics mentioned here, please call or text 484-801-0021 or reach out to Cassandra Ortner at cassandra.ortner@peytonlaw.com. We proudly support the nation’s business owners.

*Janelle Peyton is the Managing Partner of Peyton Law, a national boutique law firm providing general counsel and intellectual property legal services to small and mid-sized business owners and entrepreneurs. The firm offers business and brand building legal strategies; including business entity formation, contract drafting and review, human resources and employee matters, joint venture agreements, trademark and copyright protection, licensing & franchising, business succession planning, and mergers & acquisitions. Peyton Law serves as outsourced general counsel to companies in a wide range of industries. Visit us at peytonlaw.com.

May 24, 2022/0 Comments/by Janelle Peyton
https://peytonlaw.com/wp-content/uploads/2021/06/Peyton-Law-Main-Logo-1-1030x303.png 0 0 Janelle Peyton https://peytonlaw.com/wp-content/uploads/2021/06/Peyton-Law-Main-Logo-1-1030x303.png Janelle Peyton2022-05-24 14:03:122022-06-06 10:54:59Are you becoming a Member of a Business? Here’s what to look out for.
Branding, Business

Stand Out in the Crowd: Why Brand Differentiation is Key for Your Business

Today’s consumers are inundated with options. Thousands of businesses offer similar products and services or promise similar results. How does a consumer choose one business or product over the other? The answer: consumers will always gravitate toward distinctive, uniquely relevant brands.

With such high saturation in most markets, it can be easy for a business to get lost in the crowd. Brand differentiation is key to your business’s products or services standing out.

What is Market Positioning?

Market positioning is the process of creating a specific image or identity for a product or brand. Successful market positioning allows a business to occupy a distinctive place in the minds of their target consumers. This strategic exercise in consumer perception helps businesses establish unique places in their market and stand out from their competition.

Strong market positioning is essential for brands to become visible to their target audience and make a lasting impression. Once a business pinpoints what makes them unique, they can discover a positioning strategy that works for them. A strong positioning strategy highlights the unique features that make a brand different from its competitors.

For example, one company may find that their pricing is lower than their competitor’s and then position for affordability. Conversely, an organization may find their pricing is higher than their competitor’s and then position for quality or luxury status. Businesses may also focus on their product’s special benefits, ease of use, convenience, and more.

Why is Positioning in Marketing Important?

Positioning in marketing can essentially be boiled down to how a business wants to be perceived in relation to their competitors. The goal of market positioning is to find a defining characteristic that will help a business eclipse their competition.

Successful positioning results in a brand gaining the competitive edge they need to improve sales and promote company growth. Strong market positioning also helps businesses more clearly define their target market and better connect with their target consumer’s needs. As a result, brands can make more effective business decisions.

How to Create Strong Brand Positioning in your Market

Positioning in marketing is not easy. It requires extensive research and dedication to a specific niche, idea, or target audience. Effective positioning strategies consider three areas: the needs of the target consumer, a business’s own strengths and weaknesses, and the strengths and weaknesses of their competitor. Outsourcing this work to a marketing company is a great option for small businesses that do not have the in-house resources to complete extensive market research and cannot rebuild their brand’s architecture on their own.

First, businesses need to examine their existing position in the marketplace and determine their point of difference. Businesses may find they are marketing their product or service just like many other businesses on the market. Understanding their current market position gives businesses important insight into what needs to be changed and where to go next.

After understanding their current market position, businesses must analyze their competitors. How is the competition positioning their brand and products? Competitive analysis may reveal that one competitor’s weakness is another business’s strength. Once they have located an untapped corner in their market, businesses can begin to build a unique marketing strategy.

Once marketing materials such as slogans, logos, designs, or websites have been created, they need to be cleared for use. After your attorney conducts a search of registered marks and confirms your business can use them, you will then want to file for the necessary intellectual property protections to secure the unique materials for exclusive use.

Legal Considerations: Intellectual Property Protections

Market positioning is much more than selecting a category. The business has to commit to embodying the identity in all of its branding materials, products, and content. A strong market positioning strategy drives the words, phrases, logos, product names, and entire image of a business’s branding. Consequently, protecting your business’s intellectual property is an important part of your market positioning strategy.

Once a business has developed a strategy to cement their brand in a desirable position, they then have to actively protect that position from competition. Protecting your intellectual property means turning the unique, intangible aspects of your business into exclusive rights. As a result, competitors are unable to commercialize and benefit from the branding materials and content strengthening your market position.

Intellectual property protections naturally enhance market positioning strategies because they help secure exclusive brand identities, distinguish products or services from competition, and prevent competitors from encroaching on the unique concepts that identify your brand.

Next Steps

If you would like to learn more about any of the topics mentioned here, please call or text 484-801-0021 or reach out to Cassandra Ortner at cassandra.ortner@peytonlaw.com. We proudly support the nation’s business owners.

*Janelle Peyton is the Managing Partner of Peyton Law, a national boutique law firm providing general counsel and intellectual property legal services to small and mid-sized business owners and entrepreneurs. The firm offers business and brand building legal strategies; including business entity formation, contract drafting and review, human resources and employee matters, joint venture agreements, trademark and copyright protection, licensing & franchising, business succession planning, and mergers & acquisitions. Peyton Law serves as outsourced general counsel to companies in a wide range of industries. Visit us at peytonlaw.com.

March 1, 2022/0 Comments/by lcameron
https://peytonlaw.com/wp-content/uploads/2022/03/Marketing-Positioning-Peyton-Law.jpg 1414 2121 lcameron https://peytonlaw.com/wp-content/uploads/2021/06/Peyton-Law-Main-Logo-1-1030x303.png lcameron2022-03-01 10:15:272022-03-01 10:15:27Stand Out in the Crowd: Why Brand Differentiation is Key for Your Business
Business, Business News

Top 3 Ways to Build Your Interior Design Business

Growing a successful business is often riddled with trial and error—from attracting the right clients, developing a unique brand identity, to narrowing down service offerings. Unfortunately, there are no set guidelines when it comes to leading an interior design business, but these three legal strategies will support your firm’s growth and longevity.

Form Strong Foundations

As a business owner, it is your responsibility to limit your risk and liability to keep your business running smoothly. Interior design businesses that regularly update their formation documents and corporate records ensure their business, reputation, and personal assets are protected at all times.

Perhaps the most important choice interior designers face when starting their business is choosing which type of entity to operate under. The right business entity will protect business owners from liability, save money on taxes, create structured business operations, and build a professional foundation that clients can trust.

It is risky for interior designers to operate as sole proprietorships or in general partnerships because they offer no protection from creditors, and the owners are personally liable for business debts. Corporations (Inc.) and Limited Liability Companies (LLCs) are popular business entities because they shield business owners from personal liability while establishing a professional presence.

Additionally, as a business develops and expands, its corporate records require professional maintenance to keep updated with the status of the company. All corporations are required by law to maintain detailed corporate records. LLCs require less record-keeping, but important decisions should be memorialized and recorded. From a legal perspective, it is important to maintain organized, detailed records because it protects businesses should an audit ever occur. Having organized and complete records also helps businesses achieve bank loans and lines of credit, attract investors, have better negotiating power with suppliers, and ultimately sell for a profitable margin.

Protect your Branding

Interior designers are artists. They use their creative talents to completely transform spaces into masterpieces for their clients. They invest time, energy, and resources to fashion original designs, so the last thing an interior designer (or their clientele) wants to see is another designer imitating or exploiting their signature design concept.

To stay distinct and competitive in the industry, interior designers must protect their design plans like any piece of artwork or creative product. Each creative work, or derivative (such as plans, sketches, drawing, artwork, photography, or renderings) are individually protectable pieces of intellectual property – not to mention the brand name, logos and website design. Properly protected intellectual property provides the owner with the exclusive right to use it, alter it, and profit from it. Without the right intellectual property protections in place, interior design businesses risk having their original design concepts stolen by competition.

The best way to keep your brand identity and designs unique is to protect your rights to the intangible property developed by your business. With design concepts firmly protected by filing the necessary trademarks or copyrights, interior designers can post and share their design portfolio without worrying about their competition copying and profiting from it. They also have the right to license their work to others at their discretion. As a result, they have the opportunity to expand the reach of their brand by forming profitable collaborations with businesses who want to use their designs.

One of the most overlooked pieces of intellectual property is your business’ client list. The cost of losing your client list to a competitor is incalculable. Non-compete agreements (NCAs) are useful for businesses to protect their intellectual property from employees. Interior design businesses should have their best designers on staff sign an NCA to keep valuable designs and client lists secret and prevent former employees from using those signature designs or client lists should they start a similar business or work for the competition.

Pay Attention to Suppliers

The interior design industry is driven by connections. Whether the designer is finding new clients or establishing partnerships with suppliers, forming strong relationships is essential. Interior designers depend upon furniture, artwork, paint, flooring, carpets, and other creative elements to transform spaces and exceed client expectations. Each interior designer is only as good as the elements they can bring together, so ensuring supplier relationships is key to the success of interior design businesses.

Once vetted for reliability, quality, cost, and efficiency, a new supplier company and the interior design firm should enter into a well thought through agreement to establish the terms of the relationship and the responsibilities of each party. Well-drafted supplier agreements will protect both parties from miscommunications in the future; as they should include a comprehensive description of the goods or services provided, acceptable payment terms, payment methods, returns and refunds, shipping costs and responsibilities, warranties, delivery timelines, and more.

When using a template for this type of agreement, interior designers run the risk of leaving out key legal terms and clauses that protect their business’s interests. Poorly written supplier agreements can result in major miscommunications, such as materials not arriving in time, partial deliveries, or payment terms that are unreasonable – all of which can put interior designers in a bad position with their clients. When agreements are vague or overly broad, your business could end up wasting time and resources back-tracking instead of moving forward with new opportunities. When properly executed, supplier contracts can help interior designers derive the most value from these relationships.

Next Steps

If you would like to learn more about any of the topics mentioned here, please call or text 484-801-0021 or reach out to Cassandra Ortner at cassandra.ortner@peytonlaw.com. We proudly support the nation’s business owners.

*Janelle Peyton is the CEO and Managing Partner of Peyton Law, a leading boutique law firm designed to provide the highest quality branding, business, and legal services to companies via quarterly subscription called Strategic Legal Solution. Peyton Law offers brand building strategies through corporate and intellectual property law, including business entity formation, buy+sell, contracts, joint ventures, trademarks, patents, licensing, and other growth-related transactions.

January 20, 2022/0 Comments/by lcameron
https://peytonlaw.com/wp-content/uploads/2022/01/Interior-Design-Business.jpg 1414 2120 lcameron https://peytonlaw.com/wp-content/uploads/2021/06/Peyton-Law-Main-Logo-1-1030x303.png lcameron2022-01-20 13:27:182022-01-20 13:27:18Top 3 Ways to Build Your Interior Design Business
Business, Events

Free Education Series #2: “Business Foundations – You Need This to Survive in Times of Change”

Business Foundations - You Need This to Survive in Times of ChangeBusiness Entities: A strong foundation will survive in times of change.

Is the business entity I have the correct one for my business? Sole Proprietor, LLC, or Corporation? Can an established business change entities?

A strong foundation is essential to surviving change and applies when working through a pandemic. We’ll cover the basics on entity types and build your confidence in your business formation. Pivots and new service/goods offerings are covered; as well as common risks and adding and removing subtracting partners.

Business Entity Formation and Updating.

Good afternoon and welcome.

My name is Kiki Levy.

And I am the administrative specialist at Temple Small Business Development Center here at Temple SBDC.

We help businesses start and grow.

We provide a series of low to no cost webinars as well as no cost one on one counseling service. If you’re interested in getting connected with one of our consultants, I will put our email address in the chat here shortly and then that way we can get you set up to speak with someone.

Today you have joined us for our legal considerations business entities webinar, just to let everyone know materials will be sent to you all three to five business days after this webinar.

Also, all attendees have been muted. We encourage everyone to post any questions that you may have in the Q&A.

Please refrain from posting questions in the chat if you would like to make comments and things of that nature, feel free to post that information in the chat, but questions we are asking that you post in the Q&A at this time I will turn the floor over to Miss Janelle Peyton.  Janelle, we welcome you today and we look forward to all the information you are going to share with us today.

Well, thank you so much for having me first of all, and I’m going to go ahead and start sharing my screen if I can do that.

Let me just get this going.

Alright, can you guys see my screen?

Yes.

Okay, so this is just a little bit about me and since we’re talking about foundations today I figured I’d just quickly point out to you a little bit about my foundations. So the the place I’m coming from when I’m talking today and to my clients anytime is actually I have a four pronged foundation to me in my business.

And it comes from first starting in the practice of law in estate and succession planning.

So I learned how to look at the future for my clients and figure out where they are and where they need to be.

From there I moved on to business law and learned a lot about, you know business law in general, but really learned what kind of documents need to be in place.

What are the foundations?

What are the protections that are necessary for small and medium sized businesses?

And then I went on to intellectual property. And there it all came together and I understood how the brand of the business and the proprietary methods and the secrets of the business really play into the documents of the business and then also play into the succession planning and what is going to happen to the business in the future, whether it’s going to be sold or passed on to children.

So that’s three.

The fourth prong or foundation to where I’m coming from is that I was a business owner first.  So I owned a construction company and millwork company actually, before I went out and opened my law firm so where I come from is from a place of knowing where you stood.

I know what it’s like to start a company.

I know what it’s like to grow a company and I know what it’s like to deal with the common things that come up when you’re running a small medium sized business.

So just so you know that’s where I’m coming from when we talk today.

Here we go today we’re talking about business entities and this is called the foundation to business success, and it’s really focused on what happened.

What just happened?

We were just in a pandemic.

You know, we’re sort of working our way out of it right now, but where you know what happened?

Where are we?

Are we starting new businesses?

Are we starting offshoots of current businesses?

Have we pivoted in the business and moved things around?

So we’re going to talk with the three main pieces of business entities and the foundation of your business.

We’re going to talk about entity types.

We’re going to talk about your federal employee identification number, and we’re going to talk about governing documents.

So let’s get into it.

First is entity types and I have a little test your knowledge here for you guys and I know I can’t really this — there’s no chat or there’s no ability to really have a conversation around this.

But think to yourself, a sole proprietorship gives its owners protection from personal liability.

Is that true?

Is that false?

Give you guys a second to think about it here.

So the answer here is false, and I guess that a lot of you guys knew this.

But what I want to talk about is really when you’re thinking about forming a business, or if you’re considering whether or not you’re in the right type of entity for your business.

You first want to think about separating out yourself from your business. And when I talk to clients, I’m a lot of times I talk about buckets, but what we’re really talking about is you’re separating your assets so that you can develop some liability protection.

And the reason we want this is something goes wrong in your business, God forbid you know something goes wrong and you get sued, right?

You do not want that suit to touch your house, your car, your 401K your husband or wife’s car.

Any of that.

You want it so you want a line drawn in the sand and you want to say look, you don’t want anything bad to happen in your business, you can still live your life.

You can still buy your groceries, you’re fine.

On the other hand, if something happens in your personal life, God forbid you get in a car accident or something and you get sued. You don’t want that to go into your business.

So you have your business to lean on in that situation, if something happens there.

So what we need to do is we need to make sure that you have a separate entity that’s separate from yourself, and that’s a lot of what we’re talking about today is how do we establish that?

So the first thing to know is that a sole proprietorship does not give you protection from liability, a sole proprietorship means that you and your business are in the same bucket.

You are the same thing.

You use the same Social Security number.

For all legal purposes you are the same

So this in my mind this is a hobby.

This is not a business.

As soon as your hobby starts to make you some money or starts to put you in a situation where if something goes wrong, your personal assets would be at risk, that’s when you need to separate it out and you need to form an entity.

So what does that mean really?

We’re forming an entity with this state.

So this is a state level thing we’re talking about right now.

And what we need to do is we need to go to your state and it depends on a couple of different things what state you’re even going to file your entity in.

Part of it of course has to do with where you live and where your business operates, but part of that question it could also be are you going to have investors, investors really like entities formed in Delaware because they have very good laws that protect the investors.

So one thing we need to think about is where.

Where is it best?

And the great thing about what I do is that I can help you with that, even though I’m based in Pennsylvania and I am licensed in Pennsylvania, New Jersey.

I can help you with any state in the nation as long as I’m comfortable with the laws in that state.

So we can really take a look at this and see what’s going to work best for you.

I know I have a couple clients that just moved to Florida.

So now we’re figuring that out for them.

So this is a state level filing that we’re looking at making for you.

So we’re thinking about what state we’re filing it in. And then, and I’m going to speak generally to this because state laws are a little bit different, so there are some different options for different types of entities, but pretty much every state has a limited liability company option, and that’s where a lot of people go automatically.

They’re easy to file.

They’re easy to keep track of, and the great thing about them is that you can actually file your taxes in a couple of different ways but not have to change your entity type so.

If you’re an LLC, you can choose to file as an individual person and it just kind of passes through on your taxes.

You could file as an S Corp.

You can file as a partnership, so you have a lot of different options.

So that’s that’s a good start for many business startups.

The other great thing is that well, good and bad, there’s not a lot in the laws about limited liability companies, so the positive thing there is that you really get to decide what it’s going to run, how it’s going to — who is going to be the members.

What does it mean to be a member?

What are the different duties?

You get to figure all of that out.

On the negative side though, if you don’t figure that out ahead of time, there’s no. laws to fall back on.

So that means that if you didn’t figure it out ahead of time and now you’re faced with the problem, unfortunately you’re probably going to end up in court and a judge is going to decide for you so that can get very expensive, so you don’t want to end up there.

Corporations, on the other hand, are much more structure than an LLC, so if you think about a corporation, usually think of a bigger entity, but not necessarily t doesn’t have to be, and even around here, Delaware has a close corporation which is a corporation that is closely held, so it’s only so many members are so many stockholders are allowed to be had. So a lot of family businesses will use a close corporation and even some businesses that no, they’re not going to have a lot of owners or investors will also do something like that as well.

So there’s options.

Corporation, you have to have bylaws.

You have to have an annual meeting.

You have shareholders.

You have stocks.

There’s a lot more that goes on with a corporation.

But the benefit there is that it’s very hard to mix a corporation with your personal assets.

There’s also some great tax benefits depending upon what kind of company you are and what level you are with the corporation.

And then from the point of view of more established businesses, you may have formed as an LLC, or you may have already formed as a corporation.

But there are times in the life cycle of a business where you want to change the entity type that you are.

Or like I mentioned, I have a couple clients that just moved to Florida.

They want to move the state in which they’re filing because they want to file taxes in that state, not in Pennsylvania, New Jersey, wherever they moved from.

So as an established business, it’s also good to take a look at what is your entity type and is it still working for you.

It’s very common to start out as an LLC, but then realize, oh, I would be better served if I was a corporation.

I would pay less in taxes if I was a corporation or I want to start bringing investors on and investors don’t want to be a member of my LLC, they want to own stock in a corporation.

So there is a period of time in most businesses where they do sit down and really have a conversation about you know we formed as this, but maybe we want to become this or maybe this will give us some benefits, either in running the business itself or from a tax perspective.

And on that note, I always tell my clients if you’re starting up, or if you’re having this conversation, it is a conversation with you the business owner with me as the attorney and then with your CPA or accountant because the other side of this is the tax side and I don’t know your tax situation.

I mean, I don’t know any of your tax situations today, but I generally won’t know my client’s tax situation, your account and your CPA knows that, and then the answer is going to be different for every person in every person’s situation.

So one part of this is what’s going to work best for you from a liability protection point of view, but also what’s going to work best for you from a tax point of view, and that’s your accountant or CPA.

So when we have this meeting to discuss, you know what type of entity you should be in or you should consider changing to it really is a conversation with me, your CPA or accountant and yourself.

So it sounds like you guys aren’t going to get the materials for a couple of days after but you are going to get all of the slides that you see here.

And you’re also going to get a worksheet, and the worksheet is called the business Entity Accountability Checklist.

And on this worksheet I have a couple of different things for you to work through to figure out if it’s time for you to consider any of these things.

So number one on this worksheet.

Actually, it’s not number one.

It’s a little check Mark Box that you can use.

It says I formed or will form this type of entity.

So it’s you expressing what type of entity your business is and then underneath I have homework and your homework is to locate your formation documents and I’ll tell a quick story because we’re talking about, you know, the foundation of business in a pandemic type of situation.

I can tell you that my clients, who had their entity documentation, they knew where it was, they had it updated, they had everything ready to go.

Those were the clients that got the PPP funding the first time around.

So I know a lot of people complain that big businesses took it all first time around.

Honestly, the businesses that had all of their documents in order were the first to get paid, and I saw this because I had a lot of people calling me up at that time, saying, hey, the PPP loan is requiring me to have formation documents, and I don’t I lost them, or I don’t have them anymore.

I’ve been in business for 30 tears, who knows where that is.

Or I haven’t formed yet. I didn’t form.

I have been running this business as a sole proprietorship, and I didn’t form and I didn’t do that yet.

What can I do now?

So that’s why we’re talking about this is is not only to prepare you for the future, but also to just let you know, like how valuable it is to have these things in order to know where they are, to have them ready to go because a lot of people missed an opportunity with that first PPP funding because they didn’t have this stuff in order.

So that’s the first thing on the checklist that you’re going to see and what I’m going to do is check in with Kiki and see if we have any questions about the entity types before we move on to the next thing.

So yes, we do have two questions.

One of the questions re do you still have to file in a state if your business is Internet based?

The answer to that is yes.

To be a formal business structure, you have to file an entity type.

In that situation it usually ends up being the state in which you personally live and work and do business, but yes.

Just because you’re an Internet business does not mean that you don’t want an entity to separate you from your business.

Awesome and the second question, could you talk about forming an LLC and Delaware?

Could a home-based business in Philadelphia Register in Delaware to take advantage of tax benefits?

So that is a question I get commonly and the answer to that is sort of and again I am not the tax person so I can’t give you the definitive answer.

But if you if you file in Delaware, you can take advantage of things in Delaware.

Unfortunately, if you are doing business in other states, you should be filing the fact that you are doing business in other states with that state.

So when it comes to tax time, if most of your revenues are generated within one state, it’s that state that’s going to want to tax you over another state.

Now, if you are pretty much doing all your business in Delaware and you just happened to, you know, all of your clients are in Delaware, for example but you just happen to run the business out of your home in Pennsylvania snd then it might be really beneficial to file it in Delaware.

You’ll have to have some sort of Delaware address, but it can be a registered agent address those you know are about $100 a year to maintain, but that might be a really good option for you.

So I like how you’re thinking.

You’re thinking strategically.

The answer is going to be you’re going to have to sit down with your attorney and your CPA to really find out what’s going to work best for you there.

Alright, we’ll do one more Luann she would like to know what’s involved in changing from a sole proprietorship to an LLC in the State of PA.

So it doesn’t take too much to change, we would file your limited liability company name with the state, and there we just need to make sure that the name is different from any other company that has prior registration in this state.

We file it and then we would go ahead and do the next two things we’re going to talk about.

Which is establish the Federal EIN number and then go ahead with your corporate documents. So pay attention and we’ll get into those in a minute.

We good?

Awesome yeah, we’re good.

All right, so we’re going to move on to the federal employer identification number. Some people call this FEIN. Most people say EIN, but if anyone says FEIN, EIN number or federal employer identification number. They’re talking about the same thing.

So the question here, test your knowledge. A federal employer identification number EIN is required to open a business bank account. What do you guys think?

True or false?

So that is true and move on here.

So what does this do?

So this is a federal level document that we are filing, so the state controls what your entity type is.

But the federal government needs your employer identification number.

Officially, you don’t need this.

You don’t need this until you have employees.

However, most companies go ahead and file for it right away.

Because this is another tick on that box of you and your business are two separate things in two separate buckets, and we’re going to keep them separated for the liability reasons we talked about before.

So what this is, it’s actually very easy to file a federal identification number.

It doesn’t take long at all.

We do need some information about you when we file one for you because it is linked to your Social Security number and the reason for this is just, God forbid if anything goes really wrong in the business and they need to find out who started this business?

You know, think like really bad security stuff which I know none of you guys will get into.

But they do need to be able to trace it back to a human being.

So we will need your Social Security number and it does connect to  your federal employer identification number, but only if necessary.

So for example, no one can pull up your Social Security number.

No one can even pull up your federal employer identification number, so these are these are kind of kept at the same level of secrecy when it comes.

To your personal information and your banking information.

But what this does for you besides, you know, putting another check mark as to you and your business or two separate things, but this is how the federal government knows what business you are and whether or not you’re paying your taxes.

Essentially what this comes down to is making sure that you know you’re paying your taxes, that’s what they want.

So the EIN you’ll file taxes under this number.

And you need this to open your business bank account.

So when you go to come to your bank to open up your you know to deposit your first check, what they’re going to need from you is some sort of state document, which is that entity and those are called articles of organization or articles of incorporation.

Depending upon if you’re, you know, starting an LLC or starting a company itself, a corporation.

But that’s like a usually a two page document. You’ll have to take that in with you.

You have to take in your federal employer identification number, which is usually a one or two page letter as well, and then you’ll need what we’re talking about next, which is your operating agreement, but this is how the bank identifies your business.

This is like a Social Security number for your business, essentially.

So this is how the Federal government is going to keep track of you.

This is how your bank is going to keep track of you if you’re applying for a loan, f you apply for PPP, all of that goes under this number, this EIN. And it’s the same amount of digits as your Social Security number, so most people just think of it as your businesses Social Security number.

So you and your business are two different things.

Two separate things.

Your business is filing its taxes.

You file yours.

Your business applies for its loan.

You file your own.

You know if you’re mortgaging your house or something, that’s your Social Security number, not your federal identification number.

But if you’re, you know, trying to get a line of credit or something from the bank that’s going to be your.

Federal identification number not your Social Security number.

Saying these words a lot.

So that’s an important piece to this as well.

It’s it’s pretty straightforward to file for it, but it is an important piece.

So on the business entity Accountability Checklist, the second thing I have on there is that you have you have filed or you’re going to file for your employer identification number.

Has a line there for you to write it in, so you have quick, easy reference to it.

And and you want to hold on to the paperwork you get from the IRS.

So as I said, it’s usually a one to two page letter, just depending on if it signature page pushes to the second  page of it, but that letter is very important if you lose that letter, you can get it replaced, but it is not an easy task.

To get it replaced because it is like your Social Security number.

They don’t give it out to just anyone, so you have to go through a whole.

Verification process so that they know that they’re giving it to the right person.

But again, this happened with the PPP money came out.

People lost that letter they didn’t have that letter anymore.

And what they needed to do was go and call the IRS at a time when the IRS wasn’t there because they sent everybody home and they were trying to figure out how to forward calls.

And you know, if you dealt with it, you know what I’m talking about.

But essentially it was hard to get a human on the phone if you could get a human on the phone.

They didn’t even know how to generate the letters working from home.

So it was it was a mess, so this is part of your foundation, this is why we’re talking about this now.

God forbid you know hopefully we don’t have another pandemic or anything any other disaster like it.

But if you have this stuff handy and you know where it is and you’ve got it together and you’re organized, I promise you you will be able to jump on opportunities faster and better and you’ll be a stronger business at the end.

And while I’m talking about it just because I’m working on this for another client.

When I put together formation documents for my clients, I give them a binder.

It’s nothing super fancy, it’s just a little binder.

I put their name on the front, but I have tabs inside and I have a copy of everything in there for them so that they keep it organized so I have a tab for the articles of organization.

I have a tab for the federal employer identification letter we just talked about.

I have a tab for the operating agreement and I will you know we’ll talk about that in a minute, and then I have a tab for their trademark registration and any important contracts and agreements

So that they keep it you know it’s a good start, it keeps it all in one place for them.

And really, that’s if it’s if it’s electronic, that’s fine.

If it’s in a physical binder, that’s fine.

Just make sure you know where it is.

That’s like if you walk away with nothing today it’s make sure you know where your foundational documents exist.

So I’ll take a break, take asip of water and are there any questions?

About the federal employer identification number.

Yep, so we have four questions here, Melissa.

She would like to know.

I registered as an LLC in PA.

Could I register the same business in Delaware?

So you don’t need to, you don’t need to register a separate entity.

What it’s a called like a doing business in that state.

And if you’re, it depends on what your goals are, so I’m not totally sure what I guess I’m not sure exactly what you’re asking with this question, but once you have your entity formed in one state, you don’t have to form a brand new entity in any other state.

But there is a way for you to register in other States and it just kind of like connects to your registration in whatever state is your original state of registration?

Hopefully that made sense.

That did.

Next question, are there any other risk to your personal assets when you link your personal Social Security number with your EIN?

So there are no risks as long as you do it the right way.

Th reason why you need a Social Security number attached to the EIN is in that odd situation where like I said you did some kind of fraud or securities something or other and they need to eventually figure out who you are, but generally speaking there’s no other reason why they would need to go and find out who you are or what your Social Security number is personally.

Awesome, next question. If you decide to not run your business anymore, how do you shut down your EIN?

Oh, that’s a whole process.

There are steps to closing a business.

You have to let at the state level you have to let the state know some states let you go easier than others. I know I’m in Pennsylvania so I obviously do a lot of work in Pennsylvania.

Pennsylvania wants a lot of documentation to be able to close, and it all revolves around making sure that you have paid all and any taxes that might be due to the state of Pennsylvania, so, but it takes them a long time to kind of rubber stamp whatever it is we submit to them.

When it comes to the EIN, what you do to kind of finalize that is on your last tax return there’s a box somewhere on there that says this is the final return.

Check that and then that’s how the IRS knows that this is the final return and that this company EIN, it’ll still be connected to you.

I don’t know how long it takes for them to like kind of clean it and then recycle it. So it will still be linked to you for quite some time, but that lets them know that no more taxes are coming, that the business is essentially nonfunctioning anymore.

So I hope that’s clear.

Awesome Louann, I would like to know if you have an EIN as a sole proprietorship and change to an LLC, do you amend the EIN number you already have, or pull a new number and do what you and do what with your old number?

So you usually can keep the same number.

There are situations and there’s a ruling on this of when you need to ask for a new number.

If there is a change in ownership like a large change in ownership like you sell your company to somebody new. They will ask for a new EIN in that situation. And that’s good for you because if you sold your company, you don’t want anything coming back to you, so you want that new owner to get a new EIN and kind of start it fresh again.

So there are some situations where you would need a new one.

Right now it’s kind of back and forth on if you move to a new state and are filing a new entity in a new state.

If you need a new one, it depends on the state right now, so that’s a little fuzzy.

But we can figure that out for tour specific situation

But generally speaking, you do not need a new EIN, we can usually keep it, keep it going because on honestly, your history is linked to that. Your businesses history is linked to that in.

So if you’ve been in business for 10 years and you ask for a loan, they’re like they can look back and see that you’ve been in business for 10 years and they’re going to give you the loan.

Whereas if you get a new EIN and they’re not going to see that history anymore, so it’s kind of like you’re starting from scratch from a financial and banking point of view.

All right, and Ashley Clark she would like to know what are the negatives and positives of having an EIN without employees?

And then she asked, I closed a business about a month before COVID in PA.

Would I be able to open the business again and use COVID relief benefits?

The first question about the EIN, and if there’s any benefits or negatives with employees.

Basically you have to have one if you have employees just because you’re filing employee payroll taxes and things like that.

To not have one and not have employees, I would still have one.

If you have a business, if you have any kind of income coming in that’ not specifically coming directly to you as a W2 or as a 1099 employee then I would go ahead and get the EIN like I said in the beginning it just helps separate you from your business and you have that much more protection.

The second question I do not have a specific answer to. We’d have to talk probably offline and get some more information to be able to answer that.

Because if you were closed during when most of the relief was offered I don’t know if you can go back in time and I don’t know if I would even know that that might be a better question for an accountant or CPA who’s very familiar wiith the relief efforts.

Sorry about that.

Alrighty, that was the last question.

Okay.

Well let us move on to the governing documents and of course another question for you guys to think about.

Operating agreements and bylaws are just templates.

True or false?

And I’m guessing you are going to think, hey an attorney probably would say false, and yes, that is the answer.

You can obviously and definitely use a template.

There’s no law against using templates.

But templates are they can be a very good starting place, but they need to be adjusted, updated, revised for you and your business.

If there’s anything I’ve learned working with business owners over the last seven years, it’s that there are so many different types of businesses, so many and there’s businesses that like I didn’t even — I couldn’t even comprehend existed.

I have a client who makes millions of dollars and all his business is is cutting tubes to a certain length and then he sells them on the Internet and they have different ends on them.

And he makes millions of dollars doing it.  I couldn’t have imagined that.

And I, you know, obviously wish I had because I’d be a millionaire right now.

But every business is different.

Every business has a different reason for why they do what they do and how they do it is different and that’s what keeps my job so interesting.  There are no two businesses that are exactly the same or run by the same person.

So operating agreements and bylaws are what we’re going to talk about next.

And there are a lot of templates out there.

There are a lot of places to get them, but what you really need to do is make sure that they are adjusted for your business.

And so let’s get a little bit more specific here.

If you have an LLC, what you have go along with that is called an operating agreement.

And essentially this is a contract between you as the member of the LLC and the LLC as the company.

And this contract says how the LLC is going to be governed.

What’s going to happen?

How are the decisions going to be made and who makes them?

So essentially this document goes through and gives you the person the member of the LLC permission to open a bank account.

Permission to write checks from that bank account.

Permission to make important decisions for the company.

Permission to hire employees.

And in return it gives you there’s a statement at least a one paragraph statement in there, but maybe more stating that  you are working on behalf of the company on behalf of that LLC.

And so the LLC will indemnify you.

And that’s that liability piece that separates you from the company.

So it’s an agreement between you and the company where the company is asking you to do things on behalf of the company, but in return, the company says if anything happens, it’s on me it’s not on you as the person as the member.

So this is a very important document to have should anything go wrong.

It’s also very important to have if you have partners, because this explains what the different partners are responsible for and what they get out of this.

What is their ownership interest?

Are they are you 50/50 partners do you have three partners? Are you 33, 33, and 33?

Or are you — you know one is 50, one is 20, one is 30.

What does that look like?

What does that mean?

And then what happens if one partner wants to leave?

Are they allowed to leave?

If they leave, do you have to give them money?

If they leave, do you get their shares?

Does the other member get their shares or does the company get their shares and you have to find another member?

So there’s a lot of pieces in this operating agreement that are different and are tweaked and are really focused on how you want to run your company.

And earlier if you remember I said that if you form an LLC, there’s some great pros and some great cons and it’s that the law doesn’t say much about LLC’s.

So the pro there remember is that you can have this operating agreement run however you want it to.

It’s up to you.

How do we want this company to run?

Who’s making the decisions?

What level of decision is made by who?

But on the other hand, there is not much in the law on this.

So if you don’t have an operating agreement, if you don’t write it and you have partners and you can’t agree on something there’s no law to go to that says, well, what do we do in this situation?

It just doesn’t exist.

It’s up to you, so that’s the situation where you find yourself fighting and you might find yourself in court in front of a judge, which is not where I want any of my clients to be because between you and me, the only one that wins in that situation is the attorney.

That’s my goal. I don’t do litigation.

I don’t want my clients to go there.

I’m looking for the win win situation in everything.

So that’s the operating agreement.

When you have a company or a company like structure, that’s where you hear about the bylaws, the minutes, the resolutions, the annual meetings, the stocks, the shareholders, all of that.

So it is much more complicated, but essentially the bylaws are the same as the operating agreement.

That’s the list of how does this company run?

Who is how many votes does so and so have?

How many voting classes are there?

You can have member or you can have shareholders that have no voting privileges.

They just take dividends and then you can have shareholders that have more voting.

There’s a thousand different ways to slice it.

So what happens?

When does that annual meeting happen?

Is there a board of directors?

How many sit on the board of directors?

How many people do you need?

What if a board of directors leaves?

How do they leave?

Do they have to resign?

Do they have to get voted off?

How does that work?

If we need a new one who votes them on?

Do the shareholders vote?

Do the directors vote?

So tere’s a million little questions in there that are customizable to your company and what you need it to read what you need it to be like.

And some of those are, you know, decisions that you want to make based on maybe you have a closely held corporation you know, and it’s really about keeping it tight.

Keeping it for your family, not letting outsiders in.

Or you could be trying to attract investors so you know what you want to attract people in and you wanna make it easy as pie for them to buy into your company.

So depending upon what tour goals are these bylaws can look very different, so if you pick up a template for one situation and you’re trying to use it, it might not. apply to what you’re trying to do, and it might you know it might actually make your business grow slower.

It might stop you up and we don’t want that to happen.

So the minutes and resolutions piece they become sort of like the law of your company like the bylaws, but they happen over time.

So for example, you want to hire A new a new president or a new CEO or something you will have a meeting with your board of directors.

Let’s say that’s who’s given the the job of electing this officer.

You’ll have that meeting.

They will make a resolution.

And they’ll vote on it, whatever.

If it’s majority or supermajority, whatever you decide has to agree.

Once they agree that’s the resolution is written, it’s sealed with your corporate seal and put in your records.

So now it is sort of like the laws of your company.

And they can be, you know, changed and tweaked along the road as you need, but know that both of these documents, the bigger decisions have to be made upfront.

And the bigger decisions are the voting.

Are what happens if an important player in this passes away or becomes unable to serve anymore, so those things you can’t decide at the time of the event.

You can’t figure out how to vote when you’re trying to vote on something, you have to already know that you already have to have agreed to that.

So it’s a very important up front to figure that out with you with your partners with whoever is running this company, so that it doesn’t become an argument later on.

Essentially, we’re just trying to avoid any arguments later on.

If it’s clear, then we can proceed exactly as we intended to.

So as you are growing your company and making changes an operating agreement can be revised.

They’re often revised when a new partner comes in.

You know, sometimes it’s just you and you want to have a partner come in.

Okay.  That’s a good time to revise your operating agreement.

Or you, you know you are a partnership with a couple people, but you want to let some more in.

Okay, well now you might want to tweak somethings because now how are you going to vote?

If there’s five people, whereas before there was three and it was easy to agree, now it’s five and we have to, you know, assign everybody.

Do they vote?

Does each of the five have one vote, and then it’s you know majority wins?

3 versus 2?

Or does it depend on the percentages?

You know I own 50%, so my vote means more than you who will only own 10%.

Maybe I don’t know it depends on how we wrote the operating agreement.

So sometimes changes have to be made as time goes on.

The problem is if you have that situation that I was just talking about where you have three partners and you’re updating your operating agreement to have more partners come in.

You know getting those three to decide on what those changes are going to be is hard, and it gets harder the more people you have, the more fingers in the pot so to speak.

It will get more and more difficult to change the important parts.

So that’s why it’s so important to get that right up front.

So on your business accountability checklist, the third thing I have there is that you can check off that you have a complete and signed.

Can’t tell you how many of these I’ve seen that are not signed, not dated, so they never were really formally put into action.

So you have a signed copy of your operating agreement for LLC’s or your corporate bylaws and minutes for corporations.

And then your homework with that one is to make sure you’ve got them in a good location, you know where they are and review them to make sure they they are up to date and reflect your company’s current structure.

And don’t be shy, it’s okay, I have clients all the time that come to me.

You know they printed out a template, they didn’t sign i.

I have a client right now who’s trying to add on two partners, their corporation. They formed the entity they got the EIN, but they didn’t do this step, so we’re now writing the bylaws, and then we’re immediately amending them to make them up to date for now.

So you’re going to have to do it sooner or later.

You might as well do it, you know, do it now.

Do it while you’re starting or you know, pick up the pieces now and just get it done because you’re going to have to do it at some point or other in the future when you want to make changes, so just get it done now and then you know it’ll be done and it’ll be something off your mind.

So I’ll take a break there and see what you guys have as far as questions about the governing documents.

All right, so Christian would like to know can I form a partnership business between myself and an existing business I created?

Probably, but that depends on your state.

A business can be a partner generally speaking in other businesses.

And that’s how people make like holding companies and then there’s multiple companies underneath, so a business is sort of treated as its own person in that sense.

Awesome. Angelique would like to know when first opening up is it better to start with a sole proprietorship or an LLC?

Probably an LLC in that situation.

When you’re starting, you want to start immediately. If you know you’re running a business and it’s not just a hobby you want to create that entity and separate yourself from the business.

So I would say in that situation, yes, you want to form an LLC sooner than later.

Awesome, last one. Is it possible to form a for profit subsidiary or a nonprofit entity?

I don’t know that I understand that question, but you can form for profits and you can form not for profits.

Not for profits.

I didn’t really touch on here, but that’s a corporation type.

There are no not for profit limited liability companies.

All right and that’s the questions.

So I know we’re getting close to the end here.

So the last thing I just want to touch on is when to review.

Because as your business grows, you know these things need to be looked at to make sure that they are keeping up with the growth of your business.

So our last question is, business owners should evaluate foundational documents and entity formation every year, true or false?

And because I sort of just said it.

Yes, it’s true.

And maybe even more often.

So the last question, the last two checkboxes I have on the business entity Accountability Checklist for you guys is that you’ve reviewed everything with your CPA and you’ve reviewed everything with your attorney.

And what I say is in the last year or if I have had a change or pivot in my business which we’ve seen a lot of changes on a lot of pivots because of COVID.

Within two weeks of that change or pivot.

It’s good to like keep that in your mind.

If it’s a little longer than two weeks, it’s fine, but try to reach out to your CPA and your attorney within a few weeks of any major changes because your attorney can help you make sure that you’re protecting whatever it is you came up with.

And your accountant and CPA can make sure that there isn’t going to be any tax surprises at the end of the year.

Or maybe there’s an opportunity that you can now take advantage of that you couldn’t before.

So you really want to keep your you want to keep your core team up and keep them knowing of any changes that are going on.

And then here on this slide, I just have every year ask yourself, and this is just kind of like to jog your memory, did you change locations?

Did you start operating under a new name?

Do you have a different way of doing operations?

Any new ventures?

Any new collaborations with people, new products, new services, or even tweaking of current products and services?

So this is just kind if a little list that you’ll have to jog your memory at the.

End of each year.

So that’s all I have for you guys, if there’s any more questions, I’m happy to answer them, but I appreciate you coming and hopefully  I’ve given you guys some good information today if you want any more information about working with me, I do offer what we call our strategic legal solutions, which is our proprietary method of taking clients from kind of this unknown unsure up to being very protected and very secure and able to sleep at night because they know everything is being taken care of.

And we include all of the privileged attorney client communications and we also include work time, so it’s a quarterly subscription program that we have that’s pretty affordable, and our clients seem to love it to really get from point A to point B in a very organized way.

So if you have any questions, feel free to have a consultation with me.

And if there’s any other questions Iguess let me know Kiki.

Awesome, awesome, awesome.

What a great presentation Janelle.  Thank you so much for providing all that knowledgeable information to us today.

I think everyone found that very useful and helpful as you all start to put your questions in the Q&A for Janelle, I just posted a link to our one minute survey in the chat.

We ask that you guys provide us with feedback so we can continue to offer these webinars to you all at no cost.

I also posted a list of some of our upcoming events.

We have a wonderful business resiliency series starting up on June 3rd, so make sure you grab those links and get registered for that event and and we’ll wait around for a second to see if anyone has questions.

Janelle she just posted her email address in the chat, so if you want to reach out to Janelle about consulting services, please make sure you grab her information.

We will send out her information to you all three to five business days after today’s event.

Looks like we just Oh well, you’re welcome, Luanne.

Yeah, well it doesn’t look like anyone has any questions.

I can’t believe no one has questions.

I have s question when does the holiday weekend start?

It starts tomorrow at 1:00 o’clock.

I am super excited.

You know it’s like the first weekend that we’ve really had you know with people being vaccinated and you know just kind of just being able to get back outside and like enjoy the weather.

And maybe like the beach and stuff like that.

So I’m looking forward to this weekend.

It looks like Ashley has a question.

If you have several businesses you want to open, what should you do?

Well, go ahead and open them Ashley.

It really depends on the business types that you’re opening.

If they’re all similar or fall in a similar industry, then maybe we want to have a holding company with all of the separate branches in it.

If it’s completely different industries, we might want to break it up and just have it be very separate companies, but can definitely sit down and talk you through that.

That’s also again another conversation where we’d have to bring the CPA be counting in to know what the tax consequences are going to look like with that as well.

Awesome. Angelique.

She made a comment.

She says she wants to learn all the business lingo.

Well Angelique, if you send Janelle an email or if you send Temple SBDC an email or even fill out a application on our website.

We’ll be able to teach you all of the lingo that you will need in order to be a successful entrepreneur.

Ashley, she wanted to know should you open one name with several fictitious names.

Maybe one business with several fictitious names?

You could.

It really just depends on what your goals are with marketing because the fictitious names are more brand names, so if it applies in your situation that you would have you know, like, think of like a snack company.

The company is whatever the company is, but then they have brands and different names for each of their types of snacks like they might have chips and they have different names for their different types of chips.

And then they might have, I don’t know cookies or something else.

So keep that in mind when you’re thinking this through, but I think you’re asking very good questions.

The next anonymous attendee they would like to know.

I registered a business with the state of PA as an LLC, but I never started working the business.

What should I do?

We can get you -well, go ahead Janelle.

Yeah, I was just going to say if it’s in the state of Pennsylvania.

I think it’s five years.

If it hasn’t been five years, then it’s very easy to just close it down if that’s what you’re looking to do.

But after five years is when it gets a little bit more complicated.

Like I said before, there’s multiple steps.

But the SBDC is a great resource.

I use them all the time.

Even as an established business, so they have a lot of these answers for you guys as well.

So don’t hesitate to use them.

And if you look through the chat, I posted up our email address as well as links to our application.

So if you want to get connected with the consultant, we’re here.

You just got to get the application in and then we’ll get you connected with someone.

Angelique, she would like to know I am new to opening up and don’t know all the legal terms and how do I file what I need to express legally?

You probably need to hire an attorney to help you.

I went through three years of law school to understand the legal terms.

And I can tell you that it takes awhile to understand everything.

I am not from a family of attorneys.

I am not.

I was the first person in my family to go to college so I didn’t come from a place of already knowing pretty much anything.

So it took a while to really wrap my head around this.

And that’s why I started out in the beginning talking about the four different kind of pillars that I’ve built my business on.

And it really, it really all comes together because I was also an entrepreneur, so I understand the questions that you’re asking and I know that you feel like you should be able to understand this and it’s your business and you should really, you should know all of these aspects and you know what you can know all of these aspects, but it just takes so much time.

So what I’ve learned as a business owner is that if I can delegate some of the stuff that I have on my plate to people who can do it better, faster, you know, whatever than me and I trust those people, then that is really the best way to grow my business.

So I would encourage you to don’t worry about learning all of the nitty gritty of legal and find someone that you trust to work with and hand it over to them because they if they’re a good person and part of building trust is going to be, they’re going to explain it to you without legal terms.

So I you know I’m trained in this, so I use them, but I try not to.

I try to keep it as simple and straightforward as possible.

And what you need to do is more than anything else and the people that are going to help you grow.

And you know what?

They’ll growwith you.

And that’s part of this business community and what it’s all about.

That was great advice, Janelle.

That was absolutely wonderful advice because I know a lot of people they tend to feel overwhelmed in the beginning stages of starting up a business.

So that was that was really awesome.

Thank you for that.

Sean, he has a question or she I’m so sorry I forgot your pronoun wrong.

Do you recommend keeping the business entity separate when working with the government as a contractor?

I don’t know what the business entities are that you’re mentioning, whether it’s just working with the government versus working with B to B or B to C.

But sometimes, yes, it makes sense to keep them separate.

Sometimes it doesn’t matter, so I would I’d have to explore that a little bit more with you.

And again, I know I keep saying this over and over again, but there might be a tax piece to that as well that you want to think about.

I know hat a lot of companies right now are splitting off their software if they have software or any kind of digital products, they tend to separate that off from services because those pieces of the company will sell for a much higher multiple than services companies will.

So another way to look at this is as you you know, as you’re growing something, what is the what is the end goal?

What is the end game?

Because if you’re getting ready to sell something, you can look at it and say, well, you know if it’s, you know all mixed together under one company name, maybe if I break it apart, maybe if I break this piece off, that piece is going to sell for a lot more.

So another way to look at things, and I know I’m not giving you guys very specific answers but I don’t know your specific situations.

So I’m just trying to be helpful.

You are very helpful.

Sean. I just sent over Janelle’s email address to you. It may be easier for you all to reach out to her one on one.

We are running up on that one o’clock hour, so for any additional questions that you all have, please reach out to Janelle one on one she will be glad to answer any other additional questions.

That you may have, I just posted her email address in the chat as well as reach out to Temple SBDC.

Like Janelle said we’re here, we’re here to help.

We offer no cost consulting services.

We have a ton of webinars, legal webinars on our YouTube channel you can check out some of the information there as well.

You may get a little bit more clarification there as well, but yep, at this time I am going to make the executive decision to say we are going to end this webinar right here.

We thank you all for all your questions.

We thank you for your participation, Janelle.

Any last minute words of advice to our attendees.

Just thank you and you guys have a great Memorial Day weekend. Know that you guys are the backbone of this nation with your small business and your medium sized businesses.

And I’m here to support you and root you on and if there’s anything I can do, let me know.

Awesome, thank you, Janelle again and we look forward to you doing future webinars for in the future.

Absolutely, take care.

Bye bye.

Next Steps

If you know anyone who could benefit from this information, please feel free to share the link: https://www.youtube.com/watch?v=dYYDldWrL94.

If you would like to learn more about any of the topics mentioned here, please call or text 484-801-0021 or reach out to Cassandra Ortner at cassandra.ortner@peytonlaw.com. We proudly support the nation’s business owners.

*Janelle Peyton is the CEO and Managing Partner of Peyton Law, a leading boutique law firm designed to provide the highest quality branding, business, and legal services to companies via quarterly subscription called Strategic Legal Solution. Peyton Law offers brand building strategies through corporate and intellectual property law, including business entity formation, buy+sell, contracts, joint ventures, trademarks, patents, licensing, and other growth-related transactions.

December 21, 2021/0 Comments/by Janelle Peyton
https://peytonlaw.com/wp-content/uploads/2021/12/A-Gift-Free-Educational-Series.png 1260 2240 Janelle Peyton https://peytonlaw.com/wp-content/uploads/2021/06/Peyton-Law-Main-Logo-1-1030x303.png Janelle Peyton2021-12-21 12:14:522022-01-26 11:35:48Free Education Series #2: “Business Foundations – You Need This to Survive in Times of Change”
Business

Free Education Series #1: “P.I.V.O.T. – An Acronym for Business Success”

Free Education SeriesPivoting means changing direction or reinventing an essential part of a business to improve revenue or stand out in a competitive market. Pivot could include changing platforms, focusing on a new audience, employing new revenue models, or using new technology.

When should a business pivot? When they hit a plateau in development, when they are swamped with competition, if they are receiving lukewarm customer responses to products or services offered, or if they are preparing to sell (increase the value of their business).

PIVOT stands for: Presence, Innovation, Ventures, Others, and Terms.

Welcome, happy what is today Tuesday, you know welcome, thank you for joining us on your lunch break.  This is a great session in our legal consideration series that will be presented by Janelle Peyton who was partnering with us here at Temple SBC to put this together.

If you are not familiar with the Temple SBDC, this is your first time receiving services from us, we are a nonprofit funded by the federal, state and local government.

We are hosted here at Temple University and we’re actually one of over 1000 SBDC’s in a nationally accredited network, there are 16 SBDC’s in Pennsylvania, and since we’re located here in Philadelphia, we focus on the Philadelphia region as well as eastern Montgomery and lower Bucks County.

We offer a variety of services, namely, we are known for our one-on-one consulting.  So if after today’s session you would like some additional steps with your business, you can sign up for one on one counseling with any of our advisors at absolutely no cost to you.

We also have a variety of webinars as most of you have probably seen on our website.  It really runs the gamut from webinars such as today which are about legal considerations. We have a ton on social media marketing, digital marketing.  Food, Business series, restaurants manufacturing series.  So it really runs the gamut, and I highly encourage you to check out what else is available to you and keep a lookout for the rest of our legal consideration series.

We’ll be doing one of these every month, so with that said, I’m going to go ahead and have Janelle introduce herself and take us away.

Hello everyone, I am going to pull up my slides here.

If I can have permission that would be good.

There we go.

Sorry about that, sorry.

That’s all right.

All right?

Can you see my slides?

Yep alright perfect so you know you have to do the bio slide, right?

But really, there’s three things to keep in mind, or three things that you should know about me.

One is I’ve been doing this for about 20 years now, won some awards. Blogs, got featured on different news news, places that you would recognize ABC, Fox, things like that.

So basically I’ve done this before. I’ve been around the block and I know what I’m talking about that’s that piece if it.  You should also know that I was a business owner before I was an attorney, so when I speak to small business owners and when I help my small business clients, I’m really helping them from a position of understanding where they’re at.

My first company was in millwork installation and it was in Philly and Southern Jersey area mostly, and Mark carpenters did amazing work and it was a lot of fun to work with them so I come, everything I do and everything I help my clients with really comes from a position of how can I help them in their small business and sometimes I have to take my legal head off and help them from more of a small business point of view and help them decide maybe what the best option is for them given whatever they’re dealing with at the moment.

The third thing that you should know about me is my why.  So why am I doing this?  Why do I have a law firm? Why do I help small businesses?  And the reason is that I feel very strongly that our nation and our nation’s economy is founded on business and small business and without a strong small business and medium sized business community I don’t think our country would be what it is today.

So if there’s anything that I can do to help small business and to help that community, that’s really where I want to spend my time.

So I’ve created my company around helping small and medium sized companies figure out the legal piece of what they’re doing and trying to make it a little bit less tedious and a little bit more fun and a little bit more straightforward than maybe your larger law firms would treat people.

So that’s what you need to take away from this.

But this program is called pivoting in a pandemic, rights so I tend to want to look at the positives and not the negatives. So we’re crossing out, pivoting in a pandemic, and we’re are going to think about our goal, which is business success. So pivot to business success.

That’s what we’re going to focus on today. And obviously we should probably start with the definition of pivot now I recognize that we didn’t talk about pivoting, we didn’t hear much about it until this pandemic started and then everything was about pivot, pivot, pivot.

So you’re almost hearing it more than more than anybody really needs to, but what is it really? It is just that we are changing in direction in your business or reinventing a part of the business.

And the  purpose is generally speaking to improve your revenue or to stand out in some way, which you know would hopefully end up in improving your revenue.

But we don’t really talk about the why and how it really happens on a much more regular basis than anyone talks about.

We are small businesses.

We are medium sized businesses, and we can change direction.

We can change our minds whenever we want.

We don’t have a lot of red tape or bureaucracy inside of our businesses and that’s why we operate in the space that we operate in for the most part,

So what we’re doing with that is we can make tweaks and changes along the way all the time.

So whether or not we want to use pivot as a term, you know it’s the term of the times, but whether or not we really want to focus on that, it’s we make changes.

We make adjustments, we change as our clients change as the economy changes, and we’re really good at it, and that’s one of the things I love about small and medium sized businesses, we are really good at this if we can figure it out, we can change on a dime. And that’s how businesses explode. That’s how growth happens.

So I know pivot, you know it’s been said and it’s kind of annoying to hear at this point in time.

But really, that’s all it is.

The changes that you make on a daily basis.

So what types of pivots are there?

You know there’s changing platforms.

There’s focusing on a new audience or a new customer.

Employing new revenue models using new technology.

There’s all different ways we can pivot.

Sometimes it’s a smaller decision, sometimes it’s something larger, but really we it’s just a change.

It’s just a decision to make a change.

So when do people pivot?

When do businesses pivot?

Oftentimes they’ve hit some sort of plateau in their development.

The competition caught up and now they’re swamped.

They aren’t different anymore.

They are not receiving their responses that they want to their products or services, or you know some things have changed and now they aren’t receiving their responses that they want.

Or they’re preparing to sell.

In the negative, maybe.

Maybe they’re not doing so well, and that’s what brought about a lot of change in the pandemic was we couldn’t operate in business the way that we used to, so we had to change to stay alive.

But there’s also a lot of businesses right now preparing to sell and so part of that is how can they make their business as valuable as possible before they sell. So they’re even pivoting as they’re you know, preparing to leave the business or sell it.

So moral of the story here is that pivoting is a natural form of evolution in pretty much every type of business.

There’s going to be some changes.

There’s going to be at least small pivots, if not large ones, so as much as we are going to use the word pivot, really, we’re just talking about any kind of change or decision that you may make in your business to hopefully find a better a better outcome.

So what I did was I broke pivot into an acronym, because that’s fun, right?

So we have we have five different areas of law that go with each of the letters of pivot, and we’re going to go through these one by one and Sarah said at the beginning of this meeting that we have a worksheet that went out to everyone.

So what we’re going to do is that us a worksheet that’s also going to follow what we’re talking about today.

So hopefully I would love for you to leave this talk with some really quality good information and a good understanding of what you can then take back to your business and back to your business attorney and have an intelligent conversation about some changes that you might need to make or some things that you just might need to wrap your head around so that you can make the best decisions moving forward.

So what we’re going to do is we’re going to go through each of these five. At the end of each I’m going to take a little break and see if there’s any questions, so feel free to throw your questions into the chat box or into the Q&A. I know Sarah is keeping an eye on those for us.

So let’s get started. P.  P stands for Presence, not the kind under the Christmas tree.

Sorry I had to say it.  I’m thinking brand presence here.

So I say intellectual property is often a business’s is most valuable asset.

Let’s think about that for a second.  Intellectual property.

Intangible stuff you can’t touch is often a business most valuable asset.

Many businesses don’t even recognize that they have intangible property or intangible assets in their business, and the question I would pose to them and pose to any of you listening out there is, do you have a client list?

If you have a client list you have something worth protecting and that is intellectual property right there.

So pretty much every business in some form or another has some sort of intellectual property that they should protect whether or not they protect it with fancy patents that cost hundreds of thousands of dollars, or keep it a secret is another question, but it’s there they have it.

So the P, the brand presence piece of this.

There’s actually two pieces, the P and the I, we’re both going to talk about intellectual property with those, but I kind of break it into two sections.

There is the brand presence. So this is what you are portraying to your clients to your potential partners to your, to your employees and your potential employees.

This is what does your company look like?

What do people think of when they hear your name when they see your logo?

So this is sort of the outward presence of your company and of your brand.

The inward looking is what we’re going to talk about in under the I and that is more the internal pieces of intellectual property that you might have.

So first of all, what are we talking about?  We’re talking about your brand name.

What is your name? How do people identify your widget versus somebody else’s? Or your sneaker versus somebody elses’s?

It’s your name.

And then it’s your logo and your taglines, and maybe your packaging.

Maybe you have colors that are associated with you, you know, think of the Tiffany blue.

That’s trademarked, no one else is allowed to package jewelry in that pale teal color because that is Tiffany’s color of blue.

So what is it about your company that makes it different from everybody elses that makes it stand out?

That makes your clients and your customers go, Oh, that’s who I think they are.

That’s that brand that I know or that’s that brand that I use, and I know who they are.

So why does this matter when you pivot when you change, sometimes you are changing your brand presence.

Sometimes you’re changing your products and your services.

Sometimes you’re adding a new product or service that might have a name.

It might have a logo, you know it might have a tagline.

It might be something new there.

So I want to get you thinking about what might be new, what changes have you made even in the in the last year, and pretty much every year you should think about this.

Just give yourself some time to go okay what changes happened in the last year and are things the same?

Did I change my logo?

Did I tweak that shade of green that I used to use?

Did I change my name from, you know 3 words and now I’m just going by the first word of the company name.

You know, so.

So think about those things.  Keep those you know once a year.

So just think them through.

Unless you’re planning a big strategic move, but think those through and go okay, is there any changes here that I might need to might need to take a look at.

And identifying new intellectual property assets the business has developed or may develop during a pivot is critical to protecting the company’s unique presence and brand in a competitive market.

So if you did make a change we want to make sure that that change is protected.

If you changed your name, if you tweaked your logo, it might need to be refiled or re-registered as a new trademark.

And right now with everybody going much more national in scope and even global in scope with their brand names, it’s very important that you know that you have the rights to your name, because if you used to be a regional company, you used to work in Eastern PA, let’s say, and now the Internet are now the pandemic and everybody used to being on Zoom now you can sell your services, for example to people in California.

Well, is there somebody doing business under a similar name as yours in California for the same goods and services?

I don’t know.

But before you start marketing out there, you should know because I would hate to see something happen where you’re infringing on somebody elses name and somebody elses trademarks, and then you get a cease and desist letter. So that’s why I want you thinking about these things.

Securing your ownership rights and registering your trademarks, service marks, copyrights.

Don’t worry about those words.

That’s my job, but keep in mind that securing your ownership rights is what you need to defend.

Your you know who you are, what makes you different from competitors?

So I tell people that we need to find the intellectual property in your business.

And don’t worry about what it’s called.

I will help with that.

First we have to pull it out.

We have to see it, identify it

Then we can use a tool to protect it and a trademark, a copyright those are just tools, so don’t worry about calling it by the right name. Those are all just tools that we have to use and one might work better for you.

One might work better for another person.

They have different protections around them and also different costs to achieve them.

So what you need specifically?

That’s a conversation that your attorney and you’ll need to have together to figure out what is the best fit.

But don’t worry about that now just worry about what.

Is it that you may have changed over the past year.

So I’m going to ask you now to take a look at your worksheet and you’ll see that at the very top of that we have P equals presence, which is what we just talked about.

And the question is, has anything changed regarding your brand, such as your brand name, logos, taglines, company colors, packaging, etc.

Make a note of it here.  And this is a checklist for you.

This is for you, you can use it again and again every year if you want or anytime you make a big change in your company, but this is a great way to just like make some little notes to yourself.

Then you’ve got it written down. You’ve got it in a place, and then as you bring it up with your accountant, your attorney, whoever, whoever is important to know this information, just check the little box.  Trying to make it easier.

So before we move on to I, I want to check in with Sarah and see if we have any questions.

Hi Janelle.  Great.

I’m loving this so far.

Tons of great information.

Definitely as a small business. I think a lot of people don’t realize intellectual property can affect them too.

So I’m loving this first P.

We don’t have any questions yet, but I do want to just let everyone know that I did put a copy of the worksheet in the chat so if you didn’t find it in your email you can also download it using the chat here in zoom.

And if you have any other questions, you are more than welcome to reach out to me and I can make sure you get ahold of that, but I do encourage you to fill it out as we walk through this presentation with Janelle and like I said and Janelle said, please, please, please if you have questions, that’s what we’re here for.

OK, so feel free to put them in the Q&A and we’ll get to them as we finish each of the letters, thanks.

So let’s go on to I

The I is for innovation and as I mentioned before this is also a piece of your intellectual property.

This is kind of if you if you think about the brand presence as what you’re showing to your clients to the world this is kind of what’s behind the scenes.

What’s inside your company?

Your employees will see this, but your customers might not have any idea about it.

And we’ll talk about that, but maybe they should.

So these are innovative ideas that allow many businesses to surge ahead of the competition and succeed.

So what do these look like? They’re all internal, so a client list like I mentioned before, that would be something that you would want to protect.

You know, if one of your employees walked off with this client list, you’d want to make sure that they couldn’t share it with anyone that they couldn’t use it.

You don’t want them to walk off with it and you know to begin with, so there’s ways to protect it.

It might be certain products or services.  Think about inventions.  You know if you are in the products industry, you may have invented a new way to package something.  A new kind of seal, a new kind of tape.

Anything really.

Maybe it’s a new stack.

Maybe it’s a new type of sauce that you’re selling in a grocery store.  Whatever it is that is something that you’ve developed so again, don’t worry initially about whether it should be patented or trademarked or copyrighted.

What we want to know is did you create something that nobody else knows, and if so what should we do to make sure, it stays yours.

So if it’s a recipe, for example, let’s keep it a trade secret perhaps.

Maybe the spice blend is only known by you, but the rest of the mix is known by all the employees and they know how to make it so we keep a piece of it separate, a piece of its secret.  Or maybe Kentucky fried chicken for example, is rumored to make the spice blend in one factory and make the coding for the chicken blend in a different factory and the employees are not allowed to get a job in the other factory ever.

So if you work in one you can never work in the other.

So that’s the way that they keep their ingredients, their ingredient lists, and their recipe completely secret.

The pieces may be known, but the whole thing is secret.

You hear the same thing about Coca Cola keeping the recipe you know in a safe  only one person in the whole company knows.

And trade secrets, guess what they cost?  They cost nothing.

They cost some planning time and maybe a safe if you’re going to lock it up, but they don’t cost anything, so it doesn’t just because we’re talking about intellectual property you don’t have to be seeing dollar signs here.

Some of the other things could be business methods and procedures.

I was on the phone with a client the other day and she said, oh like, just in passing oh I have a new way that I’m calculating how I’m charging people and it seems to really be working, I had a lot new clients come on. They love this.

So we talked about it a little bit.

Okay, well it’s an Excel spreadsheet.

With an algorithm that she came up with of how to price for the services that she offered.

And that’s something that she created and something nobody else in her industry is doing.

So guess what we need to password protect that Excel spreadsheet.

Only the people actually submitting the the quotes to the potential clients is going to be able to see that.

But that’s something inside of her business that you might not recognize.

You might not think about because you’re in it day-to-day as the business owner.

But that’s something that your business has figured out.

That’s omething that is different than anybody else.

So and the other thing here is technology.

And there’s others of course as well, but you think about technology you think about software.

That’s always new and always changing.

And there are some different ways to protect software and apps and things like that.

So keep all of those things in mind.

Whether it’s internal you know, maybe it’s a way for you to track your employees, your employee, vacation time.

Maybe it’s just something you use internally, that you’ve created.

Or maybe it’s something that you know you use to serve your clients in some way or another, but these are all the things that kind of make your business work the way it works.

So if there’s anything that you can say hey, that that thing is something that I do that nobody else does.

Well, let’s make sure it’s protected first of all, and then the other side of that and I do work with a lot of marketing companies the other side of that is let people know that you have something that no one else has.

Don’t tell them what it is but you’re allowed to have a proprietary business method.

You’re allowed to have a proprietary procedure for doing something, or a proprietary worksheet whatever it might be.

But as soon as you start talking about how you have these things that no one else has guess what?

The client trust in you or your customer trust in you goes through the roof.

So if we can find these things and we can pull them out, then you can make money off of them.

And that is honestly one of the things I do with my clients.

We sit down sometimes and it’s painless for them for you, as the business owner, it’s just a conversation but usually I can ask questions to pull out some things and understand what might be different about your business and then suggest like hey have you ever thought about this or tell me a little bit more about that and we end up discovering that there’s intellectual property there that the business owner didn’t even realize that they had.

And then we can capitalize on that.

And another thing we can do with it is we can license it and we can franchise it.

So that’s a whole other realm that we can that can pull some of these things out and use them to your benefit.

So I did talk a little bit about you want to ask, is it protectable and you want to think about other strategic considerations?

So before I talked a little bit about how these are we want to find the intellectual property pieces and then don’t worry about the tools. And I call — I say I have a toolbox of different things and it does range from trade secrets to trademarks and copyrights to patents to franchising and licensing, and things like that.

So those are all tools and those are all different ways that we can protect certain pieces of intellectual property.

But what we do is once we find these pieces of intellectual property we look at what is most valuable to your company and how can we protect it?

And then we prioritize them.

So we say, OK, well, this thing you know is very valuable, and it’s not going to cost that much to protect, so let’s go ahead and work that out.

Maybe it’s The Client List thing and we just need to make sure that the independent contractor agreements and the employee agreements that you have in place are strongly worded enough that they cannot walk away with your client list.

You know, not a big deal.

Maybe just a review of a couple contracts, maybe a few extra clauses thrown in and we’re good.

All the way up to oh, I invented this like new way to apply something to something else, and it’s an invention, but it’s also a business method for my manufacturing facility.

OK, that might be a patent that might take a little bit longer.

That might take a little bit more time, but let’s talk about it and figure out where that falls in the priorities.

The moral of the story here is that seeking professional help to determine the best protection fits both the companies needs and secures the idea will ensure that the legal components are completed correctly and really we just want to make sure that if you do go down this path of protecting what you’ve got, you know, because you made a pivot. You invented something new, tweaked something. You changed something. We just want to make sure that if you go ahead and work on protecting it, that that protection will hold for you and that you go into this process with eyes wide open so that you can understand what it is you’re getting out of this.

What is important to know and you know, maybe there are pieces of intellectual property that aren’t worth protecting because it’s just too expensive or it’s just not valuable enough to you.

That’s OK too, but let’s make sure we know that that that’s our decision on those things and we can focus on building up the others.

So that’s kind of the second side of the intellectual property piece of this.

If you take a look at your worksheet, you’ll see we have, you know the I for innovation and I ask has your company developed any new products, services, technologies or business processes and you know if you have, write the notes in there.

So same thing as before, we’re just going to go through and kind of list out some things that maybe has changed for you over the past year, but at the same time, think about Oh hey, I was you know I was thinking about, you, know, putting some effort into developing that other product.

Well as you do that now, you can be proactive about saying OK, well, that product you know it’s going to need a name. It’s going to need a logo.

It’s going to, you know, be constructed in a new way so we should be thinking about the intellectual property from the get go and making sure that only those people that are involved in the process understand hat it is we’re doing so that we can kind of keep things under wraps until we know what to protect and what we can kind of let out of the bag.

So I will pause.

There and see if we have any questions thus far.

Yeah we actually do, which is great, jeanelle.

So someone asking, what’s the investment to register your business name and logo?

So typical attorney answer.

Right, it depends.

Registering your business?

That depends on what type of entity, you’re going to form.

So if you do something like a limited liability company.

In most states that’s not very expensive but if you want to offer stock and form a corporation that is going to cost a little bit more to register.

But also to get all of the bylaws and all the corporate documents together for something like that.

So that’s one piece of it.

And then trade marking.

That piece it also, I hate saying it depends, but it also kind of depends on are you trade marking a name that is probably not in use and probably can be pushed through the system. Not pushed, but can get through the system very quickly.

Or is it something that you know is kind of similar to some other things so it might need a little bit of massaging.

And then are there logos associated with it?

Are there taglines associated with it?

So that scope just can increase a little bit, so it sort of depends on what you are what you’re looking to do and what type of entity and how large a scope of trade marking you need.

But yeah, I’d like to give you a better answer but I just I’m sorry.

We can chat offline.

Yeah, no, that that’s a good point and I  totally agree.

You know we are in a legal considerations webinar, right?

And as everyone here knows, like Janelle said it’s always going to be an it depends, especially since when we deal with small businesses, we’re dealing with people who are solopreneurs. We’re dealing with, you know, people have 10 employees people have100 employees and depending on what stage you’re at, is obviously going to change you know any of your legal considerations throughout the process, but like I said, you’re going to have Janelle’s information and you’re more than welcome to reach out to the Temple SBDC.  I’m going to put our email in the chat right now for those of you that don’t have it already and we can always set you up the consultant and we can speak specifically on your business as well in the future.

And I think we’re going to keep going, Janelle.

OK, sounds good.

So next is V. V is ventures. So here we’re thinking about joint ventures and partnerships. Negotiating creating new deals with potential joint venture partners can open businesses to entirely new, lucrative audiences.

So here we’re talking about things like Co marketing arrangements.

Maybe bundling products and services with other clients or other companies. Co producing those products and services or just new ventures overall.

I’ve noticed that with within the past year there’s been a lot of business owners that I’ve known come together to form completely new partnerships in sort of similar industries, but maybe not even exactly the same. So this V sort of covers anything from starting from scratch, starting something new with someone all the way to hey I am a business like for example I had a client who I don’t want to give out too much information, but they joined with another company, it’s similar, I know what I’ll say and they did something along the lines of grass seed.

They coupled with a company that did something on the lines of fertilizer for grass.

So they decided to produce a product together that included both.

They packaged it.

Both names were on there.

They marketed it, it went out.

So it’s things like that.

It’s these creative arrangements that happen when business owners get together or you start to notice that Oh my product sells better.

You know my salty chips sell much better when they’re sitting next to a bottle of water than when they’re sitting next to chocolate cookies.

You know, maybe you Co market.

Maybe you go in together with the water company and say OK, you know here buy a bottle of water, get a bag of chips for half price or something.

I don’t know what it is, but you get the idea.

There’s so many opportunities out there to work with other businesses and other companies in different ways.

And sometimes they are very just loose and like hey let’s do a sale together, and there’s not really anything to back up how the proceeds get split out or things like that, but in a lot of situations, especially in service businesses all of that needs to be spelled out ahead of time so that we know OK if we sell, you know, an individual coaching service along with the program then you know I get this percent of the proceeds and you get this percent of the proceeds and we cross market to our different lists and whatever things go on like that.

So there’s a lot of a lot of creative things going on in that world, and think about,  you know you see people have, and I’m missing the word for it right now, but influencers will promote other people’s products. Well they’re not doing that for free. They’re doing that because they’re getting paid for it or they’re getting some sort of revenue on the back end if they sell so many, they get so many dollars.

So or somebody comes through their link, they get credit for that.

So there’s a lot of a lot.

Of things going on in the world right now that are how can we work together? Not combine our companies. You know this is a project or this is just one product that we’re testing together.

Or maybe it’s a product that you know I’m tweaking the design a little bit, but I think your manufacturing company might be able to produce it in a different way, so I’m going to work with you on that.

So this is really thinking of thinking a little bit bigger, thinking creatively, thinking collaboratively with people that you know and people around you.

People in in your industry, even competitors I see come together on things sometimes.

One might have you know some little thing that they do better than everybody else so you know go to them and say, hey, you do that better than everybody else if if I can sell this with you or that you know, maybe we’ll both make more money, let’s try it.

OK, OK that’ awesome, that’s great. So these are happening a lot.

And I think this is the part of business that I really like because we’re not fighting with each other.

We’re trying to figure out how we can all make some more money together and how everybody can come together and get what they need out of these arrangements.

So there are many benefits of starting joint ventures like this, but it’s important to start with a legal agreement that clearly spells out the duties of each partner as well as terms identifying the details of how profits and losses will be divided contributions of each party and exit strategies. And as much as I see, these arrangements start to come together and I love seeing them, if there isn’t that language in place, if there isn’t a formal agreement in place, eventually these end. These arrangements and agreements oftentimes have an end date because it’s a promotional thing or because it’s a Co marketing thing.

It only goes on for so long.

Some of them last longer absolutely, but a lot of them have an end date.

But how do we split things up when it is an end date and we just want to make sure you know if you’re using my brand name on your product I want to have the rights back to my brand name even though I gave them to you to print on that package, you know, so there’s a lot of pieces that need to get worked out.

Just so at the end of this everyone can go their separate ways and make sure that everyone is happy with what happened and everyone thinks it’s fair so that you know maybe next month, come up with something new and they can work together again.

But what happens unfortunately when people don’t have the terms spelled out together is someone has a different expectation and they end up arguing about what that expectation was or should have been or should have and all that stuff.

So what we do, what my job really is is to pull out what is it hat the two companies are two people or company and people, whatever the the arrangement might be, what is it that they’re trying to accomplish, and how can I make sure that they’re both on the same page that we get it all in writing, and that when it’s time to end because someone sold their business or this is just the end date or something goes wrong, or it didn’t work, how do we get out in a graceful manner, making sure that everybody has what they need.

So if you take a look at your work sheet and the V is ventures.

Are you considering a joint venture Co marketing or producing new or current products with a strategic partner?

If so, note that here.

Then I’ll see if we have any questions.

Looks like we are good for now, Janelle.

Alright, great.

I don’t like that I’m doing all the talking here.

All right, so the O stands for others and think of this as others in your team or others in your network, others around you.

Nurturing current relationships can create opportunities for competitive pricing.

Reduced overhead costs and long term quality and stability.

So what are we really talking about?

These are your relationships with people that you’re probably already working with your vendors and suppliers.

Maybe your clients, depending upon the industry that you’re in, could be independent contractors or service companies you’re working with, and even your landlord.

So what do I see happening here?

I see that times have changed.

We can all agree to that, right?

So things have changed, suppliers have gone out of business.  Suppliers have come into business.

Supplies themselves have changed.

You can’t buy a fence to save your life right now because the lumber mills were shut down for too long.

So this is why I use the lumber xxample because I have a client right now who has a product that is selling she’s selling tons of it.

And so she negotiated with her supplier to get this product in some kind of MDF board.

And she agreed to buy very large quantities of this.

And you know what?

She got a very good deal on it and she doesn’t have to pay the inflated prices dverybody else is paying because she agreed to buy so much of it and now she’s selling it like crazy to people because she actually has it in stock.

So these what I want to think about here is think about the negotiations that you have with people or have had with people and and how things have changed, you can tweak things sometimes and you can make it work for you and when when things outside of your control change?

And I just want you to be on the lookout for these things.

So she’s making a boatload off of this lumber because she negotiated a deal that now nobody else can negotiate with the supplier that actually has this stuff.

Because you know she’s got it tide up, she’s getting it into her business.

She’s making all the money.  That was because she had a great relationship with the supplier and she knew what to ask.

And now she’s you know off the charts.  So it’s things like even the smalles things like that can make a huge difference.

One thing to note is with landlords and if you are leasing property commercial property, any property really keep notice of when your renewal dates are because you can negotiate your agreements prior to that renewal date.

Most people don’t know when their renewal date is when their last day to negotiate.

And they just roll over into the next year or five year period, or 10 year period, whatever it is.

But if you know those dates. you can talk to your landlord and say, hey, you know the market has changed.

I don’t want to leave this space, but there’s space for so much cheaper right next door.

So can we renegotiate what the rates are, or do I have to talk to the landlord next door.

They’re going to talk to you, but you have to know those dates.

You have to know those times and you have to know to ask for those things.

So I want you to keep your eye out as you pivot, and maybe you’re already doing this.

Maybe you’ve done it and now you need to make some amendments to some of the agreements that you already had in place but look at those agreements that you have in place and think about how maybe you could tweak them or change them.

Or, you know, have a good conversation with your supplier, your landlord, your independent contractor, or your service provider about.

You know, maybe it has to do with money only.

Maybe it has to do with terms, maybe you can pay something down faster than you could before, or maybe you need longer terms.

Maybe you need you know 90 days instead of 60 days or something like that.

But those little things can be a huge difference in your bottom line of your company, so I want you to keep an eye out for those things and make sure that you’re noting those as well, and then make sure you’re documenting them because it’s going to be important to keeping you safe down the road.

So these relationships are critical to the success of a business which you already know that if you’re a business owner.

They can drive the growth of the business and ensure that the business meets its revenue goals.

Keep an eye out because maybe you can exceed your revenue goals if you play your cards right in this situation.

So on the worksheet we’ve got the oh for others and I ask, are you negotiating with your vendors, suppliers, independent contractors or landlord?

And some notes here.

And that’s another thing that is good to bring up with, you know your attorney or whoever is doing some of these things on your behalf if you have other people helping you.

So I’ll check in with you Sarah and then if not, we can jump to the last one.

Yeah, I do have one question here.

So when you’re making relationships with these others, you know your vendors or your contractors.

How official does it need to be to have something be something you could you know sue someone on? So like if a vendor didn’t agree to a term or didn’t, you know, provide your supplies on time, do you need to have an attorney involved when you write up an initial contract or you know what would be involved in that process?

So absolutely you should have an attorney involved.

So if you’re dealing with an established business, they will probably have some sort of agreement.

In place already might just be a purchase order with some terms and conditions, but it’s some sort of agreement that you would be signing off on and.

The general rule here is just if you’re signing off on something, you probably want to make sure you know what it is you’re signing off on.

So if you don’t understand anything in that, or you’re not sure about anything in there.

Definitely give it to your attorney and have a conversation.

And the great thing there is that you know any small business attorney like myself we get that there’s different levels, and you kind of mentioned this before Sarah, there’s different levels of business and if it’s just you and you’re just starting out and your clients are, you know, just people like you trying to buy your services, for example, then you need something that’s very simple and straightforward, because when you present that contract or those terms and conditions to them and they look at it and Go well, what does #2 mean? If you can’t answer them, they’re not going to trust you, and they’re not going to buy from you, so they need to be very, very clear and easy for you to explain to them.

Now as you get up into like a larger medium sized business or manufacturing business for example, you might have master contracts, you know that are 10, 20, 30 pages long that you agree to have all of the terms and conditions spelled out with a certain supplier, for example. And then you have purchase orders that are like amendments to that master agreement for the amount of supplies that you’re buying.  Let’s say you’re buying metal or something you you might have a master agreement in place, and then you just execute these PO’s to say hey, I need you know 100 pounds of that and I don’t even know what you’re ordering but you get the idea.

So when you’re starting out, companies in business probably have something already to give to you to look at and sign or and in that situation and have your attorney look at it.

But you probably want to have an attorney draft up what you’re going to be giving your clients, so you probably need some sort of client agreement or customer agreement.

If you’re selling online there’s terms and conditions.

Privacy policies on the website, things like that.

So hopefully I answered that for.

Yeah, great.

And I do have another question that just came in.

So as you stated and one of the attendees agreed, contracts can be really complicated with a lot of legalese, right?

If the contract is less than $5000, is there a way to just have a simple contract written up that isn’t as involved?

Absolutely, absolutely.

And it really, it really has to be suited to your business and what you’re doing and who you are.

So I mean, I write agreements for some of my clients that are, you know, for example, I have a client that does senior home care.

So she you know, goes in and helps seniors with different tasks around the house.

She needed an agreement that was one page very large font and very easy to understand because she’s dealing with elderly clients and she wants to make it very straightforward and easy for them.

So that’s what we did. We put together a very straightforward one to two — I think the second page had like the options you could check off, but so I think it was two pages, but we made it very simple and very straightforward for her clients.

And that’s really what you want because if you if you’re small and you’re dealing with, you know you know your client, if your clients elderly, for example in this situation, she knew exactly what she needed the contract to look like, and I helped make sure that we had the legal risks and whatnot covered for her within the constraints that she had.

Whereas I have other companies that are dealing with large companies and they have to submit their agreements to these larger companies so a little one page agreement that doesn’t have any legal wording in it is not going to fly with a big company.

They are going to submit it to their legal and then their legal is going to go well, where’s this and where’s that?

So we really tailor it to the size of business that you are and the size of business that you’re going to be presenting it to.

That’s great, and then I’m not sure if you have an answer to this, but someone you know.

If you don’t have an attorney, is there somewhere else you could get a simple contract?

Or is the best case scenario just getting an attorney for your business.

So you really want to get an attorney for your business and you want to do it sooner than later.

And there are attorneys out there that will work with you on like price and startups and whatnot, but I’ve seen so many businesses come to me when they you know they are starting to be successful in their sales, but they didn’t start out with an attorney up front and they’ve gotten themselves into trouble.

They you know, maybe their contract was pretty good, but they didn’t pay attention to the terms of payment and they have to wire transfer something which costs like $20.00 each time they do it and they have to do it within 24 hours of receiving something which it’s like I can’t do this like this isn’t reasonable for my business, but that’s what they agreed to.

So that’s just one example, but there’s a lot of just little things that that an attorney is going to help you pick up on and make smart decisions about and it’s going to help you grow faster because anything that you invest in and in really making sure that your business is whole and sound and you’re making the best decision possible it just helps propel you forward so much faster.

There’s all these hiccups that happen along the way if you don’t have that kind of smooth foundation, or that solid foundation.

All right, great, that’s all we have for now.

All right?

Well, let’s get to the T here before we run out of time.

T for time.

OK so T is terms and what we’re talking about here is your entity itself, and I know we had a question a little bit earlier about just entity and I did mention that there are different types of entities, so different businesses.

Excuse me, different business needs naturally required different types of entities and if a business dramatically reinvents itself when pivoting, or if a business is just starting, same considerations.

Honestly, it will need to re-evaluate its business entity.  So there’s a lot of questions that go into determining what is the best business entity for you.

I know these days a lot of people jump right into limited liability companies.

And they’re generally speaking, they’re really great entities to have.

But before you jump in, we want to make sure that it’s the right one for you.

I just had a client have their  accountant or CPA form a Texas entity for them and they’re looking at owning a business in New Jersey.

I have no idea why they have a Texas entity, doesn’t make any sense.

Now they’re going to file in two states.  It’s a mess.

So I want you to think about ahead of time what is going to make the most sense.

For your business for what your business does, and I have some things here to consider and this is not, you know, an inclusive list by any means.

But do you plan on having investors.

Wou know if you eventually want investors well, most investors want to have stock.  They don’t want to have membership in an LLC.

And if you’re really seriously considering investors, then you might want to go ahead and just file right off the bat in Delaware because every investor loves the Delaware laws so they would love to invest in a Delaware LLC or a Delaware corporation over anything else.

So these are some things we can talk about ahead of time, so you’re not wasting time, which is another maybe goes back to the question that we just had.

You know you could file an LLC with the state when really what you need is aDelaware Corporation for your investors, and you just you just wasted that time.

You didn’t have to waste that time.

You didn’t have to waste that money, that energy filing that if you would have thought through the process to begin with, so that’s one thing.

How much flexibility do you want as an owner?

Limited liability companies are great for flexibility. So if this is a smaller company

If this is services business.

If you’re not interested in investors.

LLC’s might be the way to go.

And the great thing about them is that they have different ways that you can allow yourself to be taxed when you’re an LLC.

And on that note, I often tell I always sorry not often always tell my clients I am looking at the entity from the point of view of the attorney in that I want to make sure that you’re protected from personal liability.

However, I also need you to talk to your accountant in CPA because they know where you’re at with taxes and they can help us determine if there’s a particular entity structure that is going to be taxed in a way that’s more beneficial to you.

No one likes tax surprises.

So, so that’s the piece that we’re trying to figure out there.

Another question, how important is it for you to be protected from personal liability?

You know if you are a single Member LLC, you might not be as protected as if you had multiple members in your LLC or if you were a corporation.

So let’s talk about that.

Do you have a lot to protect?

Do you not have a lot to protect?

What does your operational team and structure look like?

Has it changed?

You know, some people start out with with a Pennsylvania LLC that is member managed, which means that the members make all the decisions in the company.

But maybe they’ve grown and maybe now they want did I say that backwards.

Now they want managers to make those decisions and the Members to act more like stockholders.

They still make important decisions.

But to act more like stockholders.

So things like that can often change.

Do you want to minimize?

Taxes, that’s the CPA piece.

So we want to make sure that we’re on the right entity that will work for your tax structure at the time and these can change so we do need to talk about them on a regular basis just to make sure you’re still in the right entity for you.

And what works for one business owner might not be the best fit for another.

There are pros and cons to every business entity.

It’s not one size fits all, and as a business pivots or changes over time the wrong entity could restrain the company’s growth and hinder its success.

And of course we don’t want that.

So the last question on your sheet is about the terms.

Have you reviewed your entity type and tax status with your CPA and attorney?

And again, I would just recommend off the bat that everyone do this at least once a year just to make sure you’re in the eight entity that you’re filing the right tax status for where you’re at in.

And that is pretty much what I have to say.

If there’s any questions, we’ll go through them, but at the bottom of the worksheet as I say, congratulations, you’re ready to talk to your attorney about changes you made during the pandemic. So if you filled this all out, then you know exactly what you need to, what you need to talk about.

Next Steps

If you know anyone who could benefit from this information, please feel free to share the link: https://www.youtube.com/watch?v=dYYDldWrL94.

If you would like to learn more about any of the topics mentioned here, please call or text 484-801-0021 or reach out to Cassandra Ortner at cassandra.ortner@peytonlaw.com. We proudly support the nation’s business owners.

*Janelle Peyton is the CEO and Managing Partner of Peyton Law, a leading boutique law firm designed to provide the highest quality branding, business, and legal services to companies via quarterly subscription called Strategic Legal Solution. Peyton Law offers brand building strategies through corporate and intellectual property law, including business entity formation, buy+sell, contracts, joint ventures, trademarks, patents, licensing, and other growth-related transactions.

December 20, 2021/0 Comments/by Janelle Peyton
https://peytonlaw.com/wp-content/uploads/2021/12/A-Gift.png 1260 2240 Janelle Peyton https://peytonlaw.com/wp-content/uploads/2021/06/Peyton-Law-Main-Logo-1-1030x303.png Janelle Peyton2021-12-20 16:54:132021-12-20 17:04:38Free Education Series #1: “P.I.V.O.T. – An Acronym for Business Success”
Business

The Hidden Costs of DIY Lawyering

With the many costs of running a business, it is tempting for owners to take a do-it-yourself approach to fulfill their business’s legal needs. While business owners may save on upfront costs, they are at risk of sacrificing significant time, money, and security in the long run.

The Costs of DIY Trademarks

Without a thorough investigation by a legal professional into existing trademarks and confusingly similar trademarks, business owners risk serious setbacks in terms of time and money by filing a trademark application on their own.

Preliminary internet searches will show business owners exact matches to their potential slogans, logos, designs, phrases, symbols, or brand names. However, these searches will not show business owners slightly similar trademarked matches, which frequently result in the rejection of trademark applications. Unsurprisingly, the majority of trademark rejections and trademark disputes arise due to similar matches, not exact matches. It is incredibly frustrating for business owners to be forced back to the drawing board to rework their branding materials after months of waiting for approval.

Consequently, businesses forfeit hundreds of dollars, months of wasted review, and even potential trademark litigation if they have already been using a protected mark—a common occurrence. Partnering with an attorney ensures strong, well-researched trademark applications are filed, resulting in fewer issues through the trademark process and an increased likelihood of approval the first time around. Delegating this process allows business owners to focus on improving and growing their business without the time-consuming, costly need to rework trademarks and re-file applications.

A successfully trademarked brand sets an essential foundation for brand expansion and profitable business growth. Once a business’s trademark is legally owned and protected, it transforms these company materials, allowing business owners to sell, transfer, and license their trademarks. Trademarking brand materials is also critical to prevent the devaluation of trademark materials when competitors freely copy and distribute them—and the major loss of potential profits associated with growth and royalties.

The Costs of DIY Contracts

Contracts are critical to every business’s management and development. A business will often have numerous contracts in place with partner businesses, vendors, employees, customers, and many more—especially during the early establishment of a business. Well-drafted contracts that protect and promote a business’s interests are key to its future growth.

In an effort to cut costs, some business owners may be tempted to use online templates instead of outsourcing the work to a professional. Though it seems they are saving money, they are actually buying an expensive or potentially devastating legal headache later on. DIY contracts introduce a number of costly risks that could significantly damage the business and cheat the business out of profit opportunities.

DIY contracts run the risk of leaving out key legal terms and clauses that protect a business’s interests. Contracts inherently require specific legal language to meet the unique needs of the parties involved. Using generic online templates that are vague and overly broad can result in agreements that do not provide specific provisions, protections, or opportunities that are in a business’s interests. In some cases, these DIY contracts impose unintended obligations and can even be rendered unenforceable.

In the event of buying or selling a business, attorneys ensure fair valuation, negotiate a fair price, make sure money is not left on the table, and protect business owners at every stage of the transaction. In addition, having an attorney review a buy-sell agreement between co-owners of a business makes certain that there are legal provisions in place to protect the company’s financial operations and value when major life events come into play, such as death, divorce, or retirement. Contracts are not one-size-fits-all. They need to be tailored to every business’s unique needs and interests.

The Costs of DIY Corporate Records

As a business develops and expands, its corporate records require professional drafting and updating to evolve with the company. Many times there are regulatory requirements that must be satisfied within the corporate documents to protect the business and its owners. These may have unforeseen tax implications or raise concerns with the state of incorporation when done in a DIY fashion.

All corporations are required by law to maintain detailed corporate records. From a legal perspective, it is important to maintain organized, detailed records because it protects businesses should an audit ever occur. Corporate records also hold practical value since they show a business’s progression and the value of the company as a whole.

Articles of incorporation, corporate bylaws, business ledgers, tax returns, annual reports, minutes of board or stockholder meetings, and more must be up-to-date, organized, protected, and easy to access should a business want to attract investors, get a loan from the bank, or sell their business for a profitable margin in the future.

Banks and investors alike will want to review a business’s corporate records in detail before lending or investing money. Messy, mismanaged, outdated, and even missing corporate records will result in being denied loans or investors backing out. Partnering with a legal professional to properly create and manage your business’s corporate records ensures your business will not experience tax issues, automatically dissolve with the death or loss of a partner, miss out on profitable opportunities, or experience devaluation due to disorganization.

Your business doesn’t have to go it alone! Having an experienced legal professional at your side to champion your business’s interests and legal needs is invaluable.

Next Steps

If you would like to learn more about any of the topics mentioned here, please call or text 484-801-0021 or reach out to Cassandra Ortner at cassandra.ortner@peytonlaw.com. We proudly support the nation’s business owners.

*Janelle Peyton is the CEO and Managing Partner of Peyton Law, a leading boutique law firm designed to provide the highest quality branding, business, and legal services to companies via quarterly subscription called Strategic Legal Solution. Peyton Law offers brand building strategies through corporate and intellectual property law, including business entity formation, buy+sell, contracts, joint ventures, trademarks, patents, licensing, and other growth-related transactions.

November 30, 2021/0 Comments/by lcameron
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Business

Thank You Team, Clients & Partners

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November 25, 2021/0 Comments/by Janelle Peyton
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Business

What Makes Your Business Different?

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November 17, 2021/0 Comments/by Janelle Peyton
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