The purchase or sale of a business is an important decision. A transaction of this nature should involve carefully drafted and customized legal documents and agreements. There are a lot of questions that will go unanswered if not properly advised by a competent business lawyer. These unanswered questions will almost inevitably result in dispute. I have experience in deals ranging in diversity from strip mall shops to dairy farms. I look forward in assisting you in this exciting and sometimes stressful process.
It is important at the outset that you have your entity or business formed properly and that your business is set up to function the way you or you and your partners expect it to. No two businesses or groups of owners are exactly alike, and each has its own hurdles and opportunities. I want to help you form your business and take care of the legal side of things so you and the other owners can focus on what you do best - providing value for your customers. I want to see your venture succeed.
Sole proprietorships are the most basic form of running a business. In this model, you, as the business owner, are the business. Even if you adopt a trade name, such as “AAA Plumbing Express,” the business assets are still treated as your own, and vice versa. Consequently, sole proprietors face a great deal of risk and I can help a sole proprietor carefully craft agreements to protect interests and personal assets to the extent allowed by law.
A partnership is an age-old method of doing business. They are useful because business men and women can combine unique talents and resources to run a business. Unlike LLCs, LLPs, or corporations, partners in a partnership do not enjoy protection of their personal and family assets if the partnership is sued or a creditor is owed money. Also, partnerships often face issues regarding the rights, obligations, responsibilities, and capital requirements of the partners. Partnerships come with the risk of disputes among partners, and sometimes it is confusing when a partner wants out of the business or wants to bring in a family member or friend as a partner. Consequently, I advise partners to have a well drafted, custom tailored partnership agreement to govern these issues. I can craft a custom-tailored partnership agreement and advise how to address these issues in advance. I can also advise partners how they should enter into contracts with vendors, employees, customers, lenders, and other people with whom the partners will be doing business.
LLCs, or “Limited Liability Companies” are a useful business entity. They are much like partnerships, including the “pass-through” tax status. LLCs provide for very flexible business management, and the arrangements can be varied and adapted based on the relationships of the “members,” who really act like partners. Probably the greatest advantage of an LLC is the fact that you can transfer business assets into an LLC and protect your personal and family assets from creditors or from lawsuits. As with all entities, the owners must comply with state law and their own governing documents, as well as regularly file an annual report with the Secretary of State. An LLC cannot simply be used as a cheap insurance policy, or a shell company, or the owner risks being exposed to personal liability. When this happens, it is called “piercing the corporate veil.” I can advise you on how to avoid this. Also, I can help you draft an appropriate Operating Agreement that addresses issues that are unique to your business and the relationships of your business partners.
South Dakota law recognizes the business entity known as a “corporation.” Corporations are the tried and true entity for running a business. While they are more rigid in structure than LLCs, and often have more requirements to take significant action (e.g. buy real property, sell substantial amounts of assets, etc.) they have functioned to effectively run businesses for hundreds of years. In a corporation, the owners actually own stock of the company, and typically can easily transfer their stock, or interest in the company, with much greater ease than a partnership or an LLC. Corporations are subject to income tax, but in a lot of instances the owner or owners can elect to be taxed as an S-Corporation by filing paperwork with the IRS. Not all corporations are allowed to do this, however, depending on the number and nature of the shareholders. As with all entities, the owners must comply with state law and their own governing documents, as well as regularly file an annual report with the Secretary of State. Like LLCs, a corporation cannot simply be used as a cheap insurance policy, or a shell company, or the owner risks being exposed to personal liability. When this happens, it is called “piercing the corporate veil.” I can advise you on how to avoid this. Also, I can help you draft appropriate By-Laws that addresses issues that are unique to your business and the relationships of your business partners.
An LLP, or limited liability partnership, is an entity recognized by South Dakota law. LLPs require at least two partners, unlike an LLC. Also, there must be one partner who is generally personally liable for the business operations. It is typically used in a setting where one partner will have a passive role, such as being the financier for the business.
Contracts are a very broad category of legal agreements. Some are written, and sometimes verbal agreements are considered binding contracts by courts. Courts have upheld e-mail exchanges as binding, written contracts. Contracts include everything from a purchase agreement of a multi-million dollar piece of real estate, to a promise of $20 in exchange for mowing the lawn. I have drafted, reviewed, and negotiated numerous contracts, including purchase agreements, real estate agreements, employment agreements, leases of real property, leases of intellectual property, licenses, and many others. I am familiar with many of the common provisions, some of the “boiler plate” language, and the purpose behind these provisions. I can draft an appropriate, custom-tailored contracts that protect your rights and your business or personal interests.
Commercial leases are the binding legal contracts that control the rights and obligations between a landlord and tenant in an investment property. Usually, the tenant wants to “borrow” or lease the property to run a business or locate an office. These agreements are essential to having a clear understanding of whether the landlord or tenant is obligated to do some act or provide some service. They clarify how rent works, how much insurance is required, what happens during disputes, and many other important considerations. I have reviewed, drafted, and negotiated hundreds of commercial leases, and I can provide assistance to your and your business venture and make sure your rights are protected and that you are aware of the pitfalls and obligations you will face by entering into a commercial lease.
South Dakota permits corporations to operate as non-profit entities and offer protection to the persons getting together to promote a cause. Some of the common causes are charitable, promotion of a sport, or to set up a fraternal organization. Some nonprofit corporations qualify for tax-exempt status from the IRS, if they become what are called 501(c)(3) entities. To obtain this status, a South Dakota nonprofit corporation must apply to the IRS under Tax Code section 501(c)(3) and comply with various requirements. The IRS requires certain provisions and restrictions be present in the governing corporate documents. I have helped clients form South Dakota nonprofit corporations and then successfully apply for and achieve tax-exempt status. I would like to assist you in streamlining this process and avoid pitfall that can cause your nonprofit to lose good standing and achieve tax-exempt status if it is appropriate for what your organization does.
Intellectual property is a complex and often misunderstood area of the law. First, let’s segregate out the different types. Trademarks, wordmarks, or simply marks, is the word or phrase that identifies the source (“the source” meaning your business) of your product or service. An obvious example is “Microsoft” or “Google.” But it can also be a phrase you use to brand your products or services. A trademark is a crucial part of your business brand. Copyright, on the other hand, is quite simply your rights to your “copy.” That is, the content of your publication, the content of your website, the music your band writes and records, the poetry you sell.
The law has long recognized the rights of authors, composers, artists in their creations. Know-how, similarly, is a way of doing something. It is closer to patent than a lot of other areas of the law, but you do not always need a patent to have protected rights in know-how. A common type of know-how is the unique way a franchise operates a particular type of business. A patents is a protection granted to inventions or unique forms of engineering or design. Patents are highly technical in nature, and I utilize the help of reputable patent-specialist attorneys when these issues come up with my clients. Intellectual property comes into play with every business, simply because businesses have so much value in their goodwill, or blue sky, much of which is attributable to how the public recognizes that a good or service is provided by your business. I can help you register trademarks and copyrights. Additionally, South Dakota permits state-level registration of trademarks which offers an unique, local protection to your branding. I can also help you buy and sell intellectual property, and it is important if you are buying or selling a business with substantial value in its brand that you confer with me or an attorney with sufficient knowledge in the area of intellectual property. If you operate a franchise or want to license or borrow the rights to a brand, logo, artwork, or otherwise, please contact me to learn about possible pitfalls and opportunities when dealing with this type of property.
It is crucial for artists, musicians, authors, or uniquely talented or well-known individuals to have a relationship with an attorney who understands intellectual property and can provide competent advice and services in those areas. Many clients are frustrated with an attorney’s inability to communicate complex intellectual property concepts in a common-sense manner. What I pride myself on is my ability to explain complex intellectual property concepts to clients in plain english, non-condescending manner using visual aids if necessary.
South Dakota employment law works in unison with a monstrous volume of federal law to govern the scope of how your business can hire, terminate, and compensate its personnel. In addition to many legal requirements regarding employment, there are good practices employers can engage in to avoid disputes, conflicts, and costly lawsuits. Some of these good practices can be set out in well-drafted hiring practices, social media policies, dispute-resolution procedures, document retention practices, employee handbooks, employment contracts, and various other methods of being diligent while running your business with the help of others.
Events such as hiring a talented employee or termination of an underperforming employee can have significant impacts on your business. The way you choose to compensate your employees or the promises or representations you make to prospective employees can create substantial liability issues as well. I would like to sit down with you or make myself available for a phone call if you are facing some of these issues so you can be confident in a course of action or make an informed tough decision.
427 N Minnesota Ave, Sioux Falls, SD 57104
(605) 332-6803 | Main Website
BUYING OR SELLING A BUSINESS
STARTING YOUR OWN BUSINESS
CONTRACTS, LEASES, AND AGREEMENTS
NONPROFIT CORPORATIONS & 501(c)(3) COMPANIES