Putting his practices into play can also have the added benefit of promoting a greater sense of loyalty and a stronger relationship among your business’s co-owners.  Business partners aren’t always on the same page, and disagreements are to be expected whenever you go into business with someone else.  Even so, your actions and that of your partners must always be tied to an underlying goal founded on your business’s shared best interests. 

The Business Comes First: Co-Owners Must Act Responsibly to the Business and Each Other

California law says that as a business owner, you must put the best interest of the business above your own personal interests.  This means that, by law, you must act responsibly when it comes to the business.  You can’t do something to profit or benefit yourself at the expense of the business, or the other co-owners or shareholders.  (There is an exception when you tell the co-owners or shareholders what you want to do, and they completely understand how it affects them, and they still agree to it.)  Here are a few examples of the legal “do’s and don’ts” created by your legal responsibility to put the business first:

     ●  Do:  Give the business “first crack” at all opportunities to make money when those opportunities are related to the business in any way.

     ●  Don’t:  Keep secrets from your business co-owners and shareholders when those secrets have any effect on the business, or on the co-owners.

     ●  Do:  Be loyal to your co-owners.

     ●  Don’t:  Betray the business trust of your co-owners, especially in any way that would embarrass them or cost them money, unless they are doing something that is illegal or obviously harmful to others.

Perhaps most important of all is your responsibility to be careful – to make decisions responsibly and to always try to work for the benefit of the business.  This doesn’t mean that every decision will yield perfect results – that would be impossible.  What’s important is to be as careful as possible when you make any decision that affects the business.

When in Doubt, Ask Your Lawyer at San Diego Law Firm

You can improve the likelihood that everyone in your business will put the business first by following the suggestions mentioned above on creating a strong team, since these methods tend to reinforce everyone’s commitment to the business and its goals.

A clear, simple partnership agreement, or LLC documents,  (either of which San Diego Law Firm can prepare for you), can also be used to spell out each co-owner’s responsibilities in placing the business first.  If things fall apart, our skilled business litigation attorneys can help you handle and, possibly quickly stop, a business dispute.  And, if you ever find yourself caught in  a difficult situation between your own personal affairs and your business, don’t mishandle it.  We can advise you on how to handle potential conflicts to protect both yourself and your business.  Contact San Diego Law Firm at (619) 794-0243.

If you do need to hire new employees, don’t lose sight of the legal issues that go along with hiring.  A few examples here include possible discrimination when advertising for new positions, questions you can’t ask when interviewing potential employees, and the terms of employment.  Federal anti-discrimination laws and additional protections under California law make discrimination illegal when based on categories that include disability, marital status, sex, age, national origin, race, sexual orientation, religion, medical condition, and so on.  Exceptions are very limited (e.g. a women-only hiring policy for women’s locker room workers) and have to be evaluated on a case by case basis.  Discrimination can occur in all aspects of employment, even well before hiring someone when your business advertises a job, chooses its recruitment methods, or interviews candidates for an open position.  When it comes to interviews, you have to be careful not to ask questions about the applicant’s age, what his or her childcare arrangements are, about plans to have kids, or anything else that relates to a status that’s protected from discrimination if the question isn’t required to determine the applicant’s ability to do the job and isn’t legally acceptable.  Discrimination laws are complex, and you need to speak with an attorney who can explain the details of how these federal and California laws apply to your business practices. 

Aside from discrimination issues, when hiring a new employee you have to be clear about several terms of the employment relationship to help prevent disputes (and potentially lawsuits) later on with that employee.  Misunderstandings can often be prevented with non disclosure agreements (also called NDAs or confidentiality agreements), and employee handbooks or manuals that make clear whether the employment is at-will and set out company policies without creating unintended terms of employment.  These are just a few general examples, but keep in mind that many other issues can come up when dealing with prospective hires and current employees.  We’ll prepare important agreements you may need and advise you on the legal aspects of running a business, including compliance with California’s harassment laws, wage and hour laws, and employee termination rules so you can avoid many common disputes that carry serious consequences.  Contact San Diego Law Firm to learn more about the best employment and hiring practices and how you can minimize the risk of getting sued.  Our experienced business lawyers can be reached at (619) 794-0243.

As an entrepreneur, you shape your business strategies with an eye toward reducing risk, and a joint venture agreement can be designed to do the same.  With a written agreement, you can also minimize uncertainty while avoiding damaging misunderstandings and conflicting expectations so you can maintain a better business relationship.  Depending on the type of joint venture you begin and the kinds of risks involved, you may want to structure the new business as a limited liability company (LLC) or corporation created for your specific purpose, or instead detail the project solely through written agreements.  What you do to protect yourself and to fully develop your joint venture will be incorporated into your joint venture agreement.  Among other things, the contract should set out:

- What services, property, or other assets will be contributed by each joint venturer

- Whether intellectual property (e.g. copyrighted material, trademarks, patents needed to manufacture products) will be licensed for use in the joint venture

- What your respective ownership interests will be

- How profits or losses will be shared

- How assets will be divided

- What rights and duties each partner will have, including operational and decision making roles

- How future investments will be handled, should the need arise

- What your exit strategy will be, such as a buyout procedure

Some of these provisions can affect your tax obligations, and when entering into a joint venture you must always take into account potential legal liability.  For instance, a business partner’s actions can be binding on you, such as when a partner enters into contracts on behalf of the joint venture.  You and the other members of the joint venture also take on fiduciary obligations of loyalty and are charged with acting with reasonable care, among other duties that work to promote your common business dealings.  We’ll help you answer key questions through a joint venture agreement, while also managing any related concerns with a confidentiality agreement and a non-competition agreement if needed, and obtain any necessary licenses, permits, or filings required locally in San Diego or by the State of California.  If you’ve decided to seize an opportunity to collaborate with another business, a comprehensive joint venture agreement can go far in helping you maximize your chances of success.  Contact San Diego Law Firm’s skilled business lawyers at (619) 794-0243.

To the extent possible, you’ll need a buy-sell agreement that’s comprehensive and covers many different scenarios in anticipation of what could happen in your business.  The purchase of the departing owner’s share may be made by individual co-owners or the business entity itself, and the best purchase structure often depends on the size of your company.  You may also be asking about where the money will come from to buyout a co-owners share.  In this respect, small business owner John Ingrisano highlights the value of a buy-sell agreement in his blog on TheFreestyleEntrepreneur.com, since in certain situations a buy-sell agreement can ensure that there’s cash available for a buyout when the time comes.  We’ll advise you on the different options for funding a future purchase, but for many businesses, a cost-effective solution is to purchase life or disability insurance to fund the buyout when triggered by these events.  Your agreement also must address whether the owners or the business itself must pay the insurance premiums.  Here are just a few other considerations surrounding the events that often trigger the purchase of a co-owner’s interest:

- If a business partner wants to sell, you’ll need to decide whether his or her interest must be offered first to the other co-owners, or whether the other owners will be required to buy back the departing owner’s share.  The agreement should also cover whether any non-compete restrictions should be placed on the departing owner, to the extent allowed by California law.

- If retiring, the agreement will set the conditions for retirement that will qualify for a buyout, and you’ll also decide on payment arrangements.  For example, a percentage of the buyout price might be paid in installments with interest, but you’ll want to take the business’s potential for future profitability into consideration.

- Upon death or a disability as defined by the agreement, decide whether the buy-sell provisions will require the remaining owners to purchase the other owner’s share, and how the owner or the owner’s heirs will be paid. 

- If a business associate is faced with bankruptcy, a buy-sell agreement can require that partner to notify co-owners before filing, giving the others the opportunity to buy his or her interest.  This can help prevent the loss of company assets, since the money paid to the departing owner will be subject to the bankruptcy, instead of the business’s assets.

- Divorce also has the potential of bringing third parties into the picture, but the buy-sell agreement can require that the business interest be sold back to the other co-owners or the business entity.

As you decide on the terms of your agreement, we’ll explain your options and the possible benefits and drawbacks, and go over other triggering events that may be appropriate to include in a buy-sell agreement for your business (such as provisions in the event of an acquisition or an employment termination).  Besides identifying which events will prompt a mandatory or optional buyout, a buy-sell agreement also resolves crucial valuation questions.  By determining now how you’ll calculate the business’s worth and the value of your respective interests, you’ll minimize uncertainty and help prevent conflict later.  Values can vary greatly depending on the valuation method used, but by agreeing to a formula ahead of time it’s much more likely that you’ll be able to fix a fair price.  Many times it can also help reduce estate taxes upon death, although you must tread the law carefully in doing so. 

To be effective, a buy-sell agreement must be carefully thought out and comprehensive.  With years of experience, we’ll evaluate the legal and business considerations and strategize to help protect your mutual interests and that of your family through a buyout agreement or other retirement or business succession plans.  Take a close look at your business and guard against future uncertainties by contacting San Diego Law Firm’s experienced business attorneys at (619) 794-0243.

For example, here are a few general guidelines to follow when creating and maintaining a corporation or LLC:

• Keep your personal finances and the business’s finances separate.
• Legally transfer ownership of company assets to the business.
• Make sure the business has enough assets or insurance to satisfy potential liabilities.
• Always sign on behalf of the corporation, being sure to include the corporation’s name and your title.
• Act in good faith in your business dealings.
• Keep up with yearly filings, hold corporate annual meetings, keep minutes of the meetings, and maintain proper and accurate records.

As experienced business attorneys, we’re well aware of the potential pitfalls when a corporation or LLC is improperly created and maintained.  We’ll advise you on these and other business practices to help keep the business’s identity separate from your own and avoid endangering your personal assets.  If you’re thinking of forming a corporation or LLC, we’ll discuss the incentives and other important considerations with you when determining the best business structure for your company.  Reach San Diego Law Firm’s business law attorneys at (619) 794-0243.

LocalTechWire.com’s recent article offers some good guidelines on creating protectable trademarks that will keep pace with your marketing goals. Whether you’re just starting your business or are looking to build your business further, trademarks can be a cost-effective way to advance your business image. Call San Diego Law Firm today at (619) 794-0243 to help you strengthen your trademarks by handling the registration process with the USPTO, and providing you with a step-by-step plan, tailored to your particular business, so you won’t overlook any of the ways you can protect the value of your trademarks and your business image.

As recently reported in a Wall Street Journal blog, the Small Business Administration (SBA) is approving more loans as it continues implementing new provisions under the American Recovery and Reinvestment Act. According to the SBA, the stimulus program will help in making small business loans easier and cheaper to get, and will likely motivate lenders to make more of these loans by giving lenders new incentives.

If you decide to start a business, you can depend on San Diego Law Firm’s expertise to help you protect your personal assets and minimize tax liabilities by setting up the right business structure, such as a corporation or LLC, and assisting you to obtain the right business licenses and permits. If you’ll be buying commercial real estate, we’ll handle the necessary legal issues to help ensure you’re making a quality investment.