Every business needs a legal strategy. What you need to determine is whether you would prefer to make a small investment in preventative legal work or wait until you’re facing a lawsuit or dispute requiring ten times the amount of work (and fees). What sets the Trembly Law Firm apart is that we actively seek to keep business owners out of the courtroom.
While there is no way to completely eliminate the possibility of being sued or facing a legal dispute, by being proactive you can greatly reduce your odds of legal trouble and position yourself in a much stronger situation should they arise.
In this blog entry we are going to point out four legal documents that every business owner must have. Creating these documents will provide important protection for your business and the process will help you think through important questions. Give us a call today if you would like help creating them!
Articles of Organization.
You need to file Articles of Organization with the appropriate state office. This document legally forms your business and will often include your organization’s name, address, a general description of your business, and information about how your organization will be managed.
Additionally, depending on the type of organization you are forming, you will need to make additional decisions. For example, an LLC needs a registered agent who is designated to receive papers on behalf of the LLC. Make sure to speak to a business lawyer who can help you determine how to best structure your business in order to protect yourself and serve your goals.
After you have your article of organization, you will need an Operating Agreement for your new venture. The Operating Agreement outlines the structure of your business. You will assign a percentage of the business to each owner if there are multiple owners. You will specify what each owner’s share of the profit is.
A well-written Operating Agreement is an effective way to avoid expensive legal disputes down the road. And without it, your business will be governed by the default operating rules for your business structure. Besides including information about how profits will be divided, your operating statement might have information about holding meetings, making decisions, and each member’s responsibilities. The Operating Agreement can also define what happens in the event of a partner’s death.
Client or Service Contract.
Written contracts provide businesses with a legal document that help ensure both sides of an agreement fulfill their obligations. Good contracts are one way a company can protect itself and its resources. Among other purposes, your contracts define your obligations, set the parameters for many aspects of your relationships with clients, specify how and when you will be paid (and what your options are should you NOT get paid).
Contingency Plan Document.
It is impossible to predict the future, but it is inevitable that sooner or later something will go wrong. A good contingency plan document addresses much of the uncertainty your business faces. Possible scenarios that can be included in a contingency plan are hurricanes, theft, lawsuits, and equipment failures. Would your business have to relocate if there was a hurricane? Does your business have a recovery plan for the loss of irreplaceable data?
Contingency plans detail physical resources that are required if a disaster occurs as well as individual responsibilities. A contingency plan helps a business get through a disaster with less damage, saving both time and money. Thus, developing a contingency plan is an important exercise in thinking through what matters most to your business.
Do not be unprepared. Create a contingency plan, a service contract, an Operating Agreement, and and Articles of Organization. These four documents can save you unbelievable amounts of time and money down the road. Give us a call today if you would like some help getting started!