St. Louis Business Law Firm for Small Businesses and Entrepreneurs
Whether you are starting a business, buying or selling a business, or just planning for what happens when a business partner leaves or dies, planning is critical. It is often said that people don’t plan to fail, they just fail to plan, and that is so true.
Proper Entity Selection and Formation
When you form a business, what kind of entity makes the most sense? Do you want a C-corporation; an S-corporation; a limited liability company; a limited liability partnership; a general or limited partnership; or a sole proprietorship? Sole proprietorship’s (doing nothing) and partnerships (whether formal (that is written) or informal (just going into business with someone else)) do nothing to protect against liability. Corporations are more rigidly structured and require annual filings with the state. They can also result in “double taxation” unless certain elections are made. LLC’s are very flexible and do not require annual filings, but like partnerships, everyone needs to clearly understand their rights and duties. In all of these, privacy issues need to be considered and addressed.
Business Formation and Transaction Guidance
If you are going into business with someone else, how do you plan for someone’s death or disability? The death or disability of one of the principal business partners can destroy even a successful business, or result in terrible hardship for that person’s family. With planning, you can provide for a relatively smooth transition, so that the surviving partner does not have to go into business with the spouse or other family members of the deceased business partner. With proper planning, you can provide for the repurchase of the business interests of the disabled or deceased partner. You can define when a person is to be considered disabled. You can also provide for the purchase and maintenance of insurance to cover these liabilities.
If you are buying a business, should you do a stock or asset purchase? What questions should you ask; and what documents should you review? If you are buying stock, how do you know that the stock is not pledged for a loan or subject to any judgments; that the business owns its assets free and clear; that its employees are not all leaving or suing the sellers or the company; that its assets are all in proper working condition; that you will be acquiring a controlling interest in the company, or at least as much of an interest as you think you are buying?
If you are buying assets, how do you know that the seller actually has the power to sell them; that the assets are not subject to some sort of a lien or other encumbrance; that there are not any pending lawsuits that could affect your continuing business activities; or that any existing liabilities (such as environmental liabilities in connection with any land included in the deal) will not follow the assets out and connect to you? A detailed analysis is important in order to avoid any undesirable surprises after the ink has dried and the deal is done.
With his considerable Business Law experience working with small to medium sized businesses, Fred L. Vilbig can help you find your way through this maze.
I hired Fred for several legal matters and would do so again. Fred is very trust worthy and I would recommend him to anyone who needs a lawyer.