By Jonathan Schmidt / Guest Column
Kudos if you’ve decided to realize your plans and dreams by becoming an entrepreneur! Hopefully all will go as planned, which is much more likely if you have planned well. An essential part of entrepreneurial planning is preparing for the inevitable legalities.
“Did you get it in writing?” is likely to be one of the first questions asked if you end up in a business dispute. Peace of mind can be found in a confident “yes” response, which you can help to ensure with careful planning and detailed documents.
The first rule of business ownership is: Get it in writing.
The second rule of business ownership is: Have a professional help you get it in writing. If you take the plunge into ownership, make sure you set aside some time to talk to a professional legal counsel about your ideas and plans – someone who will be on your side from the very start. Some of the documents he or she will cover with you include:
OPERATING/OWNERSHIP AGREEMENT
You’ve likely thought through your business’s formation type, and whether it’s to be a sole proprietorship, partnership, LLC or some form of corporation. An attorney will review the legal ramifications of each choice, then craft a comprehensive and clear set of documents to delineate such things as necessary registrations, assets, control of the company, responsibilities, liabilities and more.
BUSINESS PLAN
A carefully crafted business plan will accomplish two things: outline your business’s goals and propose the strategies to achieve those goals. While business plans are particularly useful for those seeking investors or commercial lenders, they are also becoming standard as a blueprint for businesses to confidently and strategically plan objectives, goals and successes.
BUY-SELL AGREEMENTS
If you run a business, you’re likely going to buy and sell products. A General Contract for Products specifies the terms of those purchases, and helps protects your interests and those of your customers. Similarly, whether you provide services for someone else or they provide them for you, a General Contract for Services sets out clear terms and conditions for any services to be provided.
General contracts, when crafted carefully and with professional help, create a clear record of the expectations and obligations of buyers and sellers, and protect each party from misunderstanding and disagreements.
General Contracts for Products detail the following:
- who the parties are
- the dates of the orders and quantities of goods
- the dates and place of delivery
- warranties and disclaimers
- payment terms
General Contracts for Services detail the following:
- who the parties are
- pricing and payment terms
- duration of services
- the obligations of each party associated with the services
EMPLOYMENT CONTRACTS
Used to specify the rights and obligations of both the employee and the employer, a professionally drafted employment contract not only protects each party, it also provides a solid foundational basis for an important relationship.
Use an employment contract to specify, among other things:
- wages and/or commissions, hours and benefits
- duties and responsibilities
- confidentiality concerns
- noncompete clauses
Legal documents are welcome to savvy and busy entrepreneurs because they free up time so they can go about their business. Follow the rules, get – quite literally – on the same page with help from your attorney, and you’ll be protected with the essentials you need to build a solid, professional business.
You can learn more about starting a business in Iowa at http://bit.ly/CorridorCounsel.
Jonathan Schmidt is an attorney and partner with Nazette, Marner, Nathanson & Shea LLP. He practices in areas of business and litigation. He can be contacted at jschmidt@nazettelaw.com or www.jschmidtlaw.com.
