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- Business Formation
A business entity may be formed in various ways. Most often,
the entity is a corporation or a limited liability company.
Tax law changes in recent years have made the tax implications
almost moot. There are pros and cons to each type of
business entity. The only way to decide is to have a
dialogue with an attorney who can discuss them in detail.
- Operating Agreements
for an LLC
If a limited liability company is chosen as
the form of a business, an Operating Agreement ("OA") is
necessary. The OA determines the percentage of ownership;
who the initial Manager is and how Managers are selected; how a
member's interest is changed when additional capital is added to
the LLC; and how and under what conditions a member's interest can
be sold or acquired. The OA can have many other features and
generally controls how the ownership of the business is to be
handled.
- Contracts
Contracts require a promise and
consideration. They may be oral or in writing. It is
generally best for contracts to be memorialized in written form.
The language used in contracts must be unambiguous so that the
intent of the parties to the contract can easily and clearly be
determined from the four corners of the document. It is
important to have a contract written by an attorney who is skilled
in drafting contracts and one who has familiarity and experience
in business matters.
- Employment
Every business entity that has employees
must deal with the many issues relating to payroll taxes,
benefits, and employment policies. These can often be tricky
and full of pitfalls that can cause problems for small businesses.
- Registered Agent
Every business entity in the State of Utah
must have a Registered Agent ("RA"). Often times the
entity's legal counsel will serve as its RA. However, any
person can serve as the RA. When a lawsuit is commenced
against the business entity, the summons and complaint are most
often served on the RA. The RA is also notified each year by
the Division of Corporations that the annual registration is due.
- Buy/Sell a Business
Buying or selling a business entity can be
tricky and fraught with perils. Many documents are necessary
to assure full disclosure of actual and potential liabilities as
well as assets. Issues of indemnification by the seller for
liabilities that surface after closing are best handled by an
attorney. The complexities are best understood with good,
experienced legal counsel with substantial business experience.
- Collections
Business collections involve making proper
demands of the debtor and then carrying out all necessary court
actions. If a debtor ignores a summons and complaint for
collection of a debt, the court will most often enter a default
judgment in favor of the business. However, collecting on
that judgment can be very frustrating. The court does NOT
collect the judgment from the debtor. That is up to the
business or its attorney.
- Disputes
The term "disputes" broadly covers all kinds
of disagreements between two or more parties. Settlement of
such disputes before they escalate into full blown litigation is
far less costly and avoids the inevitable stress associated with
litigation. Negotiations in good faith will often work.
The next step is mediation. The involvement of an attorney
can often put some distance between the parties so that reason can
prevail over emotions.
- Litigation
When disputes are not resolved amicably,
they move to the courts where litigation ensues. Litigation
can be very costly and time consuming. Once the litigation
process begins, attorneys are most often needed. In fact,
when litigation involves a business entity, the entity must be
represented by an attorney. During the initial phase of
litigation, "discovery" commences. This allows both sides to
obtain from the other all relevant facts, including documents and
depositions of the parties and witnesses. After all
discovery and all motions have been filed and heard by the court,
a trial takes place. Some trials are "bench trials," meaning
a judge decides the outcome. Other trials are by jury,
meaning a panel of jurors decides the outcome. Following the
trial, either side may appeal.
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