Category: Business Law


Do I Need to Hire a Business Attorney for Help With Taxes?

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Philadelphia Business Attorneys at Sidkoff, Pincus & Green P.C. Can Help You Get Your Business Taxes in Order

When it comes to filing business taxes, careful preparation makes all the difference. If you make filing errors on your taxes or the IRS thinks you did, addressing their challenges can be overwhelming and intimidating. It is an investment of time and money, but the benefits can include significant tax savings, a better understanding of how the tax laws work, and the confidence that comes with knowing your company is protected should issues arise.

A business attorney can offer tax planning advice but can also provide additional support when disputes arise. Since business owners deal with considerably more tax laws than other people, they can often benefit from working with an attorney. If your company gets audited and/or your tax payments come under scrutiny, a business attorney can help.

How Can I Choose a Business Attorney?

The main reasons to seek out a business attorney for tax assistance include:

  • Needing to set up a hearing in front of a U.S. Tax Court.
  • Settling a major tax dispute, setting up installment plans, and guidance with innocent spouse relief.
  • Wanting to sue a state or local tax authority or the IRS.
  • International business taxes and regulations.
  • Making the most of your deductions.
  • Reporting business income and expenses.
  • Straightening out payment of employee taxes.

When researching different business attorneys, look for ones that are in your local area since you will need to visit the office. Verify that they have licenses to practice; this information can be found on your state’s bar association website. If you are looking for someone to also prepare your taxes, there should be a preparer tax identification number shown as well.

Business attorneys also help clients with the legal and tax implications of new or startup companies. This includes helpful advice, strategic short-term and long-term planning, and preparation and completion of all the necessary legal documents.

Philadelphia Business Attorneys at Sidkoff, Pincus & Green P.C. Can Help You Get Your Business Taxes in Order

Tax season can be particularly intimidating for business owners, but one of our trusted Philadelphia business attorneys at Sidkoff, Pincus & Green P.C. can guide you through the process. If you need help with your business taxes, complete our online form or call us at 215-574-0600 to schedule an initial consultation. We are located in Philadelphia, and we proudly assist clients in New Jersey and Pennsylvania.

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Protecting Trade Secrets and Confidential Information in the Workplace

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The Philadelphia Business Attorneys at Sidkoff, Pincus & Green P.C. Protect Your Business Assets

As a business owner, you likely have information that you would like to keep secret from your competitors. This type of information is known as a “trade secret,” and it is important to take steps to protect it.

Similarly, you may also have information that is not necessarily a secret but is still confidential. This could include employee records, customer lists, or supplier contracts. While this information may not give your competitors an advantage, it could still be damaging if it fell into the wrong hands. As such, it is important to consult a business attorney to take the necessary steps to protect both your trade secrets and confidential information.

What Is a Trade Secret?

A trade secret is any type of information that would give your business an advantage over its competitors if it were made public. This could be a new product you are developing, information about your sales or marketing strategy, or even just your company’s financials. Trade secrets can be either physical (like a formula) or non-physical (like customer data). As long as the information is not generally known and you have taken steps to keep it secret, it can qualify as a trade secret.

The most famous example of a trade secret is the Coca-Cola recipe. While the recipe for Coca-Cola includes just seven ingredients, the specific proportions of those ingredients are unknown outside of the company. Coca-Cola has gone to great lengths to keep the recipe secret, including building a vault to store it in and only allowing two employees to know the full recipe at any given time.

What Is Confidential Information?

Confidential information is any type of non-public information that could be damaging if it fell into the wrong hands. This could include employee records, customer lists, or supplier contracts. While this information may not give your competitors an advantage if it were made public, it could still be damaging if it fell into the wrong hands. For example, if an employee list was leaked online, your employees could become targets for identity theft or fraud. Similarly, if customer data was leaked, your customers could lose trust in your company and take their business elsewhere.

Tips to Keep Information Secure

  • Limit access to trade secrets and confidential information to only those employees who need to know.
  • Require employees to sign non-disclosure agreements (NDAs) before they are given access to trade secrets or confidential information.
  • Store trade secrets and confidential information in a secure location, such as a locked filing cabinet or password-protected computer file.
  • Make sure all physical copies of trade secrets and confidential information are shredded or destroyed when they are no longer needed.
  • Do not discuss trade secrets or confidential information in public places or on unsecured communication channels (such as email or social media).
  • Have a plan in place for what to do if trade secrets or confidential information are leaked. This might include contacting the police or hiring a lawyer.
  • Educate employees on the importance of keeping trade secrets and confidential information safe. This can be done through regular training sessions or by including this topic in the employee handbook.
  • Consider insurance policies that will cover the cost of damages if trade secrets or confidential information are leaked.
  • Review your security measures regularly and update them as needed to ensure that they are adequate for protecting your company’s most important assets – its people, its products, and its reputation.
  • Seek legal advice if you have questions about how to protect your company’s trade secrets or confidential information.

The Philadelphia Business Attorneys at Sidkoff, Pincus & Green P.C. Protect Your Business Assets

Protecting your business assets is vital to your future growth and success. Part of that includes protecting your trade secrets and confidential information. Speak with our knowledgeable Philadelphia business attorneys at Sidkoff, Pincus & Green P.C. to discuss your options to keep your assets safe. Contact us at 215-574-0600 or inquire online. With offices in Philadelphia, we proudly serve our neighbors in South Jersey, Pennsylvania, and New Jersey.

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What Are Insolvency Laws and How Do They Help Small Businesses?

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Contact the Philadelphia Business Attorneys at Sidkoff, Pincus & Green P.C. if Your Business Has Become Insolvent

The word “insolvency” signifies financial distress for individuals or businesses when debts cannot be paid on time. It is generally used after a company has entered into informal arrangements with its creditors to pay off what is due. When those do not pan out, further steps are taken.

Why Do Businesses Become Insolvent?

Businesses and companies become insolvent for a number of reasons. Poor human resources management and inadequate accounting are two main causes. It can also happen when businesses raise their costs and share that with large clients, who soon after end the relationships. Other reasons that lead to less income and high debt include not meeting customer needs, and costly lawsuits.

Insolvencies can be temporary when assets are liquidated and/or debts are restructured into manageable payments. Many times, smaller companies are bought by larger ones that assume the debt. Creditors tend to prefer those options over not getting repaid at all. A repayment plan has to be realistic and have evidence showing where the cash will come from while the business remains profitable.

Is Insolvency the Same Thing as Bankruptcy?

Insolvency and bankruptcy are two different things. Insolvency is a temporary situation that hopefully gets resolved. When that does not happen, a company may have to declare bankruptcy. During bankruptcy proceedings, a court decides how the insolvent party will handle the unpaid obligations. That could involve selling off more assets, and could negatively impact a company’s credit rating.

New Bankruptcy Laws

For the past few years, lenient lenders, low interest rates, and government stimulus money have worked to decrease the number of Chapter 11 filings. The 2019 Small Business Reorganization Act (SBRA) also made Chapter 11 more accessible to debtors; the CARES Act (temporarily) raised the debt limit to $7.5 million for many eligible small businesses. How did this happen?

In 2020, a subchapter was added to Chapter 11 through the SBRA: Subchapter V. Designed to help small businesses with limited time and resources, it lessened the time and money needed for bankruptcy cases. Through Subchapter V, businesses with less than $2.7 million in debt could apply for this program. Things changed after the $2.2 trillion CARES Act; now the threshold is $7.5 million. In essence, small businesses with debt up to $7.5 million can be eligible to file for bankruptcy under Subchapter V.

Impacts of Subchapter V

As a result of Subchapter V, more small businesses have become eligible to apply for faster, less costly bankruptcy filings. Since 2020, more than 3,400 small businesses filed for Subchapter V relief, bypassing traditional Chapter 11 filings. Insolvent businesses can reap these other advantages by filing for Subchapter V:

  • Creditors are responsible for uncovering debtor abuse and fraud because there are no appointed creditors’ committees. Debtors pay creditor committee expenses in typical Chapter 11 filings.
  • With Subchapter V, creditors are responsible for determining if debtors are properly qualified small businesses.

Contact the Philadelphia Business Attorneys at Sidkoff, Pincus & Green P.C. if Your Business Has Become Insolvent

The rules for legal bankruptcy filings have certainly changed these past few years and it can be challenging to know what best suits your needs. For a confidential consultation, contact the experienced Philadelphia business attorneys at Sidkoff, Pincus & Green P.C. Call us at 215-574-0600 or complete our online form today. We are located in Philadelphia, and help clients in South Jersey, Pennsylvania, and New Jersey.

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The Role of Contracts in a Business Relationship

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The Philadelphia Business Attorneys at Sidkoff, Pincus & Green P.C. Protect Your Business.

A contract is a legal document that outlines the scope of the agreement between two or more parties, as well as their respective rights and responsibilities. It also serves as a legal protection for both parties involved in case of a dispute or disagreement.

Why Use Business Contracts?

Contracts help define the scope of an agreement between two or more parties, as well as their respective rights and responsibilities. They also serve as a legal protection for both parties involved in case of a dispute or disagreement. Without a contract in place, either party may take advantage of the situation by not fulfilling their end of the bargain—with no recourse available to the other party.

In addition, contracts provide details about payment terms and other key items related to the business relationship. This includes information such as how long the agreement will last (or when it will expire), what happens if one party fails to perform according to expectations (legal repercussions), who owns any intellectual property created during the course of working together (copyrights) and more. Without these details laid out clearly in a contract, it is much easier for misunderstandings and disagreements between two parties to arise.

Contracts also help protect businesses from unexpected liabilities and unforeseen costs associated with entering into agreements with third-party vendors or partners. Having a contract can help protect your interests if you do end up facing unexpected liability or cost issues later on down the road.

Contracts are essential for any business relationship because they define each party’s rights and responsibilities while providing legal protection against potential disputes or disagreements that may arise during the course of working together. They also provide details about payment terms and other key items related to the business relationship which can save businesses from unexpected liabilities or unforeseen costs associated with entering into agreements with third-party vendors or partners down the line.

General Terms to Include

Every business contract should include, at a minimum, the following terms:

  • Parties Involved: All parties involved in the contract must be identified, with their name and address, as well as any relevant contact information.
  • Subject of Contract: The contract should clearly identify what is being agreed on, such as services rendered or goods supplied by each party.
  • Duration of Contract: The duration of the agreement should be specified and accepted by both parties.
  • Payment Terms: Payment terms for any goods or services provided should be detailed in the agreement. This will include any payment due dates and refund policies, if applicable.
  • Obligations of Parties: Both parties must understand their roles and responsibilities outlined in the agreement, which might also state how long a party has to perform its service or provide its goods before breach occurs.
  • Conditions of Termination: All contracts should detail procedures for termination of the agreement, including how either party can legally end the contract and any obligations that remain after it has been terminated.
  • Governing Law: It is essential to specify which law governs the agreement and where any disputes will take place if necessary.

The Philadelphia Business Attorneys at Sidkoff, Pincus & Green P.C. Protect Your Business

To make sure your business is protected, speak with the Philadelphia business attorneys at Sidkoff, Pincus & Green P.C. Contact us at 215-574-0600 or inquire online. With offices in Philadelphia, we proudly serve our neighbors in South Jersey, Pennsylvania, and New Jersey.

Managing Risk in Business

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The Philadelphia Business Lawyers at Sidkoff, Pincus & Green P.C. Help Companies Manage Risk.

Businesses that are not protected from risk are vulnerable when unpredictable situations occur and spiral out of control. While situations like skyrocketing interest rates and politics cannot be controlled by the business owner, entrepreneurs can protect themselves against lawsuits and other risks. Many businesses have shuttered their doors permanently because they did not prioritize risk management. With the stakes being so high, company owners should understand the importance of effective risk management strategies.

How Can I Determine What Risks My Business Faces?

A risk management strategy starts out by identifying sources of legal threats. The main dangers come from contracts, structural changes, regulations, and litigation. Specific threats can be pinpointed and compiled into a list that describes the risks in detail. Next, they can be categorized into the ones most likely to the ones least like occurring, taking the likelihood of financial loss into account.

Risks can also be frequent and infrequent: employees might steal things, there could be bad weather that cancels an outdoor festival, but insurance would cover these kinds of losses. Other legal risks include potential slips and falls inside a hardware store, intellectual property lawsuits, or a major fire. The legal consequences can be compensatory or punitive, like monetary fines or injunctions that close companies down.

Limiting Liability

Just like individuals, businesses have certain insurance needs, and having the same policy for years without regular reviews is risky. Business owners can also purchase life and disability insurance to cover losses and provide for their loved ones.

Businesses that sell products can hire attorneys to review their goods for litigation and regulatory risks. An example of a risk might be an improperly labeled product: if a consumer follows incorrect directions and becomes injured, the company might be held liable. Another area of risk management is contracting. Companies that hire vendors use contracts, which require the proper language to spell out what both parties’ responsibilities if the contract is broken.

Managing Physical Risks

Having the appropriate legal framework for risk management is crucial but business owners still need to be diligent about minimizing the chances of adverse events happening. One of the first steps is to analyze the location hazards and put an emergency plan in place.  An example of a location hazard might be a gas station down the street that could potentially catch fire. All employees must be made aware of emergency protocols, with a clear chain of command to step in should something happen.

Businesses should also have working alarms, smoke detectors, and sprinkler systems. If there are hazardous materials like toxic liquids on-site, employees have to be trained and properly equipped to handle them safely. These are just a few examples of physical hazards and there are other risks related to employee behaviors, technology, and strategy.

Managing risk might seem like an overwhelming undertaking, but modern legal technologies will help you and your employees streamline the processes so you can focus on running your company.

The Philadelphia Business Lawyers at Sidkoff, Pincus & Green P.C. Help Companies Manage Risk

At Sidkoff, Pincus & Green P.C., our experienced Philadelphia business lawyers can help analyze your company’s risks and develop a solid strategy to manage them and protect your interests. Contact our Philadelphia office at 215-574-0600 or complete our online form for more information. We serve clients throughout South Jersey, Pennsylvania, and New Jersey.

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When Does My Business Need to File for Bankruptcy?

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No one wants to think about bankruptcy, but unfortunately, sometimes it may be the best solution for a struggling business. To determine if filing for bankruptcy is the right choice, it is important to understand what filing entails, as well as what situations might give rise to considering such an extreme financial measure.

What is Bankruptcy?

Bankruptcy is a legal process that allows businesses and individuals who are unable to pay off their debts to either have those debts completely discharged or restructured over time with payment plans. There are different types of bankruptcy for businesses and individuals, but all types require the filer to provide detailed information about their assets and liabilities, as well as their income and expenses. This helps creditors determine how much money can be repaid.

When Should a Business Consider Filing Bankruptcy?

Businesses should only consider filing for bankruptcy when other options have been exhausted or the debt far exceeds the company’s ability to repay it in a reasonable amount of time. Other options may include restructuring debt through loan modifications, refinancing debt at better terms or having creditors agree to accept less than full payment in exchange for eliminating late fees or interest charges. If none of these options are available, then bankruptcy may be necessary in order to protect the business from further damage due to mounting debt obligations that cannot be met.

Types of Bankruptcy Available

The two types of bankruptcy most commonly used by businesses are Chapter 7 (liquidation) and Chapter 11 (reorganization). With Chapter 7, most of the company’s assets are sold in exchange for cash that is then used to pay off creditors; any remaining debt is discharged by the court. The company ceases operations immediately upon filing Chapter 7. If you have incurred personal debt on behalf of the business, however, be aware that your obligations for those debts may live on after business bankruptcy and after your business has ceased operations. If you have taken on personal liability for loans or other debts for the business, you may want to consider filing personal bankruptcy under Chapter 7 protection to attempt to eliminate these debts on yourself.

With Chapter 11, the company continues operating while attempting to reach an agreement with its creditors regarding how much will be paid out over time and which obligations will be forgiven in exchange for future payments being made on time. Chapter 11 business bankruptcy essentially allows for a clean slate for the business, after reorganizing the company’s debts.

The Philadelphia Business Lawyers at Sidkoff, Pincus & Green P.C. Help Protect Your Business

Filing for bankruptcy can often be seen as a last resort option for businesses who find themselves in financial distress due to overwhelming debt obligations they cannot meet without outside help from creditors or other sources. If your business is facing extreme financial trouble, discuss your legal options with the Philadelphia business lawyers at Sidkoff, Pincus & Green P.C. Call 215-574-0600 or contact us online. We proudly serve not only Philadelphia, but also Pennsylvania and New Jersey.

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Why is January the Best Time to Start a Business? 

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Philadelphia Business Lawyers at Sidkoff, Pincus & Green P.C. Help Clients Establish New Businesses.

Starting or incorporating a business on January 1 has several advantages, the most notable being tax breaks and startup cost savings. However, beginning the process in the last few months of the year is the most beneficial by utilizing Pennsylvania’s “delayed-effective date.”

Delayed-effective filing allows you to select a future date for the business filing to be considered effective, reducing taxes and personal liability because your business starts in the first month of the calendar year. Pennsylvania has no limit to how far ahead you can forward-date the filing, providing you with valuable time to get a head start on setting up the business, and ensuring the business is approved and formed by the start of the new year. Advantages of a January effective date include:

Streamlining the Tax Process

Business owners must file tax returns for every year of the business’s existence, regardless of profit or revenue. Starting a business in the middle of a calendar year has negative tax repercussions by requiring you to file taxes in two separate periods: one for the term you operate as a sole proprietorship and another for the period after incorporation. In addition, owners of limited liability companies (LLC) are required to declare any profits and losses on their personal income taxes as well. Setting an effective date in the first month of the year eliminates the need for two separate tax filings during the fiscal year and possibly reducing the overall amount of tax owed.

Faster Processing

Many entrepreneurs choose to start their business in January for the reasons previously stated, however, a large majority wait until January to start the filing process. As a result, state corporation offices experience a backlog in the first few weeks of the new year, creating longer wait times for officially establishing your business. This can result in delayed profits and two tax filings. Filing in late fall and selecting a January 1 effective date avoids waiting in the backlog as state offices can process the filing in the order they receive it, thereby avoiding the new year rush.

State Compliance Advantages

Businesses are required to maintain compliance with state regulations to remain in good standing and operate legally, including identifying a registered agent, filing annual reports, and paying state franchise taxes. Typically, annual reports and state tax returns are not due until the first anniversary of the business’s formation. Just as the federal tax filing, choosing a January 1 effective date avoids the need to file franchise taxes and filing fees with multiple agencies for only a few months of operation.

Additional Preparation Time

Choosing a delayed-effective date several weeks ahead gives you extra time for preparing all other essential aspects of your business, such as:

  • Bookkeeping and payroll requirements
  • Business and financial plans
  • Creating a webpage
  • Developing employment contracts and hiring staff
  • Developing trademarks
  • Entering contracts with external vendors and customers
  • Establishing bylaws
  • Establishing lines of credit or securing capital
  • Naming the business
  • Obtaining business insurance
  • Organizational shareholder meetings, if applicable
  • Purchasing inventory
  • State and federal tax registrations

Philadelphia Business Lawyers at Sidkoff, Pincus & Green P.C. Help Clients Establish New Businesses

Starting a business is an exciting new adventure for entrepreneurs, and one of the most important factors is determining the most advantageous time to start. At Sidkoff, Pincus & Green P.C., our Philadelphia business lawyers advise and assist new business owners with becoming established. Contact us online or call 215-574-0600 for an initial consultation. Located in Philadelphia, we serve clients throughout Pennsylvania and New Jersey.

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Can A Lawyer Help My Business Negotiate with Vendors?

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Philadelphia Business Lawyers at Sidkoff, Pincus & Green P.C. Help Businesses Develop and Negotiate Contracts.

Most business will eventually need to contract with outside vendors and others in order to meet business operations and success. A contract attorney provides a valuable resource for any activity requiring a contract, and more businesses are understanding the necessity of a contract that details the role of each party and provides legal protections.

What Does a Contract Attorney Do?

Contracts establish legally enforceable obligations between the parties and working with an attorney helps ensure that any contracts your business enters are executed properly and your interests are protected. Contract attorneys can review potential contracts, draft new contracts, evaluate existing contracts in disputes, and handle breach of contracts. Whether drafting a new contract or reviewing an existing one, a contract attorney can prove vital in key areas such as:

  • Terms: Contracts spell out the essential terms, or the fundamental conditions of the contract, which detail the obligations of each party and what actions are considered a breach of contract.
  • Provisions: Contract provisions are additional stipulations clarifying specific points and provide extra protection for all parties.
  • Laws: Contracts must abide by the local and state laws and regulations of the jurisdiction where they are filed. Working with an experienced attorney rather than adapting an online contract template is particularly valuable to your specific business.

Why Should I Hire a Contract Attorney?

Contract attorneys have extensive experience in contractual issues and applicable state laws, and may have specialty practice areas, such as intellectual property, tax, licensing, or sales agreement contracts. Working with a seasoned contract attorney is beneficial as they will provide:

  • In-depth understanding: Legal terminology can be complex and confusing, and managing contracts without a comprehensive understanding of legal jargon can leave you open to liabilities, inaccurate assumptions, and other critical problems. Contract lawyers are knowledgeable in contractual legal terminology and can help you achieve a better understanding.
  • Smooth negotiations: Contract negotiations can go off the rails if one or more parties takes offense of the terms. An attorney will take responsibility for drafting and executing the contract as an impartial party, preventing such a situation from occurring.
  • Incorporate laws: Local and state laws and industry regulations frequently change and must be correctly detailed within contracts. A contract attorney possesses vast knowledge of the most current laws, regulations and trends and will ensure that your contract meets legislation.
  • Prevent loopholes: The purpose of a contract is to provide protection for you and your business. Loopholes, whether intentional or otherwise, can put you at-risk of potential liabilities. When drafting the contract your attorney will make certain no loopholes are included.
  • Ensure terms: The essential terms of the contract are vital, as they detail what each party is responsible for, and the consequences should the terms be violated. Your attorney will include the best possible terms related to your industry and to protect you from disputes.
  • Protect you: Your contract attorney will ensure the contract includes specific information as to what constitutes a breach of contract and the consequences. Your attorney will also be a valuable resource for enforcing the contract should a breach occur in the future.

Whether you are starting a new business, establishing new vendor relationships, or experiencing a breach of contract, working with an experienced contract attorney is valuable to your business’s protection and future success.

Philadelphia Business Lawyers at Sidkoff, Pincus & Green P.C. Help Businesses Develop and Negotiate Contracts

All businesses enter into some form of contract with vendors and others at some point during the life of the business. Contracts are necessary to provide clearly defined terms and protection for all parties. The experienced Philadelphia business lawyers at Sidkoff, Pincus & Green P.C. work with many business clients to draft and execute many types of contracts. Contact us online or call 215-574-0600 for an initial consultation. Located in Philadelphia, we also serve clients in South Jersey, New Jersey and Pennsylvania.

5 Types of Legal Trouble to Avoid as a Business Owner

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Philadelphia Business Attorneys at Sidkoff, Pincus & Green Help You to Avoid Legal Issues.

Establishing a business helps to create economic opportunities for owners, investors, and workers alike. It takes more than obtaining a business license and a location to be successful. Proprietors of any type of businesses are susceptible to making legal mistakes that may seem minor, but can be detrimental to the business.

Whether your business is new or established, the following are five types of legal trouble that you should do your best to avoid.

  1. Choosing the Wrong Business Structure

Establishing a formal business entity with a legally recognized structure can help you to protect your personal assets. The four most common business structures are:

  • Sole proprietorship
  • LLC
  • Partnership
  • Corporation

A sole proprietorship will not protect your assets against business liability where an LLC or a corporation might. A partnership might leave you vulnerable to liability, but an experienced business attorney could help you to ensure that it does not.

  1. Not Paying Taxes

Businesses must pay taxes to federal, state, and many local governments. A variety of business taxes could apply to your enterprise. If you do not pay them, a tax collector might force your business to fold and claim its assets.

A business attorney can help you to understand business tax liabilities and help to ensure that the business pays them.

  1. Ill-Prepared for Employment Issues

Job providers must do their best to fully prepare for possible worker injuries, complaints, and other commonly occurring employment issues.

Obtaining workers’ compensation insurance is required by law and helps to protect you and your business against injury liability. If you do not have it, your business is vulnerable to potential lawsuits filed by injured workers.

Establish formal workplace rules, accepted practices, and safety procedures. Regularly training your workers can help you to prevent accidents and complaints regarding workplace harassment or discrimination.

Ensure workers are paid properly for hourly wages and any overtime that they might accrue. Failing to pay in accordance with state laws could trigger a wage complaint and lawsuit.

  1. Poor Record-Keeping

Stay on top of your business paperwork and keep it organized. If your business records are in disarray, so is your business. A professional record-keeping or bookkeeping service could help you to prevent bad record-keeping from wrecking your business.

  1. No Succession Plan

An enterprise with a strong business model could last beyond the working career or lifetime of the owner. You should ensure your business has a succession plan that enables a smooth transition of ownership and power to an acceptable individual or party. A clearly defined and detailed succession plan can help your business to succeed after you cease your ownership due to retirement or passing on.

Philadelphia Business Attorneys at Sidkoff, Pincus & Green Help You to Avoid Legal Issues

The experienced Philadelphia business attorney at Sidkoff, Pincus & Green P.C. can help you to best manage your business’ legal risks. You can contact us online or call 215-574-0600 to schedule an initial consultation at our Philadelphia law office. We represent clients in South Jersey, Pennsylvania, and New Jersey.

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Should I Opt In For a Surety Bond for my Business?

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The Philadelphia Business Attorneys at Sidkoff, Pincus & Green P.C. Can Help You Choose the Right Kinds of Surety Bonds for Your Business.

A surety bond is like a guarantee from one company to another party and is business as normal for many organizations. At its core, the word “surety” signifies a formal engagement provided for the fulfillment of an activity. For business purposes, it could be a bond to ensure timely payment to vendors or contract completion; there are other kinds of surety bonds as well.

How Can I Get Surety Bonds?

Companies need to have licenses and insurance coverage to operate, and surety bonds may or may not be optional. Unlike traditional two-party insurance policies, surety bonds are three-way agreements between businesses, the other party, and the surety company. That surety provider is not directly responsible if the agreement is broken.

State insurance departments regulate surety providers, and this underwriting is seen as a form of credit. Because of this, surety companies look at a business’s financial history, credit history, and so forth. When claims are made, the surety company gets reimbursed by the business that purchased it.

The three main kinds of surety bonds are bid, performance, and payment.

  • Bid bonds guarantee that a contractor will submit a bid in good faith and enter the contract at the designated price.
  • Performance bonds protect business owners from financial losses when contracts do not fulfill their contract document requirements.
  • Payment bonds assure that contracts get paid.

In the United States, surety bonds can be written out by insurance company divisions and subsidiaries that handle these agreements. Surety companies are certified and regulated by the state insurance commissioner and may have more oversight. The Small Business Administration guarantees bonds for select surety companies, and this can be a green light for those companies to sell the bonds to small businesses that might not have qualified.

Why Should I Get a Surety Bond?

Surety bonds are required by law in many instances but even if this does not apply, your business could benefit from having one or more of them. They protect clients who sign contracts and make them more credible. Should you be unable to deliver on agreed-upon services, a surety bond could reimburse your client and protect your reputation.

If you hire subcontractors, having surety bonds will help reduce the amount of risk you are taking on. The bonds can relate to bids, performance, and payment, but keep in mind that the bond threshold requirements may change on different projects, reflecting the amount of the subcontract, timelines, and scope of work.

What Industries Use Surety Bonds?

Besides construction, the transportation industry also makes good use of surety bonds. The majority of these are necessary according to various laws. This makes sense because there is considerable risk involved with both.

The automobile industry is also big on surety bonds; auto dealers need them because of state government regulations. There are also certificates of title bonds and vehicle registration services bonds. Licensed insurance brokers, notaries, retail businesses, farmers, medical suppliers, assisted living facilities, and lawyers also often need to get bonds.

Individuals who own private businesses or take on private projects do not necessarily need to buy safety bonds, but they may enter into agreements that require them. As an example, a lender who is financing a private home renovation would probably want construction surety bonds from the contractor.

The Philadelphia Business Attorneys at Sidkoff, Pincus & Green P.C. Can Help You Choose the Right Kinds of Surety Bonds for Your Business

Surety bonds can protect your business, finances, and reputation from risk, but they are not the same thing as traditional insurance. To learn if one is right for you, contact the skilled Philadelphia business attorneys at Sidkoff, Pincus & Green P.C. Call our Philadelphia office at 215-574-0600, or complete our online form to schedule a confidential consultation. We serve businesses throughout South Jersey, Pennsylvania, and New Jersey.

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