Category: Business Law

How to Avoid Business Fraud?

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Philadelphia Business Lawyers at Sidkoff, Pincus & Green P.C. Help Companies Compromised by Fraudulent Activity.

According to the Association of Certified Fraud Examiners, the three main types of fraudulent activity are theft, financial statement fraud, and misappropriation of assets. Small and midsize businesses are often more vulnerable to fraudulent activity and experience more damage than larger companies. As estimated 33 percent of businesses experience increases of fraud each year, frequently committed by employees, such as embezzlement, which results in loss of revenue and triggers involvement by the Internal Revenue Service.

To reduce fraudulent incidents, prevention and detection of fraud activity are crucial. All businesses should establish policies and procedures to prevent fraud, which is much easier than recovering losses following incidents of fraud. There are steps business owners can take to help protect against hackers, identity thieves, and cybercriminals, including:

  • Divide accounts: Maintain separate business and personal bank accounts. This ensures that if thieves’ access one account, they will not have access to all of your accounts and drain all your funds at once. Maintain separate business and personal credit cards as well and protect card information.
  • Separate accounting duties: Small businesses tend to operate with one employee handling all of the money-related duties, such as accounting, payroll, petty cash, and more. With only one person handle all of the finances for the entire business, embezzlement and fraud can occur over long periods of time without you noticing. Dividing the financial tasks between two or more employees helps safeguard the business funds.
  • Protect data: Computer systems often leave us unprotected from thieves and fraudsters. Install anti-virus software and firewalls to help protect your company data and alert you of attempted breaches. Establish strict policies requiring employees follow company password requirements and change passwords every 60 to 90 days.
  • Run background checks: When hiring, businesses need to bring on employees who are not only qualified, but trustworthy as well. Go beyond work history and references and perform background checks on potential employees once the list of candidates is reduced to five or less applicants. Know your current employees and business partners as well. Often the employee committing fraud is well-liked, works long hours, and takes on extra duties with little oversight.
  • Establish internal controls: Businesses can create and maintain internal controls to detect or prevent fraud, such as access to inventory and financial data, and protocols requiring more than one person’s approval for overtime, check writing, payroll, accounting, and expense reimbursements.
  • Review bank accounts: Regularly scrutinize bank accounts for any signs of theft or fraud. Pay particular attention to missing checks or those with out-of-sequence numbers, checks signed over to a third party, and payments to unknown people or businesses.
  • Perform regular audits: Establish regular, routine and unscheduled audits for all departments handling accounting, cash, inventory, returns, refunds, and other financial duties.
  • Train employees: Educate employees on fraud protection, how to detect fraud, and to report suspicious activity. Establish anonymous reporting to protect employees when reporting on a coworker and thoroughly investigate every report of suspected fraud.
  • Install secure entries: Install time-stamped key-card security systems at entry points to monitor those entering and leaving the building and limit employee access to certain areas.

Additional, business owners can establish multi-factor authentication, which sends a secret code to your cell phone if your username or passwords have been compromised.

Philadelphia Business Lawyers at Sidkoff, Pincus & Green P.C. Help Companies Compromised by Fraudulent Activity

If your business has been compromised by fraud, the knowledgeable and experienced Philadelphia business lawyers at Sidkoff, Pincus & Green P.C. can help you fight back and regain control of what is rightfully yours. Call us at 215-574-0600 or contact us online to schedule an initial consultation. We are located in Philadelphia and serve clients throughout Pennsylvania and New Jersey.

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How Do I Transfer Ownership of My Business to My Child?

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The Philadelphia Business Lawyers at Sidkoff, Pincus & Green Help Clients With Family Business Matters.

Family businesses, also known as closely-held businesses, are owned, controlled, and often operated by a single family, whether it be siblings or parents and their children. It is common for these businesses to eventually be passed down to the next generation in the family.

When done correctly, transferring business ownership to your children can ensure security and income. When transferred incorrectly, it can jeopardize both the business and family relationships. The successful transfer of the ownership of your business to your child is complex and requires careful planning. The reality is, there are nearly as many ways to transfer a family business as there are types of businesses. It is important to have a thorough discussion with an experienced business lawyer who knows how to accomplish your goals with regard to your family and complete financial picture.

What Are Some Ways Businesses Can Be Transferred to Children?

There is no question that handling a family business is an essential part of planning your estate. The following are some ways a business can be transferred to your children:

  • Include it in your will: You can simply put your interest in the business to your children in your will. This allows you to maintain complete control of the business for as long as you live, and your children to benefit from future ownership as they learn to manage the business. The downside to this route is the concern that as owners get older, they may not be able to fully run the company’s affairs. There are often tax advances to transferring all or part of the business while you are alive.
  • Gift it now: You can give your children part or all of the business now. You may have to pay a gift tax, but the lifetime exclusion is large, so there may be little or no gift tax to pay, at least through the end of the year. A major advantage of gifting is that any future appreciation in the value of the business will be excluded from your estate, and not subject to estate tax when you die. A disadvantage is that your children’s tax basis in the business will be the same as yours today, rather than a “stepped up” basis, which would be equal to the value at the date of death if they inherited ownership.
  • Sell to your children: Owners often want to transfer ownership while they are still living, but continue to receive income from the business. In these cases, a good option for owners is to sell the business to their children.
  • Transfer the business to a trust: You may also sell or give an interest in the business to a trust for the benefit of your children. This is advantageous because it protects the children’s interest from creditors and ex-spouses. Other advantages to trusts are that they can help avoid capital gains tax on the sale of the trust assets, and avoid income tax on interest payments from the trust to the owner.

Many of the above options could be combined to meet your family business needs. If you have only one child, and that child is qualified and also wants to run the business, the transferring process is fairly straightforward. When none of these three things are the case, transferring family business ownership can become much more complicated. For these reasons, it is strongly recommended to work with a skilled business lawyer to ensure that your specific goals are met.

The Philadelphia Business Lawyers at Sidkoff, Pincus & Green Help Clients With Family Business Matters

If you are looking to transfer the ownership of your business to your children, the knowledgeable Philadelphia business lawyers at Sidkoff, Pincus & Green are here to assist you. Call us at 215-574-0600 or contact us online to schedule an initial consultation. Located in Philadelphia, we represent clients throughout Pennsylvania.

What Happens if Multiple Siblings Inherits a Business?

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Philadelphia Business Lawyers at Sidkoff, Pincus & Green P.C. Assist Business Owners with Estate and Family Planning.

To many owners, leaving the family business to the next generation can be daunting, as most parents want to focus more on equality and fairness when dividing the estate and business among multiple children. However, this is not always the soundest decision for the continued success of the business, and frequently leads to family conflict.

“Fair” does not always mean “equal,” particularly if one child has taken an interest and devoted their adult career to help running the family business, but another child chose a different career path altogether. An equal division in this scenario would likely not be considered fair by either child, yet 60 percent of business owners report planning to divide their businesses equally among their children regardless.

There are a number of avenues toward an equal inheritance for all children, without equally dividing the family business, especially when not all are interested in taking succession of the business, such as:

  • Recapitalize the business and divide the money equally among the children.
  • Develop voting and non-voting stock for family members, allowing the children who want to manage the business more say in day-to-day operations and direction.
  • Utilize life insurance policy death benefits with larger shares of the insurance payouts distributed to the children not receiving ownership in the business.

Planning for the transfer of your business to heirs should be developed in the early stages of your business’s establishment for the business to endure in the event of your untimely death. When deciding on what percentage of the business you plan to transfer to your children, carefully consider:

  • Whether the business should be divided equally between children currently involved in the business and those who are not.
  • What other assets are available for the children who are not involved in the business and whether they are equal.
  • Should children outside the business inherit liquid assets as opposed to the illiquid assets those working in the business will inherit.
  • Whether you should provide those currently working in the business with early inheritance today through ownership versus waiting until your death to inherit along with their siblings not involved in the business.

Your wealth, the business’s wealth, estate and income tax, and probate laws will change over time, so making a habit of regularly reviewing and updating the plan for your business to reflect these changes is also crucial for succession.

Have open and frank discussions with your children regarding your plan for the business. Doing so manages their expectations and begins preparing them for the responsibilities of managing the business and allows it to continue operating seamlessly. Explain your reasoning behind your decisions and the goals you have set for the continued operation of the business in your absence. If you anticipate discussions may be contentious between siblings, include your attorney, accountant, or other trusted advisors to help facilitate the meeting and frame the discussions.

In today’s world, it is not uncommon for children to not receive inheritances until they are in their 50s and 60s due to longer life expectancies now. At this stage of your children’s lives, they are likely well-established in their own careers, in or out of the family business. You may determine that lifetime gifting during crucial milestones in your children’s lives is more beneficial for the entire family and ownership transfers through gifts, sales, or equity compensation may be better options than an equal division. These methods also offer a smoother transition to the next generation and helps avoid disputes over your intentions regarding inheritance.

Estate planning can be a complicated and emotional experience but acknowledging the emotional impact of inheritances and prior decision-making allows you satisfy all of your heirs and solidifies the longevity of your family business.

Philadelphia Business Lawyers at Sidkoff, Pincus & Green P.C. Assist Business Owners with Estate and Family Planning

If you are a business owner, you want your business to thrive well into the future through your family’s generations. With careful decision-making and estate planning, you can ensure that your children and your business will be well taken care of following your death. The experienced Philadelphia employment lawyers at Sidkoff, Pincus & Green P.C. can help you develop a sound plan that benefits everyone. Call us at 215-574-0600 or contact us online to schedule an initial consultation. We are located in Philadelphia and serve clients throughout Pennsylvania and New Jersey.

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What Should I Consider When Selling My Business?

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If You Are Selling Your Business, Contact the Knowledgeable Philadelphia Business Lawyers at Sidkoff, Pincus & Green .

Business owners put l time, energy, and hard work into establishing and growing their businesses. Whether your business is successful or not, there may come a time when you decide to sell your business. Even if the time is not now, you should always have a plan and strategy for when the situation to sell arises.

Preparation is Key to Success

Selling your business will probably be one of the most important decisions you will make in your life. You get one chance to price your business accordingly to reflect your effort and success. You should also determine your priorities, evaluate the timing of the sale, and assemble an expert team to help you with the sales process. You also need to understand the ethical and legal duties you face as you exit your business.

Before you start the sales process to sell your business, you must understand the steps involved. Read on to understand some factors to consider to ensure a successful sale.

  • Determine what you want from the sale
  • Define your priorities
  • Gather professional advice
  • Negotiate a good price
  • Establish acceptable terms

Finally, you must go into the sale knowing what you want to achieve: what are your non-negotiable items? What items are negotiable? If you do not firmly believe in your end result, you are less likely to end up in the best possible position.

Five Factors to Know Before Selling Your Business

Business sales plans differ based on business size, complexity, and financial standing. Learn about the top five factors every business owner should consider before selling.

  1. Business Structure and Ownership

Your business structure and the individuals who claim ownership will affect the sale of your business.

Are you the sole proprietor/owner of your business? The decisions around the sale are solely up to you and require fewer formalities.

If your business is set up as a limited liability company (LLC) or corporation, all members or shareholders must agree on the sale. This agreement can even be a corporate resolution, usually dictated by the operating agreement or bylaws of the company.

  1. Due Diligence

When selling a business, due diligence matters. You will be better off if you are more prepared, organized, and thorough with all business dealings and asking for the total value of your business.

You should always protect yourself and your business information when trying to sell your business. Before disclosing private information about your business, protect yourself by asking the potential buyer to sign a confidentiality agreement. Be prepared that most buyers will want to see the company’s financial records.

  1. Employees

Employees make up an essential part of your business. Each individual needs to be evaluated with care when considering the sale of your business. The sale of your business should never be a surprise. You should discuss the deal with employees beforehand and talk to potential buyers about your employees.

  1. Value

Pinpointing the exact value of a business can be complex. You have likely put years of work into it. You are probably full of emotions, but you should be realistic when setting a price for your business.

It would help if you researched or sought help to determine the realistic value of your business. You can consult with a CPA or lawyers or hire a business evaluator to determine what value the marketplace has for your business and structure your sale appropriately.

  1. Financials

The sale of your business depends on your finances and the buyer’s finances. The buyer is responsible for securing the agreed-upon purchase price of a business. If the buyer is low on cash, financial companies help finance the transaction. Sometimes, a buyer may not have enough cash to pay the entire price. Then, a financial business will step in to provide guidance and loans to finance the sale.

Selling your business is a big step. The process will be much easier if you plan and consider the many factors that go into this big decision. The final sale should be a success with a good strategy, sound advice, and a thorough plan.

If You Are Selling Your Business, Contact the Knowledgeable Philadelphia Business Lawyers at Sidkoff, Pincus & Green

 

The experienced Philadelphia business lawyers at Sidkoff, Pincus & Green can provide the guidance and expertise you need when you decide to sell your business. We represent clients throughout South Jersey, Pennsylvania, and New Jersey. You can call 215-574-0600 to schedule an initial consultation at our Philadelphia law office.

What Are the Benefits of Entering a Business Partnership?

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Philadelphia Business Lawyers at Sidkoff, Pincus & Green Represent Business Owners Who Need Help with Business Contracts or Disputes.

Entering a business partnership could be the best or worst decision you have ever made. Much depends on the size of your business, your financial situation, who your partner is, and much more. Therefore, before you take the plunge, you should weigh out the possible advantages and disadvantages of what a business partnership could mean to you and your business.

What Are the Advantages of a Business Partnership?

It is time to expand your business, but you have neither the cash nor the borrowing power to take your business to the next level. By entering into a business partnership, you could accomplish what you envision.

Adding a partner could give you more cash and credit to expand. It also gives you someone with whom you can share the financial burden. Of course, adding more knowledge and expertise to the business is always a plus, and adding to your list of contacts can help you as well.

A partnership brings with it another perspective, not to mention a support system that might otherwise not exist. Perhaps the best advantage of a partnership is the tax advantages. Although a partnership will have to file income, gains, losses, and deductions, it allows the taxes to move through the business and onto the individual partners. The partners, in turn, will claim the profits and losses on their personal tax forms.

Although a business partnership can help you expand, there are disadvantages to consider. In a general partnership, your decision making is no longer your own. Although a partner shares the financial burden with you, profits are also shared. Moreover, you are responsible for your partner’s debts and bad decision-making.

A possible conflict of interest is especially important to consider. Having different opinions about how the company will operate going forward is often a problem and could create unwanted tension. The idea of expanding or selling the business, for instance, could become an inextricable web of complications.

What Types of Business Partnerships Should I Consider?

There are different types of business partnerships. The most basic is a general business partnership. The owners, according to each percentage owned, most commonly 50 percent, share profits and losses, as well as any debts, liabilities, etc.

A limited partnership is best for businesses with one main owner, having co-owners with a smaller stake and/or say. A limited liability company partnership (LLC) helps to protect owners’ personal assets in case of a lawsuit. A limited liability partnership (LLP) is designed to exempt individual owners from the business debts and irresponsible actions of co-owners.

What Is Good Advice to Consider Before Entering into a Business Partnership?

Carefully consider whether or not you really need a partner. Think critically about the most obvious issues. You will not only be giving up full ownership, but you will also have to include a partner in every decision, one way or another. In other words, despite the type of partnership it is, you will have to answer to someone in some way about the operations of the business.

If you decide adding a partner is a must, carefully choose your partner, and do not be in a hurry to do so. Be certain that you are both on the same page in regard to every aspect of the business, from operations to expansion.

Another important element to consider is adding someone who can complement you. For instance, choose someone who has a different skill set. Most importantly, take the time to have a detailed partnership agreement made up.

An exit agreement, for instance, is critical. You should also determine how to allocate profits, share losses, and resolve disputes. Remember that without a carefully-constructed agreement, your business will have to follow the default rules of your state in the case of a dispute between you and your partner[s].

Philadelphia Business Lawyers at Sidkoff, Pincus & Green Represent Business Owners Who Need Help with Business Contracts or Disputes.

If you need help with a business contract or any issue regarding your business, having a competent lawyer will make all the difference. To help you in any business matter, speak with our experienced Philadelphia business lawyers at Sidkoff, Pincus & Green. Call us at 215-574-0600 or contact us online for a free consultation. Located in Philadelphia, we serve clients throughout Pennsylvania   and New Jersey.

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How Do Non-Disclosure Agreements Work?

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Philadelphia Business Lawyers at Sidkoff, Pincus & Green P.C. Assist Clients Regarding Non-Disclosure Agreements.

Non-disclosure agreements (NDAs) are legally binding confidentiality contracts regarding the sharing of sensitive business, financial, or proprietary information with others outside the agreement. NDAs are common when businesses negotiate with other businesses, firms, or individuals requiring confidentiality of the information and data shared among the parties during the process.

In business dealings non-disclosure agreements are common, especially when entering partnerships, hiring employees, or obtaining investors that require sharing sensitive information. An NDA provides confidentiality and security over the. Situations requiring an NDA may include:

  • Mergers and acquisitions: When companies combine, purchase, or sell, sensitive financial and operational information must be shared among all parties involved, including brokers and intermediaries. Organizations choose to enter into NDAs in order to protect their information and ensure confidentiality.
  • Products: NDAs are crucial when licensing or selling new products or technology to protect the spreading of proprietary, technical, and financial information outside the entities involved in the sale or licensing.
  • Partnerships: When entering into new partnerships or securing investors, NDAs are essential to protect information shared during negotiations.
  • Employees: It is also crucial for some organizations to require confidentiality among the employees regarding the sharing of sensitive data, financial or proprietary information, and business practices.
  • Clients: An NDA protects organizations from the spread of sensitive information when acquiring new clients to prevent accidental exposure that could result in legal liabilities.

What Information Should Be Included in an NDA?

Though each NDA is unique based on an organization’s needs, there are essential elements typically included in confidentiality agreements, such as:

  • Identification: Identify and detail the parties included in the agreement, which parties are disclosing and receiving, business partners, accountants, attorneys, and any others associated with the NDA, including names and contact information for all.
  • Definitions: Detail what information is to be held confidential and protected by the NDA, and rules regarding the use of said information.
  • Scope: One of the more crucial parts of an NDA, the scope clearly defines how the NDA will be enforced and specifically details on what information is protected under the agreement.
  • Obligations: This section details what is expected of those who sign the contract and the consequences if the participants violate the agreement.
  • Time limit: NDAs are generally not permanent and should specify the length of time participants are bound to uphold the terms of the agreement, as well as specify when that period will end.
  • Information return: Depending on the scope of business and what information is covered under the NDA, some agreements include a section requiring the parties to confirm that the information they were privy to has been returned or destroyed.
  • Remedies: This section details what actions will take place for breaches of the agreement. Typical consequences involve restraining orders, monetary fines, with additional actions for breaching fiduciary, copyright, patent, or trademark infringements.
  • Exclusions: As with any business contract, there can be exclusions to NDAs as well, typically information that does not require confidentiality. These may include previously disclosed information, prior knowledge of business or financial information among the parties, or information that is public knowledge.

When entering an NDA, review if carefully and understand what is expected of you. Ask questions, voice concerns, and request clarifications if you uncomfortable or disagree with the terms. Never sign a contract that you do not agree with or fully understand.

Philadelphia Business Lawyers at Sidkoff, Pincus & Green P.C. Assist Clients Regarding Non-Disclosure Agreements

If your business is planning to merge or acquire another business, entering a partnership, or recruiting investors, you are likely going to need to develop non-disclosure agreements to protect your sensitive and proprietary information. Our experienced Philadelphia business lawyers at Sidkoff, Pincus & Green P.C. can assist in developing the agreement. Contact us online or call 215-574-0600 for an initial consultation. Located in Philadelphia, we also serve clients in New Jersey and Pennsylvania.

Can Executives Negotiate Their Severance Packages?

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Philadelphia Business Lawyers at Sidkoff, Pincus & Green P.C. Help Clients to Get Severance.

Parting ways with your longtime employer does not necessarily mean your income from that employer ends with your employment. A severance package often makes it possible for a valued worker to part ways with no animosity.

A severance agreement usually includes specific legal agreements that stipulate that, in exchange for accepting the severance package, the former employee cannot make negative comments about their former employer. Accepting the severance also usually means giving up any right to sue the former employer for any reason.

A severance package could bridge the income gap between jobs. If you find one right away, you still get to collect your severance pay.

How that severance is paid, the amount, and its duration all are important to take into consideration when accepting a severance package. These various factors can affect your life for the foreseeable future, so it is important to negotiate a severance package prior to parting ways with an employer.

Factors to Consider During Severance Negotiations

It helps to consider what you need versus what you are offered for severance. Overlooking important needs could create an unintended hardship.

For most people, the most important factors to consider when negotiating a severance agreement could include:

  • Extending benefits through the severance period
  • Handling retirement packages and incentives
  • Mutual non-disclosure agreements
  • Whether you need to return or laptop computer or other work items

You likely will want to maintain your health insurance benefits and have the employer continue deducting any pay for health care benefits. If you have a 401k or another retirement package, rolling it over or accepting a payout is very important.

If you were issued a laptop or other equipment to keep at home so that you could do your job, you might be able to keep it. Non-disclosure agreements could ensure that neither you nor the soon-to-be-former employer make disparaging remarks about the other party or file any lawsuits.

When Severance Negotiations Could Start?

Severance negotiations usually begin when your job is about to end. Most people have a good idea whether or not their jobs might end soon. In such cases, notification that the job is ending and severance is offered is not surprising, but it still could be upsetting.

The potentially emotional nature of exiting a job might encourage you to accept a severance upon receiving the offer. That would be the first severance negotiations mistake that you could make.

Instead of accepting right away, you should tell the employer that you need to review the offer. No law requires employers to offer severance packages, and you are not obligated to accept one.

Standard practice is to allow you up to 21 days to review the document and accept or reject it. If you accept it and change your mind, you usually have seven days to revoke the acceptance. You can make a counteroffer and negotiate the severance regarding payment and any other items of importance to you.

How Severance Affects Unemployment Benefits?

If you accept severance pay, you cannot file for unemployment until the severance pay expires. The state views severance as an extension of employment.

Your first true day of unemployment is when the severance agreement expires, and no more money is due to you from your former employer. Once that final date specified by your severance package arrives, you can apply for unemployment benefits the next day. Filing sooner than that would violate state law.

Philadelphia Business Lawyers at Sidkoff, Pincus & Green P.C. Help Clients to Get Severance

If you are facing employment termination and want to negotiate a severance agreement, the experienced Philadelphia business lawyers at Sidkoff, Pincus & Green P.C. can help. You can call 215-574-0600 or contact us online to schedule an initial consultation at our Philadelphia law office. We represent clients throughout Pennsylvania and New Jersey.

Should I Start an LLC or a Corporation?

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Learn More from Experienced Business Lawyers in Philadelphia at Sidkoff, Pincus & Green.

Whether you provide consumers with goods, or clients with services, liability is an ever-present issue in businesses of all sizes. You might start a business, but have not made it a separate legal entity. If so, you could be liable for damages arising from any harm caused by the goods or services that you provide.

There are two effective ways to handle potential liability from your business activities. One is to create a limited liability corporation (LLC), and the other is to create a corporation. An LLC and a corporation have their own advantages. The following could help you to choose which would be best for your business ambitions.

Pros for Creating a Business Entity

An LLC and a corporation are similar in that they create legal entities. Those legal entities enable you to protect your personal assets by making them wholly separate from your business activities.

A medical doctor or an attorney who enters into private practice are good examples of people who provide services that could raise liability issues. Creating an LLC or a corporation for a private practice helps to limit liability to only those entities.

You could appoint yourself as the president and CEO of your LLC or corporation, paying yourself a regular salary and annual bonuses. Once that money is in your account, it is separated from your business activities.

Sole Proprietorship Makes You Vulnerable to Business Liability

Without an LLC or a corporation, you are operating what is called a “sole proprietorship,” which is one way to say that you work for yourself while providing goods or services to others.

A sole proprietorship does not protect your personal assets against liability that might arise from business practices. You could lose your life savings, home, and other assets if a customer or a client were to sue you and win a large settlement in court.

If you have an LLC or a corporate structure, the liability would not extend to your personal assets: instead, you could obtain business insurance that helps to cover the costs of liability if any issues were to arise.

Advantages of an LLC

An LLC is a simple and affordable way to create a legal business entity. An LLC might have more than one owner, but the ownership structure is small and reduces the amount of paperwork that you would have to file each year.

An LLC enables greater flexibility for management. You can change the management structure without enduring complicated legal filings or extensive paperwork.

An LLC also has a tax advantage over corporations. That is because the federal government does not tax the profits of LLCs like it does corporations. The profits from LLC entities go straight to the owners. And those owners pay taxes on their respective incomes.

An LLC does not have to endure complicated tax filings like a corporation does. It also does not require the kind of specialized accounting assistance and legal help that a corporation often requires to file and pay its annual taxes.

Disadvantages of an LLC

An LLC needs to turn a profit for its owners to make money. If a bad year results in no profits, then there is no pay for the owners.

An LLC requires its owners to have other sources of income. Or the owners need to be very frugal with the profits that they obtain during profitable years.

A strong business model and quality goods or services can help to overcome the potential for business losses. But you never know with something unexpected might occur – like a global pandemic that triggers statewide lockdowns.

An LLC also leaves its owners vulnerable to criminal allegations arising from potentially unlawful business dealings. Just as the profits flow straight to the owners, so does accountability for any criminal acts that might occur.

How to Create a Pennsylvania LLC?

It is relatively simple and affordable to create an LLC in Pennsylvania. You just need to file a Certificate of Organization and a docketing statement with the Bureau of Corporations and Charitable Organizations.

You could complete the paperwork yourself and pay the requisite fees to make your LLC a reality. But it can help to have experienced business lawyers in Philadelphia assist with the filing and its subtle legal matters.

Advantages of a Corporation

A corporation can control excess profits and use them to reinvest in the goods or services provided to customers or clients. The corporation also can use the excess profits to reward its shareholders. If a loss occurs, that also could be passed on to shareholders, though the president, CEO, and other executives and managers still can be paid salaries during years when losses occur. Forming a corporation helps to ensure some level of income even during bad years.

A corporation also provides your business entity the opportunity to eventually go public. You could list shares on a stock exchange and raise capital to fund your business ventures.

Disadvantages of a Corporation

You already know that a corporation has a more complicated creation process than an LLC, with the added irritation of dealing with annual corporate taxes. It is beneficial in many ways to enlist the help of experienced business attorneys and accountants.

Even if you are just a shareholder in a corporation, you could suffer financial losses during a bad year: if the corporation goes bankrupt, the shares become worthless. That partly is why the federal government has bailed out corporations in the past to help prevent them from filing for bankruptcy.

How to Create a Pennsylvania Corporation?

It takes more legwork and effort to incorporate in Pennsylvania and other states. You need to choose a corporate name that is unique, and readily identifiable when compared to other corporations.

The corporation must have an address and a registered agent. The registered agent could be an individual, such as a business attorney, who has a legal address in Pennsylvania. The agent also could be a business entity that can do business in Pennsylvania.

You will need to create corporate bylaws and appoint directors. After doing that, you can hold your first board meeting to officially name directors and adopt the bylaws.

You can file the articles of incorporation at the Pennsylvania Department of State. Afterward, you need to issue shares to your shareholders. Then you are a true corporation that might go public in the future.

Learn More from Experienced Business Lawyers in Philadelphia at Sidkoff, Pincus & Green

The experienced Philadelphia business lawyers at Sidkoff, Pincus & Green can help you choose and organize an LLC or a corporation in Pennsylvania. You can call 215-574-0600 or contact us online to schedule an initial consultation at our Philadelphia law office. We represent clients throughout Pennsylvania and New Jersey.

Can I Get Out of a Business Contract?

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Philadelphia Business Lawyers at Sidkoff, Pincus & Green P.C. Can Help You With a Business Contract.

A business contract between parties that is written and signed is a legally enforceable document. Signees generally cannot just leave the arrangement or void the contract at will.

In business, situations can change, and unforeseen circumstances can render one or both parties unable to honor their initial contractual agreements. Unfortunately, there are situations where one party purposely makes it difficult for the other to honor the contract.

A party can sometimes legally void their business agreement. Most of the time, breaching a contract comes with stiff financial penalties, legal costs, and possibly even litigation.

That is why it is important to have a business lawyer review a contract before it is signed. They may recommend including an escape clause in the agreement. This type of clause allows a party to terminate an agreement under certain predefined conditions lawfully.

If your contract did not have a termination clause, you might be able to still get out of the contract. There are some circumstances under which signees can void their agreement. It will still require legal action and an experienced lawyer.

Legally permissible reasons to void a business contract include the following.

Breach of Contract

If two or more parties sign a business contract and one signee unlawfully breaches the agreement, the other parties may not be required to fulfill their contractual obligations. The alleged breach must be proved in court. In a legal sense, a breach occurs when a party acts contrary to contract terms, refuses to maintain its contractual obligations, or prevents other parties from fulfilling their responsibilities.

Incapacity or Death

Contracts are typically nullified if a signee becomes incapacitated. This stipulation should be written into the contract terms. Generally, if a signee is deemed mentally incapable of maintaining the agreement, they are excused from the legal consequences of premature contract termination. In addition, deceased individuals are not held accountable to contract terms.

Fraud or Misrepresentation

If the contract is found to have been based on fraudulent or misrepresented information, the party experiencing the fraud or misrepresentation will have to prove it in court to void the contract. This process can be time-consuming and costly.

Impossible to Fulfill

If fulfilling your contractual obligation is deemed impossible, the contract can be lawfully terminated. However, the circumstances for voiding a contract for “impossibility to perform” are rare. Death and incapacity are legitimate reasons for making a contract impossible to perform. Traumatic and unexpected events, such as car accidents or natural disasters, may also be found legitimate reasons for making a business contract impossible to fulfill.

As stated previously, the best way to get out of a business contract is to have a termination clause built into the agreement, with predefined conditions that are reasonable and realistic. If that is not the case, a calm sit-down discussion involving all parties, led by an experienced lawyer, can result in negotiations and solutions fair to both parties.

Sometimes, it could even be as simple as asking the other party to allow you to void the contract. Smart business owners know that goodwill between business partners is worth more than going to court for a breach of contract. It may be possible to get out of your business contract for a fee or possibly for free. Let your lawyer lead the way.

Philadelphia Business Lawyers at Sidkoff, Pincus & Green P.C. Can Help You With a Business Contract

Our Philadelphia business lawyers at Sidkoff, Pincus & Green P.C. help businesses function smoothly and effectively under the law. If you are a business owner and need help with a contract or other legal matters, contact us online or call us at 215-574-0600 today. Located in Philadelphia, we serve clients throughout Pennsylvania and New Jersey.

What Qualifies as a Business Tort?

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Philadelphia Business Lawyers at Sidkoff, Pincus & Green P.C. Can Help You With Business Tort Litigation.

Whenever a conflict arises that causes harm to a business, a business tort could exist. Many business conflicts could endanger your business. The harm could be financial and threaten to close your business. The harm might even be the theft of trade secrets.

A business tort always involves the economic effects of wrongful acts that impact one or more businesses or other legal entities. Many begin with contract disputes that two or more parties cannot resolve. Then, lawsuits get filed in federal or state civil courts and sometimes both.

The plaintiff in a business tort must cite at least one cause of action for the lawsuit to proceed. A cause of action is comprised of legal facts that justify the lawsuit. Most business torts involve one or more of the following causes of action:

  • Tortious interference.
  • Injurious falsehood.
  • Restraint of trade.
  • Unfair competition.
  • Fraudulent misrepresentation.

Other causes of action also exist, and most business torts involve a combination. The plaintiff usually seeks a judgment for cash, property, or affirmation of a legal right.

Tortious Interference Affects Prior Business Relationships

Tortious interference happens when an offending party interferes with a business’ contractual relationships with others. The offending party might make it impossible for your business to complete a contractual obligation. When your business cannot perform its obligations, tortious interference might be a valid cause of action in a lawsuit.

Injurious Falsehood Explained

You likely understand the general concept of defamation. If another party spreads a malicious lie that damages your business’ brand reputation, an injurious falsehood occurs. Malice must be shown and refers to intentionally spreading a known falsehood with the intent to cause damage to your business’ brand reputation.

How Restraint of Trade Could Occur?

When an offending party does something that limits your amount of trade, sales, or delivery of goods or services, a restraint of trade happens. Whenever your business cannot continue normal operations due to the actions of other parties, a restraint of trade might be claimed as a cause of action.

Many Kinds of Unfair Competition

Unfair competition has potentially widely varying actions that could result in the cause of action triggering a civil suit. Stealing your trade secrets or using your intellectual property to siphon away some of your market shares are examples of unfair competition. The unfair competition gives the offending party greater leverage to generate profit at your expense.

Fraudulent Misrepresentation Could Void Contracts

When one party intentionally lies in order to secure a business agreement, that is a form of fraudulent misrepresentation. The misrepresentation is done with the intent to deceive a business or an individual. It might involve contractual negotiations or other business dealings and could occur in many ways, including the omission of information.

Punitive Damages Might Be Sought

When a malicious act creates one or more legitimate causes of action that you could prove in court, the defendant might be subject to punitive damages. You would have to request punitive damages in a court filing or amend an existing case to request them. However, it is important to note that punitive damages are rare.

Philadelphia Business Lawyers at Sidkoff, Pincus & Green P.C. Can Help You With Business Tort Litigation

Our Philadelphia business lawyers at Sidkoff, Pincus & Green P.C. can help you explore your legal options when you must resolve a business dispute. Call us at 215-574-0600 or contact us online to schedule an initial consultation. Located in Philadelphia, we serve clients throughout Pennsylvania and New Jersey.