Category: Business Law

Forming a Business Entity: A Comprehensive Guide to Choosing the Right Structure

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Philadelphia Business Lawyers at Sidkoff, Pincus & Green P.C. Can Help You Choose the Right Business Structure.

Starting a business is an exciting journey, but there are many important decisions to make along the way. One of the most crucial decisions is choosing the right business structure. The type of business entity you select will significantly impact your company’s liability, taxation, management, and ownership structure. This comprehensive guide will help you understand the different options available.

Sole Proprietorship

A sole proprietorship is the simplest and most common form of business. It is owned and operated by a single individual who is responsible for all aspects of the business.

Pros:

  • Easy to set up and maintain.
  • Complete control over the business.
  • Minimal legal formalities and paperwork.
  • Pass-through taxation.

Cons:

  • Unlimited personal liability; the owner is responsible for all debts and legal obligations.
  • Limited funding opportunities.
  • Potential difficulty in transferring or selling the business.

Example: A freelance graphic designer operating under their name would be a sole proprietor.

Best for small, low-risk businesses with no employees and minimal capital requirements.

Partnership

A partnership involves two or more individuals agreeing to share a business venture’s profits and losses.

Pros:

  • Relatively easy to set up.
  • Shared responsibility and decision-making.
  • Pass-through taxation.
  • Potential to attract investors.

Cons:

  • Unlimited personal liability for all partners unless a limited partnership is formed.
  • Potential for disagreements and conflicts among partners.
  • More complex management structure compared to a sole proprietorship.

Example: Two friends open a small bakery together, sharing the costs, responsibilities, and profits.

Best for businesses with multiple owners who want to share decision-making and financial responsibility.

Limited Liability Company (LLC)

An LLC is a hybrid business structure that combines the limited liability protection of a corporation with the pass-through taxation of a sole proprietorship or partnership.

Pros:

  • Limited personal liability; owners are not personally responsible for business debts and liabilities.
  • Flexible management structure and ownership distribution.
  • Pass-through taxation.
  • Possible tax benefits.

Cons:

  • More complex and costly to set up and maintain than a sole proprietorship or partnership.
  • Some states impose additional taxes on LLCs.
  • Possible restrictions on the type of businesses that can form an LLC.

Example: A group of software developers creates an LLC to develop and sell a mobile app.

Best for businesses seeking limited liability protection and a flexible management structure without the formalities of a corporation.

Corporation

A corporation is a separate legal entity from its owners (shareholders) and is governed by a board of directors.

Pros:

  • Limited liability protection for shareholders.
  • Ability to raise capital through the sale of stock.
  • Transferable ownership.
  • Perpetual existence.

Cons:

  • Complex and costly to set up and maintain.
  • Double taxation; profits are taxed at the corporate level and again when distributed as dividends to shareholders.
  • Extensive record-keeping and reporting requirements.

Example: A tech startup raising capital through venture funding would likely choose to incorporate.

Best for raising significant capital, going public, or operating on a large scale.

Philadelphia Business Lawyers at Sidkoff, Pincus & Green P.C. Can Help You Choose the Right Business Structure

Choosing a business structure can seem overwhelming. You can make an informed decision by understanding the different types and how they may affect your business. Speak with our Philadelphia business lawyers at Sidkoff, Pincus & Green P.C. about your legal options. Call us at 215-574-0600 or contact us online to schedule an initial consultation. Located in Philadelphia, we serve clients in Pennsylvania and New Jersey.

Starting a New Business? Here Are the Legal Steps You Need to Take

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Philadelphia Business Lawyers at Sidkoff, Pincus & Green P.C. Can Provide Legal Assistance if You Are Starting a New Business.

Starting a business in Pennsylvania can be an exciting journey but requires careful planning, preparation, and execution to ensure its success. There are several steps you should take when starting a business.

Step 1: Choose a Name and Legal Structure

The first step to starting a business in Pennsylvania is to choose a unique business name and a legal structure. Your business’s legal structure determines the protection of your assets and personal liability. You can choose from a sole proprietorship, partnership, limited liability company (LLC), corporation, or other legal entity. Research the different legal entities, and consider the legal and tax implications before deciding on the most suitable structure.

Step 2: Create a Business Plan

The next step is to create a detailed business outline that covers everything from your business goals, target audience, marketing strategy, timelines, and financial projections. Your business plan should be realistic and comprehensive and address your business’s key areas, including the competition, product offering, marketing plans, and funding.

Step 3: Register Your Business

Once the legal structure is chosen, you must register your business with the Pennsylvania Department of State by submitting the articles of incorporation, registering a name, or filing a trademark. The fees for registering your business vary according to your chosen legal structure.

Step 4: Register for Tax and Employer Accounts

As a business owner, you must obtain a federal Employer Identification Number (EIN) from the (IRS) and register tax and employer accounts with the Pennsylvania Department of Revenue and PA Unemployment Compensation. Make sure to obtain all necessary paperwork and license requirements.

Step 5: Register for Local Taxes, Zoning Requirements, Licenses, or Permits

Register for any local taxes, zoning requirements, licenses, permits, or certifications required for your business to operate legally. Check your local municipality, county, or township for specific requirements.

Step 6: Open a Business Bank Account

Opening a business bank account is a valuable tool to keep your personal and business finances separate. It makes it easy to track expenses and revenue and monitor your business’s overall financial health.

Step 7: Acquire Business Insurance

Business insurance can protect your assets, employees, and clients from unforeseen circumstances. General liability insurance and Workers’ Compensation insurance are essential protection types for most businesses.

Step 8: Fund Your Business

Obtaining funding is a vital step in starting your business. You can fund your business through loans, grants, crowdfunding, angel investors, or personal savings. Consider all available financing options, choose the one that suits your business needs, and make a funding plan that covers your business expenses for at least the first year.

Step 9: File and Pay Taxes

As a business owner, you must file federal, state, and local tax returns and pay taxes on time. Having a financial record-keeping system and consulting an accountant is essential to ensure compliance and avoid costly penalties.

Philadelphia Business Lawyers at Sidkoff, Pincus & Green P.C. Can Provide Legal Assistance if You Are Starting a New Business

Starting a business is exciting, but there is a lot of legal work to do. Get the help you need today by speaking with our Philadelphia business lawyers at Sidkoff, Pincus & Green P.C. Call us at 215-574-0600 or contact us online to schedule a consultation. Located in Philadelphia, we proudly serve clients in Pennsylvania and New Jersey.

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The Top Legal Issues Facing Small Businesses in 2023

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Philadelphia Business Lawyers at Sidkoff, Pincus & Green P.C. Can Help Fix Your Small Business’s Legal Issues.

Starting and running a business is a difficult task. Small businesses are responsible for handling every aspect of their operations, from hiring employees to signing contracts with vendors. While small businesses handle many challenges, one area that many owners overlook or undervalue is their legal requirements and compliance.

Pay Equity

In recent years, gender pay gap has gained a lot of attention, and many states have passed laws addressing pay equity issues. Many small businesses are unaware of their obligations to provide equitable pay to their employees, which can result in legal repercussions and significant financial penalties. Small business owners must understand pay equity laws and make necessary modifications to ensure they are compliant.

Employee Classification

Employee classification can also create issues for small businesses. Classifying employees as exempt employees, non-exempt employees, or independent contractors can significantly impact compliance requirements. Misclassifying employees can result in hefty legal bills, fines, and penalties. Small business owners need to proceed with caution and ensure employees are classified correctly.

Wage and Hour Compliance

Wage and hour compliance is another area that small business owners need to be vigilant about. Small businesses are required to pay overtime, keep accurate payroll records, and comply with strict minimum wage laws. Failure to comply can result in legal action and penalties, making it essential for business owners to stay informed and comply with the law.

Paid Leave Requirements

Paid leave requirements are state-mandated and have been gaining attention across the country. Small business owners must understand the laws and provide employees with the required amount of time off or they may face legal repercussions and penalties.

Cybersecurity and Privacy

With the increasing reliance on technology, small businesses need to be aware of the legal implications of cybersecurity and privacy. It is crucial to understand the necessity of securing sensitive information and the regulatory requirements that require businesses to protect consumer data privacy. With the increase in online threats and compliance regulations, small businesses need to protect themselves and their customers.

Contract Disputes

Contract disputes occur when one or more parties involved in a contract disagree about the terms of the agreement. This might happen when one party fails to live up to their contractual obligations, when there is a misunderstanding about the terms of the contract, or when there is a disagreement about how to interpret the contract.

To minimize the impact of contract disputes, small businesses can take several steps.

First, they should be proactive in drafting contracts, taking the time to ensure that the language is clear and that all parties understand their obligations.

Second, small businesses should consider having an attorney review contracts to ensure that they are legally sound and protect the company’s interests.

Finally, communication is key. Small businesses should make sure that all parties involved in a contract are aware of their respective obligations and that they have an open line of communication to address any issues that arise.

Philadelphia Business Lawyers at Sidkoff, Pincus & Green P.C. Can Help Fix Your Small Business’s Legal Issues

Small businesses face legal issues all the time, and how you deal with them can impact your business and employees. Get the legal help you need today by speaking with our Philadelphia business lawyers at Sidkoff, Pincus & Green P.C. Call us at 215-574-0600 or contact us online to schedule an initial consultation. Located in Philadelphia, we serve clients in Pennsylvania and New Jersey.

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Protecting Your Business From Wrongful Termination Lawsuits

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Philadelphia Business Lawyers at Sidkoff, Pincus & Green P.C. Can Help Protect Your Business From Wrongful Termination Lawsuits.

As a business owner, it is crucial to understand the legal implications that come with terminating employees. Wrongful termination, in particular, can be troublesome. Here are some ways you can be proactive to protect your business from wrongful termination lawsuits.

  1. Comply With Labor Laws

The best way to prevent wrongful termination lawsuits is to ensure that your business is complying with labor laws. This means understanding federal and state employment laws, including anti-discrimination laws, wage and hour laws, and labor union regulations. Review and update your employment policies and procedures regularly, and train your HR staff and managers to implement them consistently.

  1. Avoid Arbitrary Terminations

Arbitrary termination refers to firing an employee for no justifiable reason. To protect your business from wrongful termination lawsuits, you must have a legitimate reason for letting go of an employee, even if you do not share the full reason with the employee. This could be poor performance, violation of company policies, misconduct, or any other valid reason. Ensure that your business has proper documentation of an employee’s poor performance or policy violations so you have evidence that can be used to defend your decision to terminate the employee.

  1. Be Prepared for Termination

When termination is necessary, handle it with care and be prepared. Conduct the termination meeting in private and have a witness present to document the conversation. Be clear and concise in your communication, and avoid making personal attacks or comments that could be used against you. Provide the terminated employee with written notice of the termination, their final paycheck, and their entitled benefits. Consider offering outplacement services or support, such as career counseling or resume building, to help the employee transition out of the organization.

  1. Implement Clear and Concise Policies

Having a clear set of policies in place is essential to avoid wrongful termination lawsuits. Start by establishing a clear code of conduct that employees must adhere to. This can include rules and regulations about acceptable behavior and performance standards. By providing your employees with well-communicated rules and clearly defined job responsibilities, it will be easier to hold them accountable to those standards. That way, if you eventually have to take action against an employee, you will have a solid foundation to support your case.

  1. Document Employee Performance and Conduct

Documentation is critical for fighting wrongful termination lawsuits. Make sure that employee documents, such as disciplinary actions, performance reviews, and attendance records, are kept safe and secure. In case of a lawsuit, the documents will serve as evidence and back up the reason for the termination.

Document every conversation you have with an employee regarding their job and conduct. If an employee is underperforming or behaving negatively, take note of the date, time, and details of each infraction. Having a compilation of these details helps to provide tangible evidence when you are faced with a wrongful termination lawsuit.

  1. Seek Legal Guidance

One of the best ways to protect your business is by seeking legal guidance. You do not have to wait until you are facing a lawsuit to look for legal advice. Instead, have a lawyer on retainer to review policies and procedures and provide guidance on how to deal with potentially risky situations. This provides an additional layer of protection and ensures that, if faced with a lawsuit, legal professionals can provide the necessary guidance to protect your business.

Philadelphia Business Lawyers at Sidkoff, Pincus & Green P.C. Can Help Protect Your Business From Wrongful Termination Lawsuits

Protecting your business from wrongful termination lawsuits starts well before any litigation. Get the legal help you need today by speaking with our Philadelphia business lawyers at Sidkoff, Pincus & Green P.C. Call us at 215-574-0600 or contact us online to schedule an appointment. Located in Philadelphia, we proudly serve clients throughout Pennsylvania and New Jersey.

How to Draft Effective Employment Contracts?

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Philadelphia Business Lawyers at Sidkoff, Pincus & Green P.C. Can Help Keep Your Business Compliant.

Employment contracts are essential documents that provide clarity and structure to the employment relationship between an employer and an employee. The purpose of an employment contract is to clearly define the terms and conditions of employment, so that everyone – employer and employee alike – knows exactly what is expected of them.

The contract typically covers a range of issues, such as the duration of employment, job duties, compensation, benefits, termination details, and other relevant employment terms. Employment contracts provide numerous benefits to both the employer and employee.

For employers, they limit the scope for  disputes or misunderstandings. An employment contract ensures that both parties are aware of their obligations and expectations, which can reduce the likelihood of legal disputes.

For employees, employment contracts provide peace of mind and job security. A well-drafted employment contract can make it clear what is expected of them and what they can expect in return.

The following components should be included in an employment contract.

Employee Details

The employment contract should include the employee’s name, job title, starting date, and other basic information, such as contact information.

Job Duties

The employment contract should clearly define the employee’s duties and responsibilities. This can include details about tasks, targets, and goals expected from the employee.

Compensation

Employment contracts should address compensation, including salary, benefits, and other forms of compensation, such as bonuses or stock options. The contract should detail how and when the employee will be paid and what benefits will be included, such as vacation time or insurance policies.

Termination Details

The contract should outline the circumstances in which employment can be terminated, such as resignation, retirement, or dismissal. An employment agreement should specify what the process is for resolving disputes, including mediation, arbitration, or litigation.

At-Will Clause

An “at-will” clause is a provision in an employment contract that indicates that either the employer or the employee can terminate the employment relationship at any time and for any reason, without any legal consequences, provided there is no illegal discrimination or contract violation. The at-will status clearly outlines the terms of the employment relationship so that employers and employees alike understand their relationship and corresponding expectations.

The at-will status gives both parties the freedom to end the employment relationship at any time for any reason. However, it is important to note that having an at-will clause does not exempt employers from being held liable for wrongful termination under certain circumstances. Wrongful termination can occur if the employer violates federal, state, or local anti-discrimination laws, or violates any provision of an employment contract.

Other Terms

Apart from employee details, job duties, compensation, benefits, and termination details, there are other provisions that may be included in an employment contract, depending on the employer’s requirements and the nature of the job:

  • Confidentiality and non-disclosure: The employer may include clauses that prohibit employees from sharing confidential or proprietary information. This clause is especially important for companies that deal with trade secrets, client lists, or other sensitive information.
  • Non-compete and non-solicitation: Employers may include clauses that restrict employees from competing or soliciting business from clients for a certain period after their employment is terminated. Be aware that several states have begun invalidating non-compete clauses.
  • Intellectual property: If an employee is expected to create intellectual property during their employment, the contract may specify who owns it and how it can be used.
  • Performance expectations: Employers may set performance expectations and provide consequences if employees do not meet them.
  • Work schedule and hours: The employment contract can specify the work schedule and hours of the employee based on the employer’s requirements.
  • Benefits: Employers may specify the benefits offered to their employees, such as vacation days, sick days, health insurance, and retirement benefits.
  • Entire agreement: Employers may include clauses that specify that the employment agreement contains the entire agreement between both parties and supersedes any prior agreements, verbal or written.

Philadelphia Business Lawyers at Sidkoff, Pincus & Green P.C. Can Help Keep Your Business Compliant

To stay compliant, it is important to have effective employment contracts. Protect yourself and your business by speaking with our Philadelphia business lawyers at Sidkoff, Pincus & Green P.C. Call us at 215-574-0600 or contact us online to schedule an initial consultation. Located in Philadelphia, we proudly serve clients in Pennsylvania and New Jersey.

What Are the Best Ways to Finance a Business?

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Philadelphia Business Lawyers at Sidkoff, Pincus & Green P.C. Can Help Your Business Grow Financially

When starting a business, one of the most important things to consider is how you plan to finance the company. Whether you are looking for a loan from a bank or an investment, understanding your options when it comes to financing can help ensure your success.

Businesses often require additional funding when they face cash flow problems or want to expand their operations. Without sufficient funds, businesses may struggle to cover operational costs or invest in growth opportunities. By securing financing from external sources, businesses have access to extra money. This frees up money for other expenses, such as inventory or paying employees.

Loans

One of the most common forms of financing for businesses is through loans. This can be done through banks or other lending institutions, such as credit unions or online lenders. Loans typically come with low interest rates and are relatively easy to get if you have good credit and can prove that you have a viable business plan.

However, they also have strict repayment terms that must be met in order for the loan to not go into default. It is important that you understand all the terms before taking out a loan so that you do not end up in over your head financially.

Equity

Another popular way for businesses to secure financing is through equity investments from venture capitalists or angel investors. These investors put money into your business in exchange for either part ownership or future profits from the company.

While this type of financing does not require any collateral, it does mean that you will be giving up some control over your company and may be liable for taxes on any profits generated by your business down the line. It is always best to work with an experienced attorney when negotiating these types of deals so that you know exactly what you are getting into beforehand.

Crowdfunding

Crowdfunding has become increasingly popular in recent years as more people turn to social media and crowdfunding sites to raise money for their businesses or projects. Crowdfunding allows individuals or companies to reach out directly to potential investors who may believe in their cause and want to support them financially.

While this can be a great way to get funding quickly, it also requires an immense amount of effort on your part since you need to create campaigns, build relationships with potential donors, and generate publicity for your cause before anyone will invest. Additionally, most crowdfunding sites charge fees for using their services, which can add up quickly if you do not reach your goals within a certain time frame.

Philadelphia Business Lawyers at Sidkoff, Pincus & Green P.C. Can Help Your Business Grow Financially

Getting the right funding for your business can seem daunting. Protect yourself and your business by speaking with our Philadelphia business lawyers at Sidkoff, Pincus & Green P.C. to discuss your legal options. Contact us at 215-574-0600 or complete our online form to schedule a consultation. Located in Philadelphia, we serve clients in Pennsylvania and New Jersey.

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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.