Category: Business Law

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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What are RICO Charges?

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The Philadelphia Business Lawyers at Sidkoff, Pincus & Green P.C. Defend Clients Facing RICO Charges.

You may have only heard the term “RICO charges” on TV crime shows and in movies, but it is a very serious matter with severe consequences for those who are charged and convicted. The acronym “RICO” represents the Federal Racketeer Influenced and Corrupt Organization Act and applies to different kinds of criminal activities that take place throughout the country.

About the RICO Act

This federal law (§ 1961) was originally designed to fight organized crime and passed in 1970. The accused can be an “individual, partnership, corporation, association, or other legal entity,” but can also be a group of associated individuals. There has to be two or more acts of racketeering within a certain time frame. The prohibited racketeering activities listed in RICO include:

  • Acts or threats involving murder
  • Arson
  • Bribery
  • Extortion
  • Gambling
  • Kidnapping
  • Robbery

There are others as well, such as dealing in a controlled substance and dealing in an obscene matter. RICO lists other illegal activities, like wire fraud, money laundering, counterfeiting, collecting unlawful debts, and receiving income that’s derived from patterns of racketeering activity. In all, RICO covers over 30 kinds of crimes.

What are RICO Act Penalties?

Since RICO charges are of a criminal nature, those who are convicted of violating these laws face substantial penalties. To start, the hefty fines can be as much as twice the amount of any proceeds received from the illegal activities. The other consequence is even worse, as it involves prison time that can range from less than a year to a life sentence, depending on the crime and state laws. A first RICO conviction in Pennsylvania is a first-degree felony that comes with minimum of nine months in prison; the maximum is 20 years and a fine of $25,000. If convicted, the defendant’s total interest in the criminal enterprise is given to the federal government.

When RICO was passed, it also included procedural rules allowing the government to freeze defendant assets before cases went to court. This was done to ensure that the money would not disappear before the trial started and a guilty verdict was handed down.

Can the Government Prosecute Me Under RICO?

The RICO laws are not just for organized crime groups and their members. Those outside this realm can also be charged with the violent and drug-related crimes listed above. White-collar crimes like embezzlement, gambling, and mail fraud can also be charged, prosecuted, and convicted. Plaintiffs who were injured or otherwise harmed by RICO violations committed by other parties can also seek damages in civil suits. There is a four-year statute of limitations in these cases, but no cap on the damages.

In Pennsylvania, the state has to prove that you participated in two or more racketeering activities within a 10-year time frame in order to prosecute. They also must show that you participated or were invested in the illegal enterprise. Again, if charged under RICO, your assets related to the activity will be frozen until the case is completed and a verdict is handed down. If you are charged with multiple counts, the prison time and fines could be extended and increased.

The Philadelphia Business Lawyers at Sidkoff, Pincus & Green P.C. Defend Clients Facing RICO Charges

You should not face RICO charges without experienced legal representation, and the Philadelphia business lawyers at Sidkoff, Pincus & Green P.C. will fight to protect your rights if you have been charged. For a confidential consultation, call our Philadelphia offices at 215-574-0600 or complete our online form. We serve clients in throughout Pennsylvania and New Jersey.

How Can I Protect My Intellectual Property?

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Philadelphia Business Lawyers at Sidkoff, Pincus & Green Protect and Defend Your Intellectual Property Rights.

Intellectual property (IP) is defined as any product of the human intellect such as inventions, designs and symbols, artwork, business and product names, website content, and other creations used in commerce. While the internet is a useful tool for businesses to reach a wide range of people, it simultaneously provides wide exposure to theft and copying. The importance of protecting your intellectual property cannot be emphasized enough and the four main ways to do so are through copyrights, trademarks, patents, and trade secrets.

Copyrights are used to protect a creator’s manuscripts, song lyrics, photographs, paintings, sound recordings, and other original ideas. Although you own the copyright at the time you create something, registering the copyright with the U.S. Copyright Office gives you exclusive and enhanced rights such as the ability to seek damages when infringements occur. In most cases a copyright expires 70 years after the death of the of the creator.

Trademarks are protected symbols, logos, words, or phrases that identify your service or product. A trademark should be registered with the U.S. Patent and Trademark Office (USPTO) and renewed every ten years. Because a trademark identifies goods and services as belonging to one owner you could run into disputes if your trademark is similar enough to that of another company.

How Do Patents Protect My Intellectual Property?

Patents protect unique inventions such as machines, equipment, chemical composition, or processes. Once patented, no one else can make or distribute your invention unless you have given them license to do so. Patents are granted by filing an application with the USPTO and are usually valid for 15 to 20 years after the filing date. Note that a patent cannot be obtained for something that already exists.

“Trade secrets” are not registered with any government office but are intellectual property important enough to a company that it cannot be shared with competitors or become public knowledge. To do so might seriously jeopardize the prospects of the company. Trade secrets can be protected with nondisclosure agreements that prevent involved parties from sharing information with outsiders. If you can show that your company had protocols and procedures in place to protect your trade secrets and a theft occurs, you will be able to seek damages in court. Intercompany theft of intellectual property and corporate espionage are federal offenses.

Additional Steps to Take to Protect Your Intellectual Property

After registering your intellectual property with the government and enforcing any infringements you can further protect your published work and ideas by using digital rights management to limit online access, preventing others from copying, saving, and editing your work, blocking them from printing, sharing, and taking screenshots, and watermarking your work to show ownership.

Documentation is also helpful in proving ownership of intellectual property. At every step of your creative process document in detail what you are doing and how by using drawings, plans, descriptions, and written records. Including the date on each one is critical as evidence of when you first produced your original creation.

Deciding how to apply these different kinds of intellectual property protections can be complicated and should be done with the counsel of an experienced business lawyer.

Philadelphia Business Lawyers at Sidkoff, Pincus & Green Protect and Defend Your Intellectual Property Rights

Have you experienced copyright, trademark, or patent infringement? At Sidkoff, Pincus & Green we aggressively defend and protect our clients’ intellectual property rights. To schedule a consultation with one of our experienced Philadelphia business lawyers, call 215-574-0600 today or contact us online. Located in Philadelphia, we represent clients throughout Pennsylvania and nationwide.

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.