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Business And Corporate Law Frequently Asked Questions
1. What considerations should I make before purchasing/selling a business?
Although price is often the first issue that concerns most buyers and sellers, the purchase or sale of any business can touch on a number of other considerations, including:
- Performing due diligence investigations
- Financing may need to be arranged
- The tax implications of the deal should be addressed
- Zoning approval or regulatory licensing may be required
Working with an attorney can help make sure that the transaction is structured to protect your interests.
2. Should I create a buy-sell agreement if I’m doing business with a friend?
Regardless of how well you and your business partners currently “get along,” a buy-sell agreement is always a good idea. Events such as death, divorce and disability can alter the dynamic of your business relationships in ways that you may not be able to anticipate.
A properly drafted buy-sell agreement can establish the parties’ rights and responsibilities toward one another before any unexpected problems arise in the future.
3. What are the advantages of using an LLC instead of an S- or C-corporation?
One of the biggest advantages of using an LLC structure is the flexibility it provides. For example, LLCs can be owned by other entities, are not limited to a fixed number of members and are not required to observe the same formalities as a corporation.
For some businesses, it may be better to incorporate multiple models. That’s why discussing your unique business structure with an attorney is the first step to coming up with a comprehensive, individualized plan that works to satisfy your company goals.
4. Do I need an employee handbook for my company?
Employee handbooks can reinforce the “at-will” nature of your employees’ employment (meaning that they can be terminated at any time, with or without cause) and can help prevent claims that you have offered your employees guaranteed or tenured terms of employment.
Employee handbooks are also useful for establishing important company policies such as drug testing, workplace violence and sexual harassment policies. In short, a well-written handbook will let your employees know what their rights are and what is expected of them, which should lead to better relations between labor and management.
5. Should I register my company’s trademarks with the United States Patent and Trademark Office (USPTO)?
Registering a trademark with the USPTO can make it easier to protect the mark from infringing use by your competitors. Among other benefits, if your trademark is listed on the USPTO’s principal register, you will be able to:
- Use the ® symbol in connection with the mark
- Sue in federal court to defend the mark
- Record the mark with the U.S. Customs and Border Protection service to prevent foreign companies from importing infringing goods
6. How do I change the way my partner is conducting our business?
It depends on how your business is structured. If your business is an LLC, the operating agreement most likely contains provisions regarding how business decisions are made and who makes them, along with procedures for changing how those decisions are made. If your business is a corporation, the bylaws should contain provisions with respect to the governance of the company.
If you do not operate your business under a formal entity structure, your relationship with your partner will be governed by other provisions of statutory and common law. Give us a call at 262-422-6607 or send an email inquiry to determine your options given your individual situation.
7. How can I protect my company’s trade secrets and other confidential information?
The advent of email and the internet has made the misappropriation of sensitive information all the easier, with the threat often coming from within your own company.
Our attorneys can draft confidentiality and nondisclosure agreements to help protect against the loss of trade secrets and confidential information, as well as review your company’s internal practices to make sure that the necessary safeguards are in place to prevent any unauthorized disclosures.
8. Can I collect unpaid debts from a client who has filed bankruptcy?
You cannot take any action to collect a debt during the pendency of bankruptcy due to the automatic stay that is imposed by the bankruptcy court. DO NOT CONTACT THE DEBTOR!
You should file a document called a Proof of Claim with the bankruptcy court, alerting the bankruptcy court to the existence and amount of your debt. If your debt is secured, you must attach proof of the security such as the mortgage, MV-1 or UCC filing.
There are other actions available to you to protect your rights, depending on whether your debt is secured or unsecured, and depending upon the circumstances. Our office can assist in preparing and filing the Proof of Claim and can evaluate your case to determine whether a reaffirmation agreement, motion for relief from stay or motion to dismiss might be appropriate.
9. Are there requirements for contractors to comply with for remodels and additions?
YES! Wisconsin law requires any contractor who makes improvements to an existing home and takes any payment before the project is complete to comply with the Home Improvement Practices Act, Wisconsin Administrative Code Chapter 110.
This code requires a written contract under most circumstances and also provides that if the contractor fails to comply, the homeowner is entitled to double damages and actual attorney’s fees. The double damages penalty applies to all of a homeowner’s damages and not only those directly attributable to violations of the code.
Given the steep penalties to contractors, it is important to learn these requirements before working on a home improvement project for an existing residence. There are specific requirements as to what the contract must contain. For example, the contract must specifically describe the project and the materials to be used. It must outline the total price to be paid and provide specific start and completion dates for the work.
10. Can a condominium association move the foreclosure process along on a unit?
Banks sometimes begin foreclosure proceedings and later refuse to complete the sheriff’s sale of property, resulting in neither the unit owner nor the bank paying assessments. Likely, the bank may have found that their loan documents are not in order.
In other instances, they decide that they do not want to own the unit and be responsible for paying assessments after the sheriff’s sale. Fortunately, the Business/Corporate Division has pioneered strategies to help protect the rights of condominium associations during the process of bank foreclosures. Give us a call to determine how we can help your association.