Businesses may require professional assistance with a wide variety of transactional needs. Many business interactions with customers or the public at large are contract based and will benefit from professional design. Those business to customer transactions that are not contract based may still need to be designed to insulate the business from liability to the greatest extent possible. Most business interactions with other businesses are contract based with each side of the transaction being represented by professional counsel.
Additionally, transactions fundamentally change in form when they become cross-border or international but the substance of what is being done remains relatively unaltered.
Professional service providers often assist with reviewing existing documents or methods of conducting business. Designing business transactions and closing business deals is another area where many business find value in using a professional.
The following areas are those in which businesses routinely use professional legal counsel:
Entity Selection: Selecting the appropriate business entity to conduct a business is the threshold issue for new businesses. For more information on Choice of Entity Issues, click here.
Entity Formation: Especially in Colorado, the Secretary of State’s Office has made forming a company very easy and inexpensive. However, a legal professional is typically required to draft the operational documents that provide the legal substance to the entity formation. For example, a Limited Liability Company can be easily formed by filing Articles of Organization with the Secretary of State. However, the drafting of an Operating Agreement specific to the business that sets out how the company operates is crucial for maintaining the separation of business liability and personal assets. The same is true with a corporation. Filing the Articles of Incorporation is a simple process, but drafting strong and effective By Laws takes experience.
Entity Compliance: Business compliance refers to taking all the ongoing steps necessary to show objectively that the owners of a business are treating the business entity (corporation, LLC, etc.) as an entity separate from themselves. This separate treatment is required to maintain the limitation of liability all business owners want. Typical compliance documents include resolutions authorizing acts of the entity and documents required to have an annual meeting of equity holders and directors. For more information on compliance issues, click here.
Business Purchase: Businesses may be purchased by either buying all the assets of an ongoing business or by purchasing a controlling amount of the equity interests in an ongoing business. Asset purchases are frequently used to separate the new business owner from the potential liability of the old business. However, equity purchases (stock purchases, etc.) are often used when the ongoing business has several owners. In either scenario, the new business owner typically needs to document the purchase to protect the new owner’s ability to run the business using the following documents:
Ongoing Operational Documents: There are numerous documents and contracts required for the everyday operation of a business, such as: Confidentiality and Non-Disclosure Agreements; Authorization and Release of Information Agreements; Reselling and Merchandising Agreements; Lease Agreements; Employment Agreements; etc.
