Other than the purchase agreement and closing on that, are there any other steps I need to take for the sale of my small business? There are no employees, no real estate, no stocks, etc. It is just the sale of the name, goodwill, and some equipm...
Technically you don't need a purchase agreement - just give the buyer a bill of sale and, if applicable, an assignment and assumption agreement if it is an asset sale. If it is a "stock" sale,, just transfer the ownership. As the seller, the most important thing is getting paid. Having said that, as an attorney who works in this area all the time, I would never recommend someone do this without a good attorney. A client "bought" a business a couple years ago and then when I reviewed the documents I found the client never got title to the assets - and he was represented by an attorney who supposedly knew her stuff. For a seller I would be concerned about reps and warranties and unlimited indemnification above the amount of the purchase price among a number of other issues.See question
I have an LLC member who wants to get out of our LLC. The LLC isn't really worth much right now, and he doesn't want any money. He is on the Articles of Organization as a manager member. Is there something we can write up or is there something we ...
There is no such thing as a "Manager Member". My guess is he is both a manager and a member, but without looking at the Articles (and any operating agreement) couldn't really tell you. Presumably he would retire as a member and (assuming this is an Illinois LLC) dissociate (the word surrender does not appear in our statute) as a member or sell/assign the membership interest either to you or the company. You usually would want an assignment separate from certificate to go along with the agreement documenting the terms of transfer. Whether there is any indemnification with respect to potential liabilities either way between the parties is something to be discussed with your business attorney (a good one I hope). Also, you may want representations regarding the ownership being clear of liens. Why all of the hoopla? What if this business becomes somewhat successful? A future purchaser or investor will want proof that the other person has no rights in the company. Plus if you run it well now with proper documentation, future investors will look more favorably on other aspects of the company. As to the state reporting, someone else mentioned you can update the information on the company' s annual report and that is correct.See question
Lets say I enter into a contract with Company A in January, for services to be performed in April. In February the owner sells Company A to Company B, and I am not notified of the sale. Then in April Company B fails to perform the services and cla...
If it was a stock sale, then the contract probably transferred to B. If it was an asset sale, it may have transferred to B if they assume it. As your contract was with A, it seems like your initial remedy would be against A. Depending on the dollar amount and if there is an attorneys' fee recovery provision or not, it may not make sense to bring a suit. You really should take the contract to an attorney for advice on recovery. Practice pointer: Be proactive in the future and make sure your future contracts have attorneys' fee recovery language.See question
We would like to set up a charity. Our coupon magazine company will donate money to the charity and the charity will donate the money to individuals. Are there any restrictions when the same owners own a for profit and charity organizations, can w...
Generally speaking, what you want to do can be done. However, charities aren't "owned" in the traditional sense and property can only be used for specified purposes. You will likely want to hire an attorney to help set up the non-profit entity.See question
We plan to start an app consulting company but will outsource the coding aspect of the process. What happens if the customer isn't happy with the actual functionality of the app and wants to sue? Can they sue my company or is the coding company ...
Whoever the customer contracts with (presumably your company), will be liable for any issues. If the individuals don't run the company properly, they (Meaning you and your fellow owners) can be sued as well. So review a good article on piercing the corporate veil before your start running your business.
You should have a good agreement with the coding company/people, that holds them liable for their actions - e.g. bad coding. Beware of hiring coders as individuals without a strong independent contractor agreement. Also, don't rely on a "work made for hire" clause to protect your IP - too many people, including lawyers, mistakenly think that the work made for hire doctrine covers all IP when it is usually limited. Make sure you get full ownership of whatever is developed and not just a license or co-ownership rights. Consider how to keep them from creating similar or derivative works as well. If you are concerned about their ability to pay in a suit, have them provide insurance with your company as an additional insured.
Also, with respect to your own company, don't forget to have a good shareholders' agreement or operating agreement in place that covers what happens when you break up. No one stays in business together forever - and paying the expense up front for an agreement that sets for the your wishes is much less expensive than trying to fight it out later. Finally, don't make the mistake of inadequately capitalizing your company with $1,000 initial capital.See question
I applied for dissolution on December 23rd and was approved for dissolution on January 9th, the following year. When do I stop having nexus in the state, on the 23rd of December or the 9th of January? Thank you
Generally speaking and without knowing the facts of your situation, nexus has to do with the presence of the company in the state. Filing for dissolution does not by itself remove any nexus from the state - assuming you are using the term nexus in its proper context with respect to tax matters. This gets to be a pretty complicated area of the law and you should check with an accountant or attorney well versed in nexus issues. Having said that, the corporation will have been dissolved as of the date of dissolution; but for the effect of dissolution you can check out the Illinois Business Corporation Act or contact a business attorney.See question
I do not want to own any shares in the business, but remain the President. Can the company own the remaining shares?
Generally speaking yes - assuming it is not prohibited in by laws or Articles of Incorporation. But let's see what happens... 38% to GF. 62% goes back to the company. Now I believe the company can't "own" its own shares as a shareholder or have any votes - certainly not if it is treasury stock. So then GF really owns 100% of the outstanding stock and has total control of the corporation. She elects the board and the board then elects the officers. So GF will decide if you remain the president. Not a wife mind you where there may be a marital interest. Therefore this idea probably needs to be vetted out a little further. Perhaps another company is created that owns the stock? Now this also seems to smell as though there may be a potential lawsuit/divorce out there - if so, then fraudulent transfer laws can come into play. The giving to the GF also has gift tax implications if the company has sufficient value.See question
We will be working out of a commercially-licensed shared kitchen in our city. In doing we so, it is required that we purchase 1 million dollars in insurance. Can I make sure the insurance is adequate to cover the possibility of being sued? Or is t...
A limited liability entity will protect you from your husband's wrong doing and him from yours if assets are properly segregated. Sometimes insurance companies deny claims. If you have an employee, you will definitely want limited liability. Therefore generally an LLC or corporation is recommended in these situations. Whether or not to do an S-corp or LLC taxed as an S-corp or LLC taxed as a partnership is probably your biggest start up question and there are a lot of pros and cons to address in that situation. HIre a good business attorney or accountant that can explain all the cost differences (including replacement tax) as well as the corporate formalities in doing minutes each year for corporation. By the way, it wouldn't be a sole proprietorship, it would be a partnership as you and your husband would be in business together.See question
I've started a company that I need advise for protecting my shares, how to go public, I also have a problem with a business from last year that filed chapter 7, I have issues with someone trying to break the corporate protection.
Check out articles on Piercing the Corporate Veil on that last point. It is likely to late to do anything about it now. Depending on the situation, fraudulent conveyance law etc. will also come into play. Many people talk about going public - happens very rarely (200 IPOs worldwide in 1st half 2014 and that is the most since 2000). 1,000 times more likely that the company will be bought out by another company if it starts to do well. You really want to set it up and run it properly for that eventuality. I usually advise against C-corporations typically used in IPOs early on due to the double taxation; but each situation is different. As to protecting your shares, that is difficult to do as shares are personal property and not as easily protected as possibly LLC interests in certain states. Now if you don't own the shares, that is different.See question
What is the best way to register a new company were it is in the US but you can issue stocks to non US-citizens that reside in other countries? Is such a thing possible?
Foreign entities and citizens can own stock in a corporation or an ownership interest in an LLC. There are pros and cons to each form of entity. Usually with foreign investors residing in other countries you will decide to set up an entity taxed as a C corporation (whether that is an actual corporation or an LLC).See question