I'm in the process of starting a business in Colorado and I will need investors to get things started. I already have several people who want in, but this is my baby and I want to retain full control over the company decisions. Primarily in the sc...
Congratulations on getting your business off the ground. Some solid advice has been given to you already. But here is a little more. When it comes to financing a business, you can finance it with equity, or you can finance it with debt. When you finance your business with equity, you are giving up an interest in the business by selling people shares in the business. Those individuals then become owners in your business, whether they have voting rights or not. Limited voting rights will help with management of the business, but in the end, they are still owners, and you still have obligations to them as such. Equity financing, on the other hand, basically means the business is going to borrow money and promise to pay it back, plus interest. The lender, then, is owed money but he/she has no right to vote or manage any aspect of the business. Think of this like borrowing money from a bank. The downside, here, is if the business goes belly up, you are still obligated to pay on the loan. With equity financing, as mentioned above, there is no obligation to pay it back, unless such terms are written in an agreement. So, your "investors" might be SOL. But be careful. I have seen many situations where investors get pretty pissed off when you lose their money despite warning them of the "dangers of investing in startup businesses." You will have significant disclosure requirements and any misleading of information, no matter how slight, could expose you to criminal or civil prosecution.
The reason for this is because, in both equity and debt financing, you are taking control of someone's and that person is losing control of their money. By definition, that is the sale of a security. And with the sale of a security comes significant regulatory and statutory control. But your exposure is very fact specific, and it entails a legal analysis of every action you've done from when and how you met your first investor to the first dollar that was invested. Do not try and navigate this aspect of your business alone. There is too much risk. Get a lawyer involved.
This isn't meant to scare you from reaching for your dreams by any means. It's meant to educate you so you don't trip out of the starting gate. Spend the money, and the time on good legal advice. It will be the best investment you make.
Good luck!See question
I want to start a monthly food subscription box that send you packaged ingredients along with a recipe that you can make at home. What do I need in order to sell and send ingredients? Can I package ingredients at home or do I need a special wareho...
Great points from Robert. I think that checklist is a good place to start. Here are a few other items to consider:
DEVELOPING A BUSINESS PLAN.
SELECTING A LEGAL STRUCTURE.
FINANCING THE BUSINESS.
SELECTING A BUSINESS NAME.
CHOSING A BUSINESS LOCATION.
RECRUITING AND HIRING EMPLOYEES.
BUSINESS LICENSING AND PERMITS.
SUPPLIER, DISTRIBUTOR AND CUSTOMER LOGISTICS.
ADVERTIISNG AND MARKETING STRATEGIES.
ACQUIRING AND PROTECTING INTELLECTUAL PROPERTY (IP).
EVALUATING INSURANCE NEEDS.
I have seen over many years that many business owners fail to grasp a detailed understanding about the legal pitfalls they can encounter while starting or running a business. I think trying to prevent legal problems is paramount in any business. So, the time to hire a lawyer is before you ever need one. Learn about your needs and gain knowledge, security and peace of mind.
Remember: businesses that think they have no time for legal planning will sooner or later have to find time for legal disputes.
Take care of your business. It’s your livelihood.See question
I've seen both terms used in cases cited by the opposing counsel and I don't understand the difference. Any assistance would be great.
Repudiation is a form of breach of contract. Generally, a breach occurs when the time for someone to perform arrives and the performance does not take place. Repudiation occurs before the time of performance is owed, but the person who is supposed to perform unequivocally expresses that he/she will not perform when the time comes. Rather than being a present breach, it's an anticipatory breach and carries the same legal effect as a present breach of contract.
Hope this helps. Good luck!See question
Looking to setup a royalty agreement for $10 per unit on all units sold wholesale and retail. What would this cost? Is there a standard form?
This really depends on the complexity of the deal. There might be a form agreement you can track down on the internet but I wouldn't recommend that. You probably want to understand the agreement, not just have one. But typically an agreement of this nature is about 3-5 hours of work depending on the complexity and the back and forth.See question
We ordered a house and it's almost ready. 3 weeks ago we met with builder and point on some things we don't like, such as broken glass on windows and etc. He promised to fix it. If they don't fix it before closing my husband don't want to sign a c...
This is a contract driven resolution. if you are building a home, then there are already provisions in place about the closing date and the obligations of the builder in the event there are defects in the construction. I suspect there are provisions in the original contract for purchase that give the grounds for you to back out of the deal. I doubt a broken window is one of them. Check the original contract to see what grounds the contract can be terminated. At this juncture, you are likely not going to be able to back out. Good luck!See question
My grandfather passed away. Mom had me make a contract with her. We got it noterized in front of a banker. She drafted it saying that when he dies she'll give me a payout out of her inheritance so that I'd have enough to buy a duplex in grand junc...
I concurrence with my colleague, a promise to make a gift, which is what your mother did, is not enforceable. Call it a gratuitous promise, or a contract for a gift, it's not going to be enforced by a judge. Every contract has three elements which must be met in order to be enforceable: offer, acceptance and consideration. It sounds like you have the first two pieces met. But consideration means both parties to a contract must give something up. If you get something for free, that's a gift and you can't uphold a contract or promise to make one.
There is another variation to the rule of consideration, however. And that entails whether you changed your position in reliance on her promise to make that $300k gift to you. That is called estoppel, and it is a form of consideration because you are giving up your right to do something. For example, if you lived in Denver, and your mother agreed to give you money for a home in GJ if you agreed to move there, leave a job in Denver and bring your family there. In that instance, a court could decide that you've given consideration, thus making the contract enforceable.
Hope this helps. Good luck!See question
She has a referral agency for independent home aide. She wants out. What all do I need to do to ensure everything is done correctly and is going according to law. I have heard that when people hire out independently for their care or help in their...
You've actually addressed two separate questions. One deals with the purchase of the business and the other deals with managing it.
The purchase of the business can be done in a couple of different ways. You can buy the assets of the company, or you can buy the stock of the business. Typically when you buy the assets of the property that's what you get. You don't take on the liabilities, unless the liabilities are part of what you're purchasing. And, if you buy the stock of the company then you're getting all the assets and liabilities. If you are already in owner of the property, along with the friend you described, then the buyout will be in accordance with whatever agreements are already in place.
As for management, it's very common to have a former owner stay on as a consultant to help the business transition. You can even place in the buyout certain milestones to be met as the transition takes place.
The bottom line here is make sure you do your due diligence, find out everything about the business and make sure it's been maintained properly and there are no 'loose ends' that could trip you after the purchase.
Good luck!See question
My company/organization will only consist of myself. I will not have any overhead or assets besides myself and my computer. I am an independent consultant at hospital. I was not sure what the pros vs cons would be to select to be a PLLC vs Profess...
Overall great advice from my colleagues here. However, I will respectfully disagree about Colorado not recognizing the "PLLC" designation. I will further admit that I had to research this briefly to confirm my original thought.
But Persons licensed to practice medicine by the board may form professional service corporations for such persons' practice of medicine under the “Colorado Business Corporation Act”, articles 101 to 117 of title 7, C.R.S., if such corporations are organized and operated in accordance with the provisions of Colorado law. In those circumstances, the articles of incorporation of such corporations shall contain provisions requiring the name of the corporation to contain the words “professional company” or “professional corporation” or other abbreviations thereof.
Under the statute, "Corporation" includes a limited liability company organized under the “Colorado Limited Liability Company Act”, article 80 of title 7, C.R.S., and a limited liability partnership registered under section 7-60-144 or 7-64-1002, C.R.S.
C.R.S.A. § 12-36-134 is what dictates the corporate formation of a medical practice using a "professional" designation. There are a substantial number of additional requirements to take into consideration with the formation of your company.
I am a firm believer in the concept of not being a penny wise and pound foolish. Especially when it comes to your business. Get a good lawyer on your team at the beginning who can help you navigate these difficulties, help you organize the business and counsel you through all aspects of your business organization.
Good luck!See question
The LLC lists itself as the registered agent, and with an address which is a UPS Store.
Service of process upon a corporation is controlled by Colorado rule of civil procedure Rule 4 in District Court and 304 in County court. generally, to serve an LLC you deliver a copy of the Summons to the registered agent for service as set forth in the most recently filed document in the records of the secretary of state of this state or of any other jurisdiction, or that agent's secretary or assistant, or one of the following:
An officer of the company
The manager of a limited liability company in which management is vested in managers rather than members, or that manager's secretary or assistant;
A member of a limited liability company or in which management is vested in the members or in which management is vested in managers and there are no managers, or that member's secretary or assistant;
Or anyone who serves those functional equivalents.
If you can't find any of these people you can ask permission from the court for substituted or other service to serve the business in another form. Court might allow you to mail a copy, or serve by publication. In some instances you can serve the Secretary of State's office on behalf of the LLC.
So, to answer your question, no, The UPS store will not cut it in this instance. You will have to find one of the listed individuals above. You could check the LLC filing and see who is listed as the incorporator of the LLC. You might get lucky. Also, check their website for any other physical location.
Just keep track of all the efforts you've made to get this entity served. It'll be necessary if you pursue any alternative service options. The court will want to know how much effort you've put into it.
Good luck!See question