Why You Need A Business Lawyer
Starting a new business can be overwhelming and having the assistance of a business lawyer is crucial to your success. As an entrepreneur, there are a lot of things to consider when starting a business. Your business lawyer can advise you on things like the type of business entity you form and keeping accurate tax records. They can guide you through the complicated employment process and create strong contracts. They can also strongly support you through any conflicts or incidents that arise. Hiring the right business lawyer is important. It’s also helpful to develop a strong relationship with your attorney as your business grows as they can become one of your most valuable assets. Business lawyers are not one-size-fits-all. As with all important relationships, it’s important to make sure you’re both personally and professionally compatible. Take your time in finding the right legal representation for your specific business needs.
Consider your company’s needs.
Your company size and type can help guide you as you begin your search. You’ll want to find a business law firm that has the expertise you need now as well as in the future. A firm that has a diverse skill set is a good place to start. Finding a lawyer that has worked with businesses similar to yours can be beneficial. They will know the ins and outs of the types of contracts you will need and the issues that commonly arise. Knowledge of your industry helps them more effectively guide you in protecting your business.
Research attorneys and ask for referrals.
Researching lawyers can be mind-boggling. The sheer number of choices can be overwhelming. Online reviews are amazingly helpful. Look past the ratings and take the time to read the reviews. You may find that someone has had experiences with a specific lawyer that aligns with what you are looking for. Ask other business owners about their experiences with their attorneys. Referrals from others in your industry are especially helpful. Ask other business owners how their business lawyer resolved conflicts or tough situations. Knowing that a lawyer has been successful in representing other business owners is a good indicator that they can fulfill your needs as well.
Conduct an initial interview.
Make a shortlist of candidates and sit down with each one. Ask thoughtful questions and follow up on their responses. The conversation should leave you feeling confident in their abilities. Ask about their experience in your specific industry. Allow them to share why they think they would best represent your business. Explain what your goals are as a business owner and ask them how they can help you achieve them. Trust your instincts. It’s important that your lawyer is knowledgeable and experienced. It’s also important that you can communicate comfortably. Make sure whomever you choose to represent you is someone that you trust and have confidence in.
How a lawyer can assist your business
Your business lawyer can assist your business in a large number of ways. As you develop your relationship with them, they will learn the needs of your business. They will be able to make recommendations to improve areas of your company. It’s smart to get your business attorney involved early and often and to consider them an essential part of your team.
Launching your business
It’s best to use your business lawyer’s guidance and expertise even before your company gets off the ground. Creating your company with a strong legal foundation can protect you in the long run. This investment will likely save you money for years to come. Deciding on the type of business entity that you form is complicated. You’ll likely have to decide between a limited liability company (LLC), a sole proprietorship, a partnership or a corporation as the operating entity. Each of these has varying degrees of liability and tax implications. The number of factors in choosing which one to form makes for a complicated decision. Your business lawyer is well versed in the pros and cons of each type of business formation. Taking your specific company and your plans in mind, they can help you decide which type to establish. Making this early decision wisely can set your business up for long term success.
Creating and enforcing contracts
Strong, iron-clad contracts are the best way to protect you and your business. These legally binding documents are essential in various areas of running a company. Having a business lawyer who can expertly write and review these documents is a valuable asset. You may be launching your business with a family member or friend. Avoid an ugly situation down the road by getting the terms of your agreement in writing. Your attorney can create a contract to protect the interests of all parties involved.
When dealing with clients, it’s vital that there is an understanding of both what you will provide as a business and how you will be compensated. Depending on whether you are a service company or selling a product, your needs will vary. A business lawyer can create a contract that’s completely customized to your business needs.
Bringing on more consultants and contractors is a great sign that your business is growing. It’s important, however, to set clear expectations with a lawyer-drafted contract. This document will clearly outline the work that will be performed as well as the payment agreement. It will also create a timeline and protect you from liability and release of private information.
Navigating taxation
Complying with tax law is one of the most complicated parts of running a business. Your business lawyer’s expert advice can prevent future issues with taxation. They can also help you identify credits and deductions to potentially save you a ton of cash come tax season. Your business lawyer can guide you in developing a proactive record-keeping system to make prepping for tax filing simpler. They work with accountants on a regular basis and can recommend one to provide tax advice and help you meet all due dates and filing deadlines. Then, you can concentrate on running your business while your accountant ensures your tax compliance.
Protecting your property
It’s imperative to protect your business assets. Your intellectual property is as important, if not more, than your tangible property. A business lawyer can ensure that you’ve taken all of the necessary steps to protect both.
You may have sensitive proprietary information or trade secrets that you need to keep under wraps. Everything from product plans to client lists are valuable assets to your business. With a nondisclosure agreement, you can protect this information from an unfortunate breach. Your lawyer can create this agreement and advise you on when it should be used.
Unfortunate physical injuries can lead to costly lawsuits for your business. Protect yourself from losing your property or financial assets due to an unforeseen incident. A liability waiver can release you from being responsible for any injury that occurs to your employees or customers. Business lawyers have the expertise to guide you in creating this agreement if they feel it’s necessary for your specific line of business.
Employment agreements and issues
Employment law is constantly evolving. You can protect both your business and your employees by using an experienced business lawyer to guide you. From hiring to firing employees, legal guidance is essential in getting it done right.
Setting clear expectations for new employees sets the tone for a great working relationship. Your attorney can create an employment contract that outlines what is expected of them. It will also clearly state how they will be compensated and the benefits they will receive. Including confidentiality provisions, non-solicitation provisions, and terms of ending employment are also beneficial.
A well-written employee handbook can provide a reference guide for many employee issues and questions. Working with your business lawyer, you can create a handbook to outline your practices and policies. Everything from dress codes to paid time-off can be included. Having an open line of communication with your business lawyer makes updating these policies quick and easy.
Termination is a touchy subject. Many times, employment agreements don’t end amicably. Your lawyer can help protect you from disgruntled past employees.
Non-compete agreements and non-solicitation agreements can prevent former employees from using your confidential business information against you. It will also restrict them from going to work for a competitor and taking their customer relationships with them.
It’s helpful to keep records on the terms of any terminations or employee conflicts. Share these with your lawyer and keep them updated on any potential problems. It’s also helpful to consult with your attorney prior to terminating an employee. This will make it easier for them to represent you should any past employees accuse you of unlawful termination.
Bankruptcy guidance
Unfortunately, sharp downturns in the economy or unforeseen circumstances happen. They can put your business in a situation that you simply can’t recover from. However, this doesn’t have to mean the end of the road for your company. Your attorney can guide you through the bankruptcy process so your business can recover and even flourish.
Hard times can be overwhelming. Fortunately, your business lawyer is an expert at navigating them. They will help you decide on the right course of action to steer your ship through these troubled waters. Bankruptcy seems like a rash action, but it might just be what you need to save your company.
Filing for Chapter 11 bankruptcy can help you reorganize your business. With the guidance of your lawyer, you can develop a plan to make things right with your creditors. You may even be able to discharge a portion of the debt you owe. Your lawyer will present the plan to the bankruptcy court and with their approval, you’ll be on the road to financial recovery.
Court representation
The day may arise that your business needs to head to court. Your business lawyer will be by your side, fighting for your company and its interests. They will advise you to make the best decisions and work towards the best possible outcome.
Unfortunately, some conflicts can’t be resolved without legal action. As a business owner, it’s important to keep your lawyer updated on any trouble you see brewing. This will allow them to best guide you and handle your case should it end up in front of a judge.
Heading into the courtroom can be terrifying. Your lawyer will be with you every step of the way to help guide you through the legal process. They can also help you propose a settlement if necessary to remediate the situation at a lower cost.
Day-to-day advising
Your relationship with your business lawyer will be one of your most valuable additions to your team. Not only can they help guide you through the big moments of running your business, but they can also be there to support day-to-day operations.
Making decisions is a tough task for a business owner. Having a knowledgeable expert on your team can help. Bouncing ideas off your lawyer can help you reach the smartest conclusion. Sometimes, having your attorney present at meetings can be proactive. They can offer immediate advice and provide guidance through everything from transactions to terminations.
Your business lawyer can be a trusted advisor and voracious representative. Developing and fostering your relationship with them can provide you with useful resources. As part of your team, your business lawyer can help your business grow and prosper well into the future.
Disclaimer: This website is maintained by Lustig & Wickert, P.C. which produces this blog to provide general information about itself as well as general news about business law and commercial litigation. The information you obtain at this site is not, nor is it intended to be, legal advice upon which you should rely or act. You should contact your attorney to obtain advice with respect to any particular issue or problem. Use of and access to this website does not create an attorney-client relationship between Lustig & Wickert, P.C. and the user or browser. You should not send any confidential information to us until and unless a formal attorney-client relationship has been established. If you would like to discuss your concerns call us at 847.509.9090 or contact us by email at Info@Lustiglaw.com.
Read MoreFREEDOM TO WORK ACT – NEW RULES FOR ILLINOIS EMPLOYERS
Illinois Governor J.B. Pritzker has signed Senate Bill (SB) 672, which will be known as the Illinois Freedom To Work Act. The new law will significantly reform non-compete and non-solicitation law in Illinois. The Act imposes limitations on non-compete and non-solicitation agreements, and it provide employers with more clarity about enforceability. The new law has a January 1, 2022, effective date.
The Illinois Freedom To Work Act:
requires an employer to provide an employee at least 14 calendar days to review the agreement and “advise the employee in writing to consult with an attorney” before signing the agreement; ban non-compete agreements for employees making $75,000 per year or less (the salary threshold would increase by $5,000 every five years until reaching $90,000);
bans customer and coworker non-solicitation agreements for employees making $45,000 per year or less (the salary threshold would increase by $2,500 every five years until reaching $52,500);
authorizes an employee to recover attorneys’ fees and costs if the employee prevails in a lawsuit brought by the employer seeking to enforce a non-compete or non-solicitation agreement;
authorizes the Illinois attorney general to initiate or intervene in litigation and initiate investigations of potential violations; and
prohibits employers from enforcing restrictive covenants with employees who are separated due to COVID-19 or “circumstances that are similar to the COVID-19 pandemic, unless enforcement of the covenant not to compete includes compensation equivalent to the employee’s base salary at the time of termination for the period of enforcement minus compensation earned through subsequent employment during the period of enforcement.”
The Freedom To Work Act excludes from the definition of “covenants not to compete” the following:
non-solicitation agreements;
confidentiality agreements;
trade-secret and invention-assignment agreements;
agreements entered into in connection with the acquisition or disposition of an ownership interest in a business;
agreements “requiring advance notice of termination of employment, during which notice period the employee remains employed by the employer and receives compensation” (i.e., “garden-leave clauses”);and agreements that “the employee agrees not to reapply for employment to the same employer after termination” (ie., “no-reapplication clauses”).
The Freedom To Work Act also codifies rules set forth in Illinois case law regarding non-compete and non-solicitation provisions. Specifically, the Act codiies the rule set in Reliable Fire Equipment Co. v. Arredondo (965 N.E.2d 393 (Ill. 2011)) that the “legitimate business interest of the employer” is a totality-of-circumstances test that should evaluate factors such as scope of restrictions and “the employee’s exposure to the employer’s customer relationships.”
The Freedom To Work Act also codifies the rule set forth in Fifield v. Premier Dealer Services (2013 IL App (1st) 120327) by defining “adequate consideration” as either (a) two years of continuous employment after signing the agreement; or (b) alternative consideration, such as “a period of employment plus additional professional or financial benefits or merely professional or financial benefits adequate by themselves.”
In addition, the Act allows courts to reform non-compete and non-solicitation agreements, rather than hold them unenforceable.
Key Takeaways
Employers with employees in Illinois should review their agreements with existing employees as well as update their business agreements before the end of the year to insure compliance with the Freedom To Work Act. While existing non-compete and non-solicitation agreements would not be impacted by this legislation, as the bill does not apply retroactively, employers may take this as an opportunity to update existing agreements before the effective date of the Act. Additionally, employers may want to become familiar with the changes that will impact the enforceability of these agreements after January 1, 2022.
Contact Lustig & Wickert at 847.509.9090, by email at Info@Lustiglaw.com or visit them on the web at www.Lustiglaw.com if you have any questions or concerns.
Disclaimer: This website is maintained by Lustig & Wickert, P.C. which produces this blog to provide general information about itself as well as general news about business law and commercial litigation. The information you obtain at this site is not, nor is it intended to be, legal advice upon which you should rely or act. You should contact your attorney to obtain advice with respect to any particular issue or problem. Use of and access to this website does not create an attorney-client relationship between Lustig & Wickert, P.C. and the user or browser. You should not send any confidential information to us until and unless a formal attorney-client relationship has been established. If you would like to discuss your concerns call us at 847.509.9090 or contact us by email at Info@Lustiglaw.com.
Read MoreTips to Avoid Embezzlement in Your Business
Embezzlement is a theft by a business partner, employee or other trusted individual in a business setting. It usually involves diverting company funds or resource, but it could also include the theft of merchandise, supplies, equipment,inventory, or even business data.
Tips for Protecting Your Small Business from Embezzlement
Embezzlement happens to small to medium size businesses when they lack the checks and balances that larger companies have in place. In a new business start-up, your employees are often your family and friends, so you trust them with customer data, inventory, the checkbook, the cash drawer – just about everything. Since your employees are your friends and family, what could go wrong?
They might be your friends and family, but they still go home every night and deal with financial pressures and family issues. Maybe one day, they’ll be a little too tempted and skim a little off the top. Protecting your business doesn’t mean you don’t trust your employees; it just takes the temptation away.
Check out these six tips for protecting your business:
1. Separate Financial Duties
By separating financial duties and spreading them between several people, you’ll decrease the opportunities someone has to steal from you. Separating financial duties means that:
whomever cuts the checks should not sign them;
someone who doesn’t run payroll should hand out the checks if you’re not using direct deposit;
whoever handles the accounting should not open the mail, especially anything related to bank statements, credit card statements, the IRS, or state tax agencies, and the owner should have duplicate bank statements sent to her at home.
2. Have a Formal Screening Process for New Hires
When you’re hiring a new employee, take your time to make sure they are trustworthy Check out their social media accounts, call their references, and run a background check. Better to find out early if your new bookkeeper served time for embezzlement.
3. Deposit Cash Daily & Reconcile Monthly
Cash sitting around can be tempting for some employees. Deposit cash every day so there’s not too much lying around. You should also reconcile your bank statement at least once a month. By reconciling your bank statement regularly, you’ll be able to catch potential issues more quickly.
4. Track Petty Cash
Petty cash is often an easy target because a lot of small businesses don’t keep a close eye on it. Take away the temptation by requiring all petty cash transactions to have a petty cash receipt or log to support the transaction. If the petty cash has to be refilled, require multiple signatures.
5.MBWA – Manage by Walking Around
Managing by walking around will show your employees that you’re keeping an eye on things without micromanaging them. Your employees are more likely to toe-the-line if they know that you’re keeping an eye on what goes on in the company.
6. Have a written Expense Policy
By having an expense policy and sticking to it, your employees will have to submit receipts and other paperwork to receive reimbursement. This will stop people from ordering extravagant room service or a massage when they’re on a business trip.
Early Warning Signs
Keep an eye out for partners or employees who might be tempted to commit embezzlement. Common signs to watch for include someone who;
lives beyond their means
has financial problems
has control issues
is going through a divorce or other family problems
has been charged with a felony
submits extravagant expenses from business trips
Pay extra attention if the partner or employee has unusually close relationships with vendors or customers;
refuses to take vacation, works a lot of overtime or always wants to take their work home.
You should also be alert to petty cash that seems to disappear too fast or office supplies that go missing.
What Do I Do If I Suspect Embezzlement?
If you suspect that one of your partners or employees is stealing from the company, be careful not to assume they’re guilty. If it turns out they’re not stealing from you, they could file a lawsuit against you. When you’re interviewing the suspect, don’t accuse them – just gather the facts and the evidence. You want to understand what happened and find out if anyone else was involved.
Before you confront the suspect, talk to a business lawyer experienced in embezzlement to discuss the best course of action and get recommendations for a private investigator or forensic accountant to assess the situation. These firms will obtain, preserve and separate evidence, so when it is time to talk to the suspect or law enforcement, you have the facts on your side.