What factors are important in selecting the proper type of business entity for my new business?
The main factors to be analyzed are: limitation of liability for owners, the management of the entity, the way the entity will be taxed, and the current (and projected future) ownership structure of the entity. We can help you review these factors and determine what type of entity is right for your business, and we can draft the appropriate documents to ensure that your new entity is properly formed and governed.
Do I need a license to start a business?
The State of Florida does not require that most businesses obtain a license to operate. That being said, many professionals are required by state agencies to obtain licenses to practice their profession (for instance, lawyers or accountants). In addition, many counties and municipalities require business permits to be taken out as well. Finally, certain lines of work may require specialized licenses, such as businesses that serve alcohol. We can assist you in the process of identifying what licenses or permits are required to start your business, and we can help you in the application process.
Part of the start-up money for my company is coming from investments by family and friends – do I need to comply with securities laws?
A full answer to this question is beyond the scope of this webpage. However, as a general rule investments from family and friends that are not actively participating in the business (even if the investment is described as a loan) will qualify as “securities” under Federal securities laws and State Blue Sky laws, and will require registration of the securities offering. A number of exemptions apply if the investments do qualify as securities, and different exemptions have varying level of regulatory burdens associated with them. The lawyers of Berlin Patten Ebling can help you identify whether your plan will implicate any securities issues, and can ensure that you plan for and maintain compliance with Federal and State securities laws.
When should I start planning an exit strategy for my company?
We recommend that business owners go through the exit planning process as early as possible. This provides a framework for a clean break if unexpected circumstances arise, and also lays the foundation for a more orderly exit from the business on your terms, when you choose. We have found that early planning will maximize the value of your business when you do decide to exit, and will avoid costly conflicts with business partners.
Does my company need to have a buy-sell agreement in place?
If your company has one owner, you do not. However, if your company has more than one owner, you absolutely need some mechanism in place to deal with unexpected events (the death, disability or divorce of an owner), or to set out the terms for a planned exit by one owner. The risk is real, and the stakes are high: for instance if no agreement is in place one owner may find that he has no ability to sell his stake in the company without approval of the other owners. A solid buy-sell agreement cures this problem by setting out the terms by which an owner’s share of the company can be sold, what events trigger that right, what rights the other owners have when an owner looks to sell, and what method will be used to value the company. If a dispute arises, the alternative to a buy-sell agreement is costly and protracted litigation, which is a drain on the owners of the company, and on the company itself. This truly is an instance in which an ounce of prevention is worth a pound of cure.
My Company has a buy-sell agreement in place between the partners. How often should that be reviewed?
We advise that the terms of your buy-sell agreement be reviewed by the partners on a yearly basis to determine if the economics that underpin the agreement are still valid, and to determine if changing circumstances require any amendments to the agreement. If you find that any changes do need to be made, we can help you to draft provisions that accurately reflect your current circumstances.
I’m worried that my employees will compete with me or take customers when they leave – is there anything I can do to prevent this?
Florida generally allows employers and employees to enter into non-competition agreements and non-solicitation agreements. However, the legislature and the courts view these agreements with a fair amount of scrutiny because they consider them to be restraints on trade. To ensure that such agreements are fair, the Florida Statutes set out several requirements that must be met if the agreement is to be considered valid. In short, the agreement must be written and signed, it must be designed to “protect a legitimate business interest” of the employer, and it must meet certain restrictions as to duration, geographical coverage and the scope of business covered.
Assuming that the agreement is enforceable, the protected party has a couple of powerful remedies for the breach of the agreement. First, it can ask a court to issue an injunction against the offending party, which is essentially an order that requires them to stop breaching the agreement, or face serious penalties (including incarceration). Second, the protected party can file a suit to collect any damages that it has sustained as a result of the breach of the agreement.
The lawyers of Berlin Patten Ebling can assist you in drafting a non-compete agreement or a non-solicitation agreement that will satisfy Florida’s strict standards. On the other hand, if you are an employee who has been wrongfully accused of violating such an agreement, we can provide you with a vigorous defense to allow you to continue your business uninterrupted.