Category: Legal
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Shareholder Agreement – Capitalization Clause
The shareholder agreement lays out the rules of the relationship between the shareholders of a company. Most often the agreement is poorly written because the legal team fails to understand the business aspect of each of the respective sections. One of these sections is referred to as the Article of Capitalization or commonly called the Capitalization Clause.
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Partnership Agreements – Terminology
Each of us has our own built in dictionary for terms we hear in our business lives. I find it fascinating that the standard business term ‘Equity’ is interpreted differently within the business world. I often interpret the term using the Internal Revenue Service definition because my background is in taxation. Lawyers use this term to mean ownership…
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Partnership Agreements – An Introduction
There is a tremendous amount of information to convey to fully understand partnership agreements. This is the first in a series of articles related to partnership agreements. Throughout this series I will explain the various sections and issues a small business owner faces in creating a sound and fair agreement with a single or multiple partners.
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Piercing the Corporate Veil
When shareholders invest into a corporation, there is an expectation of limited losses amounting to the financial investment made. However, if the company is not properly run, officers, directors and shareholders are exposed to the blade of the law. This is known as piercing the corporate veil. Therefore it is critical for any shareholder, director, or officer…
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Why You Should Incorporate Your Business
As a small business grows, there comes a time when the owner(s) should consider incorporating the business. A corporation is a separate entity recognized by the state of domicile for the business. It is as if a new life is created. The state acknowledges the existence of this entity and therefore grants limited legal rights similar to those rights…
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The Basic Principles of a Partnership
A partnership is a form of a business entity that provides many more advantages than any other form of business entity. There are several basic principles of a partnership that once understood, the reader can use to his advantage in the small business world. Below are descriptions and an explanations of the basic principles of a…
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What is a Living Trust?
A tool in estate planning used to minimize probate costs upon the death of the grantor is the living trust. A Living Trust is created while the grantor is alive and typically is revocable in nature. It is designed to manage assets for the best interest of a beneficiary, usually the grantor.
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What are Trusts?
A trust is an agreement for one party to care for the assets of another party for the benefit of a third party. In essence, it is a business agreement. The person creating or the original owner of the assets is referred to as the Grantor. The party that will take care of the assets is known…
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The Sole Proprietorship – The Basics
Of the four business entity types, the sole proprietorship is by far the most flexible and easiest to manage. There are very few drawbacks. In the world of business, the key is to maximize profit with the least amount of risk.
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What is a Contract?
Article 1 of the Uniform Commercial Code copyrighted by the American Law Institute is considered the primary source for the definition of a contract. All of the 50 states have incorporated all or most of the definition of this code as statue. A contract is defined as a legal obligation between two or more parties. A…