Business Law

Business Entity Formation

If you are considering starting a new company or want to expand an existing commercial enterprise by creating a new entity, you want an experienced, knowledgeable attorney to help you choose the best legal structure for your new business. You want a lawyer who will carefully examine your business and objectives and recommend the structure that best protects your interests.

We can help you in the creating of the any of the following:

C corporations
S corporations
Professional corporations (PC)
Limited liability corporations (LLC)
Limited liability partnerships (LLP)
Partnerships
Limited partnerships (LP)
Family limited partnerships (FLP)
Business succession
Sole proprietorships

Once we have helped you select the appropriate tax-conscious entity for your business, we assist you with your business’ formation. We are experienced with all aspects of incorporation, including drafting and reviewing documents involved in the organization and structuring of your new business entity, which may include:

Articles of incorporation
Articles of organization
Bylaws
Operating agreements
Employment agreements and policies
Shareholder agreements

We can help you with all legal aspects of your business startup:

Entity selection – we can help you decide whether a corporation, partnership, LLC or other business structure would be the best for your based on your needs and business objectives.
Filing – we will help you through every step of the process of filing and registering your business with the California secretary of state’s office.
Incorporating documents and procedures – we will help you with all aspects of the initial documentation, including articles of incorporation, EIN number, opening minutes, bylaws and the information we will file with the secretary of state.

You may choose a clause stipulating that one partner can offer to buy out the other at a price he chooses. The other must then accept the sale or buy the company for the same price. Since this can favor the wealthier partner, the poorer one may want to try to stipulate that the buyout can be funded over time or with profits from the ongoing business.

In addition, the buy-sell should require a right of first refusal. That means if a partner finds an outside buyer for his shares, he must first offer those shares to the existing owners, who must match the outside buyer’s price. This shields the remaining partners from suddenly running the company with a dubious new owner.

Buy-Sell Agreements

Fund your small business buy-sell agreement with life insurance

Along with a general agreement about ownership and responsibilities, every business with multiple owners needs a buy-sell agreement. It covers how and when an owner can sell shares and at what price. The agreement should be signed before the business is started, but if you neglected to do so, do it now. Without a buy-sell, angry partners usually end up in court, and the business usually ends up wrecked. If you don’t have one, it is incredibly difficult to negotiate when something goes wrong.

The buy-sell should specify triggers that will set the agreement in motion. If an owner retires, for example, you may not want to allow him to continue to hold his shares. If an owner gets divorced or declares bankruptcy, you want to protect the business from the spouse and the courts. If an owner dies, you may want his shares to be sold to existing owners rather than passed to his three-year-old. (The company often takes out life insurance on each partner, so it can purchase the shares of a deceased partner if necessary.)

The buy-sell may also have a drag-along-and-tag-along provision. It specifies that if the majority owner or owners (“majority” should be defined in the agreement) want to sell to a third party, they can force the sale of minority owners. On the tag-along side, it promises minority owners the same proportionate price as majority owners in a sale. These are very important, because they affect the marketability of a company. The buy-sell should give a formula for valuing shares to ensure a fair price for a departing owner.