Nevada Corporate and LLC Law and Business Planning

Posted by: on Mon, Aug 20, 2012

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Unfortunately, when many business owners come to our firm to seek advice about problems they are having with their business partners, we quickly learn that because of limited funds, and an even more limited desire to tie up legal issues before starting business together, many very basic issues of proper business legal planning have never been thought about or agreed to between them. This leads often and inevitably to litigation. A Nevada corporate law attorney can help ensure you have thought through many of the important issues you must consider before starting business together.

Examples of issues that must be considered and agreed upon include:

1. What are the ownership percentages of the members or stockholders? You would be surprised how many of our litigation clients say that they had a verbal agreement about their ownership percentage, and how rarely the other side agrees with them.

2. How will major decisions be made? A new business venture faces many important decisions, like how it will invest and distribute its revenues, how it will invest in the business, what kind of financing and growth does it want to pursue, what kind of marketing expenses it will incur, what contracts does it want to enter into with others, etc. How these decisions will be made is vital to partnership understanding.

3. How will day-to-day decisions be made? Generally, the day-to-day running of the business is left to a corporate president or LLC manager or managers, but the line between what constitutes a “day-to-day” decisions and what a more major decision might be needs to be understood and agreed upon.

4. What happens if one partner wants to sell out? Many small businesses have no succession plan, and no way of ensuring that existing partners have a right of first refusal to buy a partner’s stock or ownership interest if they decide to leave the business.

5. What if additional funds are needed – how will they be raised? One issue many business start-ups face is the need to raise money. These issues can be very tricky and it is important that they be considered carefully.

6. What if there is an impasse between the partners on what needs to happen in the business? Many partners have equal ownership or authority for the business and assume they will always agree on major decisions. This is rarely a long-term likelihood. If the partners have not planned for these situations, they will often be left to litigate their differences. See our separate blog post on this issue.

7. What happens when the company goes out of business and dissolves? Often, when a business is distressed, partners who have contributed hard assets feel they can just take their stuff and go. That personal property, however, belongs to the company and must be split up in an orderly fashion – this needs to be planned for and agreed upon.

8. Are any of the partners working in the business? If so, what are the terms of their employment and compensation?

9. How will corporate recordkeeping and accounting records be handled? Who will handle these responsibilities? How will accounting information be shared between the partners?

10. What if a partner dies, becomes insolvent or bankrupt or becomes incapacitated? All of these possibilities are regularly encountered by business partners and can have a significant effect on the business. How will they be handled?

A Nevada corporate law attorney with substantial experience in Nevada corporation and Nevada limited liability company start-ups can help you get your entity formed and get the appropriate documents prepared so that you and your business partners understand what will happen in these and myriad other situations. While the costs of proper business planning certainly exceed the costs of using a legal form shop to form your LLC, the importance of proper business planning has been learned over and over again by many of our business clients who have found themselves in litigation for failing to properly plan.

At Albright, Stoddard, Warnick & Albright, our corporate and business attorneys are ready to assist you to avoid business disputes by properly forming your entity at the outset and documenting the agreements between you and your business partners.

About the Authors: The law firm of Albright, Stoddard, Warnick & Albright is an A-V Rated Nevada-based full-service law firm having attorneys licensed in Nevada, California and Utah. Our firm’s practice includes a strong emphasis on corporate and business law, including advising businesses from start-ups to well-established companies in the jurisdictions where we are licensed.

Note: This article, and any other information you obtain at this website, is not offered as legal advice, nor should it be relied upon as such, nor is it a solicitation for legal services. Only a licensed attorney can advise you with respect to your specific legal needs. We welcome your contacting our firm to discuss such representation. Contacting us does not create an attorney-client relationship. Please do not send any confidential information to us until such time as an attorney-client relationship has been established.

About the Authors: The law firm of Albright, Stoddard, Warnick & Albright is an A-V Rated Nevada-based full-service law firm having attorneys licensed in Nevada, California and Utah. Our firm’s practice includes a strong emphasis on personal injury accidents. Call us at 702-384-7111.

Note: This article, and any other information you obtain at this website, is not offered as legal advice, nor should it be relied upon as such, nor is it a solicitation for legal services. Only a licensed attorney can advise you with respect to your specific legal needs. We welcome your contacting our firm to discuss such representation. Contacting us does not create an attorney-client relationship. Please do not send any confidential information to us until such time as an attorney-client relationship has been established.