At some point in the lifecycle of a business the option to sell the business or its assets may arise for a variety of reasons. On the other side of that opportunity lies a prospective and motivated buyer interested in obtaining the assets or business itself of the established and going concern. There are a number of factors that impact the decisions on both sides of the potential transaction, but they ordinarily start with some investigation of the opportunity by the buyer, which may or may not need to be guarded by the seller through documents such as non-disclosure agreements.
Once the parties assess the opportunity and are in a position to frame out the terms of the purchase and sale, then they are ready to document those terms so that everyone involved knows exactly how things will turn out and knows the obligations and responsibilities of all the parties. Structuring purchase and sales of businesses in this manner is naturally done to avoid disputes later that can divert attention from running and growing the business or can drain the monies obtained from the purchase.
For several years, David Steinfeld has edited the Chapter on purchase and sale of businesses in Florida for the Florida Bar in its Small Business Handbook. This is a volume that is used by lawyers throughout the State in understanding how to structure such transactions and even provides sample documents for them to use. Thus, in a manner of speaking, you can say that Board Certified expert business lawyer David Steinfeld literally wrote the book in Florida on how to structure contracts for the purchase and sale of businesses.
While trademarks and service marks are one method by which a business can add value to and protect its brand, non-compete agreements, non-solicitation agreements, and non-disclosures are also mechanisms by which a business can place itself in a position to more easily enforce its rights and protect itself. However, there are certain legal restrictions that apply to some of those documents leading one to the recommendation of “don’t try this at home”. Business owners that elect to create their own contracts or download these documents from an unknown source and opt not to invest in expert business law advice, such as that from Florida Bar Board Certified business litigation lawyer David Steinfeld of the Law Office of David Steinfeld, usually create a bigger and more expensive problem for the business later.
A business that relies on its self-created documents can, for years, believe that it is protected by such defective documents only to find out when it tries to enforce them that the business is unprotected, has exposed its proprietary and confidential business information, and created its own competition that can damage or destroy the business. After spending years and significant sums to grow a business, one of the worst imaginable issues that the owner or owners can face is learning that they are helpless to fight off an attack from a former employee or new competitor who has absconded with what the business owner thought was protected proprietary business information.
Thus, sophisticated business owners invest the time and money to consult with Florida law business experts like David Steinfeld to understand the options available to them and to be able to make informed decisions on those points, which avoids more costly future disputes ever time.
When a business opens in Florida, it will generally either provide a service or sell merchandise. In either case, the intent is usually to operate the business to earn a profit for its owners and to that end they strive to market and promote the business to increase sales and generate that profit. But, what many business owners overlook in their quest for growth is the need to protect and insulate the business from attacks. Such battles can develop internally, which is why governance documents, like operating agreements for LLCs or bylaws and shareholder agreements for corporations, are beneficial. These fights can also come from employees or independent contractors from adjacent to or outside the corporate entity or from competitors or vendors outside the business.
Protecting the brand of a business promotes the growth and development of the business and enhances the possibility for profit that the owners seek. Protecting a business in this regard is not limited to the filing of a trademark application on Sunbiz, for example, but is an operational program as to how the proprietary information of and developed by the business can best be protected. Designing such a program for the business is a service provided by David Steinfeld and the Law Office of David Steinfeld.
How do you set up a business in Florida – Part 7: Non-Florida business doing business in Florida
Florida encourages and provides an easy means for non-Florida businesses, that is a business either registered in another State or Country, to register to conduct business legally in the State. The method is similar to creating a business here and is done online on the State’s website, Sunbiz. If a foreign business as it is called, either a corporation or LLC, has a credit card, internet access and a registered agent to accept service of process of lawsuits, it can register to do business here. There are even businesses in Florida that cater to such foreign businesses and offer their services as a registered agent for the foreign business in Florida.
Although a foreign business need not always or absolutely register to do business in Florida, the benefit of so doing affords the business benefits that it would not otherwise enjoy. How such benefits will apply to a particular foreign business and whether it is helpful for a particular business to do so is a topic better addressed in a discussion with David Steinfeld. The Law Office of David Steinfeld employs a great deal of technology to move at the speed of its business clients. Therefore, a foreign business wishing to discuss these topics will find it easy to do so from anywhere in the country or the world.
The likely primary reason why the LLC has become the dominant business entity in Florida is the relative ease by which it can be managed. Our LLC laws do not require that the owners, who are either managers or members, necessarily have a written operating agreement between them, but without such governing document, the owners are essentially stuck with what the Legislature has given them, which may or may not be what they desire or intend. While the LLC is governed by an operating agreement or Chapter 605, which is Florida’s LLC laws, the governance documents used in a corporation, which is designated by “Inc.”, are bylaws and a shareholder agreement. Thus, two separate documents are required for the corporation whereas only one is needed for the LLC and the cost to the business for these is then cut in half with the LLC.
While governance documents for a Florida business, such as an operating agreement for an LLC, bylaws and a shareholder agreement for a corporation, and a partnership agreement for a partnership, enhance and guide the internal operations of the business between the “partners” in common parlance, the business can also enhance its own value and add protection to its brand through trademarks or service marks. The State of Florida has its own trademark statutes that complement the Federal trademark laws, but the Florida trademark and service mark is far less costly than a Federal mark. For start-up businesses that only plan to operate in Florida or intend to initially do so, the Florida trademark may be of great value and benefit, which is a common discussion topic between new business owners and Mr. Steinfeld in consultation meetings.
Not every LLC needs an operating agreement or requires one from its inception, but the decision as to whether the LLC needs one and when it should have one should be made by the owner or owners after understanding the issues that impact the decision. Without an operating agreement, the LLC is bound by the Revised LLC Act, Chapter 605, Florida Statutes and, therefore, gets what the Legislature has decided the business should have. Sometimes, this one-size fits all approach is not appropriate for or tailored to the needs of the business.
To increase the efficiency of the process of developing an operating agreement to fit a business and to reduce the costs involved, David Steinfeld created a proprietary and easy to navigate questionnaire that incorporates the provisions of the Revised LLC Act that can be changed or modified. This allows the Law Firm to obtain salient information from the business owner without a lengthy and direct interaction, which effectively eliminates one meeting and saves hundreds of dollars for the business. Because many LLCs undertake an operating agreement early in their existence, the cost of so doing is normally very important because the fledgling business often has only so much money with which to work at that point. By making the process of creating he operating agreement faster and cheaper for the business, the Law Office of David Steinfeld can provide a value and benefit to the business that promotes its future success and avoids costly disputes in its future.
To create a business in Florida, all one has to do is log on to the Sunbiz website and follow the prompts. It is no different and no harder than purchasing merchandise online. While a corporation is said to be “incorporated” and an LLC “organized”, the result is that once approved, Articles are filed with the State and the entity is born. The Law Office of David Steinfeld based in Palm Beach Gardens can easily and effectively provide guidance in the formation of a business anywhere in Florida, but the greater value that an experienced, Board Certified expert business lawyer like David Steinfeld provides is in the crafting and preparation of documents used in managing and operating most business ventures called corporate governance documents. These include operating agreements, shareholder agreements, and partnership agreements. David Steinfeld also assists businesses in determining whether they need documents for dealing with parties collateral to and outside of the business, such as employees, vendors, and customers, like non-compete agreements, non-disclosures, and contracts.
However, not every business needs a full complement of every document available to it at the time it opens. Which documents are appropriate and when in the lifecycle of the business they can or should be used is the benefit of consulting with David Steinfeld. There are considerations that apply to these documents that Mr. Steinfeld can explain with his expertise in the field, making it easier for the business owner to make informed decisions on the topic.
How do you set up a business in Florida – Part 3: Why use the LLC
In 1999, Florida put its first LLC laws in place and then upgraded them in the early 2000s. Because the LLC was created by the Legislature it is commonly referred to as a “creature of statute” as opposed to the corporation and partnership that developed in common practice first and then were formalized or “codified” into actual written law by the government. More recently in 2013, the Florida Legislature updated and upgraded our LLC laws to fill in some gaps that had been identified over the previous years and make the LLC more user-friendly for people wanting to do business in the State.
One of the reasons why the vast majority of all businesses now formed in Florida are LLCs is because it acts like something of a hybrid; it provides and combines the protections of the corporation with which many are familiar with the practical day-to-day use and feel of the partnership. It is arguably less burdensome to manage than a corporation and provides more protections than the partnership, thus making it an ideal choice for the closely-held concerns that comprise the bulk of the business engine in Florida.
The most common business entity used at present in Florida is the LLC. Historically, several hundred years ago, the partnership was the only method by which to conduct business with others. Then, in the mid-1500s, the corporation as we understand it as a means to do business came into being to support voyages to the new world. It would seem that it was deemed more practical at the time to have a small governing board to guide the venture with one-hundred fifty shareholder/investors as opposed to one-hundred and fifty actual partners who each might have wanted to have the adventure go in a different direction.
From that time until the end of the twentieth century, the options for business people were the corporation or the partnership. However, most businesses in Florida are closely held concerns owned by one or a handful of people and are not large businesses with hundreds of stockholders, publicly traded stock, a large board of directors, or thousands of employees. Therefore, the corporation as a legal entity by which to conduct business was too cumbersome for most people and was akin to nailing a thumbtack in with a sledge hammer. In reaction, in the early to mid-1990s, the Florida Legislature revised the partnership laws to allows for different types of partnerships that would better accommodate how business people were actually operating in the State. But, those options did not afford the legal protections offered through the corporation and by the end of the 1990s they were largely abandoned in favor of the limited liability company.