Estate Law, Business Law, Personal Injury Law, Criminal Law, Family Law - ENCE LAW
Estate Law | Business Law | Personal Injury Law | Criminal Law

Matthew D. Ence                        Attorney and Counselor at Law                                   ENCE

1662 U. S. Highway 395 North, Suite 104, Minden, Nevada  89423  (775) 783-8501  Fax (775) 783-8531

Business Law


FACT #1: There are a number of different ways you can form a business. If you are doing business as a sole owner and do not specify otherwise you will be deemed to be doing business as a sole proprietorship. If you are doing business with one or more other people you will be deemed to be doing business as a partnership. However, you can also create a legal entity to do business through. The most common entities are "C" Corporations, "S" Corporations and Limited Liability Companies (LLC's).

FACT #2: When doing business as a sole proprietorship you are personally liable for all liabilities and obligations of the business. When doing business as a partnership you are joint and severally liable for all liabilities and obligations of the business. When doing business through a legal entity, liability for the obligations of the business is generally limited to the assets of the entity.

FACT #3: When drafting business contracts you can generally contract for any lawful activity. Such an agreement can be verbal, or in writing, but must contain enough specifics of the agreement to show the court what the terms of the agreement were and that both parties understood and assented to those terms. Thus it is best to put the agreement in writing.

FACT #4: You do not need a written contract for an employee in Nevada, and having a poorly drafted agreement can actually unnecessarily subject you to liability. Unless an employer makes an agreement to the contrary, all employees in the state of Nevada have an “at-will” status. This means that either the employer or the employee may terminate the relationship at any time, without notice. An employer may terminate an employee “at-will” for no reason, or for a good reason. An employer may not terminate an employee “at-will” for a discriminatory reason if the employee belonging to a legally protected class that the employer may be discriminating against.

FACT #5: Despite all attempts to the contrary agreements will sometimes be broken. Sometimes the reasons for breaching an agreement are legitimate excuses. Legally some legitimate excuses also constitute a defense, and some don’t.

If your business is sued, it becomes an unwilling participant in costly and often inescapable legal proceedings. Even if the suit is groundless, the business will typically be running up legal fees (answering the complaint, responding to discovery requests, attending depositions, and having its attorney attend court appearances) before the court looks at the relative merits of the plaintiff's claims. Some businesses actually end up in bankruptcy just from the process of defending a lawsuit. If you are not doing business as a legal entity, your personal assets are also at risk.

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TIP # 1: Form a legal entity to do business through. Generally, a Limited Liability Company (LLC) will be the most advantageous legal entity for a smaller ventures to do business through. However, the "C" corporation still have advantages, particularly with respect to the availability of nontaxable fringe benefits and asset protected retirement plans.

TIP #2: Because the corporate tax rate on the retained earnings is typically lower than the tax rates applicable to individuals, you carefully study the venture's projections and calculate the estimated after-tax financial performance of the venture before making a decision. An LLC taxed as a partnership cannot provide many of the fringe benefits that a "C" Corporation can. Members are not "employees" for purposes of the fringe benefit rules.

TIP #3: When drafting business contracts it is a good idea to include a prevailing party attorney fee provision. Such a provision calls for the loser to pay the winner's attorney fees if either party sues for breach of the agreement. The value to you is threefold: First, the other party will probably exercise more caution before deciding to harass you with a weak lawsuit - he does not want to be paying your lawyer. Second, if you win you will probably get reimbursed for some or all of the money you spent on lawyers defending you. Third, if you have a strong case, but cannot afford to pay all of the attorney fees required, you might be able to get a lawyer to accept less up front and gamble his time defending you on the hopes that he will collect against the attorney fee provision. The downside is that if you lose, you'll be ordered to pay the other parties attorney fees. If you lack the money to pay, you could be forced into bankruptcy.

TIP #4: Unless you have a good reason to do so, a written employment contract is usually unnecessary. With an oral employment contract don’t unnecessarily limit your options by promising to keep an employee "as long as they do a good job." That should go without saying. However, if you do say it, “at-will” status may be defeated. If it later becomes necessary to fire the employee, he or she can bring an action for wrongful termination, claiming the termination was without good cause and therefore a breach of the promise not to fire.

For the same reason, don't use a probationary period for new employees. To do so implies that the employee will obtain "permanent" status once the probationary period is over. Keep your employees "at-will," and make sure that status is reflected in any contracts or employee handbooks.

TIP #5: The most important business litigation tip is: Stay out of litigation!

Litigation should be a last resort, not the first. Litigation is expensive and risky. It is often better avoided, even if it means suffering a modest loss. Litigation over one's "principal" is costly, and not recommended. Litigation should be reserved for those situations where the cost is worth the expected benefit. If the matter is small enough that you can afford to walk away, do it. Never litigate without serious deliberation.

However, when the matter is significant, and you can not resolve it any other way, be sure you are represented by an attorney that will not only fight for your rights, but that also has experience presenting cases to a judge and jury.

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ENCE LAW . com - 1662 U. S. Highway 395 North, Suite 104, Minden, Nevada     (775) 783-8501  (775) 783-8531 Fax

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