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Dallas Business Law Topics

What is a family limited partnership?

As a Texas business owner, you have worked hard to build your company, and now it is time to start thinking about your legacy. A family limited partnership allows you to protect your business assets from liability, provide for your family and secure the future of your company even in the event of your retirement, death or incapacitation. 

According to FindLaw, despite the name, you do not have to transfer interests in an FLP to family members. You may choose to make gifts of interests in the FLP only to kin to keep a family-owned company intact, but you are at liberty to choose whomever you want to receive investments and other interests. 

What should you include in your partnership agreement?

A partnership agreement is not a requirement to start a new business, but if you are thinking about forming a new business partnership in Texas, or if you have a partnership already established, you should think about drawing one up. According to FindLaw, establishing your own rules by which to govern your business prevents the state from imposing a set of default one-size-fits-all rules upon you. Furthermore, making your own partnership agreement allows each partner to know where he or she stands and what expectations he or she must meet, which may help prevent minor problems from escalating into major disputes. 

One of the most basic items to include in your partnership agreement is the name of your business. You may use a fictitious name for your company, as long as it is not already in use, or you may name it after the partners involved. In either case, your partnership agreement should also include the following information.

Navigating the new business tax laws

As a new calendar year gets underway, many companies are turning their attention to how the newly implemented tax laws will play out as they file their 2018 business tax returns. Texas businesses may also decide to reevaluate the form of the entity they are using.

Historically, the tax burden associated with operating a business as a C corporation deterred many companies from creating this type of structure. As a result, the S corporation and the LLC grew to become quite popular in part due to their tax structure which could be more favorable to smaller businesses. That, however, may well change under the new tax code and some businesses may wonder if they should migrate to a C corporation structure.

Is my business partnership toxic?

When you decided to start a business with someone else, you likely had an image of sharing workloads and working in harmony. Unfortunately, not all partnerships end up that way.

While there are times when a dispute occurs and it can be resolved, partnerships can sometimes become unhealthy. In these cases, there is no opportunity for resolution. 

What are your rights when a client files bankruptcy?

If you own a business in Texas, you likely rely on customers' timely payments to pay expenses and fund growth. When a customer not only fails to pay you but also files bankruptcy to prevent any sort of debt collection action, you may be torn between pursuing the debt into bankruptcy or giving up the claim altogether. If you are like many business owners, you may assume that pursuing the debt is not worth your time or money.  But this might not be the case at all.

Though pursuing the debt into bankruptcy will require you to expend some resources, it is not as difficult as many creditors think. If, after weighing the pros and cons of pursuing the debt, you decide to proceed with collection efforts, there are routine steps you should take. The first is to comply with the Bankruptcy Code and cease all collection actions immediately. The "automatic stay" comes into effect instantaneously upon the debtor's filing of a bankruptcy petition and makes it illegal for creditors to continue with debt collection efforts without seeking approval of the bankruptcy court.  Record the account as bankrupt, and if you hired a third-party agency to collect the money on your behalf, inform it of the client's new status.

How to approach a business partnership

Entrepreneurs in Texas often need to work with others when getting new ventures off the ground. When considering a partnership, care should be taken to select the right person and to develop a positive and complete partnership agreement. 

Entrepreneur magazine recommends that people should only partner with others if they can completely trust them. A business partnership is a very close relationship that requires a lot of give and take and a lot of trust. It may also be wise to find a way to have a test partnership or working relationship before entering into a formal partnership. This might include one person hiring the other as an employee or a consultant for a while.

Choosing the right foundation for your new business

The business structure you use for your new Texas startup impacts many facets of the organization. At Palmer & Manuel PLLC, we often provide expertise to clients who wish to choose the right business structure of their startup.

When selecting the type of business entity, the formality of the operation, management, record-keeping, tax and ownership interests are among the top considerations. While there are many options to choose from, the four business structures listed below are among the most common for new companies.

Different ways you can resolve partnership disputes

Business owners in Texas will be dealing with a vast array of hurdles as they progress through their business journey. One potential issue is that of disputes or disagreements among partners, which can occur between anyone for many reasons. The important part is knowing how to handle it.

Business News Daily takes a look at what you can do when a partnership starts going downhill. They look at many different areas in which disputes can occur in, including monetary issues, intellectual property (IP), or operational functions. Depending on what caused the disagreement to occur, it's possible for partners to work things out without legal action. Mediators or counselors for business may be brought in to allow for a safe and open environment where all opinions are heard. This generally works best for issues like one partner having trouble with another not pulling their weight.

What does your business partnership agreement need?

A business partnership agreement is a vital component to the formation and ongoing operation of a company. How you and your partner agree to make money and control decisions should be address before you're overwhelmed with the day-to-day operations.

As you start to create a partnership agreement, consider adding these eight details to help prevent future issues.

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