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Red flags when choosing your business partner

You want to start a business, but you don't want to do it alone. You know you could benefit from a business partner. You're looking for someone who has skills and talents that you lack.

Who you choose is incredibly important to the health and success of your business moving forward. You do not want to make any mistakes. With that in mind, here are some red flags to look for:

Protect your company if someone wants to discharge a debt

If you work for a company that either extends credit or provides goods and services, you rely on the timely payments from those indebted to you to continue operating. When people try to avoid their financial obligations to repay your company, it can hurt your bottom line.

Attempts to collect on unpaid, outstanding amounts can eventually push the person who owes you money to file for Chapter 7 bankruptcy. If the debt in question is an unsecured debt, such as a credit card or medical debt, you might think that you have no choice but to give up on ever getting your hands on those funds. However, you can and arguably should still fight for repayment from those who owe you money.

Should you form your company as an LLC?

When it comes time to create an official entity for your business, you may quickly realize that the number of business structures you may choose from can seem overwhelming. Many new business founders push forward into the market too quickly without properly establishing a business entity, which can cause huge problems and even lead to unnecessary bankruptcy. If you have concerns about how to create a legally sound business, the good news is that you are asking very important questions that every successful businessperson must answer.

One of the most commonly used business structures is a limited liability corporation, or LLC. LLCs are relatively simple to establish and offer a number of protections that other structures do not, although they are not a good fit for everyone. If you suspect that an LLC fits your needs, it is wise to use high-quality legal resources and guidance as you need them to keep your rights protected through the strength of the law.

How to choose a partner when starting a business

If you don't already know who your partner will be in your new business venture, you will need to choose one. This can be a challenging process, especially if you don't know where to start. Today, we will provide you with a handful of tips for choosing a partner to help start your business in Dallas, Texas.

First and foremost, you will want to find a partner who has some sort of experience in the business world, especially if you don't. You will want to look to partner with someone who has helped work with startups in the past. These skills can go a long way in helping your business succeed.

Common examples of partnership disputes

Partnership disputes happen more often than you might think in small companies. Even though you are not a large corporation, it doesn't make you immune to disputes. These often arise for various reasons and can turn into costly legal battles, especially if you aren't prepared for these disputes. You cannot protect your business against all disputes, but you can be prepared for those that involve partnership agreements.

One of the most common types of partnership disputes involves authority. One partner might try to assert more authority over the other or over the employees, and this can lead to serious issues. A chain of command should be established within your company from day one to avoid this type of dispute.

Should you incorporate your business?

Incorporating your business adds legitimacy to it while also formally spreading out the responsibilities associated with it to your corporate partners. Yet with it also comes added liabilities, among which are new tax regulations. Many business owners and executives who (like you) have considered incorporating have come to us here at Palmer & Manuel PLLC questioning how they might enjoy the benefits of being a corporation yet still enjoy some of the special treatment afforded to small businesses. One way to accomplish this can be incorporating as an S corporation.

An S corporation (also referred to as a subchapter S) is a type of corporation that allows your business to avoid the issue of double taxation (having income taxed at both the corporate and personal levels). If you file as a standard corporation (a "C corporation"), your business is considered to be a separate entity from your shareholders. Thus, you pay taxes on your annual earnings and your shareholders pay income tax on their dividend payments. With an S corporation, you are allowed to pass corporate income, losses, deductions, and credits directly through to your shareholders. This allows them to pay taxes on such income at ordinary tax rates and reduces your corporation's tax liability to built-in gains and passive income.

According to the Internal Revenue Service, your business must meet the following requirements to qualify for S corporation status:

4 lawsuits that may catch your small business off guard

Growing a small business is often an effective way to realize financial freedom. Further, if you have a brilliant idea, in-demand product or necessary service, your small business probably plays and important role in the community. Still, a lawsuit may bring your organization to a standstill. 

According to some estimates, more than 50% of small businesses are parties to litigation at any given time. Therefore, even if your company has managed to stay out of court until now, you probably cannot avoid a lawsuit forever. Here are four types of litigation that may sneak up on both you and your business.

The pros and cons of non-compete agreements

When considering new opportunities in Texas, pay close attention to non-compete agreements. Non-compete agreements have traditionally been enforceable in Texas that fairly restrict the ability to work in a specific industry, in a specific location, for a specific period of time. However, the key word here is "fairly," so non-compete agreements that are too broad in their definition of the nature of the work, are too far-reaching in their geographical coverage, or are restrictive for too long a time period will not be enforceable.

Whether you are looking to start a new role or you are looking to bring someone else into a new role, you want to be sure you understand the terms so you will know exactly how enforceable the non-compete is.

The basics of easements

If you are looking for a new home to buy in Texas, there will be many things you should evaluate before you make a final decision to purchase a specific property. Factors like the condition and age of key systems such as heating, cooling and electrical will be important to asses. The age and condition of the roof is also a major factor when buying a home. In addition, you will want to fully understand the property lines around your home and what other parties might have access to some part of your property.

An easement is something that grants another party access to a piece of your property for a specific reason. As explained by Zillow, it is common for utility companies to be granted easement access to perform maintenance or checks on your service. It is also common for a particular easement to allow the general public the ability to pass through your property to some other public space, such as a park or a lake. Some easements give a neighbor the ability to use your driveway, for example, to access their property.

What is a limited liability partnership?

When you start a business in Texas, you have many options as to its structure. Even once you decide on a partnership between you and one or more other individuals, you still have a variety of options available. The most common options are a general partnership and a limited partnership, each of which has its own advantages and disadvantages. According to FindLaw, however, you also have a third option, the limited liability partnership, which combines some of the advantages of each of the two other types of partnerships. 

One of the major advantages of an LLP is that if you already have an existing partnership, you do not need to modify the partnership agreement already in place. Once you have identified the appropriate state agency, all you have to do is to register as an LLP by submitting your application. The application requirements vary somewhat by state, but at the very least, you will have to disclose your place of business and each of the partners' names. 

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Palmer Lehman Sandberg, PLLC
8350 N. Central Expressway Suite 1111
Dallas, TX 75206

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