There are certain mistakes that we see business owners make. We hope to make you aware of potential mistakes so you can avoid them.
Mistake #1 – Do-It-Yourself Counsel:
Perhaps you have heard the old phrase “The man who represents himself has a fool for a client”. While we understand and appreciate that businesses want to save time and money, the bottom line is this: hiring an attorney is almost always less expensive than not hiring one. Business owners often unnecessarily cost themselves a lot of time, money, and frustration, by trying to do it themselves. Saving a couple hundred dollars to have an attorney review a simple contract is now costing them several thousand, due to mistakes that would have been caught by the attorney. The services of a good attorney will save you time and money.
Mistake #2 – Not Talking with Your Accountant or Tax Attorney:
Just as not seeing your business attorney can cost you, not seeing your CPA or tax attorney can cost you also. A good certified professional accountant (CPA) or tax attorney can actually save you money, and pay for themselves several times over. Just one example: many small business owners may be better off taxed as an S Corporation, rather than as a partnership or proprietorship. Your tax advisor may tell you that LLC’s can be taxed as an S Corporation. Your CPA or tax attorney can discuss this issue, and many others, and save you money in the long run, and sometimes in the short-term.
Mistake #3 – Lack of Succession Planning:
Just as individuals need an estate plan, business owners need one as well. Every business owner should have a plan in place if he or she were to become incapacitated or pass away. If you are a small business owner, who would run or own the business if you died, became incapacitated, or wanted to retire? For medium sized businesses, what happens if a key employee passes away, or leaves for one of your competitors? A good succession plan can ensure the continuity of the business, and the future of the employees and customers though changing times.
Mistake #4 – Not Knowing What the Business Is Worth:
If you did want to sell or retire, do you know what the business is worth? If you have a succession plan in place, or thinking about entering into an agreement with a key employee or even a competitor, you need to know what the business is worth, or what appropriate buy-in amounts are.
Mistake #5 – Not Using the Business Entity They Set Up:
Sometimes business owners will set up their own business, perhaps as an LLC or a Corporation. Then, when it comes time to enter into contracts with vendors, with clients, or other parties, the business owner enters into and signs the contract as simply “John Doe” (personally), rather than “John Doe, President, Doe Enterprises, Inc.” In the first circumstance, if something goes wrong with the contract, John Doe will be sued personally, because he was the party to the contract, and signed personally. In the second circumstance, if “Doe Enterprises, Inc.” was the party to the contract, and John Doe signed as “President”, then the Corporation itself is the party to the contract. If there is a contract dispute, the Corporation gets sued, not John Doe personally.
Call An Experienced Business Attorney:
Ms. Hunter can help you with business deals, contracts and disputes. Call her today before you make one of the above mistakes.
Kansas City Business Attorney, Mandi R. Hunter, Building Legal Solutions.