One of the most advantageous aspects of the

Signing Your Name on Business Documents

One of the most common areas where personal liability arises is when a business owner signs his or her own name on a document instead of signing on behalf of the company. This can be a particularly hard habit to break because many people are used to signing their own name on checks and letters. It is important to understand that signing a contract in one’s life is not the equivalent of signing a letter or a contract as a business owner. Instead, it is important to make sure that your signature line always contains the name of your company, your name, and your position at the company.

Commingling of Assets

It is common for business owners to fail to maintain separate bank accounts for the company and personal business. When money from the business and personal spheres merges into a single account, the commingling of assets occurs. After commingling occurs, a business owner loses some personal financial protections and can end up facing corporate liability. This is one of the reasons why it is critical for new companies to open separate bank accounts, get checks made, and make certain that any payments made to or from the company are run through the company’s bank accounts.

Contracts Involving Apparent Authority

Apparent authority refers to an action that an employee might take, or a contract an employee might enter into, even if that employee has no authority to do so. These contracts or actions are often upheld and enforceable in court because the employee believed he or she had the authority to, or was perceived to have the authority to, enact them. To avoid problems of this nature, it is critical to select dependable employees who can help minimize your potential liability, and to have carefully crafted employment contracts, corporate structure, and iron-clad rules in place. A business attorney can help you ensure that your business is protected from anything that might lead to your personal liability.

Speak with an Experienced Corporate Law Attorney

There are a number of other ways in which business owners can end up piercing the corporate veil. It is critical, though, to always sign legal documents and contracts on behalf of the company and to always make sure that any money directly comes from and goes to the company rather than any individuals. Following these two practices help to protect individuals from a number of situations that would otherwise lead to personal liability.

If you have additional questions about personal liability in the corporate setting, do not hesitate to contact the Resnick Law today. Our corporate attorneys are prepared to help you with the numerous obstacles that can arise and are focused on making sure that your business runs smoothly and profitably.

Today’s do-it-yourself mindset has led to many new business owners to handle many legal matters on their own without the assistance of an attorney. While there are many websites that offer seemingly affordable legal document preparation and filing assistance, these alternatives are rarely suited to helping you if your business runs into a serious legal problem. Knowing

Help Deciding the Right Business Type

Preparing documents is not the only thing a qualified business attorney will do for you; your attorney will also help you decide what business type is best for you. During the incorporation stage of your venture, knowing what type of legal set-up you actually need will help you avoid wasting valuable time and money. A lawyer can tell you whether or not you need to register as a corporation, LLC, or other business entity, ensuring you are not making multiple changes to your structure because of startup errors.

Damage Mitigation

Every business has 36 to 53% chance of being sued and few business owners are truly prepared to deal with the consequences associated with litigation. Lawsuits can be filed against you at any point by a business partner, client, employee, your competition, or even a vendor. Even if the reason for the lawsuit seems frivolous to you, having a lawsuit filed against you could easily cost you a lot of money regardless of the outcome. Having an attorney who has represented your business before the suit was even filed means that you already have legal protections in place to reduce potential damages along with representation during the lawsuit.

Ensure Compliance

Laws applicable to business owners on a federal and local level are constantly changing.  Without an attorney to advise you, it is surprisingly easy to violate operating laws that were created after you started your business or changed after your business was already operating.  It is almost impossible for a business owner who is already focused on keeping a company running on a daily basis to constantly check state and federal business laws for changes that could affect legal compliance. Having a dedicated attorney reduces your chances of being blindsided by new rules or failing to comply with complicated rules that you are not implementing properly.

Benefit from Being Proactive

Finding yourself the target of a business related lawsuit or being accused of violating a law is overwhelming and extremely upsetting. The legal team at Resnick Law P.C. is here to alleviate your burden and make sure your business has the legal protection it needs. Our full-service law firm is able to represent you in a variety of business related situations including contract negotiating, buying or selling a business, collecting on unpaid accounts, and more. We take pride in offering our clients cost-effective counsel that focuses on your unique needs. Contact us to schedule a consultation at one of our two offices so that we can begin answering your questions and helping with your business’s legal needs.

(image courtesy of Alexandre Godreau)

Even businesses that are founded on great ideas can fail to be as profitable as their owners intended. While a business owner still believes in his or her idea, the business may fail because of debts to creditors and dwindling assets to cover them. In this situation, a business owner can choose to file for Chapter 11 bankruptcy in order to avoid going out of business.

Filing for Chapter 11 bankruptcy instead of Chapter 13 bankruptcy can in some ways be a strategic decision. For businesses that want to remain in operation after bankruptcy proceedings, filing for Chapter 11 bankruptcy may be the better route. Chapter 11 bankruptcy allows a business to reorganize its debts so that they can be paid without liquidating the business. Under Chapter 13, liquidation is inevitable. When deciding to file under Chapter 11, there are some issues small business owners should keep in mind.

When a business files for Chapter 11 bankruptcy, a committee is formed to ensure that the creditors’ rights are protected. These committees can get expensive, especially since they may be allowed to hire attorneys and other professionals to help with their work. The costs incurred by the committee are usually passed on to the business, adding to its debt. However, a committee is not necessary for a business debtor that is considered a small business.

A business qualifies as a small debtor when two conditions are met:

• The business is engaged in commercial or business activities and owes no more than $2,566,050 to creditors, excluding debts owed to family members.
• The business’s case must be one where a creditors’ committee has not been appointed, or the court has determined the creditors’ committee is insufficiently active to adequately provide oversight of the debtor.

Instead of a committee, a trustee is appointed to undertake some of the same tasks a committee would have if the business was not a small business.

If a business qualifies as a small business, it has to present a plan of reorganization, which basically outlines how the business will repay the creditors. However, there is no deadline or set time period within which the business has to complete repayment, except any periods included in the plan. The trustee and the court have to approve the plan, and therefore, a business cannot present a plan with an unrealistic or unduly long repayment period. If the business debtor fails to file a plan within a certain period of time, and fails to ask for an extension, the creditors may be allowed to file a plan for the debtor to follow.

Filing for Chapter 11 as a small business is also advantageous because the court may waive the requirement that the business present a disclosure statement. This can further reduce the expenses involved with bankruptcy.

Contact Us for Legal Assistance

If you are a small business owner who is going through financial troubles and you are considering filing for bankruptcy, you need to speak with an experienced bankruptcy attorney to discuss the best approach for your business. Our experienced attorneys can discuss the legal issues that will arise in a bankruptcy and how they will affect your business. For more information, call us at Resnick Law, P.C., in Bloomfield Hills and Detroit, Michigan.

(image courtesy of Ian Baldwin)