BUSINESS LAW IN GRANDVILLE, MI

There are several ways to operate a business including: sole proprietorship, partnership, limited partnership, limited liability company, and corporation. Each type of entity has its own advantages and disadvantages. They are taxed differently, require different IRS filings, require different amounts of work to maintain, have different restrictions regarding who can be owners, and provided different levels of protection for personal assets from your business' liabilities. A knowledgeable professional can help sort out which type of entity best fits your situation.

Other than choosing the right business entity for you, it is important to plan for the future. Many issues should be addressed at the beginning such as: what happens if one of you wants to leave the business, what happens if one of you dies or becomes disabled and not able to work, will you be able to bring your children into the business? These and other issues should be resolved in writing at the outset of the business. It is always easier to resolve these types of issues when starting a business rather than dealing with them later.

Certain types of contracts, such as contracts concerning the sale of real estate and contracts that will last longer than one year, must be in writing. However, verbal contracts are enforceable if they do not concern those areas where written contracts are required. The danger is that many times the parties to a verbal contract cannot agree what the terms of the verbal contract were when one party's expectations have not been met and this inevitably leads to problems. It is always best to put any agreement in writing. Again, it is almost always less expensive to negotiate terms at the beginning than try to resolve disputes later.

You have several options. You can sell or give stock to your employee either with or without restrictions. You can give your employee stock options, the ability to purchase stock in your corporation at a set price for a period of time. The downside to giving stock or stock options is that you lose some control of the corporation. If you do not want to give stock your employee, you can give stock appreciation rights, the right to receive the appreciated value of stock over a certain period of time. Giving stock appreciation rights works best when there is a recognized market to determine the change in the stocks value. Finally, you can give your employee the right to receive bonuses based on your business's profitability. Each option has specific requirements and tax consequences so you should get the help of a professional when deciding which method you want to use.