Here’s a typical scenario. … You need a new website for your business, and your next-door neighbor just happens to be a great website developer. So you hire her to build your website. When it’s finished, she uploads the site on your hosting company’s servers, switches it on, and gives you the original files. You’re thrilled with the work, and you pay her in full. Now you have a great website to market your business. But do you own your website?

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Nondisclosure agreements (also known as NDAs and confidentiality agreements) help companies protect their confidential information when they need to disclose the information to third parties. Businesses need nondisclosure agreements when they are entering into new business arrangements with vendors or customers, when they are hiring new employees or consultants, or when they are exploring strategic transactions, such as selling their business or expanding by buying a new company. This post explains some important background information about nondisclosure agreements and breaks down the most common provisions that they usually contain. [click to continue…]

Even the smallest of businesses enter into contracts virtually every day. Contracts with customers, with vendors, potential business partners, online contracts. Small companies are often required to use the standard contract documents presented by larger counterparties. But there are a few form contracts that most businesses should have that were designed just for them. [click to continue…]

Business owners have a number of entity choices when they form a new company to operate their business. But for most businesses, the best choice is a limited liability company. This post is part of a choice-of-entity series. The other posts cover S corporations, where we learned how S corporations can be a good choice for businesses that are required to operate as corporations but want to save on income taxes, and C corporations, which are often a good choice for high-growth startup companies and businesses that intend to go public.

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Every business owner has to choose at the outset what type of entity they want to create for their business. This choice has important effects on how the company is operated, how it is taxed, and the owner’s after-tax proceeds when the business is sold. This is the second in a series of posts about choice of entity. The first post covers S corporations. [click to continue…]

Every business owner has to choose the type of entity they will establish through which to conduct their business. This choice can have important implications on how the business is taxed, how it will be permitted to raise capital, and how easy it will be to sell the business when the business owner decides to exit. Clearly, this is an important decision. This post is the first in a series on choice of entity. [click to continue…]

Limited liability companies offer a lot of flexibility when it comes to tax matters. Often, when I ask someone how their company is taxed, they’ll say “It’s taxed as an LLC” or maybe just “It’s an LLC.” That doesn’t tell me much, because LLCs can be taxed as sole proprietorships, partnerships, S corporations, and C corporations. That’s a lot of choices.

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When a business owner forms a limited liability company or a corporation, they expect the entity to protect them from their business’s liabilities. But sometimes the company doesn’t protect its owners. As I discussed in Your LLC Won’t Protect You from Yourself, business owners are always liable for their own negligence and other actions. Piercing the corporate veil is another situation where business owners can be held responsible for their companies’ obligations. [click to continue…]

Business owners and potential purchasers of businesses tend to have a number of questions about corporate stock and how it works. This post is a basic 101 tutorial, which answers some common questions about stock in a corporation and how it works. [click to continue…]