| Read Time: 4 minutes | Business Law

Business Defamation—Everything You Need to Know

A business’s reputation can lead to either great success or complete failure. Now, when a disparaging comment can be made instantly online and dispersed to thousands, your business may suffer significant harm with the click of a button. When someone makes a false claim about your business, you want to do as much as you can to protect your reputation. This article provides information on the types of claims you can bring, Texas defamation laws, and how to avoid business defamation.  What Is Business Defamation? Defamation is when someone makes a false statement about a person or entity and causes damage to their reputation. These statements can be either written (known as libel) or spoken (known as slander). If a person spreads false information about your business that causes harm, there are two possible claims you can file: defamation and business disparagement. The differentiating factor between the two claims is who suffers the harm. A defamation claim alleges harm to an individual’s reputation. For example, the individual could be the business owner. Business disparagement claims, on the other hand, allege harm to a business’s economic interest. As the Texas Supreme Court summarizes, “The two torts differ in that defamation actions chiefly serve to protect the personal reputation of an injured party, while a business disparagement claim protects economic interests.” It is possible to file both types of claims to protect your personal reputation and recover economic losses to your business. At Massingill Attorneys & Counselors at Law, we can help determine which type of claim makes the most sense for your business. What is an Operating Agreement and Why do I Need One? Texas Defamation Laws To be successful in a lawsuit for defamation or business disparagement, the plaintiff must prove all elements of the claim.  Elements of a Defamation Claim  To prove defamation in Texas, the plaintiff needs to show evidence of three elements.  Defendant published a false statement The false statement can be either written or spoken. Keep in mind that a negative comment about your business is not the same as a false statement. Statement was defamatory toward the plaintiff A statement is defamatory when it harms the reputation of a person or entity. Defendant acted with required degree of fault Depending on who the plaintiff is, the defendant must have made the statement with a certain level of fault. For private individuals, which is likely how a business owner will be classified, the degree of fault is negligence. When the plaintiff is a public official or public figure, the defendant must have acted with actual malice. There is a one-year statute of limitations to file a lawsuit for defamation in Texas. If your business suffers economic harm more than a year after the false statement is made, you may be able to file a business disparagement claim. Having a business slander and defamation case can be time-consuming and costly. The lawyers at Massingill Law Firm can help simplify the process with their decades of experience both pursuing and defending commercial defamation lawsuits. Schedule a free consultation online or call 512-601-6794. As a Business Adviser I have referred several clients to this firm and when I’ve asked about their experience, it was consistent: “This Law Firm is extremely knowledgeable and reliable, Josh is very easy to work with and they are focused, efficient and cost effective.” Because it is important that my clients are being recommended to the best most ethical referral partners, I am happy to endorse the Massingill Law Firm. John Russell Principal Adviser: The Russell Consulting Group Elements of a Business Disparagement Claim  If your business suffered economic losses because of a false statement, you may consider filing a business disparagement lawsuit. This type of claim requires a plaintiff to prove the defendant did the following: Published false or disparaging information about the business, Acted with malice, Lacked privilege to make the statement, and  Caused special damages to the business.  Let’s explore each of these elements in detail.  Publication of false/disparaging statement First, the statement must be published, meaning the disparaging words could either be spoken or written to someone. False comments made in a private conversation likely will not count.  If a person makes a true statement that harms your business, you will also not have a valid claim. The comment must be false.  Malice Malice is the intent of the defendant. The person or entity making the comment must have known it was false, or not cared whether or not it was false, and made the statement anyway.  Lack of privilege If the defendant had a legal privilege to make the false statement, then the business disparagement claim will fail. Examples of privilege include statements made under oath during a judicial proceeding or statements made by members of state or federal legislatures during debates.  Special damages The plaintiff must show that the business suffered special damages as a direct result of the disparaging statement. This means that you must be able to prove economic loss to your business. The defendant’s actions must have stopped others from doing business with you. There is a two-year statute of limitations to file a business disparagement lawsuit in Texas. Partnership Agreements: How Using a DIY Template Can Cost You How to Avoid Business Defamation A hurdle for businesses is tackling online defamation. From Yelp to Google reviews, the opportunity to spread false information is huge.  As a preemptive measure, you may include an anti-disparagement provision in your contracts with customers or clients. However, this would only apply to parties to the contract. Some businesses hire a reputation management service. These companies go after those publishing defamatory information and threaten legal action. They also have the ability to publish enough positive information about your business, using search engine optimization (SEO) tools, to bury the false statements.   If the damage has been done, your only option may be to file a lawsuit for defamation or business disparagement. Remember, not everyone is going to like you. You won’t always...

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| Read Time: 5 minutes | Business Law

The Easy Guide to Forming a Corporation in Texas

When you start your own business, you’re probably worried about simple things, like how to attract customers and turn a profit.  As your business grows and develops, you might find yourself thinking about incorporating your business.  Before you incorporate your business, however, you need to be well-informed about the details of the process.  On top of that, you need to learn about the different incorporation options that are available.  Finally, you need to carefully assess your business goals and evaluate what your priorities are.  Read on to learn about how to form a corporation in Texas and how a qualified business formation lawyer can help you achieve your business objectives today.  To get in touch with our team, please contact us online or call (512) 410-0343 to get started. How to Form a Corporation in Texas There are several important steps to forming a corporation in Texas. Step #1 — Know Your Options The first step is understanding the two types of for-profit corporations. All for-profit corporations have several characteristics in common, namely: The issuance of transferable shares of stock to officers and shareholders; Management roles; Corporate entity longevity; and Limited liability.  However, each corporation type offers its own unique advantages and disadvantages.  C corporation A C corporation (C corp) is the default form of corporation. Because they are the default form of corporation, C corps are easier to create. This means less paperwork to worry about.  Another advantage of a C corp is that you can have an unlimited number of shareholders. This may allow you to more easily raise funds through stock offerings.  The greatest disadvantage of a C corps is double taxation. Specifically, your company’s revenue is taxed twice—first when your company makes the revenue and again when you file your personal tax return. Unlike some other business structures, like sole proprietorships, C corps do not allow tax write-offs for corporate owners on their personal tax returns.  However, not all the taxation consequences of C corps are negative. You can deduct certain employee benefits, like health and dental insurance. Finally, the 2017 Tax Cut and Jobs Act reduced the corporate tax rate to 21%.  S corporation An S corporation (S corp) is a newer kind of corporation type that emerged in the middle of the last century. Because C corps are the default corporation structure, you can form an S corp only after filing an additional form, Form 2553, with the IRS. S Corps also have to meet additional requirements. For example, S corporations in Texas cannot have more than 100 shareholders, and none of these shareholders can be corporations or foreign citizens. S Corps can offer only one class of stock.  On the other hand, S corporations avoid double taxation, so corporate revenue is taxed only when it passes to the individual shareholders. An S corp’s revenue is taxed at the individual income tax rate of each shareholder, which may in some cases be lower than 21%.  In general, you should incorporate as a C corporation in Texas if you want to grow your business into a larger company that can benefit from unlimited numbers of shareholders. Conversely, you may want to file for S corporation status if you don’t expect to have too many shareholders and wish to benefit from lower taxes. Figuring out the type of business formation to register can be challenging. An experienced lawyer in this area can not only speed up the process, but also ensure you pick the right formation for your business, saving you thousands and potentially hundreds of thousands over time. To speak with a lawyer specialized in helping business formations in the state of Texas, call 512) 601-6794. They can help with articles of formation, certificate of formation, and advise on your specific situation. Pros and Cons of a C corp vs. S Corp C Corp S Corp Easier to create, less paperwork More requirements than C Corp Double taxation Revenue only taxed once Does not allow tax write-offs for corporate owners on personal tax returns Can offer only one class of stock Unlimited number of shareholders No more than 100 shareholders Step #2 — Choose a Name for the Corporation Once you have chosen the type of corporation that is right for your situation, you need to pick a name for your company. Under Texas law, your corporation’s name has to comply with certain rules. These rules include the following: Your company name must include the word “corporation,” “company,” “incorporated,” or “limited” (abbreviations are acceptable); Your company name cannot include the words “lotto” or “lottery”; and Your company cannot imply that it is created for the benefit of war veterans or  their families, and use words like “world war,” “veteran,” “legion,” or “disabled.” Assuming you meet those requirements, your company name must also be unique—that is, there cannot be another company in the state operating under the same or a similar name. Once you have a name, you can check the Texas Taxable Entity Search Tool to see if that name is available.  Step #3 — Pick a Registered Agent When you create a corporation in Texas, another critical step is hiring a registered agent.  Registered agents serve to accept official correspondence—including government documents, tax forms, and legal notices—on behalf of your business. The registered agent then forwards these documents to the corporation.  Texas law requires that each corporation designate a registered agent. However, registered agents can be easily found online and usually range from about $100-$300 per year.  Step #4 — Establish Your Corporation’s Initial Management To file a certificate of formation in Texas, you must have at least one director. Directors play an important role in the management and administration of the company. Their goals include establishing the bylaws that define the business’s operating procedures and participating in periodic meetings. Texas law requires that directors be natural persons (meaning they cannot be a corporation, trust, or non-profit organization).  Step #5 — File a Texas Certificate of Formation  Once you have successfully filed Form 201...

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| Read Time: 5 minutes | Business Law

6 Questions to Ask a Lawyer When Starting a Business

Thinking about starting a business can be exciting. But there is no doubt that getting a business up and running also requires a lot of hard work. And while you may be tempted to do it all on your own, it never hurts to ask for help from a professional—in fact, doing so can ease much of the stress and uncertainty that comes with formally setting up a business. Before you start your own business, there are a number of things you should know. But don’t feel like you have to figure it all out on your own. Instead, contact an experienced Texas business law attorney today to help you get the answers and assistance you’re looking for. The team at Massingill Attorneys & Counselors at Law can help you at every step along the way. Send us a message or call (512) 410-0343 for assistance. As you get started, here are six questions to ask a lawyer when starting a business.  1. Can I Name My Business Whatever I Want? For many people who want to start a business, what to name the business is one of the first decisions they will make. However, formally selecting your name is not always so simple.  Sometimes, an aspiring business owner may have a name in mind only to discover that it is already being used by another business in the area. And even if your proposed name is not identical to any other business names, you still may be precluded from using it if it is not sufficiently distinguishable from other names.  This can certainly complicate matters. Thus, before you set your business name in stone, first consult with a small business attorney who can help you determine whether your desired name is available.  An experienced lawyer can help you run a name availability search to ensure that your proposed name is available and distinguishable from other names already being used. 2. What Do I Do If My Desired Business Name Is Available But I’m Not Quite Ready to Move Forward? If your proposed business name is still available, this is great news! But sometimes, you may not be ready just yet to take the next steps to formally set up your business. In this scenario, you may be wondering whether there is anything you can do to reserve your business name. Fortunately, the answer to this question is yes.  In fact, the Texas Secretary of State permits online reservation of names for any type of filing entity. A business entity reservation is effective until the 121st day after the application is accepted. This can give you some extra time to prepare for the next steps while also keeping your preferred name on hold in the interim.  3. What Type of Business Entity Should I Select? There are many types of entities to choose from as you look to form your Texas business. These include:  Sole proprietorships,  General partnerships,  Corporations,  Limited liability companies (LLCs),  Limited partnerships, and  Limited liability partnerships. Each one will have its benefits and drawbacks. But which entity type is right for your business? The type of business entity you select will depend on a number of factors. Some of the factors to take into consideration include:  Whether you plan to have employees;  Desired tax treatment for the entity;  Whether you plan to own and operate the business yourself or with one or more business partners; and What personal liability protection you want.  Of course, this is not an exhaustive list. Depending on the needs and desires of your business, there may be many other factors you’ll want to consider as well as you select your entity type.  Give our Texas business formation attorneys a call today to discuss what entity type might best fit your business’s needs. Our team is here to answer any legal questions you may have about starting your business. 4. What Formation Documents Do I Need to Get Started? To set up your new business, there are certain formation documents you will want to have prepared. In many cases, you will need to file what is called a certificate of formation with the secretary of state to formally create your business entity. Examples of other documents you might consider preparing include bylaws for a corporation or an operating agreement for an LLC.  While these are not required, it is highly recommended to have these types of documents in place for your business. They will allow you to more clearly delineate the business entity’s policies and procedures. While these types of formation documents can seem intimidating, they are crucial to the success of your business. Thus, make sure to work with an attorney who can help you understand and create the documents that you will need.  5. Are There Any Other Documents I Will Need for My Business?  No matter what type of business you plan to create, one thing is certain—there will be various documents and contracts that you need throughout the life of your entity. In fact, the key to most successful businesses is the existence and implementation of legally sound contracts and agreements. Examples of contracts that are found in many businesses include:  Employment contracts Independent contractor agreements Severance agreements Nondisclosure agreements Noncompete agreements Partnership agreements Buy-sell agreements Sales contracts Security agreements  Property and equipment lease agreements Indemnity agreements As these are legally binding agreements, it is always best to have any necessary documents prepared by an experienced legal professional. Failure to do so could result in disputes, and even lawsuits, in the future. 6. Should I Protect My Business’s Intellectual Property?  The short answer is absolutely! Protecting your business’s intellectual property is essential to its growth and success moving forward. Many people mistakenly believe that they do not need to protect their intellectual property until their business is more well-established. However, this is not the case at all.  Protecting and safeguarding your valuable intellectual property can be a great way to gain goodwill in your business and better prevent infringement by bad...

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| Read Time: 4 minutes | Business Law

How Much Does a Business Attorney Cost in Texas

As a business owner, you’ve no doubt run into situations where you needed legal help. Due to the way most attorneys handle billing, it’s nearly impossible to figure out: Just how much does a business attorney cost? As a result, budgeting for legal help can be a challenge. Law firms rarely disclose their prices outright, and many operate on the “billable hour” model that offers little clarity to businesses needing to carefully plan their expenses. Fortunately, more business attorneys are moving to a “flat fee” model for billing, which offers much greater predictability to clients. Please don’t hesitate to send a message or call our experienced Texas business lawyers today at (512) 410-0343 for assistance. Flat-Fee vs. Hourly Billing The traditional method of charging for legal services is based on the billable hour. Under this model, attorneys track the time they spend working for a client in six-minute increments. Attorneys and firms with billable hours typically require a retainer to cover the cost of the project. However, the initial retainer may be set at an amount that doesn’t necessarily reflect the true cost of the project. Flat-fee billing, on the other hand, involves estimating the cost of the project before any legal work takes place. With this method, the client has a clear idea of how much their lawyer will cost before making a commitment. How Do Attorneys Calculate Flat Fees? Attorneys calculate flat fees using their past experience with particular legal issues. In general, attorneys will take into account: The type of legal services requested; How long they estimate the project to take; How difficult the project is; and Potential issues that could extend the duration of the project. Once the attorney estimates the approximate time, they will calculate a flat fee based on their hourly rate. How long something will take largely depends on the complexity of the legal matter at hand. For example, experienced Texas business attorneys may find it easy to estimate the cost of their business formation services because the process is relatively straightforward. However, if the legal matter involves a complicated contract issue, it may be more difficult to estimate. Is a Flat-Fee Billing Better Than Hourly? Flat fees aren’t necessarily cheaper than hourly rates, but they do offer a number of benefits to clients. When you buy other professional services, you often have the option of paying “per project” rather than by the hour. By bringing that concept to the legal profession, flat-fee billing gives clients the ability to make well-informed decisions about hiring an attorney. In other words, flat-fee billing significantly increases a client’s ability to properly weigh the cost of obtaining particular legal help. In some cases, an attorney’s services would be beneficial, but not strictly necessary. For a small business on a tight budget, flat-fee billing allows them to decide quickly whether to forego these types of legal services. In other situations, an attorney’s services may be all but required. When that’s the case, flat-fee billing allows clients to budget more effectively for that expense. Flat-fee billing also gives clients more confidence about how much their attorney is charging. Texas attorneys are bound by strict ethical rules when it comes to the fees they charge their clients. Unfortunately, not all attorneys act ethically, and some clients worry that their attorney will “inflate” their billable hours. Because a flat fee is set and agreed upon from the get-go, clients worry less.  All this isn’t to say that hourly billing is worse. Many business attorneys and firms with hourly billing can still estimate the cost of a project, even if they don’t offer flat-fee billing as a payment option. How Much Does a Business Attorney Cost? The actual cost of a business lawyer will vary greatly depending on the attorney and the project you hire them for. Different attorneys charge different amounts depending on their experience and the difficulty of the project. For example, new or less experienced attorneys tend to charge rates on the lower end of the scale. Ultimately, the cost depends heavily on the specific attorney and the nature of the legal services required. Only your attorney will be able to tell you how much their legal help will cost. Accordingly, it’s best to speak with the attorney directly about your legal issue. Most offer free initial consultations where you can learn more about the total cost of their legal services. Do I Need a Business Lawyer? Because of how much lawyers can cost, business owners are often hesitant to hire them unless they feel like it is truly necessary. While there are some things a business can do without an attorney’s help, in most cases it’s best to hire an attorney. Even something that seems simple (like obtaining a business license) may involve unexpected obstacles. In other cases, having an attorney will be necessary, such as during contract negotiations or if there’s an employment dispute within your company. The bottom line is that having an attorney you can go to for business law matters is beneficial in the long run. Particularly if you hire an attorney early in your business’s lifecycle, they’ll be able to provide better legal assistance because they’ll be more familiar with the needs and goals of your business as it grows. We Offer No-Nonsense Flat-Fee Pricing Massingill Attorneys & Counselors at Law understands that transparent pricing practices are valuable to our clients. That’s why we offer flat-fee rates for our legal services. Whether you’re just starting a business or need assistance with your existing business, our business law attorneys are here to help. Book a consultation today or give us a call at (512) 410-0343 to get started.

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| Read Time: 5 minutes | Business Law

LLC Formation in Texas: 10 Reasons Hiring a Lawyer Beats DIY

One of the first significant decisions made as a Texas small business owner is choosing the right type of entity for your business.  LLCs or limited liability companies enjoy increasing popularity in Texas. LLCs in Texas offer the protections of corporations with the flexibility of a partnership. Also, LLCs are not subject to the in-depth filing requirements demanded of corporations. For immediate assistance, please contact us online or call our firm at (512) 410-0343 today. Why Hire a Lawyer to Form Your Texas LLC?  Although a business lawyer is not required, setting up an LLC without one may result in complex legal issues that may end up costing your LLC a significant expense. There are many reasons why it’s beneficial to hire an experienced small business attorney in forming your LLC in Texas. Setting up an LLC requires numerous steps. Additionally, as your LLC business progresses, legal issues may continue to arise. Retaining a small business attorney’s services limits the possibility for your LLC to engage in litigation over avoidable conflicts. Here are some of the things a Texas LLC formation attorney can do for you.  1. Set You Up for Success An attorney works to ensure your LLC begins on the right foot. Through consultation during the LLC formation process, an experienced Texas business attorney reviews your risks, future challenges, and goals as your venture commences.  2. Correct Mistakes  A qualified business attorney works to correct any mistakes when creating an LLC. Starting a business is a stressful yet exciting event. As you market and establish your business, keeping tabs on potential legal issues may be furthest from your mind. Through extensive discussions with your business attorney, you may review the details of your LLC Operating Agreement and quickly spot any gaps in liability that may exist. Furthermore, addressing unclear positions, employee responsibilities, and other information avoids confusion down the road. As your LLC gets off the ground and begins to succeed, the last thing any business owner needs is the threat of litigation to slow their momentum. An experienced Texas business attorney remedies these possible points of conflict before they become an issue. 3. Avoid Legal Problems Even if in agreement, LLC members may experience other legal problems as your business grows. Disagreements may arise when one member of the LLC fails to perform obligatory tasks. Additionally, a Texas business attorney can assist with issues facing your business as it grows. For example, drafting company policy handbooks are essential to avoid sexual harassment, wrongful termination, or discrimination lawsuits. Qualified business attorneys equip their clients with the tools to prevent liability under the multitude of federal and state laws. 4. Protect Your Interests  Initially, you may not understand the legal requirements of how to create an LLC. For example, when forming an LLC in Texas, the LLC name must contain the words “limited liability company,” “limited company,” or the abbreviations “LLC,” “L.L.C.,” “LC,” or “L.C.” Additionally, your LLC name must be distinguishable from other business entities on file with the Texas Secretary of State. If your LLC has more than one member, you must obtain a federal Employer Identification Number (EIN) with the IRS. The EIN identifies you for federal tax purposes. Retaining the services of an attorney ensures prompt handling of these critical tasks. 5. File Required Paperwork Forming an LLC in Texas requires filing a Certificate of Formation for a Limited Liability Company. This certificate must include the following information: The LLC’s name, The name and address of the registered agent for service of process,  Whether the LLC is member-managed or manager-managed, The names of each member or manager, A general statement of purpose for the LLC,  The name and address of the LLC organizer, The effective date of the certificate, and  The signature of the organizer.  Texas permits the online filing of the Certificate of Formation for a Limited Liability Company for a fee of $300. A Texas LLC does not require an operating agreement. However, creating an operating agreement is strongly advised. The operating agreement sets out the rights and obligations of members or managers of the LLC. Additionally, it preserves your limited liability by showing that the LLC is indeed a separate business entity. Hiring an attorney to draft a concrete operating agreement reduces the opportunity for disagreements and conflict between the LLC members or managers. Additionally, a well-crafted operating agreement includes essential provisions such as buy-out clauses and termination clauses. Additionally, Texas LLC law requires filing an annual franchise tax report with the Texas Comptroller. Missing these filings can affect the operation of your LLC through the imposition of penalties. Extensive delays may result in the automatic dissolution of your LLC. 6. Tax Advice Taxation of your LLC occurs at local, state, and federal levels. An attorney educates you on the most advantageous election for tax purposes. Avoiding double taxes, delinquent taxes, and penalties should be a priority for your LLC. These unnecessary and avoidable expenses hurt the profitability of your company. 7. Protect Intellectual Property  Intellectual property includes product designs, inventions, trademarks, business services, trade secrets, client lists, and original works. All intellectual property adds value to your business and gives your Texas LLC a competitive advantage. It is wise to consult with an attorney depending on the type of intellectual property connected to your LLC. For example, federal law requires the filing of trademarks, copyrights, and patents to obtain certain protections. Additionally, an experienced business attorney works to preserve your intellectual property rights, thereby providing vital protection for your business. 8. Prepare Company for Audits  There may be instances where your Texas LLC faces audits. Audits of your LLC can occur at any time. During an audit, parties may investigate the financial records of your LLC. Additionally, audits may investigate company policies and procedures of the LLC. As your LLC undergoes the process of an audit, your business attorney guides you through the process and advises how best to protect your interests. 9. Contract Review As your Texas LLC grows, you...

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| Read Time: 5 minutes | Business Law

Small Business Lawyers: How They Can Help You

Running your own business can be rewarding work. For many, it’s a dream come true.  But if you currently own a business, or even if you are in the early stages of starting your own business, you know just how much there is to do and how complicated it can be.  Regardless of where you are in the business ownership process, you may have at some point considered whether you should hire an attorney. But you might be asking yourself, What does a small business lawyer do?  Many people wonder whether an attorney can actually provide value to their business. In reality, an experienced small business lawyer can help your business in countless ways.  The business lawyers at Massingill Attorneys & Counselors at Law can provide invaluable services to your Texas small business. From legal research and advice to in-court business litigation disputes, we have what it takes to be your Texas small business law firm. Contact us today for a free consultation to discuss your business needs and see how our attorneys can help you.  What Does a Small Business Lawyer Do?  Lawyers help clients understand the law and navigate legal disputes. But what does a small business lawyer do, specifically?  A well-qualified small business lawyer will be able to provide a wide array of legal services. Below are some of the services we frequently provide to our Texas small business clients.  Business Formation Before starting a business, there are a number of key decisions you must make and legal requirements you must comply with.  Do you want to set your business up as an LLC, a partnership, a corporation, or some other type of entity? How do you go about registering your business with the Texas Secretary of State?  An experienced small business attorney can help you navigate these crucial questions and many more as you formally set up your business. At Massingill Attorneys & Counselors at Law, we can assist you with all aspects of the business formation process. Our Texas business formation attorneys can help:  Determine the right entity type for your small business; Advise on tax implications and personal liability protections; Draft and file any necessary corporate formation documents; Apply for an employer identification number (EIN) from the IRS; and Provide valuable advice and counsel moving forward.  Setting up your Texas small business correctly is crucial to its future success. The wrong decisions at the outset can lead to problems down the road that may be costly and time-consuming to correct. Thus, make sure to have someone in your corner with the knowledge and legal expertise to put your business in the best position possible. Business Transactions Sometimes, you might need an attorney to help your business with transactional matters.  If your business is preparing for a corporate merger or acquisition, it is almost always recommended to engage an experienced legal professional to advise you throughout the process.  Our attorneys regularly assist our small business clients with negotiating business transactions and drafting necessary documents to get deals to close. We will also work in consultation with your CPA to ensure that we do what is in the best interest of your business.  Contract Drafting and Review No matter what type of business you own, you will almost certainly require contracts at some point or another.  Examples of commonly used business contracts include:  Partnership agreements,  Operating agreements,  Indemnity agreements,  Nondisclosure agreements,  Property and equipment leases,  Purchase orders,  Security agreements,  Employment contracts,  Independent contractor agreements, and  Noncompete agreements.  Contracts are legal documents. Thus, it is imperative that you have an attorney who can draft and/or review any documents that may be critical to the success of your business and ensure that they are valid and enforceable. At Massingill Attorneys & Counselors at Law, we recognize that each business is unique and will have different needs. That’s why we will work with you to review and draft contracts that are tailored to fit your business.  Intellectual Property As your business grows, you may discover it is time to hire a small business attorney to help protect and pursue your intellectual property rights.  Many people think that intellectual property is reserved exclusively for rights in inventions. Thus, they mistakenly believe that if they are not an inventor, they do not need an IP attorney. However, this is not the case.  While patent rights are of course one important category of intellectual property rights, trademarks and copyrights are two other important intellectual property rights that are applicable to many small businesses.  An experienced small business lawyer can help you register trademarks and copyrights you may use in connection with your business. Doing so can help you build and grow your overall brand.  Additionally, by registering your trademarks and/or copyrights, you put the general public on notice of your intellectual property. If someone attempts to infringe on your validly registered IP, a small business attorney can help you take legal action to enforce and safeguard your rights moving forward.  Business Disputes and Litigation No matter how smoothly your business runs, there is always a possibility that a dispute will arise.  Small business disputes come in many forms. Examples of common legal disputes that might arise in the course of your business include:  Partnership disputes,  Breach of contract disputes,  Customer disputes,  Employment disputes, and Disputes with other businesses.  No matter what type of legal dispute your business is facing, it’s no secret that it can cost you both time and money to resolve. However, hiring a small business lawyer can often lead to a more efficient and cost-effective resolution.  If and when a dispute does arise, don’t be left wondering where to turn. The attorneys at Massingill Attorneys & Counselors at Law are trained negotiators ready to fight for your rights. We will work to effectively and efficiently resolve your dispute. Why Hire Massingill Attorneys & Counselors at Law as Your Small Business Lawyers So, what does a small business lawyer do? A well-qualified small business attorney will be able to assist you with just about anything that...

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| Read Time: 5 minutes | Business Law

Partnership Agreements in Texas: Why Using a DIY Template Is a Mistake

There are dozens of websites that offer legal document templates for low or no cost. The cost of a lawyer may tempt business owners to use these templates rather than hire legal counsel, especially when it comes to forming a simple business entity like a partnership. Unfortunately, however, using a legal DIY template can pose several problems. Because Texas partnership agreements are important documents, business owners should treat them with care. Finding and using a template online comes with a number of risks that could make doing so a costly mistake. For assistance, please don’t hesitate to contact us online or call our firm at (512) 410-0343. Our Texas business lawyers will explain what you need to know about partnership agreements in Texas. Types of Texas Partnerships A partnership is one of the most basic types of business organizations. All you need to form one is two or more people engaged in a for-profit business. Legally speaking, a Texas partnership agreement is not strictly required. However, having this governing document is the best way to avoid internal issues as the business grows. There are several types of partnership, and each will require a slightly different partnership agreement. Texas partnerships can be: General partnerships (GP), Limited partnerships (LP), Limited liability partnerships (LLP), and Limited liability limited partnerships (LLLP). Each type of partnership has different advantages. Generally speaking, which type of partnership you form depends on the role that each partner has in the business. Massingill Attorneys & Counselors at Law can help you decide which type of partnership suits your business the most. Problems with Using a Business Partnership Agreement Texas Template As mentioned above, using a partnership agreement template is not without risk. If you’re considering using a template for your Texas partnership agreement, here are the issues you may run into and the reasons why we strongly suggest against them. Partnership Agreements Are Not “One Size Fits All” From one business to another, there are certain things that remain relatively similar. However, the governing documents for those businesses may be very different. This causes a problem when you consider that most DIY templates are designed to cover as many situations as possible. As a result, using a template partnership agreement likely means that you miss out on some of the fine-tuning you may need. For example, a “partnership agreement” template may have some parts that apply to both a general and limited partnership; but at the same time, that single agreement will not work particularly well as either a Texas limited partnership agreement or general partnership agreement. Texas business owners should therefore be wary of how broad the templates are. Consult with a Texas estate planning lawyer today to learn the nuances of how Texas estate planning laws can impact your case. Contact us online or give us a call at (512) 410-0343 to schedule your free consultation. You Won’t Know What’s Missing If you’re using a DIY template, then you probably don’t have much experience with these agreements to begin with. If that’s the case, then it is important to recognize that even if you understand what is in the template, you may know what is not in it. In other words, there could be crucial provisions missing that you are unaware of. This is one area where the benefit of an attorney cannot be overstated. By having an experienced business attorney draft your partnership agreement, you can rest assured that the agreement contains every part that it should. You Don’t Know Who Drafted the Template Even on websites that appear reputable, there is no guarantee that a lawyer or legal professional drafted the template. In fact, in many cases, it is just as likely that someone drafted the partnership agreement Texas template while referencing another online template. When that happens, misinformation or poor drafting can propagate from one template to the next if various sites all use each other as a source. Unfortunately, there’s simply no way to know for sure. You Won’t Receive the Personalized Advice or Drafting a Lawyer Provides When it comes to drafting a limited partnership agreement, Texas business attorneys do more than just write out the document for you. Remember that one of the reasons a lawyer is expensive is the knowledge and training they have. Drafting any kind of business document, whether it’s a contract or a partnership agreement, is a complex process. Consequently, attorneys receive training to spot relevant issues and understand the complexity of a given legal situation. If your partnership is unique in some way or if you have specific ideas about the direction of the business, a lawyer is available to discuss those ideas with you in real-time. An attorney can provide you with a custom Texas partnership agreement tailored specifically to your needs. While you may save some money, you won’t have access to any of that added value by using a template. You Might End Up Needing a Lawyer Anyway There are two reasons why a business owner might end up hiring a lawyer after using a template. First, businesses frequently need legal help with a variety of issues unrelated to their formation. For example, a partnership may need help negotiating a contract with another business. If you’ve already hired a lawyer to help you draft your Texas partnership agreement, then it will be that much easier if you need other legal help later on. As an added bonus, a lawyer who has been with you from the start will be more familiar with you, your business, and your goals. This can allow them to provide more efficient and effective service. More significantly, you may end up hiring a lawyer because of issues with the partnership agreement template you used. If the agreement is drafted improperly, you may run into conflicts with your business partner down the line. Depending on what the problem is, you may end up paying more than if you simply hired an experienced Texas business lawyer in the first place. Templates...

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| Read Time: 5 minutes | Business Law

Employment Contracts in Texas: Mistakes for Small Business Owners to Avoid

Contracts exist to help businesses and individuals set expectations for their professional relationships. Texas employment contracts are no different and are an important part of any small business. When drafting an employment contract, Texas businesses must be careful. Not everything that a business owner may want to include is enforceable. Therefore, having a basic understanding of Texas employment contract law is crucial, especially if drafting an employment agreement yourself. If you find yourself asking questions by the end of reading this article, contact our experienced business law attorneys today to schedule a free consultation. Texas Employment Agreements: Overview Texas, like most states in the U.S., is an “at-will” employment state. With at-will employment, the employee or employer may terminate the business relationship without notice at any time. They may do so for no reason or any reason not prohibited by law (for example, it would be illegal to fire someone for a discriminatory reason). When there is an employment agreement, however, the parties will instead be bound by the terms they agree to. Many businesses use some sort of employment agreement when hiring a new employee. Doing so ultimately protects both parties by clearly setting the ground rules for employment. With that in mind, here are some common pitfalls small business owners may make in their contracts and how to avoid them. What is an Operating Agreement and Why do I Need One? Overly Broad Non-Competition Clauses This is perhaps the most significant mistake employers make with respect to their employment agreements. Particularly in competitive industries, business owners often want to restrict their employees’ ability to work for competitors. However, Texas law places limitations on these provisions. Specifically, an agreement not to compete must be reasonable with respect to The time it remains in effect after the termination of employment; The geographic area (like a state or a county) to which the non-compete applies; and The scope of the activity covered by the non-compete. If a contract fails to be reasonable in any of these ways, a court may find it unenforceable. This may be a problem for businesses that use the same non-competition clause or agreement for all their employees. For example, a non-compete probably could not restrict a low-level sales rep the same way it could a co-owner or high-level executive. Accordingly, small businesses are better off providing a fair and balanced non-compete that a court will uphold. Business attorneys familiar with Texas employment contract law can help you draft an appropriate non-compete to protect your business. Non-Compete vs. Non-Solicitation Non-compete clauses often include a “non-solicitation clause.” While non-competes cover an employee’s competition with the business, non-solicitation clauses protect a business’s existing clients and employees. While not always strictly necessary, non-solicitation agreements are useful in industries where a former employee may try to “poach” clients or coworkers from their former employer. Watch for Labor Poster Scams Ambiguous Conditions for Termination Clarifying the events or conduct for which the business may fire someone is a significant part of a well-drafted contract. Not only does it make clear to the employee what kind of conduct they should avoid, it can protect your business if an employee challenges their termination. Texas businesses have many options when it comes to termination clauses and what they include. If you’re unsure how to draft an employment termination clause, our Texas business law attorneys can help. Unclear Descriptions of Duties A common mistake that business owners make is not including a sufficient job description in their Texas employment contract. While it may seem unnecessary if both you and your future employee understand what will be expected of them, clearly defining their duties can avoid headaches later on. In addition, being absolutely clear about the scope of an employee’s job can protect the business from liability later on. Under the doctrine of “respondeat superior,” courts may find an employer liable for the acts of their employees working within the scope of their employment. Whether respondeat superior applies depends on the specific facts of a given case; however, a clear job description in the employment agreement may make that determination easier if necessary. Employment Law Basics: Tips for the Entrepreneurial Doctor Missing or Incomplete Confidentiality Clauses When it comes to an employment agreement, Texas business owners may not always think to include a confidentiality clause. While not all businesses will need one, business owners should consider it if the employee will handle any sort of sensitive information. Texas employment agreements with a confidentiality clause should be sure to address confidentiality both during and after employment. Employees may be clear on the expectation of confidentiality while employed but may not understand their responsibility when they leave. Texas employment agreements should therefore include information about how long the confidentiality will last after an employee leaves. If you’re concerned about your employees handling sensitive information, we can help you draft a strong confidentiality agreement. Minimal Compensation and Benefits Information In the context of an employment contract, Texas businesses have the upper hand when it comes to bargaining power. As a result, employers can take advantage of opportunities to make new employees more comfortable with their position within the company. One such opportunity is clearly defining any offered compensation and benefits in the employment agreement. Doing so allows the business to explicitly establish the base salary or wage, insurance options, and how the business handles holidays and vacation time. As an added bonus, this may also allow a business to protect itself from challenges by an employee about what the company offers. Unclear Drug Testing Policies Not all employers require drug testing. But when they do, making that clear is important. Because Texas has a medical marijuana program, employees may be under the impression that their use of medical marijuana is shielded from any employer drug test. However, this is not necessarily the case. Explaining drug testing policies in the employment agreement can help businesses avoid training an employee who may take issue with those policies. Ready to Draft Your Texas...

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| Read Time: 2 minutes | Business Law

Commercial Leases and COVID-19: What You Need to Know

The novel coronavirus pandemic is making life difficult for small business owners. Many of our clients are struggling to manage newly-remote employees who have been forced to work from home due to shelter-in-place orders, applying for emergency financing, weighing employee layoffs, and fighting to keep their doors open. For many businesses, monthly rent is the largest line item in the budget. One of the most stressful and complex problems these business owners are facing is how to meet their commercial lease obligations as their business operations are crippled by the pandemic. STRUGGLING BUSINESS OWNERS SHOULD ADDRESS THIS PROBLEM HEAD ON, AND QUICKLY. WAITING WILL ONLY MAKE THINGS WORSE. If you find yourself in a similar situation, here are a few things to consider… 1. Look for a force majeure provision in your lease. “Force majeure” is a French term for “superior force” used to describe a type of contract provision that excuses nonperformance of a contractual obligation if the nonperformance is caused by certain events beyond the party’s reasonable control (floods, earthquakes, hurricanes, tornadoes, acts of God, etc.). Force majeure provisions are fairly common in commercial leases, so you should review your lease to see if it includes such a provision. Depending on the wording of this provision, you may be able to avoid certain lease obligations during the current crisis. An attorney can help you decipher your lease agreement and explain your options. 2. If your lease does not include a force majeure provision, certain common law doctrines (impossibility or impracticability) may provide some relief. These are complicated, so you’ll need to contact an attorney for assistance. 3. Finally, you might opt to negotiate temporary rent reductions or abatements with your landlord. During the financial crisis of 2008-2009, landlords commonly offered significant concessions to keep tenants in place because doing so was preferable to engaging in mass evictions. Landlords are business owners too. They’ll be making hard choices in the coming months just like their tenants, and it may be possible to negotiate a win-win lease “workout” that benefits all parties. It’s possible to do this on your own, but an attorney experienced in commercial lease negotiation may offer the best solution. IF YOU HAVE QUESTIONS ABOUT YOUR LEASE OR NEED ASSISTANCE WITH A COMMERCIAL LEASING NEGOTIATION, GIVE US A CALL AT (512) 410-0343.

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| Read Time: 3 minutes | Business Law

Five Things to Know Before Selling Your Business

EDITOR’S NOTE: THIS IS A GUEST POST BY JOHN FINCHER, A CERTIFIED BUSINESS INTERMEDIARY IN AUSTIN, TEXAS. JOHN IS NOT AN ATTORNEY, BUT WE ASKED HIM TO SHARE SOME THOUGHTS WITH OUR READERS WHO MAY BE CONTEMPLATING SELLING A BUSINESS. CLICK HERE TO LEARN MORE ABOUT JOHN. 1. SELLING A BUSINESS IS A COMPLEX PROCESS AND CAN TAKE 9 MONTHS OR LONGER Selling a business is not like selling a house or any other personal property you that you own. I always say, “Selling a business has a lot of moving parts.” Those moving parts require the guidance of someone who is experienced in the process and can effectively move the deal from step-to-step. Planning is step number one and includes understanding the owner’s goals for a transaction, your company value, and signing an engagement agreement with a Sell-Side M&A Advisor. Step number two is providing the information requested from your Sell-Side M&A Advisor to prepare a Confidential Business Memorandum (CBM) with many details about your company, the market, your competition and the financials recast to show the true earnings of the business. A marketing plan is activated and buyers are contacted and required to sign a Non-Disclosure Agreement (NDA) before being presented with the CBM. On the third step, once interested buyers are located, there is a flow of additional information requested and questions answered. There are site visits after hours or on weekends to protect confidentiality that the business is for sale. A Letter of Intent (LOI) is negotiated with a buyer in this deal making stage. Finally, there is a move toward a Close that includes coordinating all of the due diligence requested from the buyer that includes your Sell-Side M&A Advisor setting up a secure data room that the buyer can access. Your Sell-Side M&A Advisor will work closely with your transactional attorney to resolve any open issues as your attorney negotiates and finalizes a Definitive Purchase Agreement. These four steps that I’ve briefly outlined require approximately nine months of time, which is the average, although deals have concluded in shorter time-frames and longer. 2. KNOW THE RIGHT TIME TO SELL When is the right time to sell your business? It would be logical to say that the right time to sell is when your business is worth the most money or selling it will achieve your financial goals. The short answer is to sell when your business has at least three years of upward trend in revenue and profitability and certainly before the next downturn, unless your business is recession proof. However, some sellers have to sell rather than want to sell. I call these the five bad D’s – Death, Divorce, Disease, Downturn and Disgruntlement and they don’t have a choice as to the timing. 3. USE YOUR LEGAL AND ACCOUNTING PROFESSIONALS TO CLEAN UP THE BUSINESS PRIOR TO THE SALE Cross your t’s and dot your i’s with expert legal advice to make sure your business is saleable from a legal perspective and with your CPA to make sure your business is saleable from an accounting perspective. Are your contracts assignable? Is your lease? Have you kept the proper annual shareholder meeting minutes if required by your legal entity? Do you have any pending lawsuits or legal matters that need settling? Do you have any regulatory or environmental issues? Do you have any tax liabilities that may need the help of your CPA professional to solve? Are your books and records accurate and will they hold up during due diligence? What is a likely tax scenario of how much you will owe upon the sale of your business and is there a compelling legal reason or tax reason to sell stock instead of assets? 4. BE MENTALLY PREPARED Are you willing to think win-win with a buyer? There are several ways to structure a sale and some will benefit the Buyer but not the Seller and others will do just the opposite. There will be much to negotiate throughout selling a business and oftentimes you will need to move toward the middle as will the Buyer. Contain your ego and emotion and use your Sell-Side M&A Advisor as an emotional buffer when necessary between you and the Buyer. Keep in mind that you will need a good relationship with the Buyer after the sale as there is much to transition from one owner to the next after the Close. 5. KNOW YOUR PATH AFTER THE SALE Know what you are going to do, after selling your business. Some people want to stay engaged with the business in some capacity and others are ready to walk away. Do you have other interests and passions to pursue that will give you purpose? John Fincher is a Certified Business Intermediary with Corporate Investment in Austin, Texas. He is a former entrepreneur who has bought, sold and merged companies and has been working for over twelve years representing sellers in M&A transactions.

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