The Inside-out Legal way starts with intro­duc­ing you to legal con­cepts, your legal risks, and how you can min­i­mize those risks. You don’t need to be a legal expert. You just need to be aware of these things.

Struc­ture Your Business

Choose the best busi­ness struc­ture when you’re start­ing up. It might be a sole pro­pri­etor­ship, lim­ited lia­bil­ity com­pany, or a cor­po­ra­tion. Adapt your struc­ture as your busi­ness grows. You might want to form another LLC to hold valu­able assets.

Cre­ate and fol­low the gov­ern­ing doc­u­ments for your busi­ness. Cre­ate inter­com­pany agree­ments, if nec­es­sary. And trans­fer assets to your LLC.

Set up and Man­age Your LLC

If you have employ­ees, a part­ner, con­tracts, or valu­able assets, then form an LLC with the state of Alaska. Enter into an oper­at­ing agree­ment that accounts for how many own­ers your busi­ness has, your man­age­ment struc­ture, your tax elec­tion, the right buy-sell pro­vi­sions, and every­thing else you need to gov­ern your LLC.

Pro­tect Your Trademarks

Choose a strong trade­mark for your prod­ucts and ser­vices that doesn’t vio­late some­one else’s trade­mark rights. Con­sider reg­is­ter­ing your trade­mark with the United States Patent and Trade­mark Office, then pro­tect it.

Get a Good Lease

If you lease space, get a good lease. Take the time to allo­cate the duties and lia­bil­i­ties fairly between you and the land­lord. Make sure every­one under­stands each other’s expec­ta­tions going into the lease, then fol­low it. Don’t just file it away and for­get about it. If you do these things, you’ll go a long way to avoid­ing nasty landlord/tenant disputes.

Man­age Your Employees

Avoid the legal pit­falls sur­round­ing your employ­ees by cor­rectly cat­e­go­riz­ing your inde­pen­dent con­trac­tors, cor­rectly des­ig­nat­ing your employ­ees as hourly or salaried, imple­ment­ing and fol­low­ing an employee hand­book, pro­tect­ing your employee’s right to pri­vacy, fol­low­ing wage and hour laws, pre­vent­ing ille­gal dis­crim­i­na­tion, keep­ing your employ­ees safe, and much more.

Enter into a Buy/Sell Agreement

The unfor­tu­nate truth of any busi­ness is that it will expe­ri­ence its tragedies. There might be death, dis­abil­ity, bank­ruptcy, or divorce to dis­rupt life. Some­times own­ers want out of the busi­ness or a group of own­ers may want to force one of the own­ers out.

The mem­bers or share­hold­ers can plan for these pos­si­bil­i­ties with agree­ments such as a right-of-first-refusal, a forced sale, or an option to pur­chase. The plan includes a mech­a­nism to set the pur­chase price and a way to fund a pur­chase. With­out these plans, the mem­bers or share­hold­ers may end up with unwanted part­ners, the inabil­ity to buy-out a mem­ber, or the inabil­ity to sell their inter­est in the business.

Nego­ti­ate the Sale or Pur­chase of a Business

One of these days you’ll real­ize that your busi­ness is all grown up. You’ll need to decide what you want to do with the busi­ness. Do you want to sell it? Do you want to trans­fer it to your chil­dren? Do you want to close it? Do you want to merge it? You need to think through these things to pre­pare for them.

The typ­i­cal sale involves an exchange of infor­ma­tion under a con­fi­den­tial­ity agree­ment, an inves­ti­ga­tion of the com­pany, some­times a let­ter of intent, then nego­ti­a­tion of the busi­ness sale agree­ment and the final closing.

The Most Impor­tant Thing

Yes, there is the most impor­tant thing. Your chil­dren don’t bring you pride by merely being in com­pli­ance with the law. They bring you pride when they adopt the val­ues and lessons you teach them. You want them to have a good rep­u­ta­tion. If they have a great rep­u­ta­tion, that’s all the better.

Make sure you trans­fer your stan­dards and val­ues to your busi­ness and employ­ees, then live up to them. Con­vey them to your employ­ees. Write them down in a code and teach the code to your employ­ees. Pro­vide a mech­a­nism that allows for reports about chinks in your armor so that you can fix them. It’s all about integrity.