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Portland Business & Commercial Law Blog

Skip the business formation process by buying a business

Starting a business is an exciting step for hopeful Oregon entrepreneurs, but that is not always the optimal way forward. Instead of navigating the entire business formation process from the very beginning, it may be possible, and even optimal, to buy an existing business. There are certain steps a person will want to take if he or she is looking to buy an established company. 

As the baby boomer generation ages, many of them who are business owners will be looking to sell. This means that it this type of business transaction could increase in frequency in the near future. One of the most important considerations for this process is that by buying a business that is already established and running, an owner can save a significant amount of time and money. Owners will also get an established client base, proven business plan and experienced employees as well. 

Tips for success in the small business formation stage

Starting a small business is an exciting step for an Oregon entrepreneur. During this process, there are several important legal and financial factors to consider that will impact business operations going forward. The choices made during the business formation process are critical to the future of a company, and it can be beneficial for an owner to think carefully about all options before moving forward. 

One important step during this phase is to carefully review the business plan. Part of the business plan may also include how a business will obtain the financing necessary to start operations. Another step is to be certain that all necessary licenses are applied for or already obtained, such as the licenses that a restaurant will need to service alcohol. 

Take encouragement from other companies’ successes

In many cases, business owners do not envision selling their ideas and hard work to another company. However, sometimes the market changes, making mergers and acquisitions (M&A) extremely profitable options for companies looking to increase their collective value.

While M&A can take a long time to complete, the November 2018 $69 billion deal between CVS and Aetna may serve as an example of the options you might have as your business grows. Depending on your end goal, a similar deal may serve you well.

Specific types of contracts for specific types of employees

Oregon business owners understand there are various challenges associated with running a successful company. One of those challenges is dealing with the legal requirements that business owners have to address in order to protect the interests of their companies. This includes drafting strong and enforceable employee contracts. 

Employment contracts should match the needs and objectives of the company. It is possible to custom-tailor these agreements, allowing for the inclusion of specific terms that are important for the particular job or type of business. It is also important to have the right type of contract for specific types of employees. For example, independent contractors and full-time employees have different classifications, and therefore, they should have different types of contracts.

Business litigation and changes in noncompete laws

Many Oregon business owners employ the use of certain types of legal agreements to protect the interests of their businesses, including noncompete agreements. Frequently included as part of employment contracts, noncompete clauses are intended to protect the interests of the employer in the event that the employee leaves the company, lowering the risk of business litigation. This prevents a former employee from taking proprietary information to a competitor or disclosing information about the company.

There are some who believe that noncompete agreements unfairly impede the ability of employees to find new jobs, limiting their upward mobility. Estimates suggest that as many as 30 million employees are affected by these types of agreements. Many employees sign these agreements because they do not understand the potential long-term implications or are uncertain of whether they have the ability to negotiate with an employer. 

Business formation tips for new entrepreneurs

Entrepreneurs often launch businesses motivated by the dream of working for themselves and doing what they love. It's an exciting step, but it's also prudent to move thoughtfully and carefully through the business formation process. It's easy to make mistakes or commit missteps during this time, but an Oregon entrepreneur can take measures to avoid legal and financial complications down the road. 

It's easier than ever to start a business, but that doesn't mean that every person who does this will succeed. Thanks to various websites, a person can take every step necessary to start a business online, but that may not be the smartest choice. There are important legal implications to every choice a business owner makes, starting with drafting an operation agreement, employee contracts and choosing the right type of entity.

Avoiding business litigation and protecting intellectual property

One of the most important steps for an Oregon business is to protect its intellectual property through strong trademarks. Having trademarks in place gives a business legal grounds to pursue recourse in the event of any type of copyright infringement. Infringement is a particularly serious issue for companies involved with industrial design, significantly increasing the chance of business litigation. 

Because of the sharp increase in the number trademarks currently held, it can be difficult to register a design without infringement on some aspect of a previously trademarked design. Once a business has a trademark, it is up to that company to monitor for actions that could potentially infringe on its property. This can be a complex process, but it is worthwhile to protect things such as designs and product plans.

Important choices for the business formation stage

When a person decides to start a small business in Oregon, that is only the first of many decisions he or she will have to make. Entrepreneurs are faced with many choices in the business formation stage, and of these involves deciding on the right type of business entity. This is a critical decision as it will affect how a business is taxed and other financial aspects for the future of company operations. 

The most popular choice among small business owners is a limited liability company. An LLC is practical for many small business operations, particularly because it limits a business owner's personal liability for business debts. In an LLC, the owner's assets and the business' assets are separate, adding a measure of protection for the owner. There is a lot of flexibility allowed with an LLC, and as many as 75 percent of small business startups make this choice.

SEC rules in favor of company in shareholder business litigation

Shareholders are an important part of many big corporations in Oregon and elsewhere. These individuals often have input into certain decisions regarding company actions, and meetings allow for issues to be presented and for votes to take place on applicable subjects. Of course, there are also instances in which shareholders may take issue with company actions or lack of action, and disputes could lead to business litigation.

This type of dispute recently affected an energy company in another state. According to reports, the company did not find it necessary to draft a clean energy plan that would detail their intended efforts to become completely reliant on renewable energy by 2050. However, four shareholders for the company believed that drafting the plan was essential to the company.

Mediation helps companies avoid protracted business litigation

Mediation can play a valuable role as an alternative to bitter and protracted business litigation in Oregon and elsewhere. Mediation is less formal than arbitration and does not include an attempt to litigate the issues between the parties. Instead, mediation is a search for common elements of agreement that the parties can use to bring about a potential peaceful resolution of their differences instead of quickly resorting to business litigation. A business will want to include in-house counsel or outside business law attorneys in the process so that all rights are protected and a business solution is formalized without detriment to either party's legal position.

In modern business relations, it is often counterproductive for a company to enter into an all-out adversary confrontation with another business. The two companies may still have many things in common and many reasons to want to keep doing business together. The pre-litigation resolution of controversies in an amicable manner can sometimes even build a stronger bond between the companies and increase the channels of productive communications between them.

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