Company Operations Attorney in Palm Desert, California

According to U.S. Census Bureau data, monthly new business applications, which averaged fewer than 300,000 prior to the COVID-19 pandemic, have now risen to nearly 500,000 a month as the nation returns to a more normal state. These statistics reflect the number of persons and entities applying with the IRS for an Employer Identification Number (EIN).

With all this optimism, those embarking on a new venture as first-time entrepreneurs should be aware of the many pitfalls that may await them, as many new businesses fail in the first two years.

As you begin your journey into business ownership, make sure you’re properly prepared to execute the contracts, agreements, and other binding legal documents that will help protect you against disputes and breaches of obligations. If you’re already in business, make sure you have everything you need in writing to have optimal protection.

Run a smooth and error-free operation with general counsel services from our team at the Law Offices of Jerry J Goldstein in Palm Desert, California. Get the guidance you need, whether you live in San Diego, Orange, Riverside, or San Bernardino County, as you embark on your new venture or streamline your current operations.

Avoiding Common Pitfalls

A small business is defined as any business with fewer than 500 employees. Unless those 400,000-plus new businesses are being launched as wings of larger corporations, it’s unlikely that many of them envision that kind of employee load. Even if it’s just a new “mom & pop” operation, a small partnership, or a sole proprietorship, a new venture faces many hurdles.

Different experts and websites categorize pitfalls facing new businesses in different ways, but they pretty much all agree that it’s a mistake to go it alone, relying on your gut instincts or preconceived notions of what will or won’t work.

To increase your chances of success in your new business, you will need the advice and shared experiences of others, not only from those specific to your field but also relating to business operations in general. There may be nothing more important than receiving proper legal counsel and all of the appropriate legal documents you need to protect yourself and increase the prospects for the success of your venture.

Contracts & Agreements for Smooth Operations

Even in a sole proprietorship, you are going to have business dealings with others — suppliers, landlords, employees, customers, or government agencies. All of these relationships are going to require legal documentation to protect yourself, your business, and your assets. Here are some documents that have a significant impact:

Partnership Agreement

If you’re going into business with a partner — or partners — you must have a written agreement that spells out everyone’s duties and obligations — who does what, how will debt and profit be split, etc. The agreement should also dictate steps to take when a dispute erupts — should a vote be taken, should you call in an arbitrator? Like the Boy Scouts, you must “be prepared.”

Real Property & Equipment Leases

Get these reviewed by an experienced business attorney before you assume onerous terms and obligations. Acceptance of the lease, term, rental payments, security deposit, ownership, the responsibility of care, Insurance, taxes and fees, liability for loss and damage — all need to be addressed.

Vendor Agreements

If your business relies on a supply of products or services from others, you need to lock them into airtight agreements, generally through a contract that states both their obligations and yours — delivery dates, payment dates, and more. The last thing you want to do is to open up shop one fine day and discover that you have nothing to sell because a vendor let you down.

Marketing & Sales Agreements

The same holds true if you rely on others to do the marketing and sales for you. You will need to lock them into terms that benefit both parties and protect you against nonperformance. Sales and marketing goals should be clearly stated.

Confidentiality & Non-Disclosure Agreements

You will want to protect your intellectual property and trade secrets, even if it’s just a specialized form of marketing or a customer list. Get employees and others to sign confidentiality and non-disclosure agreements. You may also consider non-compete agreements, but these are difficult to enforce in California.

Employment Agreements

Perhaps one of the biggest — if not most aggravating — pitfalls businesses can face are employees who don’t perform as expected or who cause ripples in the operation through their attitude. Employment in California is considered to be “at will.” Leave it that way by specifying so in any agreement you have with your employees, or spell it out carefully along with all other pertinent policies in an employee handbook and even in job applications.

Elements of Enforceable Contracts

A contract can be express, oral, or implied. An express contract is one that has been clearly written out and signed. An oral contract could be a shaking of the hands over what each party will do. An implied contract is just that — implied over time by the conduct of the parties involved. Say you always send a certain independent contractor out to do service calls for your appliance repair business. Over time, this becomes an implied contract, though it was never written out or agreed upon orally.

Obviously, an express contract is the most legally enforceable type. The other two can devolve into arguments over who said or did what and why.

Therefore, as much as possible, you need to get everything in writing, keeping in mind the elements that make a contract legal and therefore enforceable. Six elements are generally believed to comprise a valid contract in the U.S. These elements include:

• Offer: This is what one party offers another party for services rendered, generally cash considerations. It includes all terms and conditions for fulfilling the agreement.

• Acceptance: This occurs when the other party agrees to the offer and its terms and conditions.

• Mutual Assent: Also called “the meeting of the minds,” this generally means signing the contract.

• Consideration: This is what is offered in exchange for goods or services, generally cash.

• Capacity: This means that the persons agreeing to the contract are of legal age (18 and older), of sound mind, and not under the influence of foreign substances while signing.

• Legality: A contract is bound by the laws within its signing jurisdiction. For instance, you cannot agree to open and operate a marijuana dispensary in a state or locality that prohibits them.

Sometimes these elements are combined into five or even three components. The five components would include the offer, acceptance, consideration, competency, and legal intent. The three would be offer, acceptance, and consideration. Regardless of how the contents of a valid contract are expressed, the six elements above must be present.

Why You Need an Attorney

Whether you have an ongoing business or you’re just getting started, it’s important to review the legal instruments by which you operate, including contracts and agreements of all types. If they haven’t been put into writing, it’s high time they were. If they’re already in writing, it’s probably time to revisit and potentially update them.