This month, Kiecker Law is celebrating National Entrepreneurs Month. A couple of weeks ago, we talked about what goes into starting a business from a legal standpoint. Today, we want to talk about other legal issues for business owners. We’ll talk about two main topics: keeping your legal structure up to date and the contracts you use within your business.
Keeping Your Legal Structure Up to Date
What do we mean by keeping your legal structure up to date? Assuming you set up a legal entity, the state requires you keep your records up to date and renew your business filings on a yearly basis. Essentially, that means that you need to have meeting minutes xxxxx, and xxxx for you to be considered a legal functioning business. You also need to file an annual renewal with the State of Minnesota.
So, what happens if you don’t file the necessary paperwork? Essentially, the State of Minnesota will dissolve your business entity and will no longer recognize you as a business. That means that someone else could file paperwork for a business of the same name and they would have rights to your business name and all the protections that go along with it.
Next month, we’ll talk about how not having the appropriate paperwork filed can affect you when you’re ready to sell your business. It’s safe to say, that it is in your best interest to make sure that you are keeping your business filings up to date with the state.
The other part the legal aspect of your business that we want to discuss are the every day contracts that you agree to and use. Inevitably, you will be asked to sign contracts to do business with other companies. If you own a retail store, one of your vendors may ask you to sign a contract that allows you to be the only seller of their products in a 30 mile radius. That may seem like a great deal, but when you get something you’re always asked to give something up as well. Those contracts may prohibit you from selling certain other products as well. Is that really something that you want to agree to? Or maybe the vendor requires you to provide prime shelf space. Is that really the best thing for your business? As they say, the devil is in the details on these types of contracts and often times you will be required to give up something that you do not really want to. It’s essential that you carefully consider all of your options before signing a contract.
Another scenario might include you growing your business so much that you need to add on to your building. If so, that’s great, but you’re likely going to want to hire a construction company or contractor. In that case, you may want to add deadlines for when things need to be done by or your business could be more adversely affected that you are willing. Again, reviewing those contracts is essential. Many times it’s in your best interest to have an attorney review them first just to make sure the contract is saying exactly what you want it to.