The Top Ten Legal Documents Every Business Should Have -2

2. Tax election status documents, filed in a timely manner, with input from a competent tax advisor (here again, either an attorney knowledgeable about the tax laws or an accountant).  For example, the timely filing of the appropriate IRS and corporate documents to meet IRS deadlines in forming and electing status as an “S” corporation to gain this structure’s tax flow-through benefits is critical. 

3. Valid and ENFORCEABLE operating agreements, partnership agreements or corporate bylaws.  These documents establish your set of rules for running, governing and growing your business.  In them, important issues such as how you and your partners, members or other stake holders distribute profits and losses, decide ongoing business issues, and, if necessary, sell, transfer or dissolve the business should be included.  Effective and competent advice as to the best options for voting, member’s admittance, deadlocks in decision making and stake holder dilution avoids costly and emotional litigation and expense later.

4. Buy-sell agreements between owners or members.  These agreements contemplate the calculation of purchase price for an owner’s share upon death, disability or retirement.  Funding mechanisms for such agreements, such as life insurance trusts, are often overlooked but critical. 

5. Non-competition and non-solicitation agreements with co-owners and key employees.  These are absolutely essential to protect the “know-how” of your business.

 Top Ten Article 1 <2> 3 4  NEXT