Legal Question in Business Law in Minnesota

Re: business law

Thank you for the post.

The best type of business entity to form and the agreements that are associated with such an entity can be critical. They help to determine the rights and responsibilities of the parties as part of the business enterprise. All too often, those who do not take the time to analyze their business needs and goals wind up in litigation trying to get paid out on their business investment.

The only way to answer your question is to review with you and your business partners your business plan including your goals for growth, necessary ownership interests, and concerns with regard to the valuation or alienation of each person's business interest.

For a consultation call 612.240.8005

Re: business law

Thank you for your question.

The question of which business structure is most appropriate has less to do with the type of business enterprise, than it does with the nature of the investment made by the investors and their prospective relationship with the business.

In the most general terms, there are basically three methods of organizing a business, and the propriety of each method depends on a wide number of factors, including (among others)the nature of the business, the number of partners or investors, the manner in which the business will be capitalized and the manner in which profits will be handled, the nature of type of liabilities to which the business,its employees, and investors may be exposed.

In the most general terms, a business can either be operated as a sole proprietorship, a partnership, or a corportation (sub s corp, c corp, LLC, non profit). My initial reaction is that a manufacturing business, with various suppliers, inventory, and perhaps a number of employees, should be set up as a corporation, but I would need to know much more about the size of the business, and the relationship between the investors, employees and management, among other things.

In addition, if you or other investors are purchasing or selling an existing business, particularly if there is some combination of inventory, payables and receivables, and real estate, the terms of the purchase should be carefully reviewed by a lawyer. Among many other issues, you may have concerns about former employees starting a rival business and stealing customers. You must also account for outstanding liabilities, not only to suppliers, but also for possible claims resulting from work that was previously done by the company.

Even if the business is small, and the investments are modest, the pitfalls resulting from poor business planning, a sloppy or non-existent purchase agreement, and poorly executed business organization, can lead to substantial problems that are far more costly to fix after the fact.

If you have additional questions, please feel free to contact my office at your convenience. My contact information is below. Good luck, and again, thank you for your question.

Re: business law

Thank you for your inquiry. In general, there is no preferred business entity for a manufacturing business. Instead, the appropriate entity is determined based on the number and type of owners in the company, and how profit distribution will be determined. In order to make an entity selection, you must consult with an attorney to review specific information relating to your business and its owners.