LawCounsel, P.L.C. provides a full range of legal services to businesses. Many of our clients are small to medium sized owner-operated enterprises. Through the life cycle of your company, we ensure that all legal aspects of your operations are addressed. Regardless of whether you are new or established, our goal is to help you navigate the path to your venture’s success. Our services include entity formation, employment and services, general business operations, commercial finance, and the purchase and sale of a business, amongst others.
BUSINESS ENTITY FORMATION IN MICHIGAN
One of the most critical decisions organizers of a business make is what form of entity to use. Historically, the choices have been a sole proprietorship, general partnership, limited partnership, C or S corporation, or limited liability company (LLC). In some instances, joint ventures and other strategic alliances have been used.
Besides limited liability, business organizers deciding should consider such issues as the formality of business operations, the number of owners required, capital structure, profits, voting, management, transferability of interests, and continuity of life. As for tax considerations, the LLC’s status as a pass-through avoids the double-taxation difficulty with C corporations while permitting simplicity and privacy not always available with an S corporation. LawCounsel, P.L.C. can guide you through your decision-making process.
Professional corporations and LLCs are the statutory means by which licensed professionals, such as physicians, dentists, lawyers, certified public accountants, and enrolled agents, incorporate under Michigan law. An entity must incorporate as a professional corporation or PLLC if it is incorporated to provide one or more services in a learned profession. Deciding when a professional should incorporate is similar to deciding when any business should incorporate. You should conduct a thorough consultation with our attorneys and review the applicable state laws and Internal Revenue Code provisions. We will also review the many tax provisions that relate to professional entities as well as those that relate to a business corporation or LLC.
Many changes also have occurred in how professionals deliver services in recent years. One of the most significant is the use of the Internet. In consulting with you, we review the ethical and legal requirements. For instance, it is not appropriate for a physician to prescribe medications for a patient outside Michigan based on an Internet diagnosis. We also consider privacy and authorization issues. One of the key changes relates to the application of HIPAA directly to business associates. Business associate agreements are now a key part of the landscape and, if you are representing clients who are subject to HIPAA, these changes are of significance. Further, also enacted in the stimulus were provisions for incentive payments to health providers to implement electronic health records (EHR). There are incentives for those implementing EHR and achieving “meaningful use,” as well as reductions in medical reimbursement for health care providers who do not implement EHRs.
Nonprofits play an important role in American society, and we are often asked to advise these entities or to serve on their boards. The term nonprofit should not be confused with tax exempt. Creation of a nonprofit is regulated by state law, while tax exemption under Section 501(c)(3) and other provisions of the Internal Revenue Code is regulated by federal law. In general, although nearly all tax-exempt organizations are nonprofit organizations, some types of nonprofit organizations are not tax exempt.
LawCounsel, P.L.C. can assist you in organizing as a nonprofit corporation under Michigan law and seeking tax-exempt status under federal law as a public charity, private foundation, etc.
One issue that is of utmost concern to our business owner clients is the fate of their business on their death, disability, or retirement. Essentially, only one of three things can happen: The business can be continued, it can be sold, or it can be liquidated. In family businesses, the senior generation usually has a strong desire to see the business pass to the next generation.
An ideal succession plan has two major components: an estate plan and a management succession plan. The estate plan addresses issues such as succession to the beneficial ownership of the business, minimization of transfer taxes, and estate equalization for children who are not active in the business. The management succession plan centers on control of the business, management of the business’s day-to-day operations, and other considerations unique to the specific family and business.
At LawCounsel, P.L.C. we can assist you with your buy-sell agreement, redemption agreement and other succession planning mechanisms as well as your estate planning for business interests.
EMPLOYMENT AND SERVICES
Employment relationships arise through various means. Terms of employment may be governed by employee handbooks, individual written or oral agreements, policy statements, and several applicable statutory provisions. If you intend the employment relationship to be “at-will,” i.e., terminable with or without a reason, you should memorialize this intent at the hiring stage. The safest way to ensure at-will status is in an employment application, an employee handbook acknowledgment, or a separate employment contract. Our Michigan Business Law attorneys can also address nondisclosure agreements and covenants not to compete.
If one of your employees is terminated, it is advisable to negotiate a separation agreement including a release of all claims, generally supported by consideration in the form of severance pay. Your employee should be offered a reasonable period to consider signing such a release, but the time to review and/or revoke a separation agreement may be statutorily mandated based on the age of the employee.
Finally, every employer client should be proactive in preventing sexual harassment and other forms of workplace discrimination by promulgating a formal policy distributed to all employees. Because computers and the Internet play an increasingly larger role in the workplace, we also advise you to adopt computer network, electronic device, and Internet usage policies that prohibit inappropriate transmission of information.
Our services encompass contract drafting and negotiation, electronic commerce, and debt collection among others.
Contract Drafting and Negotiation
The process used to produce a contract is a creative one. LawCounsel, P.L.C. can gather materials and facts, determine what benefits are to be derived from your contract, and negotiate skillfully to achieve them. The subject matter may range from the sale of goods or services to the settlement of a dispute or the appointment of a sales representative or distributor for your business. In some circumstances, a host of warranties may be implied in the absence of an effective disclaimer, and the only way to effectively disclaim them is to put appropriate language in a written contract.
In a commercial setting, our review of even ordinarily mundane terms and conditions can produce favorable results for you. Take a contract for the sale of goods, which is often formed as a result of a number of separate documents (e.g., requests for quotes (RFQs), quotes, drawings, specifications, purchase orders, scopes of work, order acknowledgments, invoices, etc.), which collectively comprise the contract between the parties. In most transactions our business clients will exchange form agreements such as a purchase order (buyer) and invoice (seller). Both sets of documents will contain various terms and conditions that often are inconsistent with each other, yet each party assumes that its terms govern the transaction. This situation is referred to as the “battle of the forms” as the parties struggle for control of the transaction and its governing provisions. Our drafting and negotiating skills can avoid this scenario by (1) conditioning buyer’s performance on acceptance of seller’s terms and (2) objecting to any and all additional or different terms contained in buyer’s forms.
Electronic Commerce for Businesses
MICHIGAN DEBT COLLECTION ATTORNEY
Debt collection is immensely important to our business owner clients as constant economic fluctuations create concerns about the quality of accounts receivable. Our attorneys can play a valuable role in collecting receivables by using proven procedures and forms. Creditors’ rights practitioners must be aware not only of state laws and local court rules but also of the applicability of the Fair Debt Collection Practices Act and bankruptcy issues. We can also help you keep common business forms and credit extension policies current by avoiding “legalese” and providing remedies when your customers fail to honor contract commitments.
We regularly assist our business clients in the drafting and negotiation of extensions of credit for business purposes. Our attorneys can prepare:
- Security Agreements;
- Irrevocable Letters of Credit;
- Inter-Creditor Agreements;
- Subordination Agreements;
- Securities Account Control Agreements; and
- Forbearance Agreements.
Regardless of your intent in connection with the investment in your business entity, we can discuss the benefits of combining equity with debt instruments in the form of secured or unsecured debt. Thinning the entity (i.e., minimization of capitalization) involves transferring the smallest amount of assets as capital contribution. Although care must be taken to avoid a claim of insufficient capital contributions, the tax benefits of minimizing the capitalization of the entity must be examined as well as debt’s priority in the insolvency setting.
PURCHASE AND SALE OF BUSINESS
At LawCounsel, P.L.C., our attorneys can provide you guidance in buying or selling small or medium sized businesses. A transaction can take several forms; (1) asset sale; (2) stock sale; (3) merger; (4) consolidation; or (5) consolidation. Although the buyer usually dictates the transaction’s form, the seller nearly always determines the payment terms. It probably goes without saying that sellers prefer receiving the purchase price in cash, with no seller financing. However, business realities rarely make this possible. Where this is true, the seller must often finance part (often a significant part) of the purchase price. Such an arrangement requires a careful analysis of the ongoing business operated by the buyer and what it can bear in the way of periodic payments. It also requires that the seller’s lawyer carefully structure security devices to protect the seller’s rights in the event of a default.
Based upon decades of experience partnering with businesses and being part of the local West Michigan business community, our attorneys are able to provide comprehensive legal services and business advice to our professional clients. Learn more about LawCounsel, P.L.C. below or contact us for assistance with a referral to an attorney who can assist with your business needs.
WE LOOK FORWARD TO HEARING FROM YOU
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200 Viridian Drive
Muskegon, MI 49440
15130 Wildfield Drive
Spring Lake, MI 49456
We are here to serve in this time of crisis. We can meet using video conferencing or by telephone.