If you are about to take the exciting step of forming a new business, you should not overlook the important decision of the type of entity your business will utilize. The business entity you select will affect every facet of your business, so you should make the decision with the aid of trusted legal professionals.

No two situations are the same. Simply because a competitor or similar business has utilized, for example, an LLC business structure does not mean that this is the right choice in your situation.

Why Business Type Matters

The law defines several types of business entities, and each has distinct features that could help or hurt your business. The type of entity selected will affect how the business is taxed, and different business entities have different requirements in terms of paperwork. The potential personal liability that a business owner may be exposed to is another key consideration. Finally, the type of entity you select will dictate how you can raise money. 

A business is only as strong as the contracts it enters. There are many ways that a business contract can be detrimental to a company: it can favor the other side, it can be unclear from a legal perspective, it can be vague, and it can leave out key terms. Many business owners fall victim to using a template contract found online that is not properly tailored to the parties and their unique situation.

On the other hand, a well-crafted contract can be an important asset to a business, giving the business stability. It should be noted that there are many ways a business contract can be poorly constructed, and those business owners looking to enter into a contract should be aware of these areas. Contract issues that commonly affect business owners include:

• Too much legalese. If you do not understand the terms of the contract because legal jargon is used, this does not mean the contract is a good one. A good contract should be readable and understood by the parties. There may be a term or two that will need to be explained to you by a lawyer, but on the whole, a good contract should be understandable.
• Lack of specificity. A contract has the same effect between the parties as law. Thus, it should be clear what each party’s obligations are. Any detail known should be included. For example, if payment is to be mailed to a party, the address for the party should be written out in the contract. The entire agreement should be reduced to writing. It is dangerous for the agreement to be partially in writing and partially verbal.  
• Failure to address the contract’s termination. All contracts will come to an end, so the contract should contemplate how that will be done and under what circumstances.
• Omitted litigation provisions. Most contracts should include an agreement on what law will govern any disputes arising between the parties, and if a party will be liable for attorney’s fees and court costs in the event of a contractual breach.

A Milwaukee, WI Commercial Contract Lawyer Can Help

If you are considering signing a business contract, you should have an attorney on your side. The qualified Milwaukee, WI business contract attorneys at our firm will use our years of experience in representing businesses when reviewing your contracts and ensuring that they meet your business objectives. 

Business owners invest a great deal of time and money into their companies, and they will want to be sure they are able to reap the rewards for their efforts. When forming a business, it is important to select the correct entity that will allow you to file taxes properly and address liability issues.

Common business entities in Wisconsin include the following:

• Sole Proprietorship – In this type of business, there is no separation between the owner and the company. Revenue generated by the company is taxed as part of the owner’s income, and the owner is personally liable for business debts.

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When a business becomes involved in a legal dispute, it can have a major impact on the company’s bottom line. While the costs of commercial litigation can be significant, successfully defending against a lawsuit can help avoid being required to pay damages. Breach of contract lawsuits are one common type of commercial litigation, and business owners should be sure to understand their options for defending against accusations that they have not fulfilled their contractual responsibilities.

Breach of Contract Defenses

When a business is accused of breaching a contract, either in part or in full, it is important to raise every possible legal defense. A defendant in a breach of contract lawsuit may use “affirmative defenses” which argue that even if a breach occurred, certain circumstances occurred which caused the contractual agreement to be void. Some affirmative defenses include:

Starting a new business is an exciting time. Business owners put a great deal of thought into their plans for their company, and setting those plans into motion can be immensely satisfying. However, decisions made at the beginning of a business venture can greatly impact a business’s future. Therefore, it is important for business partners to plan for the future and ensure that their rights are protected. One way to do so is through a shareholder agreement. Furthermore, having this type of agreement in place can help safeguard against future commercial litigation if disputes should ever arise between partners.

What Should be Included in a Shareholder Agreement?

A shareholder agreement, also known as an operating agreement, is a contract between the people who have an ownership interest in a company. The agreement outlines the shareholders’ rights and ensures that each person’s interests are protected. Moreover, the agreement may additionally describe how certain types of disputes will be resolved if they should arise in the future.