February 23, 2023 at 10:36 p.m.
Who Owns the Pickup?
Legal considerations, the basics
By Richard Koenings-
In answering this question, a common question, I’m reminded of the Kenny Rogers hit song “The Gambler” and the lines “you got to know when to hold em, know when to fold em, know when to walk away and know when to run.”
First the answer, no but highly recommended. You should have a trusted and comfortable relationship with a business lawyer who can be a resource and advisor when a matter arises that may seem to have legal overtones or its just a new direction for you that you want to check if there’s something you’re missing. If you don’t yet have that relationship, get a few referral suggestions from people whose opinion you trust, your accountant, your banker, other business friends, etc.
If you’ve been in business for any period of time, from your own experiences or conversations with friends and acquaintances, you probably have developed a sixth sense to know when something might require or be best served by a professional second opinion.
It’s your experience that tells you to hold them or fold them when it’s a something you’ve done before and the second opinion is unnecessary, but if it’s a new direction, it’s your sixth sense that says to you “I should get that second opinion on whether to walk away or run.” Yes, it may cost you some money, but it may save you a lot more in money and peace of mind.
To incorporate or not and if so how
While you can start a business without incorporating, that is, setting up a legal entity to operate under, generally my advice is, if you’re serious about a business venture its worth the protections of a legal structure, a corporation.
You don’t want to expose your family and personal assets, i.e., house, cars, personal bank accounts, spousal income, etc., to the success or failure of your venture, you want it to stand or fall on its own. It is another form of insurance, things can go wrong and to some extent, they always do.
Both of these concepts, insurance and separate legal structure, force a problem to be dealt with by others in the case of insurance such as car insurance, or within the legal entity such that the “other side” can’t make a run on your personal property as opposed to your business property.
There are a number of structures available to you depending on the peculiarities of the business, but the most common form to use is what is called a Limited Liability Company or an LLC. It’s easy to set up online and extremely flexible to use.
But, a word of caution, do create the operating documents and follow the reporting requirements called for. Why? Because if you don’t, if things go south, you risk having the apparent protective shield from personal exposure ignored under the law. Some recent changes, effective just last month, to the law of legal structure, referred to as “Business Entity Law,” make it more imperative that the substance must follow the form, you separate your bank accounts, you have separate letterhead, business cards, the whole bit.
Do you need a lawyer to do this? No, but it depends on your experience and comfort level with operating in all respects as an independent entity not entwined with your personal property. You’ve got to look separate, operate separately, and document separately.
What every businessperson should know about legal considerations
A couple of basic concepts come to mind, like when is a contract a contract? While all contracts don’t have to be in writing to be valid, all must contain three distinct elements. There must be an offer, an acceptance of the offer as made (not countered, because that would be a new offer), and what many people don’t realize, consideration has to be exchanged. Most commonly that’s money, even a down payment, but could be taking or not taking some other action in reliance on the offer and acceptance. Without all three elements there is no contract.
Another basic, intellectual property. Again, I’m not trying to make lawyers out of any of you, but there are four terms to know, trademarks (your brand names and slogans, registered or not), copyrights (your printed materials), patents, (protected for limited periods of time relating to unique inventions or designs) and trade secrets (confidential business information such as formulas, customer lists, and the like kept confidential).
And the last basic, employment legal considerations. There are a lot so this is one to be cautious with and do seek advice on. It relates to hiring, disciplining, compensating, firing, harassment, leave, benefits, etc., etc. Probably more commonly a concern and a complexity in every business above all other legal requirements.
The Summary Message
Know when to hold em, know when to fold em, know when to walk away, know when to run. That’s my advice for keeping your pickup from being taken from you by another party. The cost of timely legal advise is minor compared to the costs of not getting it in so many areas of business operations.
Next up
Another real time stories pause, service sector, essential services, doctors, dentists, and the like. How did they survive shutdowns and where are they now?
Richard Koenings is an instructor and professor at Nicolet College and Concordia University, an executive manager of small and large businesses, a founder of three businesses, and has 30 years of experience as a business lawyer.
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