If you’ve started a Houston business, chances are you’ve encountered one of the following issues or made one of these mistakes. The good news is, it may not be to late to fix these issues, but they first must be identified and then properly and promptly addressed.
Starting a Houston business is an exciting process. Yet after working hard on developing a brand and marketing materials, have you thought about whether or not someone else may be using that name, and you might be infringing on that name? Imagine the cost, personal headache, and heavy use of company resources to redo everything that bears the infringing name. Not to mention, starting your public awareness back at zero. Even worse, what if you were taken to court and required to pay costly fees and a settlement to the other party? Much of this can be avoided by doing some research to make sure the name you choose isn’t the same or nearly the same as another entity on file with the office of the secretary of state. The best practice to avoid wasting time is to come up with a short list of favorite names, give them to a business attorney and have them look them up in order of your preference. Having more than one option can speed up the entire process of securing a unique final selection.
For many years, business owners have been attracted to the idea of hiring independent contractors instead of employees. Some of the benefits of hiring contract labor include limitation and ease of termination of employment as well as lower tax liabilities. But there are several statements that must be true about the nature of their job duties and functions in order to properly classify and worker as a contractor. Employers who don’t properly classify their employees can end up facing lawsuits, responding to the IRS, or answering to another state or federal agency. Furthermore, whether your workers can be classified as contract employees or regular employees, you’ll need to consider drafting solid contracts that protect your businesses trade secrets and business interests.
Litigation can happen even to the best run business. One of the benefits of insurance, particularly general and professional liability insurance, is coverage for some claims. If you are leasing an office space, most leasing companies require you to maintain a minimum level of general liability insurance. For your own sake and peace of mind do some due diligence and research, and purchase renters and property insurance. There are too many cases, such as fire, theft, flood and water damage that can arise, the effect of which could render you unable to afford to replace your expensive equipment and assets that are necessary to conduct your business.
As companies grow, so do their values and the need for shareholders to protect against disability, divorce, and/or death. You have to ask yourself, “If a shareholder dies, do I really want to be in business with the member’s spouse, or even a competitor?” As a general rule, shareholders, through an agreement, can choose to allow shares to be transferable or restricted to the original owners. A shareholder agreement can provide who can and cannot become a company shareholder/owner. This type of agreement also sets up a general sale procedure in the event a shareholder would like to sell his or her shares to another party or back to the company.
It’s important, for many reasons, including IRS, employment, business management and financial forecasting to thoroughly document your business operations. Expenses must be kept, filed, and regularly reviewed for inaccuracies. Small inaccuracies, left unnoticed and unaddressed, can be costly to a business in the long run. Should you ever want to sell your business, any potential buyer is going to want to review your financial records and your business processes. Additionally, poor documentation can often be a limiting factor to a business’ potential scalability.
Garcia-Martin & Martin, P.C., is a business and employment law firm located in Sugar Land, Texas. Their attorneys work with businesses and individuals in all types of business and employment matters throughout the Houston, Texas area. They can be reached at (281) 277-3066. You may also visit their website at www.mgmartinlaw.com for additional information and practice areas.
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