Gunderson, Denton & Peterson welcomes Bert Millett to our firm as an Associate Mesa Arizona Attorney.  Bert focuses his practice primarily on Business Law, Real Estate Law and contract issues.  He prides himself on his ability to advocate effectively for his clients with an eye for detail and precision in the matters he handles.

 Bert graduated from Arizona State University with a B.S. in Business Management in 2002 and a J.D. from Sandra Day O’Connor College of Law in 2006.  Prior to attending law school at ASU, Bert managed a mid-sized business where he gained first-hand experience in the legal issues faced by business owners.  Since then, Bert has helped business owners with contract issues, business disputes, securities offerings, and much more.

Has a Lack of Corporate Compliance Destroyed your Company’s Liability Protection?

Familiar adages have a way of popping up just after they would have been useful, as if to say, “I told you so.” How about this one – “Never put all your eggs in one basket.” That is why you formed a corporation or limited liability company to do business in the first place. It’s smart to limit personal liability. Without necessarily disagreeing with the underlying principle, Mark Twain offered his own insightful variation of the old saying. He said, “Put all your eggs in one basket and then watch that basket.”

So how is that business entity you formed doing these days? This is a great time of year to review your company’s corporate compliance with Arizona law. Have you filed your Annual Report with the Arizona Corporation Commission? The ACC doesn’t send a reminder anymore, so you may be surprised to learn that your corporation might have been administratively dissolved. How about that pesky annual meeting required by statute? Have you generated the proper meeting minutes or corporate resolutions? Has your place of business changed? How about your statutory agent? These are some of the seemingly unimportant details that cause legal headaches for your company.

There may be a relatively easy fix for most simple non-compliance issues. But, as business attorney’s, we see too many instances of big problems resulting from simple inattention to corporate compliance requirements. For instance:

• A company can lose the right to use its own name without the help of an Arizona Business Attorney.
• A company may be unable to maintain a lawsuit to enforce its rights.
• A minority owner could bring a troublesome lawsuit against the company and the majority owner.

Most dangerous, a creditor of the company could seek to pierce the corporate veil and pursue claims against the owners if they haven’t been playing by the rules.

Nearly every legal problem a business entity encounters could have been mitigated or prevented entirely with the proper documentation and attention to corporate compliance requirements. The problem is, you’re running a business in a tough economy. You don’t have time to become an expert on corporate law, much less stay up to speed on the complex and ever-evolving regulatory environment.

So why not come in for a company tune up? We provide efficient corporate compliance services. At an appointment with us, you can sit down and review your company’s legal status. We’ll help you evaluate your risk based on your circumstances and recommend cost-effective ways to protect your business. We offer competitive rates and flat fees for the preparation of common business documents. You’ve worked hard to be successful. Let our corporate compliance attorneys at Gunderson, Denton & Peterson, PC, help you avoid regulatory pitfalls and expensive legal disputes. After all, an ounce of prevention is worth a pound of cure.

Business owners should have plans in place to ensure that their business will remain viable in the event that they die or become incapacitated.  Maintaining the viability of the company will allow the business to retain its value and remain a valuable asset that can be passed on, with the careful help and planning from the Arizona business law team at GDP.  Failure to prepare before such an event occurs can put unnecessary burdens on family, friends and employees.  If the business owner dies or becomes incapacitated before making preparations, the business might be left to someone who does not possess the skills needed to run it successfully.   

The appropriate manner to prepare and plan will depend on the way the business was set up.  If the business is a sole proprietorship, there is no separately existing business entity, and all of the business’s assets and liabilities are in the owner’s name. An Arizona business planning lawyer can help you prepare for this eventuality, as a sole proprietorship usually ends upon the death of the sole proprietor, and the business assets and liabilities become part of the owner’s estate.  For this reason it is usually better to use a business entity that will survive the death or incapacitation of the business owner.  LLCs and corporations are two effective business entities that can have an existence past the death of the owner(s).

Complications can occur when there are multiple owners or business partners.  Many times business partners do not want a new partner after the previous partner becomes incapacitated.  To prevent any unnecessary problems, a prearranged buy-sell agreement can be drafted.  This agreement would obligate remaining partners or business owners to purchase the interest of a deceased or incapacitated owner at a predetermined price.  These agreements are often funded by taking out a life insurance policy on each of the business owners.

Appropriate business contingency preparations will depend on each business owner’s situation and goals.  Attorneys from Mesa Attorneys Gunderson, Denton & Peterson, PC, help business owner clients by analyzing their unique circumstances and helping protect assets during necessary business transitions.

The requirements of the Federal Trade Commission’s Franchise Rule

The franchise industry is large and growing larger.  The U.S. Census Bureau recently collected franchising data for certain industries and found that in those industries 10.5% of businesses were franchises and $1.3 trillion of the $7.7 trillion total sales were from franchises.[i]  There is a lot of money in the franchise market, and it can be very lucrative for an individual with a successful business to franchise that business.  However, in order to comply with the law and ensure long-term profitability, a franchisor needs to abide by the franchise rules and regulations set forth by the Federal Trade Commission – specifically the Franchise rule.  The Federal Trade Commission has brought cases against hundreds of companies based on the Franchise Rules. An Arizona Franchise Attorney can help navigate the complex rules.

A key part of the Federal Trade Commission’s Franchise Rule is the Franchise Disclosure Document (FDD).  The FDD is a legal document given to potential franchisees by the franchisor to disclose information on many areas of the franchise business.  Use of the FDD was mandated by recent changes to the Franchise Rule, and it replaces the previously used Uniformed Offering Franchising Circular (UFOC).  A franchisor is required to provide this document at least 14 days before a sale is made, as his Arizona franchise lawyer can tell him.  The Federal Trade Commission’s regulations require certain specific information to be included in the FDD.  The Franchise Rule contains 23 Items that must be included in the FDD.  The following is a brief description of six of the Items:

-          Item 2: Business Experience – The FDD must have the business experience over the previous five years of key individuals in the franchisor’s business.  Key individuals usually include the franchisor’s directors, trustees, general partners, and principal officers. 

-          Item 5: Initial Fees – Any money that must be paid by the franchisee to the franchisor before the franchisee’s business opens must be disclosed.  If the fee is not set, the possible range of the fee or a formula to determine the fee must be given.  

-          Item 12: Territory – The Franchisor’s FDD must specify whether the franchise is for a specific geographic location.  The Franchise Rule contains specific language that must be included if the franchisor is not granting an exclusive territory.  If the territory is exclusive, remedies must be given in case there is an intrusion into that territory, as stated in the franchise agreement negotiated by the business franchise lawyer.  Any restrictions on the franchisor from soliciting or accepting orders from consumers inside the franchisee’s territory must be specified. 

-          Item 17: Renewal, Termination, Transfer, and Dispute Resolution – A table must be added to the FDD that outlines the franchise relationship.  A brief description of required contract provisions must be included in the table. 

-          Item 21: Financial Statements – The franchisor must include a balance sheet and statements of operations, stockholders equity, and cash flows.  These statements should be audited by an independent auditor and be completed according to GAAP (generally accepted accounting principles).  There are specific exceptions for start-up franchisors, but even then audited financial statements should be provided as soon as practicable. 

-          Item 23: Receipts – The Franchisor’s FDD must have two copies of a detachable acknowledgement of receipt.  The Franchise Rule contains specific language that must be used in the acknowledgement of receipt. 

This is just a small sample of what must be included in the FDD.  As can be seen, franchise law and the requirements for the Franchise Disclosure Document are evolving and complex.  Having an experienced franchise attorney is essential if you are franchising your business or looking to buy a franchise. Attorneys at Gunderson, Denton & Peterson, PC are experienced in working with franchisors and franchisees on their franchising issues.  Attorneys from the firm are available to meet with you to review and analyze the Franchise Disclosure Document or address any other franchise or business issue. 

Gunderson, Denton & Peterson welcomes Bert Millett to our firm as an Associate Attorney.  Bert focuses his practice primarily on Business Law, Real Estate Law and contract issues.  He prides himself on his ability to advocate effectively for his clients with an eye for detail and precision in the matters he handles.

 Bert graduated fromArizonaStateUniversitywith a B.S. in Business Management in 2002 and a J.D. from Sandra Day O’Connor College of Law in 2006.  Prior to attending law school at ASU, Bert managed a mid-sized business where he gained first-hand experience in the legal issues faced by business owners.  Since then, Bert has helped business owners with contract issues, business disputes, securities offerings, and much more.

Arizona Business Financing Strategies

Bridge financing is a short term financing option available for personal or business uses.  Individuals use this service to bridge the time period between buying a new house and selling their prior one.  A business with equity financing expected to close in a short time can also use a bridge loan to secure working capital until the funding goes through.

Personal Uses for Bridge Financing

             A bridge loan is a short-term interim loan used until permanent financing is secured.   A common use for bridge financing occurs with the purchase of a house. Many people worry that they need to have the closing date of their new home purchase occur after the sale of their current home.  This gap in time may cause you to miss out on your new home.  Bridge financing allows you to continue with your purchase by obtaining short-term financial assistance without needing to close on the sale of your previous home.  The bridge financing is used to close on the new home and the funds from the sale of your previous home are used to pay off the short-term financing.  This financing helps you “bridge” the time between your purchase and your sale. 

            It may be difficult to financially qualify for two mortgages on two properties at the same time.   A lender can use different criteria to qualify you for bridge financing.  With assistance from the Arizona business attorneys at Gunderson Denton & Peterson, the terms are negotiated for financing and payment of the bridge loan.  This will allow you to enjoy your new home without the worries of losing it to another purchaser while waiting for your home to sell.  

Business Uses for Bridge Financing

 
Get immediate cash flow to keep your business growing.

             Bridge financing can be recommended by an Arizona Business Attorney

used in business to provide debt financing or short-term cash flow before a company conducts an initial public offering or receives other sources of private equity financing.  If you want to take your business public but need additional immediate funds to accomplish this, bridge financing through the company’s initial public offering can be made.  An investor (a bank or individual) provides the cash in return for a discounted price on the initial public offering.  This could make the difference between going public or not.

            Bridge financing can also be helpful for a new business.  This financing can inject small amounts of cash to carry a company so that it does not run out of funds between private equity financing.  This influx in cash can help your business continue to run or grow until other financing opportunities are available. 

             With all financing options come questions and a need for guidance.  The attorneys Gunderson Denton & Peterson can provide the direction, services, and advice necessary to execute bridge and many other financing options that you or your business may need.

]]> http://blog.gundersondenton.com/2011/10/06/is-bridge-financing-for-you-how-to-avoid-losing-a-great-opportunity-because-of-lack-of-financing/feed/ 0 http://blog.gundersondenton.com/2011/08/17/the-duty-of-directors-and-officers-regarding-corporate-opportunities/?utm_source=rss&utm_medium=rss&utm_campaign=the-duty-of-directors-and-officers-regarding-corporate-opportunities http://blog.gundersondenton.com/2011/08/17/the-duty-of-directors-and-officers-regarding-corporate-opportunities/#comments Wed, 17 Aug 2011 20:23:46 +0000 admin http://blog.gundersondenton.com/?p=157 Arizona Attorney Discusses The Duty of Directors and Officers

The Duty of Directors and Officers Regarding Corporate Opportunities

When can a corporate officer take a corporate opportunity for his own benefit?

People who become corporate officers or directors assume important legal duties to the shareholders of the corporation.  One specific duty that an officer or director owes to shareholders is not to personally take corporate or business opportunities that could otherwise benefit the corporation.  

For example, assume that you are the CEO of a corporation that sells glass windows and you find a new glass provider that is cheaper than the one the corporation currently uses.  If you use the new glass provider for your own personal gain, you are taking the corporate opportunity.  If the corporation sues, you could be liable to the corporation for any damages that resulted from you taking the opportunity. 

To determine if a corporate officer or director has breached his or her duty toward shareholders by taking advantage of a corporate opportunity, some of the questions the court or the corporate counsel And corporate Law Attorneys in Arizona may ask are:

1. Was this opportunity within the corporation’s line of business?
2. Is it reasonably expected that the business would be interested in the opportunity?
3. Could the corporation have afforded it?
4. Would the corporation have taken advantage of the opportunity?

It is possible for a director or officer to take personal advantage of a corporate opportunity—if it’s done properly.  The officer or director must disclose the opportunity to the corporation, and the corporation decided not to pursue it.  It is important that the disclosure was full and fair.  In short, the director or officer has to give the corporation a fair chance to take advantage of the opportunity.

Directors and officers in this type of situation can face personal liability if they do not follow the law carefully.  A knowledgeable business attorney can explain whether a particular situation counts as a corporate opportunity, and how the director or officer should proceed if he or she wants to take personal advantage of such an opportunity.  A business attorney, such as the ones at Gunderson, Denton & Peterson, PC can also advise a corporation if one of its directors or officers has improperly taken a corporate opportunity.

]]> http://blog.gundersondenton.com/2011/08/17/the-duty-of-directors-and-officers-regarding-corporate-opportunities/feed/ 0 http://blog.gundersondenton.com/2011/08/08/pre-incorporation-contracts-of-promoters/?utm_source=rss&utm_medium=rss&utm_campaign=pre-incorporation-contracts-of-promoters http://blog.gundersondenton.com/2011/08/08/pre-incorporation-contracts-of-promoters/#comments Mon, 08 Aug 2011 17:48:55 +0000 admin http://blog.gundersondenton.com/?p=151 Continue reading →]]> Liability For Start Up And Duties In Creating a Corporation

When is a promoter liable for the terms found in pre-incorporation contracts?

A promoter is a person in charge of establishing a corporation, besides the Arizona Business lawyer.  The promoter’s duties may include finding investors, incorporating the business, and negotiating pre-incorporation contracts.  A pre-incorporation contract is a contract made in behalf of a corporation before the corporation is created.

Because the corporation does not exist at the time a pre-incorporation contract is made, the promoter, not the corporation, is bound by the terms of the contract.  However, when Arizona contract lawyers and other parties create a pre-incorporation contract, they usually intend the contract to be adopted by the corporation when it is formed.  When a contract is adopted by the corporation, the promoter is freed of the obligations of the contract.  A corporation adopts the contract if it accepts the benefits of the contract or if it replaces the old contract with a new one.

Pre-incorporation contracts can be risky for the promoter.  The promoter can be stuck with the contract if the corporation is never formed or if the corporation decides to not adopt the contract.  To prevent unintended liability, a promoter should consult with an experienced mesa attorney, such as the ones at Gunderson, Denton & Peterson, PC, who can assist in the incorporation of a business and in the creation of pre-incorporation contracts.

]]> http://blog.gundersondenton.com/2011/08/08/pre-incorporation-contracts-of-promoters/feed/ 0 http://blog.gundersondenton.com/2011/07/26/should-my-business-be-a-sole-proprietorship/?utm_source=rss&utm_medium=rss&utm_campaign=should-my-business-be-a-sole-proprietorship http://blog.gundersondenton.com/2011/07/26/should-my-business-be-a-sole-proprietorship/#comments Tue, 26 Jul 2011 22:25:05 +0000 admin http://blog.gundersondenton.com/?p=148 Continue reading →]]> Business Formation

Choosing The Correct Business Type

The advantages and disadvantages of being a sole proprietor

According to the U.S. Census Bureau, more than 70% of businesses in the United States are set up as sole proprietorships.  A sole proprietorship is a business entity that is owned by one individual and does not have any distinction between the owner of the business and the business.

Sole proprietorships do have advantages.  The biggest advantage is that there are no formal steps to set up the business.  When an individual starts doing business, the business is a sole proprietorship unless another business entity has been created.  Other advantages of a sole proprietorship include reduced cost of business, fewer regulations, and more control over the business.  With all of these advantages, the question then becomes:  Should I set up my business as a sole proprietorship?  The answer is almost always no.

The answer is no for a couple of reasons.  First, although a sole proprietorship has certain advantages, it also a major disadvantage.  In a sole proprietorship, the business owner has unlimited liability —that is, the business owner will be personally responsible for all business liabilities.

There are many different types of business entities, and it can be difficult to find the one that best fits your business needs.  Every business and business owner’s situation is unique.  If your business is currently set up as a sole proprietorship, you can meet with an experienced Arizona business attorney, such as the ones at Gunderson, Denton & Peterson, PC, who can talk with you and help you create a new business entity that will give you and your business a greater chance for success.

]]> http://blog.gundersondenton.com/2011/07/26/should-my-business-be-a-sole-proprietorship/feed/ 0 http://blog.gundersondenton.com/2011/07/11/why-do-i-need-a-buysell-agreement/?utm_source=rss&utm_medium=rss&utm_campaign=why-do-i-need-a-buysell-agreement http://blog.gundersondenton.com/2011/07/11/why-do-i-need-a-buysell-agreement/#comments Mon, 11 Jul 2011 23:10:05 +0000 admin http://blog.gundersondenton.com/?p=144 Continue reading →]]> Why do I need a Buy/Sell Agreement?

Attorney in Arizona advises on business buy sell agreements

Owning your own business can be tricky.  When partners are involved, it can become even more complicated, especially if something were to happen to one of them. An Arizona Corporate Law Attorney can be essential in setting up a corporation that adequately protects you.

A Buy/Sell Agreement is an agreement between the owners of a business that details what is to occur if there are significant changes in the life of a business partner.  Divorce, personal bankruptcy and death are only a few of the changes that can adversely impact a business partnership.  However, with a properly constructed Buy/Sell agreement, the headache of dealing with these changes can be minimized and your business can continue to thrive.

For example, you and a co-owner have been in business for years.  If your partner were to die prematurely, his widow might want to continue to take the same money out of the business that her husband had received when he was living.  If the widow is left in a difficult financial situation, she may force a sale of her inherited portion of the business in order to make ends meet, derailing your plans.  Situations such as this can be avoided by executing a Buy/Sell agreement with an Arizona Attorney.  The agreement sets forth the purchase price to be paid for the deceased partner’s part of the business, or it provides a formula for determining the price.  The agreement can have a mechanism for providing the funds needed to make the purchase.  The agreement can call for a life insurance policy to be purchased, and upon the death of a partner, the money received can be used to buy the widow’s portion of the business.   This allows you to continue your work while at the same time providing for the widow’s interests.

Because Arizona is a community property state, a partner’s divorce can lead to the division of your business between your partner and his ex-wife.  In community property states, all earnings during marriage and all property acquired with those earnings are considered community property, owned equally by husband and wife. When property is divided during a divorce, each spouse can claim a right to all community property. To avoid this prospect, a good Buy/Sell agreement may require the ex-wife of a divorced partner to sell any interest received in a divorce settlement back to the company, according to a valuation method provided in the agreement.  Our firm was recently involved in a case where a well-drafted Buy/Sell agreement prevented an ex-spouse from causing such problems, and even required the ex-spouse to accept a discounted value, paid over time, for her share of the business.

A business partner’s personal bankruptcy can throw an unexpected wrench into your company’s plans.  In some scenarios, a bankruptcy trustee can liquidate the assets of your business and take your partner’s share to satisfy his personal debts.  Even though the business is managed properly, your partner’s debts could ruin all the progress you’ve made in your business.  A well-drafted Buy/Sell agreement can ensure this doesn’t happen to you.  The agreement could require that your partner notify you of his filing for bankruptcy immediately, and give you the right to buy his portion of the business

For most companies, providing large lump cash payments to a divorced or bankrupt partner is not feasible.  In the Buy/Sell agreement, terms can be established to alleviate any cash flow worries.  An agreement can provide for a down payment followed by installments over a certain number of years with a reasonable interest rate.

The Arizona business attorneys at Gunderson Denton & Peterson, PC are experienced and available to assist in constructing Buy/Sell agreements.  Rely on their experience to help you avoid any unforeseen and potentially harmful changes to your business by creating a Buy/Sell agreement.

]]> http://blog.gundersondenton.com/2011/07/11/why-do-i-need-a-buysell-agreement/feed/ 0 http://blog.gundersondenton.com/2011/06/21/what-are-corporate-formalities/?utm_source=rss&utm_medium=rss&utm_campaign=what-are-corporate-formalities http://blog.gundersondenton.com/2011/06/21/what-are-corporate-formalities/#comments Tue, 21 Jun 2011 21:02:01 +0000 admin http://blog.gundersondenton.com/?p=139 Continue reading →]]> How to use corporate formalities to keep your corporate liability shield in place

Corporate Attorney’s Use Formalities To Keep The Corporate Liability Shield

Corporations are one of the most widely used business entities because they provide advantages, such as limited liability, to their owners. However, in order for a corporation to maintain those advantages, the owners need to follow certain corporate formalities, often with the help of corporate counsel. The courts have identified corporate formalities as actions that business owners should take in order to maintain their business’s status as a separate legal entity.

One of the corporate formalities that should be followed is for the Board of Directors to hold an annual meeting. Further board or shareholder meetings may be required when certain decisions are to be made. During these meetings, corporate minute book should be kept. This book should contain an accurate account of meetings held by the board of directors or shareholders.

To maintain the liability advantages of having a corporation, corporate funds must not be intermingled with the personal funds of the corporate owners. A corporation should have its own bank accounts separate from those of the directors or shareholders, and records should be kept showing where the money is and how it is used. If funds are intermingled, a court may find that the business is not a corporation, but simply an alter-ego of the business owner. That means that the business owner could be held personally liable for the corporation’s debts.
In order for a business to maintain the privilege of being a corporation, these corporate formalities, and others, must be followed. Practiced corporate lawyers at Gunderson, Denton & Peterson, PC are experienced in creating corporations and can help you establish and following the appropriate procedures to ensure that you and your business will be protected.

The corporate attorneys at Gunderson, Denton & Peterson, P.C. are experienced with matters relating to General Business and corporate formalities.

]]> http://blog.gundersondenton.com/2011/06/21/what-are-corporate-formalities/feed/ 0 http://blog.gundersondenton.com/2011/05/31/employee-or-independent-contractor-why-does-it-matter/?utm_source=rss&utm_medium=rss&utm_campaign=employee-or-independent-contractor-why-does-it-matter http://blog.gundersondenton.com/2011/05/31/employee-or-independent-contractor-why-does-it-matter/#comments Tue, 31 May 2011 21:31:34 +0000 admin http://blog.gundersondenton.com/?p=134 Continue reading →]]> Arizona Employment Attorney Discusses Employee Classification

Classifying your workers to avoid future liabilities:

The differences between an employee and an independent contractor can have a great impact on both the worker and employer. For example, an employer generally must withhold federal, state, and FICA taxes from an employee’s paycheck and pay an unemployment tax on the employee’s wages. Employees must be paid overtime and are subject to minimum wage calculations, while independent contractors are not. Furthermore, certain state and federal employee regulations apply to businesses only when they have a certain number of employees, and independent contractors are not included in the number.

For this reason, care should be taken, and an Arizona employment attorney consulted in ensuring that a worker is correctly classified as an employee or independent contractor. Employers who misclassify workers as independent contractors can be responsible for past employment taxes and may even have to pay penalties. It is also important for an employer to have a correct understanding of how many employees there are so that they knows which employment regulations are applicable.

It can sometimes be difficult to determine the classification of an employee. The general rule is that the more control the employer has over the worker, the greater the chance that the worker is an employee. Examples of questions that can be asked are:
• Does the worker supplies his or her own equipment, materials and tools?
• Does the worker control the hours of employment?
• Is the work is temporary or permanent?
• What is the degree of control over work and who exercises that control?
• Is the worker an integral part of the business?

Many employers assume that if a worker signs a contract saying that he or she is an independent contractor, then that settles the matter. It does not! The question of whether a worker is an employee or an independent contractor can only be answered after looking at the specific facts in each set of circumstances. The Arizona employment attorneys at Gunderson, Denton & Peterson, PC have experience in a wide variety of situations related to employees and independent contractors.

]]> http://blog.gundersondenton.com/2011/05/31/employee-or-independent-contractor-why-does-it-matter/feed/ 0 http://blog.gundersondenton.com/2011/05/10/when-can-the-corporate-veil-be-pierced/?utm_source=rss&utm_medium=rss&utm_campaign=when-can-the-corporate-veil-be-pierced http://blog.gundersondenton.com/2011/05/10/when-can-the-corporate-veil-be-pierced/#comments Tue, 10 May 2011 22:37:12 +0000 admin http://blog.gundersondenton.com/?p=127 Continue reading →]]> The Legal Defenses Of Businesses

How to make sure your corporation gives you liability protection

Piercing The Corporate Veil

One of the advantages of a corporation is that the owners have limited liability. A corporation is a distinct legal entity, separate from its owners. The separation between the owners and the corporation is sometimes called the “corporate veil.” Because of the corporate veil, owners in the corporation are not personally liable for the financial obligations of the corporation, and the most that an owner can lose is the money that was invested in the corporation.

However, corporation owners must be careful. If not, there may be times when the corporate veil can be “pierced,” causing the owner of a corporation to become personally liable for corporate liabilities. For example, if owners do not follow corporate formalities, there is a greater chance that the corporate veil will be pierced and the owners will be exposed to personal liability for corporate obligations. Corporate formalities that must be followed include Board of Director meetings, votes on major issues, keeping of corporate minutes, and filing annual reports. Commingling corporate and personal funds will also put the corporate veil at risk. Consulting a good Mesa Arizona business attorney will reveal that if money flows back and forth between the owner and the corporation, those cash flows must be documented and justifiable. Using the corporate account to pay personal bills, for example, is a dangerous action that could be seen as a sign that the corporation and owner are one. If the corporation and the owner are found to be one, the owner can be liable for corporate liabilities.

There are additional ways in which the corporate veil can be pierced. Owners of a corporation should take precautions to ensure that they are not personally at risk for the liabilities of the corporation. For business owners, an experienced business attorney can be consulted to assess the potential risks and determine what steps need to be taken to guarantee that the corporate veil is not pierced. For those who are contracting with a business, or are owed money by a defunct business, an experienced business attorney can advise on strategies for possibly piercing the corporate veil and reaching the owner’s assets.

]]> http://blog.gundersondenton.com/2011/05/10/when-can-the-corporate-veil-be-pierced/feed/ 0 http://blog.gundersondenton.com/2011/03/30/how-do-i-buy-an-existing-business/?utm_source=rss&utm_medium=rss&utm_campaign=how-do-i-buy-an-existing-business http://blog.gundersondenton.com/2011/03/30/how-do-i-buy-an-existing-business/#comments Wed, 30 Mar 2011 15:37:16 +0000 admin http://blog.gundersondenton.com/?p=123 Continue reading →]]> Crafting a sales agreement that will maximize your return on investment and limit liabilities

Large risks are involved when starting a business.  According to the Small Business Administration, only half of new businesses survive past five years.  One way to reduce the risk of being a business owner is to buy an existing business with proven cash flow or profits.  Although buying an existing business reduces risk, it comes with a heavy price.  To protect the investment, a purchaser needs to make sure that he receives what he bargained for. This can be accomplished by ensuring that a comprehensive sales agreement is created.

When buying a business there are many issues that need to be addressed.  An attorney can assist you by asking the key questions and focusing on the areas that will have the greatest impact on the business’s future success.  For example, what parts of the business should you buy?  Is it better to buy the existing business entity or should a new entity be formed to only purchase the assets?  The manner in which the business is purchased can have a great impact on a business’s future liabilities. The answer to these questions will depend on the specific circumstances surrounding each business purchase.  And how you answer can make a huge difference as to your taxes, profits, and potential problems down the line.

When buying a business, there is frequently a concern that the previous owner will form a new competing business.  To solve this potential problem, an attorney can create a Covenant not to Compete.  This covenant should be an essential part of the sales agreement as it will prevent the previous owner from becoming a competitor for a determined amount of time, increasing your chances for success.

Buying a business without a comprehensive sales agreement exposes you and your business to financial risk.  With the help of an experienced attorney, you can limit your risks and increase your potential earnings by having a favorable sales agreement that addresses the key issues.

]]> http://blog.gundersondenton.com/2011/03/30/how-do-i-buy-an-existing-business/feed/ 0 http://blog.gundersondenton.com/2011/03/15/why-should-i-create-a-partnership-agreement/?utm_source=rss&utm_medium=rss&utm_campaign=why-should-i-create-a-partnership-agreement http://blog.gundersondenton.com/2011/03/15/why-should-i-create-a-partnership-agreement/#comments Tue, 15 Mar 2011 20:50:51 +0000 admin http://blog.gundersondenton.com/2011/03/15/why-should-i-create-a-partnership-agreement/ Continue reading →]]> Why Should I Create a Partnership Agreement?

Avoiding partnership pitfalls with a Mesa Arizona Attorney for partnerships

Many partners go into business without working out the details of their business relationship. Some partners do discuss the details of their business, but never create a written agreement. Failure to create a written document or agree to terms can lead to unnecessary conflicts and confusion. It can even lead to the addition of new terms that no partner intended. Partnership agreements are crucial.

Many states have adopted the Revised Uniform Partnership Act (RUPA). One of RUPA’s purposes is to fill in the missing terms of a partnership agreement with generic terms found within RUPA. This occurs when a term in a partnership agreement has not been agreed to and is under dispute. For example, if the voting method is disputed and is not addressed in the partnership agreement, the court will use the RUPA term that says each partner gets one vote, regardless of what percentage of the business that partner owns. Terms added by the court may not be what any partner intended. To prevent the addition of unwanted terms to an agreement, it is important that the partnership agreement cover all of the significant issues. Forming a comprehensive partnership agreement will create certainty and improve the business’s chances for success.

To minimize the risk of confusion and conflict among partners, an attorney can assist you in forming your partnership and drafting a partnership agreement. The attorney can represent the partnership itself, or all the partners, or one partner, depending on what makes the most sense. An attorney will discuss with you your relationship with your partners and assist in the creation of a written partnership agreement that addresses the specific needs of your business and partnership. A well-written partnership agreement will give a partnership a strong foundation.

]]> http://blog.gundersondenton.com/2011/03/15/why-should-i-create-a-partnership-agreement/feed/ 0 http://blog.gundersondenton.com/2011/03/03/how-can-i-make-sure-my-arizona-business-gets-paid/?utm_source=rss&utm_medium=rss&utm_campaign=how-can-i-make-sure-my-arizona-business-gets-paid http://blog.gundersondenton.com/2011/03/03/how-can-i-make-sure-my-arizona-business-gets-paid/#comments Thu, 03 Mar 2011 23:39:15 +0000 admin http://blog.gundersondenton.com/?p=117 Continue reading →]]> Getting Your Arizona Business Paid

Making Sure Your Corporation Is Legally Protected

Using promissory notes and security agreements to turn your receivables into cash

Cash is king.  A business will not survive if it is not able to turn its account receivables or loans into cash.  There are certain actions that businesses should take to increase the chances of collecting on a loan or receivable.  One of these actions is to use a well-written promissory note.

A promissory note is a written contract in which one party makes an unconditional promise to pay another party a specified amount of money.  A promissory note should be used in any transaction that results in another party owing your business money.  A party’s refusal to agree to a promissory note should be cause for concern and usually is a sign of future collection problems.  Some basics that should be included in the note are the amount of the loan, the date by which it should be paid back, and the interest rate.

To further increase the chances of being paid, a promissory note can be secured with some form of collateral.  Under a security agreement, if a party fails to repay the loan, ownership of the collateral is transferred to your business to mitigate the damages of the failed payment.  This transfer process can be complicated, so security agreements should be carefully drafted to ensure that they have the desired effect.

You should use an experienced Arizona attorney specializing in business law to identify the needs of your business and advise you as to whether a promissory note or security agreement is appropriate in your situation.  An attorney can also create a promissory note and/or security agreement that has the essential elements and is enforceable in Arizona.

]]> http://blog.gundersondenton.com/2011/03/03/how-can-i-make-sure-my-arizona-business-gets-paid/feed/ 0 http://blog.gundersondenton.com/2011/02/25/how-do-i-avoid-a-partnership-dispute/?utm_source=rss&utm_medium=rss&utm_campaign=how-do-i-avoid-a-partnership-dispute http://blog.gundersondenton.com/2011/02/25/how-do-i-avoid-a-partnership-dispute/#comments Fri, 25 Feb 2011 16:22:44 +0000 admin http://blog.gundersondenton.com/?p=109 Continue reading →]]> Steps you can take to make sure a partnership dispute does not wreck your business:

At times, unforeseen disputes arise between partners.  Partnership disputes can occur because of financial difficulties, poorly written partnership agreements, or different ideas for the future of the company.  Other times, the dispute may involve wrongdoing by one of the partners, such as in cases of embezzlement or a breach of fiduciary duty.  Whatever the reason for the dispute, it is in the best interests of the business and the owners to resolve the dispute quickly.

Partnership disputes often deal with complex issues that will greatly impact the future of the business.  If you are not able to resolve a partnership dispute, you should find a competent attorney to protect your interests.  Ideally, the dispute should be resolved through negotiations.  However, sometimes resolution of the dispute will take more than negotiating – it may require litigation.  Throughout the process, your attorney can investigate the issues and recommend appropriate courses of action.

Sometimes a partnership dispute will result in the dissolution of the business.  Dissolution requires observance of certain procedures, and it is crucial to follow them.  An attorney can help you follow the proper procedures and ensure that at the dissolution of the business, the assets and liabilities are fairly and properly distributed among the parties.

Creating a well-written partnership agreement minimizes partnership disputes.  In the early days of a partnership, when everything seems to be going well, partners sometimes do not want to spend the time, effort and money to have a partnership agreement drafted.  But the money is well-spent as insurance against future partnership disputes that can be disastrous.  If you do not have a partnership agreement, or if your agreement is poorly written, you are at risk.

]]> http://blog.gundersondenton.com/2011/02/25/how-do-i-avoid-a-partnership-dispute/feed/ 0 http://blog.gundersondenton.com/2011/02/09/longtime-mesa-attorney-wayne-l-gardner-is-joining-the-law-firm-gunderson-denton-peterson-p-c/?utm_source=rss&utm_medium=rss&utm_campaign=longtime-mesa-attorney-wayne-l-gardner-is-joining-the-law-firm-gunderson-denton-peterson-p-c http://blog.gundersondenton.com/2011/02/09/longtime-mesa-attorney-wayne-l-gardner-is-joining-the-law-firm-gunderson-denton-peterson-p-c/#comments Wed, 09 Feb 2011 20:47:32 +0000 admin http://blog.gundersondenton.com/?p=104 Continue reading →]]> Mesa Arizona Veteran Attorney Joins Firm

Mesa AZ Lawyer Wayne Gardner Joins GDP

 



In addition to his other areas of legal practices, Wayne Gardner, a Mesa Arizona Attorney, has set up websites to focus on his service as an:

• Arizona Landlord Attorney
• Mesa AZ Real Estate Attorney
• Estate Planning Attorney in Mesa
• Mesa Business Law Attorney

Starting January 1, 2011, Wayne will bring his expertise in real estate matters, commercial transactions and complex business transactions to GDP.  Wayne has been General Counsel for large companies and Managing Partner for Jackson White Gardner.  A former Arizona State Legislator and President of the Mesa School Board, Wayne also spent nearly six years abroad serving his church as President of the Santiago East Chile Mission and Mexico Cuernavaca Mission.

]]> http://blog.gundersondenton.com/2011/02/09/longtime-mesa-attorney-wayne-l-gardner-is-joining-the-law-firm-gunderson-denton-peterson-p-c/feed/ 0 http://blog.gundersondenton.com/2011/01/28/how-do-i-dissolve-my-business/?utm_source=rss&utm_medium=rss&utm_campaign=how-do-i-dissolve-my-business http://blog.gundersondenton.com/2011/01/28/how-do-i-dissolve-my-business/#comments Fri, 28 Jan 2011 16:47:11 +0000 admin http://blog.gundersondenton.com/?p=97 Continue reading →]]> Dissolving A Business

When A Corporation Ceases To Operate

Taking the steps necessary to dissolve your company and avoid future liability

One of the advantages of an LLC or corporation is that it can exist in perpetuity.  However, this can result in a situation in which even after all business activity ends, the business entity still exists unless it is properly dissolved.  Failure to dissolve the business entity when business operations come to an end can expose the business or its owners to unnecessary future liability.  When the decision is made to close a business, specific steps should be taken so that the business entity is legally dissolved.

The decision to dissolve the business needs to be made by the appropriate business owners in consultation with a business law lawyer.  The bylaws of a corporation or the operating agreement of an LLC will dictate the internal procedures needed to begin the process and will specify who is required to make the decision to dissolve the business.  Once the ownership has approved dissolution, there is paperwork to be prepared and filed with the necessary government offices.  Additionally, all debts will need to be satisfied with company creditors and any ongoing litigation will need to be settled or resolved.  After all of the liabilities are taken care of, the company’s assets should be liquidated and distributed according to the bylaws or operating agreement.  Under some circumstances, a company will be considered to exist—even if it has been dissolved—for purposes of wrapping up its affairs and paying its debts.  Just dissolving a company will not make its debts go away, and may in fact worsen the situation by imposing liability on the owners.

The above items are some of the basic tasks that need to be completed to dissolve a business.  The dissolution of each business will have unique circumstances.  However, going through the proper process will minimize future liabilities.

]]> http://blog.gundersondenton.com/2011/01/28/how-do-i-dissolve-my-business/feed/ 0 http://blog.gundersondenton.com/2010/12/30/is-your-non-compete-agreement-enforceable/?utm_source=rss&utm_medium=rss&utm_campaign=is-your-non-compete-agreement-enforceable http://blog.gundersondenton.com/2010/12/30/is-your-non-compete-agreement-enforceable/#comments Thu, 30 Dec 2010 21:02:15 +0000 admin http://blog.gundersondenton.com/2010/12/30/is-your-non-compete-agreement-enforceable/ Continue reading →]]> Mesa Business Attorney discusses Enforcing Non-compete Ageements

How An Attorney Can Help Enforce Agreements, Including Non-compete Clauses

Factors in drafting (or fighting about) a non-compete agreement in Arizona

Non-compete agreements can be used to protect a business’s most important asset, its customers. These agreements are frequently given as a condition of employment and can restrict future competition from its employees. Non-compete agreements are governed by the states and for this reason there will be variations in the law depending on where the business is done. However, non-compete agreements are enforceable in most states, including Arizona.
If a court believes that an agreement is unreasonable or over-burdensome it will be unenforceable. To make an agreement reasonable, restrictions to competition should be limited by time, scope, and geography. Every one of these restrictions must be reasonable. If there is any restriction in the agreement that is unreasonable, the entire agreement will probably be unenforceable. As a practical matter, this means that the geographic area can only be as large as necessary to protect the employer’s legitimate interests; the length of the agreement can only be as long as necessary to protect the employer’s legitimate interests; and the scope of activities prevented can only include those necessary to protect the employer’s legitimate interests. Some shorthand examples: If your company only does business in Maricopa County, then the agreement should not limit competition outside Maricopa County. If you could train a replacement for the departing employee and bring them up to speed in six months, then the agreement shouldn’t be longer than six months. And if your company works in the x-ray technology area, then the type of activity restricted should probably be related to x-ray technology. Each of these examples is just an example.

The validity of a non-compete agreement will depend on the unique circumstances of each situation. Reasonable restraints in one situation can be found to be excessive in another. Attorneys at Gunderson, Denton & Peterson, PC have drafted non-compete agreements, have consulted with clients about the enforceability of non-compete agreements, and have litigated on both sides (employer and employee) of lawsuits regarding non-compete agreements.

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