Agreements have a number of benefits including:
Providing the employee with the basic terms of his/her employment. For example, among other things, the employment agreement will state basic duties, salary, and benefits.
Protecting the employer. It will clarify the employer’s expectations for the employee and grounds for termination. It prevents an employee from subsequently alleging that there were additional verbal promises of increases in salary, promotion, or other changes in responsibilities.
Lawsuits in the work setting are now a major concern for employers. Recently, there has been a great increase in the amount of lawsuits based on sexual harassment, discrimination, and wrongful termination. Such lawsuits can put a tremendous financial burden on a business owner.
Businesses can protect themselves against damages and liability against employee lawsuits by providing clear, written policies covering the rights and responsibilities of their employees through an employee handbook.
Having such information in a clear printed format for your employees gives them in writing, the company policies, requirements, and what is expected of them. This can avert possible future misunderstandings an employee may have about their job or employer. Although it cannot provide for every situation that might arise, providing an employee manual or handbook can reduce your liability against lawsuits and at the same time provide important information to your employees.
Business owners take the approach of having a work force only when and if they need it use independent contractors.
With independent contractors, it’s possible to have personnel to work on (or off) your premises without becoming subject to payroll taxes or to many state and federal employment laws. Traditionally the government has not favored treating personell as independent contractors, so there are several complex federal tests involved to make sure that the person actually qualifies as an independent contractor.
If your worker is classified as an “employee,” rather than an “independent contractor,” you will be held liable for extra taxes, recordkeeping, and safety requirements. The right contract can prevent this from happening by showing the validity of the independent contractor relationship.
To validly complete the formation of the LLC, members must enter into a written Operating Agreement which sets out rules for the ownership and operation of the business (much like a partnership agreement or stockholder’s agreement). An operating agreement usually includes:
An operating agreement is necessary to:
Help ensure that courts will respect your personal liability protection by showing that you have been diligent about organizing your LLC. Failure to draft an operating agreement could be used by a plaintiff to pierce the veil of limited liability. This could lead to unlimited, personal liability for the business’ debts.
Govern how profits will be split, how major business decisions will be made, and dictate procedures for handling the addition and departure of members.
Help to prevent disputes among members and provide methods to resolve disputes without the need for costly and emotionally draining litigation.
Shareholder Buy/Sell Agreement
If there are two or more shareholders in a corporation, there must be a shareholder agreement which provides direction for a situation in which a shareholder dies, divorces, or becomes mentally or physically incapacitated. For example, what happens if a shareholder dies? What happens to the shareholder’s shares?
If the shareholder was married, the shares would go to the spouse. What if the spouse then decides he/she wants to shut the corporation down, or sell it? The remaining shareholders are at the mercy of the spouse and could have part of their corporation sold to a complete stranger, or worse have their entire business closed down.
A shareholder agreement also instructs how the owners are going to terminate their business relationship in the event that they decide they do not want to, or cannot, go on working together. Without such an agreement, the parties are literally at the mercy of the good or bad intentions of one another, and there is virtually no way for the business to wind up if one party does not agree with the other on virtually any issue.
A shareholder agreement addresses all of these issues and many more.
Please contact us for more information.