by Bill Miller | Jun 28, 2018 | Business
Darrell K. owned a company that manufactured products for outdoor hobbies. As his business grew, he expanded his product line. In the coming year, he plans to hire a marketing director, a new business manager, and several scientists to research and test new product ideas. Darrell realized his company creates and maintains a lot of confidential information. He wondered if he needs to protect that information. His attorney suggested he draw up a non-disclosure agreement.
What is a Non-Disclosure Agreement?
This agreement, sometimes referred to as an “NDA,” is a legally binding contract. The parties to the contract agree to keep certain information secret, disclosing it only if given permission.
There are two distinct types of non-disclosure agreements:
- Unilateral NDAs are one-way agreements used when one party discloses secrets to another party. For example, Darrell has a meeting with potential investors and discussed new products in development. An NDA should protect his company’s trade secrets from misuse.
- Bilateral NDAS are mutual agreements to protect information that both parties have presented. As an example, Darrell meets with an entrepreneur interested in merging his company with Darrell’s. Both parties divulge information about their business operations. A bilateral NDA might be signed by both parties, agreeing to keep the other party’s information secret.
Non-Disclosure agreements usually state what information is to be protected and for what period of time. The parties typically add other provisions as needed.
When Are Non-Disclosure Agreements Used?
Sometimes employers ask employees with access to confidential information to sign non-disclosure agreements. Non-disclosures may prevent leaks about new products or marketing campaigns. In Darrell’s case, he asks his marketing director and scientists to sign NDAs. If these key employees left the company, the disclosure of inside information like marketing strategies and research could really hurt Darrell’s company.
Businesses often disclose sensitive information to banks when asking for loans. The same holds true when seeking new investors – data may be offered to help potential investors make informed decisions. For example, Darrell needs more capital for product development and asks his bank for a loan. The bank probably won’t give Darrell the money he needs unless they know his intentions.
Are Your Company Trade Secrets Safe?
The attorneys at Miller Estate and Elder Law assist clients with their business concerns, from forming the business to preparing contracts.
For a free consultation with an experienced Alabama attorney, contact us at 256-251-2137 or use our convenient Contact Form. We have offices in Anniston and Birmingham and serve clients in Gadsden, Hoover, Talladega, Vestavia Hills, and surrounding areas.
by Bill Miller | Jun 7, 2018 | Business
There are different types of business entities, each with their own disadvantages and advantages. A limited liability company might be the best structure for some companies, while others benefit more from a partnership. The same holds true for incorporation your business: is it the right move for your company at this time? Let’s take a look at some of the advantages and disadvantages of incorporating a business.
Incorporating Your Business Might Be a Good Thing.
Corporations are considered to be an entity, separate from the shareholders. Corporations can be sued, can sue others, can enter into agreements. There are some other distinct advantages to incorporating a business:
Longevity. If one shareholder leaves or sells out, the corporation still stands. The corporation does not end when an owner dies, like most sole proprietorships.
Liability. Shareholders enjoy limited liability, especially compared to other business types of business entities. However, officers of a corporation may be held personally liable for actions taken as an officer.
Taxes. Some corporations may meet the requirements to elect S Corporation status. The corporation, then, would be taxed like a partnership. This may result in lower taxes for the owners.
Residency. Unlike some other states, Alabama does not have a residency requirement. An entrepreneur living in Michigan, then, could incorporate a business in Alabama.
But There Are Some Disadvantages.
Of course, the corporate structure is not perfect for everyone:
- Start Up Costs. Forming a corporation is more expensive and time consuming than forming other types of business organizations.
- More paperwork. More documents are required to start a corporation compared to other entities. In addition, corporations face more regulations that require them to file paperwork.
- Taxes. An incorporation may result in higher taxes. Some income is taxed twice, once for the corporation and once for the shareholder.
We Can Help with Business Concerns.
The attorneys at Miller Estate and Elder Law know how to help you make informed decisions about your business. For a free consultation, contact us at 256-251-2137 or use our convenient Contact Form. Our offices are located in Anniston and Birmingham. We also assist many clients in the Gadsden, Hoover, Talladega, Vestavia Hills, and surrounding areas.
by Bill Miller | May 28, 2018 | Business, Estate Planning
When someone starts a business, the last thing they want to think about is death. A close second? Incapacity. However, planning for these events is critical to a company’s success. If you are a business owner, you need to include your business interest in your estate plan.
What is “business succession?”
It’s a way of ensuring that a business will continue operating if the owner (or one of the owners) dies or becomes unable to participate for some reason. It also may protect a company when an owner retires or is in the midst of divorce negotiations.
How can I include a business in my estate plan?
First, if you have partners, you can put a buy-sell agreement in place. This document spells out how the business will be handled if you can no longer participate in the company. For example, your buy-sell may provide for an owner’s interest to be bought out by the other partner or by the company itself. Having a good buy-sell in place is no good, however, if there’s no capital to pay for the buy-out. Business owners may use insurance policies, sinking funds, payment plans, or personal funds to purchase another owner’s interest.
Your estate plans must be synchronized with your business succession interests. Does your durable power of attorney address your business interests? Your power of attorney can be broad or limited. Does your agent have the power to make decisions about your business? More importantly, does your agent have the ability to make those decisions?
Does your Will leave your business interests to family members who have little interest in the business? Your loved ones may not be the best people to continue operating the company.
What can happen if I don’t have a business succession plan?
Without the right planning, a business could be in real trouble.
Let’s look at Dan and Bob’s Construction Company. Dan and Bob started their company from nothing. After 30 years, business was thriving and expanding every year. Then Bob suffered a major stroke, something the average 50-year old doesn’t expect to happen. Although Dan and Bob were astute businessmen when it came to building houses, they had failed to put together a business succession plan.
The company was thrown into confusion because Dan did not have the authority to make financial decisions by himself. One of Bob’s sons tried to take his place in the business but had no interests in business of any kind. Bob had not executed a durable power of attorney that would allow anyone to make financial decisions for him, so his wife had to petition for a guardianship/conservatorship. The company suffered cost overruns and angry clients because they fell behind in honoring their contracts.
A buy-sell agreement would have allowed the company to smoothly transition. Bob’s partnership interest could have been bought out by Dan or by the company itself.
Don’t Have an Estate Plan Yet?
The attorneys at Miller Estate and Elder Law help their clients develop estate plans that cover all their assets, including business interests.
For a free consultation with an experienced Alabama attorney, contact us at 256-251-2137 or use our convenient Contact Form. We have offices in Anniston and Birmingham and serve clients in Gadsden, Hoover, Talladega, Vestavia Hills, and surrounding areas.
