Protecting Your Business: How a Frederick, MD Attorney Can Help You Navigate Legal Challenges
You have invested enormous amounts of time and energy, not to mention money, into your business. All that hard work and effort could come to naught if you have not protected your business against legal challenges. As a business owner, you cannot predict every possible legal issue that might occur, but good planning can prevent worst-case scenarios. That is why it is critical to obtain counsel to help protect various facets of your business and navigate any legal challenges.
When seeking trusted legal guidance for your business, you need the services of experienced business law attorneys at Lusk Law.
A business law attorney can help you determine the best structure for your particular business. You must choose your business structure prior to registering with the state of Maryland. Your lawyer will explain how a business structure affects your taxes, required paperwork, personal liability, and your ability to raise money for your company. Those conducting business internationally need an attorney’s expertise for the tax treatment of their enterprise.
Business Structure Types
Sole proprietor–With a sole proprietorship, your business assets, and liabilities are not separated from your personal assets and liabilities. While easy to form, they are best for small, lower-risk businesses, the classic one-person or “mom and pop” operation. It is often difficult to obtain financing for sole proprietorships.
Partnerships–Consisting of two or more parties, partnerships are unincorporated business structures agreed to by the parties in writing. This structure does not offer liability protection. There are other partnership structures that can offer liability protection.
LLC –A Limited Liability Corporation should protect your personal assets, such as your house, in the event of a lawsuit or bankruptcy. Owners of an LLC, known as members, are considered a partnership by the IRS for income tax purposes unless the LLC elects to be treated as a corporation. Maryland is among the states permitting the formation of single-person LLCs, which are entities differing from their owners. By filing Form 8832, a single-person LLC can elect to be considered a corporation for tax purposes.
Because LLC members are considered self-employed, they must pay self-employment tax contributions toward Medicare and Social Security.
Limited Partnership–Partnerships may prove a good choice for multiple-owner businesses or professional groups, such as accountants. One general partner has unlimited liability, while all other partners have limited liability. The latter also have less control over the business.
Limited Liability–A limited liability partnership is similar to a limited partnership, but every owner has limited liability. They are not responsible for the actions of other partners.
C Corp–A corporation provides the strongest protection against personal liability. It is the corporation held liable legally, not the owners. Corporations have an edge in financing because they can raise capital via the sale of stock. It is a good structure for medium-sized businesses or those considered high-risk.
Disadvantages include a higher formation cost and the potential for being taxed twice. This involves taxes on profits as well as on dividends issued to shareholders.
S Corp–This special type of corporation should avoid the double taxation possible with a C Corp. As per the IRS, S Corps elect to pass corporate income, losses, deductions, and credits through to their shareholders for federal tax purposes, thus avoiding corporate income double taxation.
Licenses and Permits
A business attorney will advise you on the proper licenses and permits you need to operate your business. They can also help you obtain the necessary tax identification number.
If a federal agency regulates your business activities, you must obtain a federal license or permit. For instance, if your business involves manufacturing, importing, or selling alcoholic beverages, you will need a permit from the federal Alcohol, Tobacco, Tax, and Trade Bureau, part of the U.S. Treasury Department. You will also need a license from your local Board of License Commissioners.
No matter the nature of your enterprise, you need to purchase commercial liability insurance. While employees injured while on the job are covered by your workers’ compensation policy, any third party visiting your premises could suffer a serious slip and fall injury.
In Maryland, any business with at least one employee must carry workers’ compensation insurance.
Other types of liability insurance that can protect your business include:
Errors and omissions insurance– Also known as professional liability insurance, this coverage provides protection for the company and the professional if errors occur and a client lawsuit results.
Directors’ and officers’ insurance– This policy protects directors and officers of companies against personal losses should they be sued due to their company roles. This insurance may cover legal fees and other expenses related to lawsuits.
Business disputes arise, and without a strong contract in place, your business can suffer. A business lawyer will negotiate, review and draft contracts protecting your interests while addressing all pertinent issues.
Maryland is an at-will state when it comes to employment. Employers can fire an employee for virtually any reason if there is no contract or legal agreement to the contrary. The right employment or non-compete agreement constructed by your business lawyer can protect your business.
Protecting your intellectual property via patents, trademarks, or copyright is imperative. Your business attorney can help you register any of these assets to obtain the strongest protection.
While huge companies such as Dole, Marriott International, and eBay–to name just a few–have been well-publicized victims of cyber attacks, small businesses are three times more likely to be targeted. Even worse, two-thirds of these smaller enterprises will end up failing within six months due to these attacks, according to Cybercrime Magazine.
The National Cybersecurity Alliance recommends taking the following steps to protect your business from cyber criminals:
Require strong, long, complex passwords to make it harder for criminals to breach your system.
Enable multifactor identification–Require secondary methods of employee identification to keep cyber criminals out of important accounts.
Make employee education a priority–Employee error accounts for the majority of cyber attacks, so regular cybersecurity training is a must.
Consider cyber insurance–Because a cybersecurity attack can destroy your business, consider purchasing cyber insurance help recover costs from ransomware attacks or other types of data breaches.
In addition, it is vital to keep your security software up to date. Install key software updates as soon as they become available.
There are two inevitable things in life, and one of them is taxes. Avoid issues with the IRS or the Comptroller of Maryland by keeping good expense records. While Maryland’s business taxes are higher than many other states, your attorney can ensure your business pays its fair share of taxes but not more than necessary.
Contact a Frederick, MD, Business Law Attorney
At Lusk Law, we are available to discuss any business concern or question. Call today to schedule a consultation.
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