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A business partnership is one of the most important professional relationships you may ever have. Unfortunately, many business partnerships go the way of romantic relationships and terminate in acrimonious, sometimes traumatic breakups. Just like people don’t go into a marriage expecting to get divorced, people don’t start a business partnership with the expectation that they will have to dissolve the partnership. There are certain issues that you can try to avoid that might put unnecessary strain on your business partnership. Disagreements about the responsibilities of each partner Before either of you commit your time, money or other resources to a business, you need to have a written partnership contract. Your contract should outline what each of you will do or provide for the company. If you don’t actually discuss and spell out the responsibilities and expectations of each partner, you could easily clash over unmet expectations and the resulting sense of disappointment they create. The more thorough and honest you are while drafting a partnership agreement, the easier it will be for you to know what to expect and how to resolve conflicts in the future. One business partner engaging in fraud or breaching the contract One of the most common reasons for people to get into contentious partnership disputes relates to the behavior of business partners after they sign an agreement. When one business partner doesn’t fulfill their obligations, resentment can grow to a point where it impedes the relationship. It may also be possible that your business partner engages in some kind of fraud that affects you, the company or its customers. They may have lied to you about what they intended to contribute to the company or their employment history and skills. These actions could create serious legal risks. Failing to talk about the end of the partnership at the start If you only talk about the near future when discussing your business with your partner, you may eventually disagree about the necessary steps for your company. For example, if you intend to retire by the age of 65 and will want to have your partner buy you out or to sell the company at that point, it’s important to disclose that expectation early in the relationship. Otherwise, you could wind up battling each other and depleting your company’s assets. Partnership disputes can sometimes get resolved amicably. Other times, they may require the dissolution of the partnership or even the sale of the business. Planning ahead to avoid partnership disputes will protect the investment you make in your new company.

A business partnership is one of the most important professional relationships you may ever have. Unfortunately, many business partnerships go the way of romantic relationships and terminate in acrimonious, sometimes traumatic breakups. Just like people don’t go into a marriage expecting to get divorced, people don’t start a business partnership with the expectation that they will have to dissolve the partnership. There are certain issues that you can try to avoid that might put unnecessary strain on your business partnership. Disagreements about the responsibilities of each partner Before either of you commit your time, money or other resources to a business, you need to have a written partnership contract. Your contract should outline what each of you will do or provide for the company. If you don’t actually discuss and spell out the responsibilities and expectations of each partner, you could easily clash over unmet expectations and the resulting sense of disappointment they create. The more thorough and honest you are while drafting a partnership agreement, the easier it will be for you to know what to expect and how to resolve conflicts in the future. One business partner engaging in fraud or breaching the contract One of the most common reasons for people to get into contentious partnership disputes relates to the behavior of business partners after they sign an agreement. When one business partner doesn’t fulfill their obligations, resentment can grow to a point where it impedes the relationship. It may also be possible that your business partner engages in some kind of fraud that affects you, the company or its customers. They may have lied to you about what they intended to contribute to the company or their employment history and skills. These actions could create serious legal risks. Failing to talk about the end of the partnership at the start If you only talk about the near future when discussing your business with your partner, you may eventually disagree about the necessary steps for your company. For example, if you intend to retire by the age of 65 and will want to have your partner buy you out or to sell the company at that point, it’s important to disclose that expectation early in the relationship. Otherwise, you could wind up battling each other and depleting your company’s assets. Partnership disputes can sometimes get resolved amicably. Other times, they may require the dissolution of the partnership or even the sale of the business. Planning ahead to avoid partnership disputes will protect the investment you make in your new company.

Every professional needs to consider the risks of doing business, including facing claims about substandard services from clients. Insurance coverage is one of the most important means of mitigating professional liability. Skilled, licensed professionals often carry specialized insurance coverage. For example, real estate agents may carry errors and omissions coverage in case they accidentally make mistakes on paperwork or give their clients improper advice. Professional liability insurance can protect individuals from lawsuits by providing direct compensation to clients affected by mistakes that they have made. Coverage is critical to avoiding litigation and ensuring personal financial liability. How much professional liability coverage do people running their own practices or small businesses generally need to carry? CLIENT DEMANDS OFTEN SET THE STANDARD When a professional specifically partners with businesses, they may find that the companies that hire them have a standard expectation for insurance coverage. Frequently, those contracting with businesses need to have proof of at least a million dollars in professional liability coverage. Maintaining that amount of coverage can indemnify the professional in the vast majority of cases where clients might make a claim. It can also help make them eligible for lucrative contracts with successful businesses. POTENTIAL LOSSES CAN INFLUENCE COVERAGE AS WELL The nature of the services that a professional provides can influence how much coverage might be necessary for their protection. Architects who could face multiple claims from different parties if an error results in an unsafe edifice might need to carry more than a million dollars in coverage. Their policy may need to cover the losses suffered by the property owner and any injuries people incurred when an issue arose. The more people that a single mistake could impact and the greater the likelihood of a professional’s mistakes causing substantial financial setbacks, permanent injury or death, the more important generous amounts of coverage become. Professionals may need to sit down with someone who understands liability rules and insurance regulations to decide what amount of coverage is necessary for optimal protection. Purchasing adequate insurance coverage is a key step toward limiting personal and professional liability. Professional liability insurance can help protect people against mistakes or oversights that could not only affect their careers but also their personal finances.

Every professional needs to consider the risks of doing business, including facing claims about substandard services from clients. Insurance coverage is one of the most important means of mitigating professional liability. Skilled, licensed professionals often carry specialized insurance coverage. For example, real estate agents may carry errors and omissions coverage in case they accidentally make mistakes on paperwork or give their clients improper advice. Professional liability insurance can protect individuals from lawsuits by providing direct compensation to clients affected by mistakes that they have made. Coverage is critical to avoiding litigation and ensuring personal financial liability. How much professional liability coverage do people running their own practices or small businesses generally need to carry? CLIENT DEMANDS OFTEN SET THE STANDARD When a professional specifically partners with businesses, they may find that the companies that hire them have a standard expectation for insurance coverage. Frequently, those contracting with businesses need to have proof of at least a million dollars in professional liability coverage. Maintaining that amount of coverage can indemnify the professional in the vast majority of cases where clients might make a claim. It can also help make them eligible for lucrative contracts with successful businesses. POTENTIAL LOSSES CAN INFLUENCE COVERAGE AS WELL The nature of the services that a professional provides can influence how much coverage might be necessary for their protection. Architects who could face multiple claims from different parties if an error results in an unsafe edifice might need to carry more than a million dollars in coverage. Their policy may need to cover the losses suffered by the property owner and any injuries people incurred when an issue arose. The more people that a single mistake could impact and the greater the likelihood of a professional’s mistakes causing substantial financial setbacks, permanent injury or death, the more important generous amounts of coverage become. Professionals may need to sit down with someone who understands liability rules and insurance regulations to decide what amount of coverage is necessary for optimal protection. Purchasing adequate insurance coverage is a key step toward limiting personal and professional liability. Professional liability insurance can help protect people against mistakes or oversights that could not only affect their careers but also their personal finances.

Property owners hire contractors with the expectation that they’ll take care of a project in a professional manner. Most projects are completed without any issues, but there are times when construction defects may plague the process and vision of interested parties. Determining what type of defect that’s present is often the first step in the process of getting it corrected. The following are the most common kinds of construction defects that may impact the integrity of any particular project. DESIGN DEFECTS Design defects happen if there are flaws in the engineering or architectural plans that govern a project. They may arise because of errors or omissions that occur during the design process. Structural issues and other serious problems can occur because of design defects. For example, lack of proper drainage because a building’s design doesn’t allow for it can lead to water damage over time. MATERIAL DEFECTS Material defects are the result of using substandard materials for a project. In some cases, this may be because of inappropriate material substitutions. These defects vary in severity based on how crucial the material is to the project. For example, poor quality concrete used as foundation is typically a more serious issue than poor quality trim being used around interior doors. WORKMANSHIP DEFECTS Workmanship defects occur when the quality of the work doesn’t meet the client’s agreed-upon expectations or the requirements for the project. This type of defect can encompass any aspect of a project, such as electrical work, plumbing, roofing or framing. Defects in this category may lead to safety hazards or place the structural integrity of a building in jeopardy. SUBSURFACE DEFECTS Subsurface defects relate to issues with the ground or soil beneath a structure. These defects can cause serious problems, such as foundation shifting or settling, leading to cracks and structural instability. Poor site preparation, such as inadequate compaction or failing to properly account for soil conditions, often contributes to these defects. When a construction defect occurs, many contractors will stand behind their projects and correct the problem. Yet it’s possible that a property owner will take legal action if their contractor doesn’t correct a defect. Legal assistance is beneficial in these cases because they can often be particularly complex and lengthy affairs.

Property owners hire contractors with the expectation that they’ll take care of a project in a professional manner. Most projects are completed without any issues, but there are times when construction defects may plague the process and vision of interested parties. Determining what type of defect that’s present is often the first step in the process of getting it corrected. The following are the most common kinds of construction defects that may impact the integrity of any particular project. DESIGN DEFECTS Design defects happen if there are flaws in the engineering or architectural plans that govern a project. They may arise because of errors or omissions that occur during the design process. Structural issues and other serious problems can occur because of design defects. For example, lack of proper drainage because a building’s design doesn’t allow for it can lead to water damage over time. MATERIAL DEFECTS Material defects are the result of using substandard materials for a project. In some cases, this may be because of inappropriate material substitutions. These defects vary in severity based on how crucial the material is to the project. For example, poor quality concrete used as foundation is typically a more serious issue than poor quality trim being used around interior doors. WORKMANSHIP DEFECTS Workmanship defects occur when the quality of the work doesn’t meet the client’s agreed-upon expectations or the requirements for the project. This type of defect can encompass any aspect of a project, such as electrical work, plumbing, roofing or framing. Defects in this category may lead to safety hazards or place the structural integrity of a building in jeopardy. SUBSURFACE DEFECTS Subsurface defects relate to issues with the ground or soil beneath a structure. These defects can cause serious problems, such as foundation shifting or settling, leading to cracks and structural instability. Poor site preparation, such as inadequate compaction or failing to properly account for soil conditions, often contributes to these defects. When a construction defect occurs, many contractors will stand behind their projects and correct the problem. Yet it’s possible that a property owner will take legal action if their contractor doesn’t correct a defect. Legal assistance is beneficial in these cases because they can often be particularly complex and lengthy affairs.

Business owners and executives often have to make difficult choices about harm reduction and risk mitigation. They need to address likely risks for the organization while simultaneously keeping costs to operate the company low. Professionals often have to balance the likely need for certain types of insurance coverage with the cost of a policy. One type of insurance that many professionals overlook is business interruption insurance coverage. While most companies never need business interruption insurance coverage, those that do may find it invaluable during times of economic hardship. HOW DOES BUSINESS INTERRUPTION INSURANCE WORK? Business interruption insurance is a type of coverage that helps pay operational expenses while a company cannot operate. Typically, the business has to face factors outside of the control of executives or ownership for such coverage to be available. A natural disaster might result in the long-term closure of nearby roads. That may force a retail establishment to close indefinitely. Business interruption insurance can help cover fixed operational expenses until the company either closes down for good or can finally reopen. WHAT DOES BUSINESS INTERRUPTION INSURANCE COVER? Technically, every business interruption policy is unique. Organizations typically outline the costs they want to cover in the policy, and the insurance company may impose either a set amount of coverage for those losses or a specific duration of time when the policy can pay those expenses. Business interruption insurance can cover mortgage payments or costs for rental space. The policy can pay for employee wages when a company has salaried employees. It can even cover the cost of their benefit packages. Reviewing policy documents to ensure proper coverage for likely expenses is an important part of securing business interruption insurance coverage. Given how expensive a business interruption policy claim can be for an insurance company, businesses often face a complex claims process. They likely need to have thorough documentation of the issue that caused the interruption and proof of the expenses that the policy should help cover. Those starting businesses, moving into a different position at an organization or reviewing current company protections may need support as they evaluate their current coverage for obvious gaps. Business interruption insurance can be very useful for some organizations and might potentially be a waste of capital for others. Exploring company exposure and different forms of insurance coverage can help owners and executives determine what forms of support they require for the protection of the organization, its investors and its employees. Reaching out to the team at Goodkin APC can help businesses evaluate their insurance options and current policies accordingly.

Business owners and executives often have to make difficult choices about harm reduction and risk mitigation. They need to address likely risks for the organization while simultaneously keeping costs to operate the company low. Professionals often have to balance the likely need for certain types of insurance coverage with the cost of a policy. One type of insurance that many professionals overlook is business interruption insurance coverage. While most companies never need business interruption insurance coverage, those that do may find it invaluable during times of economic hardship. HOW DOES BUSINESS INTERRUPTION INSURANCE WORK? Business interruption insurance is a type of coverage that helps pay operational expenses while a company cannot operate. Typically, the business has to face factors outside of the control of executives or ownership for such coverage to be available. A natural disaster might result in the long-term closure of nearby roads. That may force a retail establishment to close indefinitely. Business interruption insurance can help cover fixed operational expenses until the company either closes down for good or can finally reopen. WHAT DOES BUSINESS INTERRUPTION INSURANCE COVER? Technically, every business interruption policy is unique. Organizations typically outline the costs they want to cover in the policy, and the insurance company may impose either a set amount of coverage for those losses or a specific duration of time when the policy can pay those expenses. Business interruption insurance can cover mortgage payments or costs for rental space. The policy can pay for employee wages when a company has salaried employees. It can even cover the cost of their benefit packages. Reviewing policy documents to ensure proper coverage for likely expenses is an important part of securing business interruption insurance coverage. Given how expensive a business interruption policy claim can be for an insurance company, businesses often face a complex claims process. They likely need to have thorough documentation of the issue that caused the interruption and proof of the expenses that the policy should help cover. Those starting businesses, moving into a different position at an organization or reviewing current company protections may need support as they evaluate their current coverage for obvious gaps. Business interruption insurance can be very useful for some organizations and might potentially be a waste of capital for others. Exploring company exposure and different forms of insurance coverage can help owners and executives determine what forms of support they require for the protection of the organization, its investors and its employees. Reaching out to the team at Goodkin APC can help businesses evaluate their insurance options and current policies accordingly.

Starting a partnership requires each owner to protect themselves while they simultaneously focus on the broader interests of the company. One way to do this is to have a comprehensive operating agreement in place for the business, ideally before it becomes operational. One of the primary concerns that should be addressed in a partnership operating agreement is the definition of the partnership structure. This includes specifying the type of partnership, such as general, limited or limited liability partnership. DEFINING CONTRIBUTIONS AND OWNERSHIP Each partner’s contributions to the business, including intellectual property, physical assets and financial matters should be noted in the agreement. It should also clearly state the percentage of ownership in the company for each partner. ROLES AND RESPONSIBILITIES Each partner may have a part of the company that they’re responsible for. This should be written out in the operating agreement so that there’s not any doubt about who should handle what. Consider daily operations, overall management and decision-making processes. PROFITS AND LOSSES Profit and loss distribution is a critical part of an operating agreement. This should include the agreed-upon formula for splitting everything. It might be based on the initial contributions of each partner. The more detailed this information, the less of a chance there will be a dispute in the future. DECISION-MAKING PROCESSES The decision-making process should be outlined. This includes the voting rights of each partner and what’s required for making significant decisions. While it may not happen often, deadlocks should also be covered. This includes resolution methods for those situations. PROCEDURES FOR ADMITTING NEW PARTNERS There may be a time when new partners need to join the partnership. Having the selection criteria and procedures for this included in the agreement can make that easier. The method for adjusting profit and loss divisions and ownership percentages should also be included. EXIT STRATEGY AND DISSOLUTION The terms for a partner leaving the company or for dissolving the partnership should be written out. This can include retirement, resignation and other options like buyouts. A comprehensive operating agreement may have other elements. For example, dispute resolution methods might be a good addition so there’s a plan in place if partners don’t agree on business operations. Working with a legal representative who can assist with developing this document may be beneficial, given the complexities at issue and all that is at stake.

Starting a partnership requires each owner to protect themselves while they simultaneously focus on the broader interests of the company. One way to do this is to have a comprehensive operating agreement in place for the business, ideally before it becomes operational. One of the primary concerns that should be addressed in a partnership operating agreement is the definition of the partnership structure. This includes specifying the type of partnership, such as general, limited or limited liability partnership. DEFINING CONTRIBUTIONS AND OWNERSHIP Each partner’s contributions to the business, including intellectual property, physical assets and financial matters should be noted in the agreement. It should also clearly state the percentage of ownership in the company for each partner. ROLES AND RESPONSIBILITIES Each partner may have a part of the company that they’re responsible for. This should be written out in the operating agreement so that there’s not any doubt about who should handle what. Consider daily operations, overall management and decision-making processes. PROFITS AND LOSSES Profit and loss distribution is a critical part of an operating agreement. This should include the agreed-upon formula for splitting everything. It might be based on the initial contributions of each partner. The more detailed this information, the less of a chance there will be a dispute in the future. DECISION-MAKING PROCESSES The decision-making process should be outlined. This includes the voting rights of each partner and what’s required for making significant decisions. While it may not happen often, deadlocks should also be covered. This includes resolution methods for those situations. PROCEDURES FOR ADMITTING NEW PARTNERS There may be a time when new partners need to join the partnership. Having the selection criteria and procedures for this included in the agreement can make that easier. The method for adjusting profit and loss divisions and ownership percentages should also be included. EXIT STRATEGY AND DISSOLUTION The terms for a partner leaving the company or for dissolving the partnership should be written out. This can include retirement, resignation and other options like buyouts. A comprehensive operating agreement may have other elements. For example, dispute resolution methods might be a good addition so there’s a plan in place if partners don’t agree on business operations. Working with a legal representative who can assist with developing this document may be beneficial, given the complexities at issue and all that is at stake.

Regulatory compliance is crucial to the success of any modern business. The failure to adhere to both state and federal regulations could lead to a loss of licensing or financial penalties. As a result, executives and business owners are often familiar with existing statutes that apply specifically to a particular industry. However, they also need to stay up to date on the regulations that apply to their business, as they change all the time. For example, a law passed by federal lawmakers in 2021 just took effect on the first of the year. The Corporate Transparency Act (CTA) was a bipartisan piece of legislation that created a new requirement for certain businesses. Organizations may need to file a report with federal agencies or could be at risk of large fines of up to $10,000 for non-compliance. WHAT BUSINESSES MUST FILE A REPORT? As the name implies, the CTA specifically applies to corporations and other businesses where ownership is not readily evident. Limited partnerships and limited liability companies (LLCs) are also required to file a report under the CTA. Companies must disclose the identities of all individuals with a beneficial ownership interest (BOI) to the Financial Crimes Enforcement Network (FinCEN). WHAT CONSTITUTES A BENEFICIAL OWNERSHIP INTEREST? The CTA provides a very clear definition of BOI. The company filing the report must include identifying information about any investor who has at least a 25% ownership interest in an LLC, corporation or other business with an opaque structure. The report should also include details about who filed the paperwork to form the company. WHEN IS THE REPORT DUE? Businesses already operating as of January 1st, 2024 have until the beginning of 2025 to file their initial reports. Businesses formed after the CTA took effect must make ownership disclosures during the startup process. Additionally, updated reports are necessary anytime new investors meet the requirements for having a BOI in the company. It is very easy for those focused on the operations of a business to overlook changes in the law that could end up costing them quite a bit of money. Reaching out to the team at Goodkin APC can help business owners, executives and investors better ensure ongoing regulatory compliance even as the law evolves.

Regulatory compliance is crucial to the success of any modern business. The failure to adhere to both state and federal regulations could lead to a loss of licensing or financial penalties. As a result, executives and business owners are often familiar with existing statutes that apply specifically to a particular industry. However, they also need to stay up to date on the regulations that apply to their business, as they change all the time. For example, a law passed by federal lawmakers in 2021 just took effect on the first of the year. The Corporate Transparency Act (CTA) was a bipartisan piece of legislation that created a new requirement for certain businesses. Organizations may need to file a report with federal agencies or could be at risk of large fines of up to $10,000 for non-compliance. WHAT BUSINESSES MUST FILE A REPORT? As the name implies, the CTA specifically applies to corporations and other businesses where ownership is not readily evident. Limited partnerships and limited liability companies (LLCs) are also required to file a report under the CTA. Companies must disclose the identities of all individuals with a beneficial ownership interest (BOI) to the Financial Crimes Enforcement Network (FinCEN). WHAT CONSTITUTES A BENEFICIAL OWNERSHIP INTEREST? The CTA provides a very clear definition of BOI. The company filing the report must include identifying information about any investor who has at least a 25% ownership interest in an LLC, corporation or other business with an opaque structure. The report should also include details about who filed the paperwork to form the company. WHEN IS THE REPORT DUE? Businesses already operating as of January 1st, 2024 have until the beginning of 2025 to file their initial reports. Businesses formed after the CTA took effect must make ownership disclosures during the startup process. Additionally, updated reports are necessary anytime new investors meet the requirements for having a BOI in the company. It is very easy for those focused on the operations of a business to overlook changes in the law that could end up costing them quite a bit of money. Reaching out to the team at Goodkin APC can help business owners, executives and investors better ensure ongoing regulatory compliance even as the law evolves.