Plano Business Assumed Names
You can run your Plano Texas company using an assumed name. Also known as “doing business as,” “DBA,” and fictitious name, an assumed name is a name other than your own under which you do business with the public.
For example, the name “AAA 24-Hour Carpet Cleaning Services” could be an assumed name. However, the name “John Smith’s Cleaning Services” is not an assumed name if your own name really is John Smith. Many sole proprietorships register an assumed name for several reasons, including privacy protection, and the ability to sell a company that isn’t closely associated with a personal name.
For about 10 bucks, you can register an assumed name for your business with the Collin County Clerk’s Office. However, it is important to note that registering an assumed name doesn’t protect you from trademark or service mark infringement claims. For example, if you registered the name “Starbucks” for your coffee shop, there’s a good chance that the real Starbucks based in Seattle would come after you with their lawyers for infringement.
It’s also important to note that name registration doesn’t provide any asset protection features. If you’re doing business as a sole proprietorship under an assumed name, you’re not going to have the liability protections afforded by doing business as a Texas limited liability company or corporation.
If you have any questions about what’s the best way of doing business, be sure to talk with your Plano business attorney.
Plano Texas Business Rules of Customer Engagement
If you don’t establish rules for your Plano business, your customers will do it for you. Instead of a win-win relationship, you’re likely to find yourself on the short end of the stick. Contrary to popular belief, the customer is not always right. In fact, your business rules should establish what is right because, more often than not, your customer doesn’t really know.
What should you do?
Establish clear rules on how your prospects and customers will deal with you, i.e. what is and isn’t acceptable behavior — then enforce those rules.
For example, if you have Net 30 payment terms, don’t tolerate slippage. There will always be customers who will test your boundaries. The Net 30 becomes Net 120…and then simply nonpayment if you make exceptions to your rules.
When you enforce the boundaries set by your rules, you’ll either eliminate potential troublemakers before they become customers or quickly thereafter. This is important because you’ll make more money dealing with customers on your terms than catering to those who violate them.
Of course, one of the best ways to set your rules is in a clear “plain English” contract that’s enforceable under Texas law. When your customer signs the agreement, it is hard to argue ignorance of the rules within it. Your Plano business lawyer can help you put together customized Texas contracts for unique deals and standard contract templates for repeat transactions that contain the right legal terms.
Texas Subchapter S Corporations
Many Plano Texas entrepreneurs think they need to set up a corporation in order to protect their personal assets. As a practical matter, most really mean a Subchapter S corporation.
What is a Subchapter S corporation? That’s a corporate tax election that lets income pass through the corporation to the shareholders and be taxed once at the federal level (Texas has no state income tax – knock on wood – so an “S” election at the state level isn’t necessary). This contrasts with a Subchapter C corporation where income is taxed twice: once at the corporate level and a second time at the shareholder level.
Rarely does it make sense to take the double hit on taxes if your business can qualify as an S corp instead.
However, Texas business owners should seriously consider using a limited liability company (LLC) instead of an S corporation. In most cases, you get all all of the benefits of an S corp for both asset protection and tax purposes without all of the legalese required to operate a corporation. A properly drafted LLC operating agreement (a contract between the owners of the LLC) can govern how things are run without having endless meetings and related legal paperwork.
Your Plano business attorney can help you select the right type of Texas business entity for your company. Just don’t assume that a corporation is the right way to go.
Texas Nondisclosure Agreements
Texas business nondisclosure agreements are contracts where one or more parties agree to keep secret certain information. A nondisclosure agreement can be an independent contract or the provisions can be part of a larger agreement, such as an employment contract or an agreement to buy a company. From tech trade secrets to customer lists, there are many topics that one can agree not to disclose to others.
If your Texas company wants to enter into a nondisclosure agreement, remember the handshake rule. If you wouldn’t trust the person to honor a nonbinding “gentlemen’s agreement” agreed to with a handshake, chances are high that you’ll end up in court trying to enforce your rights under the nondisclosure contract. In nondisclosure breach cases, your damages are often high because the confidential information has already been used against you by the time you head to court to enforce your legal rights.
Quite frankly, putting the nondisclosure provisions in a contract serves the primary purpose of letting the other party know how important you view the data as confidential and that you intend to protect your legal rights. Your Plano business lawyer will be able to draft contract language that makes this clear. That will deter some from ever crossing you by leaking the information or otherwise using it in violation of your contract.
Texas Contracts
A Texas contract is an agreement between at least two parties (individuals or businesses) that describes what the parties have agreed to. Provisions agreed to can be positive (do X), negative (not do Y), or a combination of both (do X but not Y).
Although parties usually intend for their contract to be legally enforceable, there are agreements that may not be legally binding. For instance, if one party to the agreement is mentally incompetent, the contract might not be binding against him. A contract to do something illegal is almost always unenforceable. For example, if the parties agree to sell cocaine (an illegal substance), there isn’t going to a way to enforce the agreement in court or otherwise.
Most Texas business contracts of value are in writing to ensure that they can be enforced. However, in some instances, a verbal agreement can be a binding contract. Factors that may determine whether an oral contract is legally enforceable include the dollar amount (value) of the contract and whether the parties can perform their obligations under the agreement in less than one year.
Oral agreements are not preferred because they can lead to misunderstandings (and related lawsuits). The better course of action is to have a written agreement signed by all the parties to the agreement.
Whether or not your Plano, Texas business attorney negotiates the contract on your behalf, you should have him paper the details to make sure that your rights are fully protected.
Of course, the best action is to only enter into contracts with parties who you trust will carry out their obligations under the agreement. If your gut instinct bugs you about a potential deal, that red flag is probably a good sign that the proposed contract will harm you in some way. Be prepared to walk. There are always alternatives to signing a bad contract.
Buy-Sell Agreements: Texas
Texas business owners can use buy-and-sell contracts called buy-sell agreements to make it easy for surviving owners to purchase the equity interest of a co-owner who wants to leave the company (such as retirement), faces personal bankruptcy, becomes incapacitated because of ill health, or even dies.
If your Plano business is a Texas corporation, a Texas limited liability company, a general or limited partnership, you should consider putting a buy-sell agreement into place to protect the long-term interests of yourself and the business.
One of the key benefits of using a buy-sell agreement is that it reduces risks for everyone in advance of bad events. You can customize the agreement to have it address the unique facts surrounding your business and the individuals who own it rather than trying to deal with courts and lawyers after-the-fact when a co-owner leaves. With careful planning, the contract will permit your Plano company to continue operations without a hitch.
Of course, your business and your lives will change over the years. If you’ve got a buy-sell agreement in place already, you’ll want to review it with your Plano business law firm to make sure that it always reflects what you want done based on the present rather than how things used to be.
Buy a Texas Business? Now is the time
If you’re looking to buy a Texas business, despite conventional wisdom, now is a great time. There are plenty of Plano-based companies that can be obtained at bargain prices right now because their owners are panicking due to the recession.
Many are overextended in their personal finances (mortgages, kids in college, luxury car leases, etc.). With a bad economy, they’re looking for a way to get their hands on some quick cash. Baby Boomers are really panicking because they’ve watched their retirement savings dwindle to a point where “retirement” may not be in the picture soon.
However, if you’re looking for a Plano business to invest in, don’t pay too much for it. Entrepreneurs tend to have a distorted sense of the value they’re bringing to the table when it comes time to sell. Ego gets in the way of accurately measuring fair value.
Pay for what an enterprise is worth to you, i.e. there must be a reasonable return on investment (ROI) when making projections on future income from a company rather than the inflated numbers a seller will pitch to you based on changes that you could make to the business after you buy it. Don’t pay twice for changes that you’ll have to make post-purchase – once to the seller who never made them and a second time when you incur the expenses to make them.
Remember to avoid deals that involve Plano companies that keep two sets of books. The seller in this type of situation will brag about using one set of numbers to pay federal income taxes and another set (the “real ones”) to base his asking selling price. This type of business is loaded with potential tax fraud liabilities and other exposure that you just don’t want. Even if the deal seems good based on the numbers, why take the risk? The seller, who was willing to risk jail while owning the company, isn’t going to be around to take the fall when his misconduct is uncovered by the Internal Revenue Service, a customer who received a defective product, etc.
Be sure to consult with your Plano business attorney and your accountant to minimize your risks before making a purchase.
Does Your Texas Business Lawyer Know Internet Law?
Because the Internet is an important medium for marketing your business, you’ll want to make sure that your business lawyer knows something about the laws that govern websites and ecommerce.
Unfortunately, many Texas business attorneys don’t know anything about Internet laws. Being an Internet lawyer is a niche. Just like many Plano, Texas dentists aren’t orthodontists, most business lawyers don’t practice Internet law.
In other words, if you’re either doing business online or considering it, you’ll want a Texas business lawyer who knows how to protect your interests offline and online. Don’t be fooled by a law firm that claims that it does a lot of things (ranging from estate planning to criminal defense to Internet law). In many cases, this type of law firm is a jack-of-all-trades that will take almost anything that comes in the door. This is bad because you’ll be overpaying for a generalist to learn something that a good business lawyer with Internet experience can already do for you.
Texas Joint Ventures
A Texas joint venture (JV) is a partnership formed by at least two people or businesses in order to complete a single project. You and your joint venture partner share the risks and rewards of the JV. This includes responsibilities for the project plus any profits or losses generated by your joint venture.
It rarely makes sense to enter into a Texas joint venture unless your JV partner brings something important to the table that you don’t already have or can’t acquire by outsourcing to an independent contractor.
In addition, there’s also the risk with a JV that your joint venture partner will do something stupid that creates potential liability for you. Prudent Plano business owners often use a Texas limited liability company or a Texas corporation as the JV partner in these types of deals in order to reduce personal liability if things go wrong.
Before you enter into joint ventures, make sure you talk with a Plano business lawyer first. You’ll want to maximize your chances of success in any JV plus reduce risk with the right joint venture legal documents in place.
Texas Partnerships
A Texas partnership can be formed when at least two people own and operate a business together. Although wise business owners use a written partnership agreement to state the rights and obligations of each partner, there are at least two other ways you can form a partnership: (1) through your actions; and (2) what you agree to when talking with your partner.
The most common type of Texas partnership is a general partnership. As a general partner, you typically split profits and losses with your partner equally. While this may seem fair, general partnerships also carry some risks. For example, you could be held liable for the misconduct of your partner even though you had nothing to do with his actions. When lawyers are looking to sue general partners, they’re concerned with getting paid (i.e. who has the assets to satisfy a court judgment) – not which partner actually did the bad stuff that caused the lawsuit in the first place.
Because of this risk, some Plano business owners choose to use Texas limited partnerships or Texas limited liability partnerships to run their businesses. There typically are fewer risks with these types of entities than with a general partnership.
However, it is far more common for Plano companies to operate as either a Texas corporation or a Texas limited liability company instead of as any type of partnership. When deciding whether to use partnerships, limited liability companies, or corporations for your business interests, you’ll want to talk with your Plano business attorney and your CPA first.