1. Do not operate as a sole proprietor.

Doing business in your own name without organizing a business entity can expose your personal assets to business liabilities. Sole proprietors are liable for all claims arising from the business. Consider forming an entity to operate your business. In Florida, there are many choices including

corporations, limited liability companies, and various types of partnerships with limited liability. Each type of entity has a different management structure, offers various protections, and has certain advantages and disadvantages to consider.

  1. Put agreements in writing.

Whether your agreement is with a co-owner, an employee, or a client, it is easier to enforce an agreement and avoid misunderstanding or mis- remembering when the agreement is in writing. Additionally, certain oral agreements are unenforceable in Florida unless they are in writing. Even if the amount of money to be exchanged between parties is not substantial, liability can still arise from occurrences related to a transaction. Written agreements can help protect against such liability.

  1. Have your contracts reviewed.

Whether you are considering entering into an important transaction or you use a certain form contract repeatedly in your business, consider having your contracts reviewed by an attorney. You can provide significant protection for your business by including certain key provisions, such

as a limitation on liability and provisions allowing you to terminate the contract under certain circumstances. An important provision that is often overlooked is the attorney’s fees provision, which can provide for the recovery of attorney’s fees if you are later forced to file suit to recover

money owed. Furthermore, you can provide that any lawsuit related to the transaction must be in the county where your business is located to avoid the inconvenience and uncertainty of defending a case in another location.

  1. Consider non-competition, non-solicitation, and non-disclosure agreements for key employees or business owners.

Building a successful business takes a significant investment of time, money, and effort, so consider protecting your business in the event that an important employee or co-owner later decides to leave the business and compete locally. In Florida, non-competition agreements are governed by a statute that provides which types of restraint of trade are valid. A non-competition agreement must be justified by legitimate business interests as that term is defined by statute in order to be enforceable. Furthermore, a court will determine whether a non-competition agreement is reasonable or unreasonable based upon the geographic area in which competition is prohibited and the length of time of the restraint.

  1. Be wary when representing your business in court.

Many business owners are aware that the principal of the business may represent the business entity in small claims court in Florida. However, this is an exception to the rule and only applicable in small claims court. Business entities are required to retain counsel for litigation in all other courts. Since small claims court is only for claims up to $8,000, this means any time a lawsuit or counterclaim is filed in which the amount sought in good faith exceeds $8,000, the business must retain an attorney. Failing to timely retain an attorney can result in losing valuable rights to respond to and defend a lawsuit.

If you are unsure about your rights in business matters, you should call an experienced attorney with the resources to advise you.

This newsletter is for general information and education purposes only. It is not offered as legal advice or legal opinion. To the extent this message contains tax advice, the U.S. Treasury Department requires us to inform you that any advice in this letter is not intended or written by our firm to be used, and cannot be used by any taxpayer, for the purpose of avoiding any penalties that may be imposed under the Internal Revenue Code. Advice from our firm relating to Federal tax matters may not be used in promoting, marketing or recommending any entity, investment plan or arrangement to any taxpayer.
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