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How to Protect Your Small Business
Disclaimer: This article on how to protect your small business is intended for the purposes of providing information only and is to be used only for the purposes of guidance. This article is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.
Entrepreneurship is on the rise. There are as many as 1.22 million employer businesses in Canada, 97.9 percent of which were small businesses. However, the sad reality is that many new businesses fail within the first five years. So, what are the key factors that contribute to a successful startup?
There is no single answer to this question as each business is unique and faces its own challenges. However, one answer may lie in how we protect our businesses.
While we may not consider contracts and legalities to be a priority in our business, they should be. Having well-drafted contracts in place from the outset can save your business a lot of money, time and headaches down the road.
In this article, we will talk about why we fail to protect our business, why it is vital to do so and the top three contracts that you should have in place.
Protecting Your Business
Your business is the result of your blood, sweat, and tears. It is hours of hard work, sacrifice, and dedication. So why do we fail to protect it? We work tirelessly to make our dream a reality, but when it comes to protecting that dream, we often neglect to take the necessary steps.
Why is this?
There are a number of reasons. For one, we may not think that our business is susceptible to certain risks. We may also believe that we don’t have the time or resources to put into protecting our business. And finally, we may simply be unaware of the steps we need to take.
However, the truth is that all businesses are susceptible to risks and it is vital to take the time to protect your business. While you will probably be fine most of the time, the damage that of having one legal issue can be enough to completely destroy your years of hard work. Let’s outline what happens in your business when you have strong contracts in place to protect your business.
Building a Strong Business
First of all, taking the steps to legally protect your business and limit your liability brings you peace of mind. It allows you to focus on the work that you love without having to worry about the what-ifs.
In addition, strong contracts set clear expectations between you and your business partners, employees, customers, and vendors. This clarity leads to smoother operations and fewer surprises down the road.
Finally, having well-drafted contracts in place provides your business with a competitive edge. When you can show that you have taken the steps to protect your business, it instills confidence in those who do business with you.
Your Business Contracts
Now that we’ve talked about the importance of protecting your business let’s talk about the contracts you need in your business. But first, what if someone provides you with a contract to sign?
Should I Sign Someone Else’s Contract?
If you are going to be signing a contract provided by a vendor, service provider, client, etc., then you will want to be sure to review it thoroughly. You likely will also want to have it reviewed by your lawyer. A lawyer can flag any issues that you can negotiate before you sign a contract.
This does not have to be an expensive or time-consuming project. You can have a lawyer review and revise a contract for a relatively low amount, but gain peace of mind moving forward in a business relationship.
Ideally, you will provide your own contract, but if you do sign another person’s contract, make sure you review and understand it first.
Now, let’s go over the top three contracts that every business should have in place.
1. Employee Contracts or Independent Contractor Agreements
2. Client Agreements
3. Agreements
While there are many other types of contracts that your business may need, these three are a great place to start.
Employment or Independent Contractor Agreement
Whether you hire independent contractors or employees, you need to have a contract in place. There is a big difference between the two, so you need to make sure to speak to a lawyer to clarify what contractual relationship you’re going to have with the person you’re adding to your team.
This is one area where many businesses see things go sour. The reality is that you probably don’t have the bandwidth as a small business owner to be paying out more money than necessary because of a poor decision.
Specifically, you want to build in confidentiality into your contractor or employment agreement. For many of us, there’s a “secret sauce” or even proprietary information about how we do business. You need to protect your business by ensuring that your employee or contractor cannot use your confidential information, take clients or poach employees.
Client Agreement
This is crucial for both service-based businesses and product-based businesses that are selling higher-ticket items. For the purpose of this article, we will focus on service-based businesses.
You want to ensure that the terms on which you’re providing your service are clear, and you want to be clear on how you can stop working with someone. The reality is that we will all face that nightmare client at one time or another.
When you’re ready to walk away from someone who is, for example, disrespectful to your or your staff, you want to know that your contract allows you to. Because if it doesn’t, and that client does not release you from your obligations, you could be facing an uphill battle.
Another area that your contract must cover is about the terms and timing of payment. The absence of these terms could result in you working for weeks or months without getting paid, which can be frustrating.
By providing clear, strong contracts for your clients, you are setting the tone of the relationship and protecting your business.
Your Estate Plan
This is not necessarily a contract, but it is documentation that will protect you, your family and everything you have worked so hard for. The sad truth is that 56% of Canadians do not have a will or powers of attorney in place.
If something were to happen to you, what happens to your small business?
If you’re a sole proprietor, the answer is likely nothing. Your business dies with you. However, if you are incorporated, your shareholders will inherit the business and its assets.
You need to ensure that you have your business structured in a way that protects your family, your employees and yourself. You also want to make sure the people who are running your business know what to do and how to do it.
Having these documents in place and having them drafted by a strategic, skilled advocate who understands what your business means to you, is simply invaluable.
Protecting Your Business With Beeksma Law
When it comes to protecting your business, you need to have the right people in your corner. At Beeksma Law, we understand that your business is your lifeblood.
We also know that you cannot afford to make a mistake when it comes to contracts or any other legal agreements. That is why we take the time to get to know you, your business and what you need to protect it. Our team has a well-rounded experience to help you protect everything that matters to you most.
To learn more about how we can help you, please contact us today.
3 Questions to Ask Before Co-Owning a Home
Disclaimer: This article on Co-Owning a Home is intended for the purposes of providing information only and is to be used only for the purposes of guidance. This article is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.
Whether it is to buy an investment property, due to changing life circumstances, such as a divorce, or because of raising interest rates, more and more people are opting to co-own a home with another party. In fact, we recently learned that there are mixers and apps to match potential co-owners together!
While you may be considering the benefits of sharing costs, the reality is that this is not a decision that should be made lightly.
Just as you wouldn’t purchase a home without considering whether it was the right house for you, you don’t want to purchase a home with someone without asking key questions first. In fact, we strongly recommend that anyone co-owning a home should enter into a co-ownership agreement that will set out the rights and responsibilities of the owners.
For clarity, when we talk about co-owning a home, it applies to owning a property with anyone (including children, parents, siblings, etc.) who is not your spouse. Any property owned with your spouse is covered under the Family Law Act.
This article will highlight three questions to ask before buying a home with someone else. Of course, your situation and interests are unique to you. It is always best to talk about these issues with a lawyer who can help you protect your interests and be proactive about any issues that may come up.
Question #1: How will we structure the ownership?
There are two ways that individuals can co-own a property: as tenants in common or as joint tenants.
Tenants in common means that each owner owns a defined percentage of the property. This ownership can be equal (50/50) or unequal. For example, you may own 60% and your co-owner owns 40%. You can sell, borrow against, or will your undivided interest at any time (subject to the terms of any co-ownership agreements.
A joint tenant relationship means that each owner owns an equal interest in the property. If one joint tenant dies, their ownership interest will automatically transfer to the surviving joint tenant(s). There are four criteria that must all exist in order to be considered a joint tenant:
- All joint tenants must acquire ownership interests at the same time;
- All joint tenants must acquire title by the same deed or will;
- All joint tenants must hold an equal and undivided interest in the property (for example, 50/50); and
- All joint tenants must hold an equal right to possession of the property
If any of these criteria are not met, then the joint tenants will be considered tenants in common.
Question #2: Who will be responsible?
It is important to determine who will be responsible for what when co-owning a home. This includes things like:
- Making the mortgage payments;
- Paying the property taxes;
- Paying for repairs and maintenance; and,
- Carrying insurance on the property.
Who is responsible for making sure that the house remains in good repair and is well-kept? It is important to have an agreement that sets out each owner’s expectations and responsibilities.
Question #3: What happens if…
When purchasing property with your relatives or friends, it is hard to imagine anything going wrong. Unfortunately, things can change and it is important to plan for all eventualities.
This is where you’re going to want to use your imagination and think of many possible scenarios. For example, what would happen if an owner:
- wants to sell the property;
- wishes to make improvements or changes;
- tries to borrow money against their interest in the property; or
- passes away?
What would happen if one or more of the owners could not agree or resolve a dispute?
A good real estate lawyer will be able to help you plan for these potential scenarios by including terms in your co-ownership agreement. For example, the agreement could state that if one owner wants to sell the property, the other owners will have the first right of refusal. Or, if an owner wants to borrow money against their interest, they may need to get the consent of the other owners first.
It is much easier (and cheaper) to plan for these issues when everyone is on the same page at the beginning rather than try to deal with them after they arise.
It’s not too late!
What if you already co-own a property? You may still be able to put a co-ownership agreement in place. This is something that you should discuss with a lawyer to ensure that all of your interests are protected.
An ounce of prevention is worth a pound of cure!
We have represented many individuals who now find themselves dealing with time-consuming and expensive real estate litigation. Each of them was convinced that they did not need to put anything in writing – that it would never happen to them.
Don’t let this happen to you! Be proactive and have a real estate lawyer help you plan for all contingencies by drafting a comprehensive co-ownership agreement.
At Beeksma Law, our real estate litigation experience helps us identify potential issues and conflicts that may arise. We then work with you to negotiate strong contracts that will protect your interests and give you peace of mind.
If you are thinking about co-owning a property with your friends or relatives, please contact us to discuss your options. We would be happy to help!
Weathering the Storm: Life Changes
Disclaimer: This article on life’s changes is intended for the purposes of providing information only and is to be used only for the purposes of guidance. This article is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.
While life’s changes can happen at any point, they are made much more difficult when they happen during a period of economic instability and uncertainty.
This article will provide some tips on how to weather the storm during life’s changes from a legal standpoint, particularly during periods of economic hardship.
Separation, Divorce and The Matrimonial Home
While there are many factors to consider when a marriage ends, what happens when the couple wants to sell the matrimonial home?
The decision to sell the family home is often one of the most difficult a divorcing couple will face. There are many factors to consider, such as:
– The current market value of the home
– If one spouse plans to keep the home, whether they can afford the mortgage and upkeep on their own
– The sentimental value of the home
– The potential stress of dealing with the sale during an already difficult time
Right now, other issues within the real estate industry complicate this decision. You can see our previous article that goes into this in more detail. However, we are seeing an increase in deals falling through because buyers cannot get approved for a mortgage or because appraisals are coming in low.
Some people purchase a home with other family members after a separation or divorce. If that is the case for you, have you discussed a co-ownership agreement? This document outlines each party’s rights and responsibilities and can help prevent any misunderstandings down the road.
A “Business Divorce”
What is a business divorce? It’s when partners in a business decide to go their separate ways. This can happen for many reasons, such as disagreements on the direction of the company, financial difficulties, or simply different goals for the future.
Like a marital divorce, a business divorce can be a very difficult and emotional process. It’s important to have a lawyer who can help you navigate this process and protect your interests.
Some things to consider:
- What is the value of the business?
- How will the division of assets be handled?
- What does your partnership agreement say?
The Death of a Loved One
The death of a loved one is always a difficult time. In addition to the grieving process, there are often many financial and legal matters to take care of.
You may be impatient to settle the estate and move on, but it is important to take the time to understand all of the implications of your loved one’s death. This is especially true when it comes to taxes. Depending on the size of the estate, there could be significant tax implications.
There is a reason why it is called the “executor’s year.” At the best of times, estate matters take time to work through. Many courts are experiencing backlogs, so it can take even longer.
If you are named as an executor in a will, make sure you understand what is expected of you. However, if you do not have the time or ability to take on this role, you can decline or ask to be removed. If no executor is named, and you are a beneficiary under the will, you may want to consider applying to be the estate administrator to move things along.
Weathering the Storm with Beeksma Law
At Beeksma Law, we are also families, entrepreneurs, homeowners and members of our community. We understand how difficult these times can be and we are here to help.
We offer a free initial consultation to discuss your legal matter and help you understand your options. Please contact us today to book an appointment.
Weathering the Storm in Your Business
Disclaimer: This article on Business is intended for the purposes of providing information only and is to be used only for the purposes of guidance. This article is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.
There’s no nice way to put it, it is hard to be a business owner right now. Many businesses are struggling to keep their doors open.
While we may be past lockdowns and other restrictions, supply chain issues still loom and there are plenty of other challenges to contend with. So how do you weather the storm? How do you keep your business afloat when everything seems to be working against you?
Let’s discuss three key areas where you can make good choices today that will help your business in the long run.
Negotiating Commercial Leases
Let’s share a story of a woman we’ll call “Jane”. Jane was desperate to find a space for her growing business and signed a commercial lease without discussing it with a lawyer.
Unfortunately, Jane did not realize that “standard terms” of a commercial lease tend to favour the landlord. Problems arose with the space because of the landlord’s actions, and Jane was forced to delay opening her business while these were being addressed. Meanwhile, she still needed to pay rent for a space that she could not use.
You have an opportunity to avoid making the same mistake as Jane. Consult with a lawyer before you sign anything, even if it’s just a simple “standard” lease.
Yes, there is a cost to this. However, having a lawyer help you to understand your lease and negotiate for more rights can help you save much more in the long run.
Having Proper Contracts In Place
Another mistake that businesses make is not having proper contracts in place with their key suppliers, customers, and employees.
This can lead to a lot of problems down the road, such as:
– Unpaid invoices: If you don’t have a contract in place specifying when and how your customer will pay you, you may have a hard time getting paid.
– Unreliable suppliers: If you don’t have a contract in place specifying the terms of your agreement, your supplier can change the terms at any time. This can lead to disruptions in your supply chain and unexpected costs.
– Unstable support: If you don’t have contracts in place with your service providers, they can create delays or disruptions in your business. It can be hard to prove non-performances if no contract exists.
To avoid these problems, ensure that you have proper contracts with all of your key suppliers, customers, and employees. This will protect you in the event of any problem that may arise because of them.
Understanding Construction Liens
Construction liens are a big problem for businesses, especially small businesses. A construction lien is a claim that a contractor or supplier can make on a property if they are not paid for their work.
If you are a contractor or a subcontractor, make sure that you are staying on top of payments. You can register a lien on the property if you are not being paid. However, you can only do so within 60 days of completing the contract.
Weathering the Storm With Beeksma Law
Making good choices today can help your business weather any storm. By taking the time to understand your commercial lease, put proper contracts in place, and stay on top of payments, you can protect your business from common problems.
At Beeksma Law, we know the struggles that entrepreneurs face. We are here to help you protect your business from the common legal problems that can arise. Contact us today to discuss how we can help you.
Case Study: Co-Ownership Gone Wrong
Disclaimer: This article is intended for the purposes of providing information on property co-ownership only and is to be used only for the purposes of guidance. This article is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.
We have spoken before about the importance of having a co-ownership agreement in place. It’s important because it helps avoid conflict and delineates the responsibilities of each owner.
“But that doesn’t apply to me. I’m buying a house with my very best friend – it won’t go wrong.”
That is what our clients thought too. Let’s discuss their real-life example of co-ownership gone wrong, and how to prevent it from happening to you.
At Beekmsa Law, we have seen time and time again that an ounce of prevention is worth a pound of cure. This is especially true in the case of co-ownership agreements so if you are considering buying a home with another party, speak to us first. We can help save you a lot of headaches.
The Scenario
Two couples (let’s call them the A’s and the B’s) were close friends. They decided to buy a home together. They found the perfect house and put in an offer, which was accepted. Couple B lived in the home and the other half was rented out.
They were so excited about the new venture that they didn’t get a lawyer to draw up a co-ownership agreement. After all, they knew and trusted each other. They felt that in the event there was a disagreement, they could resolve it as friends.
After some time, couple A decided that they would like to sell the home. Couple B liked their living arrangements and refused to sell the home. Tensions grew, as the parties disagreed on who paid for what expenses and what each party had expected going into the transaction.
That is when couple A came to us. With no agreement in place, there were two options: to come to an agreement with couple B, or to apply to the court for a partition and sale.
An application to the court would have come at a high cost – in both time and money – so the couple decided to try to come to an agreement with couple B first. This is where we were able to help.
The Solution
We helped couple A negotiate with couple B, and in the end, the house was sold.
However, this is not the rosy ending we would have preferred to see. That relationship was forever damaged, and it could have all been avoided with a co-ownership agreement in place.
A Better Way – Co-Ownership Agreement
We wish that Couple A had come to us before purchasing the home and setting up a co-ownership agreement.
If a co-ownership agreement had been in place, there would have been a clear process in place for when one party wanted to sell. The disagreement would have been limited because the contract would have anticipated this, and the friendship may still be intact today.
A co-ownership agreement would have helped to avoid conflict by setting out each party’s expectations from the start. It would have addressed important issues such as:
– Who is responsible for what expenses?
– What happens if one party wants to sell the property?
– What is the procedure for making decisions about the property?
The Lesson
While we often go into situations expecting that everything will go well, it’s always best to be prepared for the worst. This is especially true when entering into a co-ownership agreement. Buying a property is a big investment, and you want to make sure that you are protected now and in the event anything changes in the future.
If you are considering buying a property with another person, come and speak to us first. We can help set up a co-ownership agreement that will protect you and your investment. Book a call here and our team will be more than happy to talk to you about your situation.