Although each business has its own need for specific documents my goal here is to share with you certain business documents and types of documents that are important to businesses in general.
When it comes to doing business you need to remember to treat your business as a business and not a hobby. For that reason I suggest to our clients that, at a minimum you need to establish a separate checking account for your business. While that may seem like a “no brainer” you might be surprised at how many business people have failed to do so. Some of the benefits of a separate business checking account are that it:
- Helps segregate expenses and income for tax time;
- Helps in the overall recognition that you have a business entity;
- Helps in the overall management and budgeting of your business.
How about that Federal ID Number – By statute corporations and partnerships must get a Federal ID number because the business is a “taxpayer” and the business must file its own tax return. Although a sole proprietorship and/or a single owner LLC without employees does not require a Federal ID Number this does help establish the business on the IRS records.
Let’s Talk Contracts – One of the top causes for business lawsuits is the lack of clear and concise communication. Get it in writing. The agreement can be in the form of a contract or simply a purchase agreement but it must contain the names of the parties involved and what is to be provided by each party both on the seller and the buyer side. Oh, and what happens if there is a problem with the agreement? It’s wise to spell out the rights of each party involved.
Employees and Confidentially/Non-Compete Agreements – Many individuals believe, incorrectly, that confidentially and non-compete agreements are not valid. However, providing the terms are “reasonable” they are legally enforceable agreements. Courts balance the needs/rights of the employee. NOTE: the key word here is “reasonable”. If a Court does not think the terms are reasonable, it may “reform” the Agreement and enforce the Agreement as reformed.
In my next post I’ll help you better understand more about documents related to sole proprietorships including your Trade Name, what Multi-owner businesses should be concerned about from agreements to business minutes.
Thanks for reading and should you have a question please feel free to contact us here at the firm.