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Located in the Miami metropolitan area, the Law Offices of Santiago J. Padilla, P.A., offers comprehensive services for business clients with a variety of needs.

5 Things To Know About Commercial Transactions

When establishing a new business in the U.S., you will either need to understand all the regulations governing the formation and operation of the business and the specific rules within the industry in which you operate or hire someone who does. Not operating in compliance with the law or the contract that enforces the agreement between you and other parties sets you up for financial risks and repercussions. A Transaction Attorney like Santiago J Padilla, who focuses on commercial law and provides legal counsel and services to mitigate the risks associated with commercial transactions can provide valuable advice in this endeavor. Here are five things you should know about structuring a successful commercial transaction.

1. Starting a Business Involves Many Legal Aspects

Starting a business requires determining how that business will be structured and formed. There are four main types of business formation. These include:

- Sole Proprietorship

Sole Proprietorship is the most straightforward and involves one person acting as an owner-operator with one hundred percent ownership of their business.

- Limited Liability Company (LLC)

A limited liability company protects the partners from judgments and debts. An LLC involves partners and is structured by an operating agreement. The terms of the deal, percentages of ownership, and expectations of each are important factors to outline in the agreement, and an attorney can help structure the agreement.

- Limited Liability Partnership (LLP)

A limited liability partnership is outlined by a partnership agreement. Both LLPs and LLCs provide a layer of financial protection to its owners; however, an LLP requires at least two members, whereas an LLC may only require one.

- Corporation (C-corp or S-corp)

Forming a corporation generally involves the inclusion of stock, which are purchased by shareholders. In corporations, bylaws and a Board of Directors are required as are shareholder agreements. Bylaws and shareholder agreements both necessitate a transaction attorney well-versed in the art of these formations.

2. Contracts Are an Important Part of Your Business

For formed businesses, a commercial transaction involves two or more parties who exchange services or goods for remuneration. Parties can include individuals, businesses and government agencies who create a contract when they enter into a documented agreement that provides the rules surrounding the transaction. Contracts act as a protective measure; they are legally binding and enforceable, which means that all parties must live up to their stated agreements. If they don't, the other party may legally pursue them to enforce the contract or seek damages in the form of remuneration for the loss that occurred as a result of non-compliance.

3. There Are Many Types of Contracts

Depending on your business structure, industry and the nature of your business, a contract will often define your business relationship. There are many different types of commercial contracts. An effective contract/agreement mitigates your personal and business risk, positions you competitively in the market and maximize profits. While not all-inclusive, some of these agreements include:

  • Service
  • Distributor and Reseller
  • Manufacturing or Supply
  • Employment and Consulting
  • Non-disclosure and Non-compete
  • Purchase Agreements

4. Contract Negotiation and Structuring Is Critical

A deficient contract puts you at legal risk and impedes your ability to operate effectively for a profit. A well-structured contract on the front end ideally avoids expensive litigation and attorney feeds down the road. Whether dealing with company formation, transaction contracts, employment or distributor agreements or any other number of deals, the right attorney will protect your interests. Indeed, in many situations the small print or boilerplate of a contract can aid you and your company if the transaction goes bad.

5. Mergers and Acquisitions Require Legal Experts

A Merger & Acquisition Lawyer can help merge two businesses, acquire a new organization, or dissolve a partnership or business. They can also help communicate with government agencies, negotiate contracts and work with legal representation of the other business. [add link here??]

Contact Santiago J. Padilla Today!

If your company has legal business needs, a Transaction Attorney should be retained. Santiago J Padilla focuses his practice in commercial transactions and will meet all your business legal needs. Call us today for a consultation.

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