Articles Posted in Business Formation

Founding a small business is a venture packed with excitement. It’s a test of your savvy and personal strength. Many also find it to be a source of immense pride and a satisfying accomplishment.
2014 is a perfect year to make it happen, especially as the Wall Street Journal reported that many small business owners anticipate a breakout year in which they can put the worst of the recession firmly behind them. A survey of nearly 1,000 small business owners nationwide revealed more than half said the economy had improved last year (up from 36 percent a year earlier) and nearly 40 percent said they expect market conditions to be even better this year (up from 27 percent last year). Three-fourths of all business owners polled said they expect better sales this year than last, and their confidence index is the highest it’s been in 18 months.

Of course, entrepreneurs tend to be optimistic by nature, and none embark on the quest of starting a small business in Boston with the assumption it’s going to tank. Of course, there are never guarantees. But careful legal planning may significantly bolster your chances of success. At the very least, failure to consider relevant legal strategies could result in your business floundering before it ever has a chance to fly.

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The formation of a business partnership can serve a multitude of purposes and be advantageous to all involved. Primarily, business partners can help to enrich each other with contributions including money, labor, property or skill.
But knowing which type of partnership is best and ensuring that all parties’ interests are protected requires the oversight of one or more experienced business formation attorneys in Boston.

The ongoing case of Queen v. Schultz, recently reviewed by the U.S. District Court for the District of Columbia, reveals what can happen when individuals don’t seek legal counsel from the start. At least for one of those involved, it resulted in a great deal of time, money and effort spent in furtherance of a partnership that may or may not have legally existed.
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Entrepreneurs and owners of successful companies know that one of the most important decisions for which they are responsible is the determination of location. A firm’s location can make or break an operation. signing.jpg

Once a specific location has been identified, the firm will need to decide if the property should be purchased or leased. This decision, and the processes that follow, should be carefully overseen by a commercial lease attorney.

A poorly written or executed commercial leasing agreement can have a detrimental impact on an entity’s stability and long-term viability. A bad lease may also be more likely to result in costly litigation, which is what happened in the recent case of Pannell v. Shannon, reviewed by the Kentucky Supreme Court.
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New entrepreneurs often display a passion and enthusiasm that is commendable. They believe in their product or service, they’re eager to thrive and they dive head-first into marketing. neonsigns.jpg

While advertisement is an important aspect of launching any firm, our Boston small business lawyers urge all new company owners to consult with their legal team on a strategy. Advertising practices are regulated by both federal and state laws, and Massachusetts has some of the strongest consumer protection statutes on the books.

Sales practices that are deemed deceptive or unfair are addressed by the Federal Trade Commission, as well as the Massachusetts Attorney General. Per the Federal Trade Commission Act, advertising has to be truthful and fair and advertisers have to back up their claims.
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The confidence of small business owners is soaring, according to a new report from Reuters, which likely means that more Boston business formation is on the horizon.


The staff at our Boston small business law firm understands the challenges of starting and maintaining a small business. A huge part of making the leap to launching your dreams is having at least some level of confidence that you’re going to be successful.

The next critical step is to consult with an experienced business attorney in Massachusetts, who can help you tie up the legal loose ends and ensure that you and your financial interests are protected – whether it is a joint venture, partnership, sole proprietorship, limited liability partnership, C-corporation, S-corporation or a limited liability company. An attorney can help you sort out which one of these options makes the most sense for your start-up.

Confidence, though, is one of those things that, like money, often multiplies for those who have it. That’s why this news is so good. Reuters reports that the confidence held by U.S. businesses rose to an encouraging high last month, with more owners planning to rebuild their stocks after nearly five years of liquidating their inventory.

According to the National Federation of Independent Businesses, the “optimism index” spiked by almost 95 percent in February – the highest it has been in a year. What’s more, it was the sixth month in a row that it had been inching upward.

It breaks down like this: Of the more than 350,000 federation members, nearly 15 percent reported upping their inventories – which is an increase of three points since the first of the year. The number of businesses that were still slashing their stocks dropped four points, to 20 percent last month. The federation’s survey showed that the inventories of small business owners increased by about 5 percent last month. Most felt that they didn’t have enough in stock to meet the demands.

These aren’t adjusted for seasonal variations, but a spokesman for the federation was quoted as saying that this is excellent news for the overall economic recovery and growth in the U.S. The more people buy, the more people are employed – and the cycle continues. When inventories are increased, it boosts the gross domestic product – something that is evident in fourth-quarter figures.

In fact, recent results of government research determined that job growth surpassed 200,000 last month – the third consecutive month of gains. Additionally, unemployment is remaining about the same – little more than 8 percent – for the third year in a row.

One mistake new business owners sometimes make is assuming that they can’t afford to hire an attorney to help them sort through the issues that frequently crop up. The truth of the matter, though, is that you can’t afford not to. Failing to do this can leave you vulnerable to potential scams, theft, lawsuits and financial hemorrhaging.
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The Internet is changing and it could be huge for Massachusetts businesses just getting their start.

Most Americans are used to typing “.com” at the end of a website, such as this one, to get to where they are trying to go. Sometimes, it’s “.net,” “.org” or a variation, but the majority are “.com.” But new changes will require companies to bid on other generic top-level domains that could change the way people browse the Internet, by creating domains such as .pepsi, .walmart or .car.
This is big news for Massachusetts small businesses that are just getting their start or those who are already established and want to develop a better online presence. Our Boston small business lawyers would encourage any small business owner to do research on this topic in order to continue strengthening their company’s position in an increasingly digital world.

This is especially true with companies that have similar names to other businesses or use a common name, such as Smith or John in their company name, because branding is so critically important to a company setting itself apart from others.

Starting in January, the Internet Corporation for Assigned Names and Numbers, a non-profit group that manages the Internet, is opening the bidding for new top level domains. The organization will accept applications from any business and personal site that wishes to create a new domain.

At this point, a lot is unknown. For one, experts believe it will cost millions of dollars to obtain, run and publicize a new domain name. Second, it’s unclear if users will be willing to forgo the popular .com to look for other domain names. Some may succeed, while others may be difficult to find.

It will take a lot of advertising dollars to make these new sites work and, inevitably, many will fail. Some companies will be forced into buying a domain name simply as a defensive measure. There are many people who make money off of registering potentially popular web sites and then selling them at the opportune time.

Some companies, analysts believe, will register sites in order to make a profit later on. Larger corporations may be enticed to purchase these domains as a defensive measure, to protect their image and company name.

Most believe that the cost of registering a new domain will be prohibitive to scammers who are trying to make a quick dollar. And the non-profit group has also set up a trademark clearinghouse that allows trademark owners to register their marks so that others can’t steal them. In registering the trademark, the clearinghouse will be cross-checked.

While it may be costly, small businesses should consider this change and determine if it is something to consider. Having a strong Internet presence is important and in many cases can make or break a company. In forming a small business, consult with a Boston small business law firm can provide your enterprise with a strong legal foundation and sure legal footing for the future.
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Boston business attorneys note small business economic confidence posted its first gains in seven months in September as outlook for sales improved and businesses prepare for the holidays.

Reuters reports the National Federal of Independent Business said fewer small businesses expect sales to decline. The recession from which the country is still trying to emerge has been a precarious time to start a business. Yet statistics show that this recession, like the ones that have come before it, continues to incubate small businesses. In many cases, laid off or downsized employees have struck out on their own out of necessity. In other cases, other factors made it the right time to launch an enterprise. 1200761_main_street_vs__wall_street.jpg

The BBC recently reported that employees in both the U.S. and Europe are increasingly turning to starting their own business as a way to better ensure their own job security amid today’s unforgiving corporate climate. While the U.S. unemployment rate sits at more than 9 percent and Congress debates job proposals of varying credibility, the number of new businesses is growing at the fastest rate in 15 years.

Such businesses are the driving force behind the U.S. economy –accounting for 52 percent of the workforce, according to the Small Business Administration. Nearly 20 million workers are employed at companies with fewer than 20 workers. Another 20 million work at companies with fewer than 100 workers. Together they rival the 47 million who work at companies with 500 or more employees.

Still, the reality is that more than half of all small businesses fail during the first 5 years. Common reasons include:

-Lack of experience
-Poor location
-Over investment in fixed assets
-Poor credit availability
-Insufficient funding
-Personal use of business capital

-Unexpected growth
-Low Sales

Tax and regulatory concerns can also play a part in small business failure, as can lack of access to experienced legal counsel. Business formation includes your choice of entity and is an important consideration. Formations include sole proprietorships, partnerships, limited liability corporations (LLC), S-corporations and C-corporations. Each has its pros and cons — including tax implications.

Early stage coaching, business startup and planning and corporate finance are also critical aspects of getting a business off the ground. Complying with state and federal employment law is critical as well.

The challenging nature of starting a successful business means such ventures are often started by midnight CEOs — someone who is hanging onto a steady job while launching a business in his or her spare time. In many cases, they are starting a business similar to the one in which they already work — which can raise issues involving employment contracts, non-competes and other protective measures.

Most believe such ventures will offer them the job security not present in corporate America. And that can be the case — just be sure you are launching your business with a solid legal foundation.
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A New York Investment Fund has made an unsolicited bid to acquire Cambridge-based AMAG Pharmaceuticals, the Boston Business Journal reports.

AMAG’s board of directors said it would evaluate the offer and make a recommendation to shareholders. MSMB Capital Management, a New York fund that invests in health care and biotechnology, made the $378 million bid to block the proposed merger of AMAG and Allos Therapeutics.
When it comes to mergers and acquisitions in Massachusetts, the actions of boards of directors will be scrutinized. A board’s responsibilities when it comes to planning and corporate finance are to act in the best interest of the company and its shareholders.

Our General Counsel on Call service provides legal advice to corporations in Massachusetts. Properly fulfilling the duties of the board can be particularly complicated during a merger or acquisition or when dealing with possible issues of employment discrimination, liabilities or financial issues governed by Sarbanes Oxley.

The deal between Allos and AMAG is worth $686 million and would give Allos about 40 percent of the new joint venture. AMAG Pharmaceuticals is focused on the development of therapeutic iron to treat iron deficiency anemia. Allos Therapeutics is focused on anti-cancer therapeutics. The merger was announced in July. “We are very excited about this merger as it creates a combined company with an enhanced commercial presence in attractive market segments supported by a more efficient organizational structure,” said Brian J.G. Pereira, CEO of AMAG.

MSMB Capital Management is a long-term shareholder of AMAG and said it does not believe shareholders would be best served by the merger.

The Boston Business Journal has since reported that AMAG’s board has rejected the “white knight” bid and reaffirmed its intentions to merge with Allos. The journal also reports that AMAG has come under some pressure this year after reporting lower-than-expected sales of its anemia drug.

The board announced that the “previously disclosed proposal by MSMB Capital is not reasonably expected to result in a superior offer to the merger with Allos Therapeutics, Inc.”

When boards often run into problems is when it’s revealed that board members stand to profit substantially from one course of action. Conflicts of interest and other legal issues must be thoroughly explored and resolved — to protect both the merger and the integrity of all involved.
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State officials inadvertently created a powder keg (as opposed to a beer keg!) when they instituted new regulations forcing micro-brewers to use at least half their hops and grains from local farms, the Boston Herald reports.

An experienced Boston business attorney understands the impact government regulations can have on the viability and profitability of a Massachusetts business. In this case, brewers claim the law could kill the fledgling industry just as it gets off the ground.
The Massachusetts Alcoholic Beverage Control Commission permits small brewers (less than 5,000 barrels) to set up shop with a $22 Farmer-Brewery license. The only other options is a Manufacturer License, the cost of which starts at $4,500. The advisory issued through the MABCC aims to “encourage the development of domestic farms.”

Brewers say local farms could not come close to meeting demands.

In some cases, it may be necessary to consult an experienced law firm to lobby on behalf of your business when the state or federal government is considering legal changes. Certainly waiting and hoping the government gets it right is not the best approach. In other cases, whether planning a business startup in Massachusetts or working to ensure compliance with new or existing regulations, consulting a Massachusetts business law firm is the best bet when it comes to keeping your business on the right side of the law.

As a result of the new regulations, brewers found themselves stuck in a no-man’s land — the Farmer-Brewery License requires brew be made with local crops but forbids on-site sales, tasting and self-distribution, which are key points in the business plans of most microbrewers.

“If this stands for 2012, we don’t have a business,” said Jean-Claude Tetreault, owner of Trillium Brewing Co.

By Tuesday, the uproar caused the MABCC to reverse itself. More than two dozen brewers had complained, according to the Boston Globe. After meeting with the makers of Samuel Adams, Cape Ann Brewing Company and Ipswich Ale Brewery, Massachusetts Treasurer Steven Grossman said the commission had made a mistake.

Common industries regulated through the Massachusetts Office of Consumer Affairs and Business Regulation include autos and transportation, banking services, cable TV and telecommunications, energy and utilities, home improvement and construction contractors, insurance, retailers, landlords and real estate.

Businesses also have an obligation to safeguard personal information from identify theft. Rules and regulations involving workers’ compensation, unemployment and social security disability benefits is another complex area of law. Ignorance is not a defensible excuse for noncompliance. A firm offering General Counsel on Call services can keep you legal and can help you avoid regulatory violations or other costly legal mistakes in the formation or operation of your Massachusetts business.
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A Massachusetts technology lawsuit between Varian Semiconductor Equipment Associates Inc. (VSEA) and a group of its investors is heating up; shareholders claim they will be shortchanged by a $4.9 billion takeover offer from Applied Materials Inc. (AMAT).

As we reported recently, Massachusetts business law attorneys have seen an increase in merger and acquisition activity with the beginnings of the economic rebound. And while an experienced law firm is always required to handle such complex transactions, technology startups are best served by having experienced legal representation during the formation and investment stage. How a business is formed — and how investors are brought on board — can go a long way toward determining investor rights during such disputes.
In this case (Crane v. Varian Semiconductors, U.S. District Court, District of Massachusetts), investor David Crane contends members of the board of directors of Varian violated U.S. securities laws, issued misleading proxy materials, and failed to fully explain the sales process. The lawsuit also alleges that it’s unclear why the board chose to negotiate exclusively with Applied Materials Inc. Crane contends shareholders will not receive a fair price unless the transaction is stopped by a court.

Varian Semiconductor Equipment Associates Inc. is based in Gloucester, Massachusetts. The company designs, manufacturers and services semiconductor processing equipment used to make integrated circuits. The company has more than 3,000 high current, medium current and high energy implanters installed at facilities throughout the world. The systems implant more than 5 million wafers per day.

Applied Materials Inc., based in Santa Clara, California, provides equipment, services and software to manufacturers of semi conductor, flat panel display and solar photovoltaic products. Applied agreed to buy the company in anticipation of increased demand for microchip technology used in mobile devices. News of the lawsuit sent Varian stock up slightly; the stock has risen 66 percent so far this year.

Applied announced the signing of the merger agreement in May, which valued Varian at $63 a share. At the time, the price represented a 55 percent premium to Varian’s closing stock price. Upon completion of the deal, it was announced that Varian would operate as a business unit of Applied’s and would continue to be based on Gloucester.

“We believe the opportunity is very attractive for Varian’s customers, employees and shareholders,” Varian’s chief executive officer Gary Dickerson said at the time. “In addition to our combined strengths in the semiconductor space, Applied’s proven capability to extend its technology to adjacent markets like solar and display can help unlock the tremendous potential of ion implantation in these markets.”

Varian is a manufacturer of the ion implantation technology, which is currently used in Internet applications, personal computing and telecommunications. The companies have said the their combined efforts should open new markets for the technology.

The stock is currently trading at about $61 a share.
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