Employment agreements come in a variety of formats. In our experience, the most important provision is the termination provision. Typically, from the employee-side, the employee wants to be terminated only for “good cause”. If this type of language is not included, the employee does not have a safety net and can usually be terminated “at will” by the employer.
Also, many times, the employment agreement will be tied to receiving an interest in an existing or newly created company. The type of business you intend to operate, the number of owners of the business you intend to have, and your financial wherewithal (and resultant tax implications) are typically the primary criteria for determining what business entity, if any, you should use in forming a business entity. In other words, one size does not fit all and the correct business entity (i.e., limited liability company, professional limited liability company, corporation and limited partnerships) all have their benefits and detractions depending upon the criteria listed above.
Also, it makes good sense to have a mechanism to determine the valuation of the company so that upon its sale or division the members can determine each party’s interests. This is typically done through a buy–sell agreement, also known as a buyout agreement. This agreement sets forth the triggering events that will allow the other member(s) to buy the departing member’s interest and the price for that member’s interest.
As most people know, if you operate a business without using a corporate entity, you risk the possibility that your personal assets may be at risk if a problem arises due to your business’s activities. For that reason alone, many people use corporate entities. In all scenarios, we recommend you purchase insurance if possible to help secure against any possible problems that may arise due to your future business’s activities.
One of the most popular corporate entities is the limited liability company (i.e., the LLC). A limited liability company is a separate legal entity that can be owned by one person known as a “member” or it can be owned by many persons. Key aspects of the LLC are that: (1) LLC’s can choose how they wish to be taxed (e.g., as a pass-through entity where the income goes directly to the owner’s tax return or as an S-Corp), so long as the tax election is proper under applicable law; and (2) members are not personally liable for debts of the LLC unless they were personally involved in a wrongful act.
One of the initial steps you should take is to check out the Minnesota Secretary of State’s website to see if the name you want to use for your business is available: http://www.sos.state.mn.us/index.aspx?page=790
Then, give us a call or email us and we can help you: 612-860-8757