Written by Michelle N. Ogborne

How to Avoid Business Disagreements

Even with the most careful planning and attention to detail, business disagreements can occur. For example, let’s pretend your company creates had products. A customer orders a product but realizes once they receive it, it’s not exactly what they were expecting. This situation could create a disagreement between you and the customer. Fortunately, you can minimize your risk by putting the proper legal structures in place to protect your company.

Structuring Your Company

You have many options available to you when structuring your company. Here’s are some of the most common:

  • Sole Proprietorship – This structure is for businesses that have a single owner. It is the simplest and easiest business entity to form. However, you’re solely responsible for raising capital and making decisions. Also, you’ll be responsible for covering the costs of any business disagreements, since legally there is no distinction between you and the business.
  • Partnership – A partnership is similar to a sole proprietorship, except that multiple owners share responsibility for the company’s decisions and finances. Partners share all profits and losses according to their percentage of ownership. However, you’ll also share responsibility for any financial or legal mistakes your partner makes.
  • Corporation – Interest in Corporations is transferred by issuing shares to stockholders. Corporations offer limited liability protection because the corporation is legally separate from the shareholders. The owners are thereby protected from personal legal action if the business is sued. However, shareholders are separate tax entities from the organization itself.
  • Limited Liability Company (LLC) – The LLC structure treats the business as a corporation, even though it is privately held. Additionally, the owners are separate from the business for financial and tax purposes.

The structure you choose can have a significant impact on your personal and business finances in the event of a lawsuit, so you’ll need to choose wisely. If you make the wrong choice, you could be exposing your family to a lot of risk. At Ogborne Law, can help you determine which structure makes the most sense for your business.

Protecting the Corporate Veil

In some business disagreements, you may need to go to court. In doing so, you’ll likely incur legal fees and other related expenses. Because of this, you should always keep your personal bank accounts separate from the business accounts and never comingle funds. This simple step can make it more difficult for a plaintiff in a business disagreement to  come after your personal assets.

Detailing Everything in Writing

When you agree to deliver your products or services to a client, you should always put the agreement in writing. Take care to go over every detail, as these contracts can protect you in the event of business disagreements. The more information you provide in the document, the more protection you will have from a legal standpoint.

This logic holds true for your advertising and marketing materials as well. Make sure that every detail is correct so that don’t risk business disagreements relating to false advertising. Every promise made in your ads should be deliverable.

Remember when Red Bull got sued because the drink didn’t actually give customers wings? Now, the company’s ads include a disclaimer saying that the wings are metaphorical, not physical. Save your company time, money and hassle by being direct and upfront right from the start.

For Help with Legal Issues Involving Business Disagreements

Here at Ogborne Law, we can help your Phoenix business with the above tasks and any other legal concerns you have for your business. While we cannot promise to prevent all business disagreements, we can help you reduce the chances of them happening and minimize the impact on your business when they do. Get in touch with us today to schedule a free consultation to discuss your business needs.