Big Firm Experience With Small Firm Benefits

Texas faring better as country’s economy slows

An economist recently observed that Texas’ economy performed slightly better than other states in the second quarter, an article of WBAP reported on August 1.

According to Southern Methodist University economist Dr. Bernard Weinstein, Texas did “fairly well” even though the nationwide economy barely reached a 2 percent increase in the second quarter. Though consumer spending is up, which is an important factor in a healthy economy, Weinstein noted that fewer businesses are making new investments. Weinstein explained that job creation is hurt when businesses do not make new investments in plants and equipment. Last year, the Texas economy created 175,000 new jobs, down from the 300,000 created two years ago. 

If you plan to contribute to the U.S. economy by running your own business, the Texas business lawyers at Adam Pugh may be able to work for you. Find out how we can provide you with fresh ideas on how to operate legally by calling (512) 472-2431.


What to write in a business plan

Potential entrepreneurs are often reluctant to write a business plan for their chosen venture because they assume it is unnecessary. However, a comprehensive plan can provide you with a full understanding of what you want to do and where your business will go in the future. Below are the topics that should be included in a business plan:

  • Executive Summary
  • Set-up and Structure of Business
  • Financial Plan Strategy
  • Development and Regulatory process outline
  • Marketing Plan
  • Biographies
  • Launch and Delivery Plan

The business plan serves as a map for entrepreneurs to help them determine each aspect of their business. While there is no infallible way to succeed in running a business, having a comprehensive business plan puts a potential entrepreneur one step ahead of competitors. If you are trying to start your own business in Austin, an attorney at Adam Pugh may be able to work for you. Call our office today at (512) 472-2431 to find out how we can push you ahead of your competitors.


4 steps to forming a small business in Texas

Operating a small business is an elusive practice for many, but the effort can come with huge rewards. Individuals determined to take the plunge and become an entrepreneur in Texas are required to complete four basic steps.

  1. First, you need to file a business name with the county and/or state and decide what kind of legal structure it will be.
  2. Determine the required taxes you need to settle within the jurisdiction of your business, including taxes owed to the federal government.
  3. Depending on the chosen business type, you will need to secure business permits and licenses, including registrations and authorizations for your business.
  4. Lastly, as a future employer, you will need to meet the state and federal requirements concerning employment laws.

Forming a small business is exciting, especially if it will help you fulfill your dreams. If you are ready to enter the business world, seeking the advice of an experienced business attorney is important. An attorney can offer you assistance and guidance along the way. Find out how an attorney at Adam Pugh in Austin may work for you today by calling (512) 472-2431.


Choosing a name for an LLC in Texas

A Limited Liability Company, or LLC, is a business structure that blends features of a partnership and corporation. Texas law initially requires potential entrepreneurs to provide a name for their chosen LLC.

Entrepreneurs who choose to form an LLC should understand that their business name must contain the abbreviation “LLC.” For example, John might use “John Law Firm LLC” as his law firm name. There are several ways to write the LLC abbreviation, such as L.L.C., L.C., or LC. The abbreviated form of limited and company such as Ltd., LTD, and Co., can also be used in forming business names. The business names should be unique in nature and not resemble existing company names. One way of checking a business name’s availability is by searching the Texas Secretary of State online research tool SOSDirect. Entrepreneurs are given 120 days to reserve a business name after filing the Form 501. Entrepreneurs are subjected to a $40 fee for filing the Form 501 through mail or SOSDirect.

If you want to know more about LLC’s, or if you have decided to open up your own business in Austin, get in touch with the Adam Pugh business lawyers. Find out how we may help you start your business by calling (512) 472-2431.


Common pitfalls while raising venture capital

Venture capital is a powerful tool for a startup hoping to expand, providing the leg-up to even climb onto the growth ladder. It is a complex process, however, governed by SEC rules and lined with pitfalls that can rob founders in the long run. It is imperative that you seek experienced legal guidance through each step of the process of raising capital.

Here are just a few of the common issues that cause startups to make critical errors in the venture capital stage:

Reaching out to investors – The SEC has established strict rules against advertising or soliciting venture capital. Do not publicize, advertise or put content on your website about seeking capital. You should not reach out over social media, unless there has a pre existing relationship has been established. A lawyer can help you seek out qualified capital.

SEC Rule 506 – You cannot sell securities to non accredited investors. Your investors must pass certain checks and criteria, which an attorney can help you understand. This protects the startup from a myriad of compliance and regulatory issues.

Work through a registered broker – There are a wide range of variables that can make a finder unqualified to broker the deal, including certain types of commissions and compensation.

Due diligence – It is critical that you thoroughly investigate any potential investors, doing your homework and determine motivation, net worth, end-game and other dynamics that could adversely affect the relationship you are about to establish with your investor.

Issuing equity – It is not always in the startup’s best interest to issue preferred stock, unless the firm is raising a significant amount of capital. Seek guidance regarding options for other types of equity or value that you can issue that will protect you from dilution later.

Raising capital is an incredibly complex process with countless opportunities for mistakes. Seek out prudent guidance and wisdom from a firm that has led other companies successfully through the VC process. Adam Pugh serves startups throughout Austin, Texas and has the experience to protect your firm from devastating errors while raising capital.


Is Your Business Protected from Employment-Related Liabilities?

Texas is doing fairly well these days in terms of small business growth, currently ranking fourth in the nation for jobs added by small businesses — in this case, those with fewer than 50 employees.

In fact, Austin was recently recognized as having the fastest-growing economy among large cities, while Round Rock ranked in the top 10 for economic growth among cities of any size. These rankings are largely due to employment numbers.

Growth of business operations typically brings with it a need for more employees, as well as the need for careful planning of contracts, employee relations and management.

Poor management of human resources creates liabilities for employers, and companies need sound legal strategies to avoid unnecessary complications that divert time and assets away from growing the business.

In addition to the creation of enforceable employment contracts, your business may need to cover a variety of other legal bases related to employment, including:

  • Employee confidentiality agreements
  • Promotion policies
  • Non-compete agreements
  • Employment manuals that establish the guidelines of the work environment
  • Procedures for disciplinary action
  • Employee entry and exit procedures, including termination procedures and employee testing

Texas businesses can guard against employment-related liabilities by taking action now.

While there is always a certain level of risk with a new hire, employers can protect their interests now and in the future with careful employment planning.

Slater Pugh, Ltd. LLP, provides contract and employment-related services to businesses in Austin and the surrounding areas. To learn more, please see our employment law overview.


Considering a Merger in Texas? Cover Your Legal Bases.

While mergers are common in business, every deal has its legal nuances and complexities, and even minor mistakes can have long-term and costly effects. In addition to the legal agreements between the merging entities, the new or restructured corporation typically must create new or updated contracts, procedures and corporate bylaws.

Slater Pugh, Ltd. LLP, provides all of these legal services to merging and newly forming entities. Our firm assists Texas companies in:

  • Creating or amending corporate bylaws
  • Creating co-owner contracts
  • Outlining shareholder relationships and negotiations
  • Creating contracts that determine payment distribution
  • Negotiating any severance pay issues

Merger Filing Requirements

A certificate of merger must be filed with the Texas Office of the Secretary of State if any of the filing entities is a domestic entity, or if the purpose of the merger is to create a domestic entity.

Merger filings in Texas typically include a plan of merger, plus any additional attachments required by the Texas Business Organization Code. For example, Texas entities created through a merger must provide additional statements regarding any amendments or changes to a certificate of formation, which must be attached to the merger filing.

As an alternative to filing a complete plan of merger, the merging parties may choose to complete and certify specific statements in the Alternative Statements section of the required form.

The Secretary of State notes two of the most common reasons for the rejection of mergers:

  • Failure to include appropriate additional statements
  • Failure to obtain the correct certificate of account status from the comptroller

It goes without saying that any business owner or organization considering a merger should have experienced legal counsel every step of the way, whether you’re filing the required forms, creating new contracts or updating your bylaws.

For more on these matters, please see our overview of business and corporate law.


Austin Ranked as Top City for Young Entrepreneurs

In 2015 one study ranked Austin as having the fastest-growing economy among large cities. The factors considered in the rankings included population growth and decreases in unemployment rates, among others. In fact, of cities of any size, Round Rock also came in the top 10 in terms of economic growth.

Now a separate study conducted by NerdWallet has looked at 181 metropolitan areas in the U.S. to determine which cities are the friendliest to young entrepreneurs, and Austin again ranked at the top.

Depending on the type and scope of your plan, locating small-business financing can be difficult, but Austin came in fifth nationwide for U.S. Small Business Administration loans.

Per 100,000 residents, new businesses in Austin received nearly $18 million in SBA loans. These loans can be used to start, acquire or expand a small business. SBA also provides loans for assets such as buildings and land, as well as microloans for startups, disaster assistance loans, and loans for exporting working capital.

If you’re thinking of starting or expanding a business in Austin, then it’s wise to speak with an experienced business attorney about your financing options. A lawyer can help you select an appropriate loan structure and minimize the risk.

Analysts also looked at Austin’s local business environment, including the education level of the population and how cost of living affects the operating cost of a business.

Austin’s cost of living was found to be lower than the national average, and a lower cost of living, coupled with lower office and workspace costs, can be a boon to new businesses. In fact, Midland, Texas, was also in the top 10 in this area.

For entrepreneurs and startups, it’s crucial to get it right the first time around. 

A multitude of factors have to be considered when starting a new business. You have to be smart about the kind of entity you choose to create, and you have to make the right choices with regard to financing and capital development.

You’ll also need detailed, enforceable contracts that are specific to your business, and you’ll need to cover your bases with regard to intellectual property. And it’s a good idea to get a professional to assess the long-term risk of your business plan.

For more on these matters, please see Slater Pugh Ltd. LLP’s overview of representation for entrepreneurs and startups.


What Are the Essential Elements of a Texas Business Contract?

With Austin and other parts of Texas currently enjoying a growth-friendly business climate, the need for well-written, comprehensive contracts is on the rise. An ambiguous or poorly drafted contract could prove disastrous for a company.

If you are thinking of signing any sort of business agreement, then it’s a good idea to first get some feedback from a contract lawyer. With that in mind, let’s consider the basic legal elements of a contract.

Under Texas law, a binding contract typically consists of six essential elements:

  • Offer and acceptance
  • A legal purpose for the contract
  • Mutual assent
  • Sufficiently defined terms
  • “Consideration”
  • Competent, authorized parties to the contract

Offer and Acceptance

A contractual offer must be based on someone’s willingness to enter into a bargain, and the other party’s acceptance of the offer must not alter the offer’s terms. If acceptance changes the terms of the offer, then the offer has been rejected, or a change in the contract constitutes a counteroffer.

Legal Purpose

A contract can be legally binding only if its purpose is legal. You could not, for example, enforce a contract whose purpose is to bargain for illegal drugs or weapons.

Mutual Assent

For a contract to be enforceable, both parties must express mutual approval of the terms. This essential aspect of a contract is also sometimes called the “meeting of the minds.” Mutual assent means that both parties understand and agree to the terms of the contract. Determining mutual assent is based on what the parties said and did, not on their subjective intent.

In other words, the meeting of the minds is most effectively established in writing.

Sufficiently Defined Terms

A contract is not legally binding unless its terms are clearly defined, and courts are not able to create contracts where none exist. Keep in mind, too, that an ambiguous contract may have unforeseen consequences that negatively affect your business in years to come. A contract lawyer can help you avoid unwanted surprises.

Another important point: if you agree with someone else to negotiate a contract later, then that agreement is generally not an enforceable contract itself.

Consideration

In contract law, a consideration clause essentially establishes a relationship between you and the party with whom you’re contracting. “Consideration” refers to the “benefit to the promisor or a detriment to the promisee.”

Additionally, Texas case law has established that a monetary consideration is not necessary for a contract to be enforceable, but of course contracts frequently involve monetary considerations.

Competent Parties

Lastly, a binding contract must involve parties who are competent and authorized to enter into a contractual agreement.

Protect your interests by getting legal advice.

Your business contract should be developed specifically for your business, and cheap Internet-vended forms often prove to be more trouble than they’re worth. A contract lawyer can draft a contract that meets your business’ specific needs. For more on these matters, please see Slater Pugh Ltd. LLP’s overview of contract disputes.


Why Some Austin Homebuyers Are Going with Realtor-Free Transactions

With solid employment numbers and a high economic growth rate, Austin’s housing market is on track to break records this year. The Austin Board of Realtors reports that on average the price of a single-family home was $333,452 in October 2015. That price represents a 7-percent increase from the same time last year.

While this is all good news, higher home prices mean higher commissions for realtors, and sometimes homeowners look back on their residential real estate transactions and wonder whether a realtor was needed at all. Could that heavy cost have been avoided?

If you’re able to find your own home to purchase, then you may not need help from a realtor, but you do need to cover your legal bases.

In some cases, a realtor’s 6-percent cut can come to tens of thousands of dollars that, with the right legal help, could have been saved. If you’re buying a house at the current average price in Austin — $333,452 — then you may end up paying a realtor a 6-percent commission of $20,000. At the same rate, the realtor would get $60,000 if the home is priced at $1 million.

Don’t leave money on the table. Let a real estate law attorney help save you money and protect you from legal pitfalls and financial harm.

The reality is that the traditional home-buying process is not the best option for all homebuyers, and a realtor-free transaction may be the best way to minimize costs and maximize the deal.

At Slater Pugh Ltd. LLP, our real estate transaction attorneys provide advice and representation to homebuyers and home sellers. Our services include:

  • Drafting contracts, including offer letters and purchase agreements
  • Negotiating prices
  • Handling inspections, title-related matters, financing and closings

To learn more about a transactional strategy that is often more cost-effective than the traditional home-buying process, please see our real estate law overview.

Contact Us

Learn more about how we can handle your business’ legal needs.

Contact our offices today at (512) 472-2431 to speak with a qualified member of our legal team.