Category: Business Law

In these uncertain times, many business owners face multiple challenges from different directions. We have never been in a situation quite like this before, and we do not know whether it will be safe to resume ordinary business operations in a month, six months, or even a year. The U.S. Chamber of Commerce predicts that over 40 percent of the small businesses in America might close their doors forever by the end of 2020.

When a business cannot open its doors because of the pandemic, its revenues can plummet. Some expenses continue, like the rent on the shop you cannot use to sell your products or services to customers. You probably have questions about running a business during a pandemic and knowing when to call it quits. A South Carolina business attorney can guide you through the decision-making process and draft the documents you need.

The Vast Unknown

It is practically impossible to engage in business planning when you do not have all the facts you need. In this pandemic, your business might be struggling to determine answers to these issues:

• When the government will allow you to re-open your office or store.
• How long you will stay open until the next shut-down.
• What restrictions you will have to follow to re-open, and how those things will impact your business.
• How to keep your workers, customers, and yourself safe during the health crisis.
• How you will get enough revenues to keep your business going.
• Whether you can pivot your line of work into a COVID-19 related enterprise to generate income.
• What legal liability you might have if a worker or client gets sick.

Traditional business planning cannot function without answers to those questions, so we have to develop a new way of thinking about business viability in a pandemic.

Some Options for Staying Open or Closing

One of the first things to ask yourself is whether you want to stay in business. If you lost the passion for having your own business because you are nearing retirement, do not want to try to retrofit your company to the new economic realities during and after this pandemic, or lost a close loved one to COVID-19, you might want to talk to an attorney about wrapping up operations.

If you think your company has a future, you have some options for riding out this storm. Here are a few suggestions:

• The new Chapter 5 bankruptcy, also called the Small Business Restructuring Act, helps small companies with a quicker, simpler bankruptcy process. If your company has less than $2.73 million in debt, you can reorganize and keep the business in operation. The creditors do not have the option to veto the plan.
• Filing a Chapter 11 bankruptcy can help if you have a larger company. These bankruptcies cost more and take longer than a Chapter 5, but might be a good choice if your company owes more than $2.73 million.
• A Chapter 7 bankruptcy can wipe out your debts, but you could lose your personal assets. If you pledged your house as collateral for a Small Business Administration (SBA) loan, for example, a Chapter 7 might force you to sell your home.
• You can close your business without filing for bankruptcy if you have enough assets to pay off your debts or work out a deal with your creditors. Be sure to have your lawyer draft enforceable agreements.
• Think carefully about borrowing money to stay afloat in this pandemic. If your company will not have the resources to pay the debt when it comes due, borrowing money could be digging a deeper hole instead of helping you.

As part of your analysis, you might want to write a new post-COVID-19 business plan. You will have to speculate about several factors, so you might write up several “what if” scenarios. A South Carolina business attorney can advise you about bankruptcy, restructuring, and remaining viable during this pandemic. Contact us today.

Splitting decision-making 50/50 with your business partner can cause a multitude of conflicts for your company. Many business partners end up splitting decision-making equally by default because their partnership documents do not clearly define the roles and responsibilities of each partner. A South Carolina business attorney can guide you through the formation of your partnership or another business entity and draft documents to help you avoid these and other foreseeable issues.

How Equal Decision-Making Can Cause Problems for a Company

When both partners have 50 percent of the decision-making authority in a company, they can become deadlocked when they disagree on a topic. As a result, production can get halted until the partners resolve the conflict. The entire commercial entity can collapse.

There are several solutions to this situation:

• Set up the company as a 51/49 partnership instead of 50/50. When there is no consensus on a decision, one partner can make the call on the issue and avoid downtime for the company.
• If the partners absolutely will not agree to a 51/49 partnership, then allocate specific 51/49 control to the partners for certain types of decisions. For example, the partner with an IT background could make the final decisions about applicable tech issues if the two partners cannot reach an amicable agreement after extensive discussion. You will want to put the details of this arrangement in writing.
• The combined shares of partners who get added after the initial setting up of the company should be less than half of the total shares of the business. Let’s say that the founder takes on two partners a few years into the enterprise. The founder should retain a greater than 50 percent ownership of the company to keep the new partners from causing a stalemate. A 60/20/20 arrangement could prevent such problems.
• If the business entity is already set up, and the partners are experiencing problems or want to avoid these situations, it is possible to change the arrangements. For example, the partner who wants decision-making control could buy one share of the other partner to achieve a 51/49 partnership. 

Impasses are not the only reason that equal partnerships are usually not advisable. A 50/50 ownership scheme is often not the best use of each partner’s unique skills and experience. Let’s say that one partner is an innovator, and the other partner is a natural manager. 

If the person with managerial skills has an equal say on setting up the subject matter of the business, the product could suffer. Also, the innovator should probably take a back seat to the decisions of the manager when it comes to handling administrative details after the product launch.

While it is possible to modify the business arrangement after the initial start-up of the company, it is a better practice to address these matters during the initial formation of the company. 

Contact Willcox, Buyck & Williams, PA today to learn more. Our South Carolina business attorneys can answer your questions and advise you on the best approach for your situation. Every commercial entity is unique, and “one-size-fits-all” templates are rarely a good fit. 

Businesses all over America are facing challenges that we have never seen before. Companies are trying to stay afloat and position themselves to be ready for customers when the lockdown restrictions get lifted. In addition to surviving financially, your business needs to be mindful of potential liability claims down the road from clients and employees. A South Carolina business attorney can help you navigate through these uncertain times. 

The economic and public health situations are changing daily. This COVID-19 business update can provide some guidance about measures you can take now, with the understanding that you will need to stay on top of new developments as they arise. You should always do what makes sense in your situation. Here are a few suggestions of things you might consider:

Reach Out to Your Customers 

You can use email, your website, Facebook, Instagram, and other social media to stay connected to your customer base. Let them know that you are still in business and eager to provide the goods or services they need. Post a prominent COVID-19 update on all the pages of your website.

Tell them how they can connect with you and obtain your goods or services. Explain the steps you are taking to keep them safe. Assure them that you are following the applicable government regulations and guidance about COVID-19. Let them know which apps they can use to make purchases and get your goods delivered to them.

Place a large sign in the windows of your “brick and mortar” office or store. People need to be able to read the information from their cars or at least 10 feet away. Let the public know:

• Your new hours
• Any restrictions, like wearing masks, the required distance between shoppers, whether children are allowed in the store, how many people can be in the store at one time, arrows that direct the flow of traffic inside the store, purchasing limits, whether you accept cash, and whether you have a “one shopper, one cart” rule.
• Special arrangements, like the hours during which only people over a certain age or those in a high-risk group can shop.

NOTE: If you had to close temporarily, you might want to update your Google My Business profile to let people know that fact. If you are offering delivery, curbside pickup, or selling items through a shopping or delivery app, you should not mark your Google profile as temporarily closed.

Protecting Your Revenue Stream

Some companies can adapt to the current situation and keep some money coming in to stay in business. These suggestions will not work for everyone, but this is the time to use creative thinking. Some people have been able to obtain Small Business Administration (SBA) forgivable loans, government assistance, and other funding. Stay informed about new financing opportunities for your business.

A few of the assistance programs are federal, but do not overlook possible state, county, or municipal measures that could help. Mortgage and rent forgiveness, loan payment forgiveness, delayed or deferred interest on loans, and a moratorium on utility shut-offs for nonpayment are a few examples of measures that could buy your company some time during this pandemic.

Instead of the ways that your business generated income before the pandemic, you might want to think about offering:

• Curbside sales
• Online sales
• Gift cards for purchase through your website
• Online classes or consultations with clients

If you have not already done so, consider establishing an account with a local shopping or delivery service like Instacart so that your customers can make purchases with relative safety and convenience, and local individuals can earn some income by working as shoppers and delivery people.

Try to find functions that your employees can perform while working from home. You might find that you need less office space after this pandemic because some of your staff can work from home in the future.

Manage Potential Liability

You should take every reasonable step to keep your employees and customers safe. Before long, we are likely to see stories in the news about lawsuits from people who contracted COVID-19 visiting a store or office, making a curbside purchase, or having goods delivered to them. It will be a challenge to prove who was at fault in these cases, but the litigation could cost you massive legal fees. 

Contact Willcox, Buyck & Williams, PA today for assistance with local and federal directives for your business. Our South Carolina business attorneys can help you plan your operations to minimize your risk.

The coronavirus pandemic has been challenging for everyone, including business owners. Throughout South Carolina, business owners are faced with enormous challenges, including protecting the health of their employees and customers as well as trying to pay bills and overhead costs while being restricted by the various Executive Orders affecting business operations throughout the state.

If you have questions about your obligations under the current Executive Orders or you have questions about programs to help business owners, contact a South Carolina business attorney. An attorney can help you review your options and develop or modify your business plan to incorporate the new “normal” we are all facing in light of the COVID-19 outbreak.

Five Things All Business Owners Should Do to Weather the COVID-19 Pandemic

1. Review all Executive Orders issued by state and local governments.

The Executive Orders issued by the Governor impact businesses throughout the state. Some businesses are required to close while other businesses may remain open with certain restrictions. Make sure that you read these orders carefully and comply with all restrictions to avoid penalties. 

Additionally, check with your county and city government for restrictions. Some local governments have added restrictions for businesses operating within their city or county limits.

2. Apply for loans and other business aid.

There are many state and federal loans, grants, and aid available to businesses during the COVID-19 pandemic. Apply for loans and other aid to help cover payroll and overhead costs. Talk to your lender or attorney to review the various options and the requirements for each loan to determine which aid options are best for your company.

3. Follow CDC guidelines for stopping the spread of the virus.

The Centers for Disease Control (CDC) has guidelines for businesses to respond to the coronavirus. To protect your employees and customers, review and follow the CDC guidelines for COVID-19. 

4. Review contracts, leases, and loan agreements.

You may need to extend the terms of contracts and leases during the pandemic. You may also need to request loan modifications or other considerations form lenders. Review contracts and agreements with your business attorney to determine the actions you can take and your legal obligations. Contact lenders and creditors to inquire about special considerations regarding debts during the shutdown. Many lenders and creditors are working with businesses to help them manage debt payments during the shutdown.

5. Review your business budget.

Carefully review your business budget to determine if there are ways you can reduce overhead to save money. Many business owners are finding they need to adjust their short-term and long-term financial plans to adjust to the coronavirus pandemic. 

As you review your business budget, keep your employees in mind. Be as honest and transparent as possible with employees regarding layoffs and furloughs. If possible, assist employees who are laid off or furloughed seek unemployment benefits.

Contact a South Carolina Business Attorney for Help

It is a difficult and challenging time. Make sure that you communicate with our South Carolina business attorneys regarding business matters during the pandemic. Preparing and planning can protect your business interests, employees, and customers.

Anytime we hear the word “audit,” we automatically think of something negative, such as an IRS audit. However, a legal audit can be very beneficial for your business. Legal audits can save your company money and avoid future legal problems. Our South Carolina business attorney can perform a legal audit of your company and help you develop a strategy to address any problems that the audit reveals.

What Is a Legal Audit?

A legal audit is a routine “health” checkup for your company. Generally, an experienced business law attorney performs legal audits. An attorney reviews various aspects of your business to assess the risk and potential for legal problems. A legal audit can identify issues with your company’s structure, management, policies, procedures, and daily operations that could lead to compliance problems and lawsuits. 

Staying on top of everything can be difficult, especially when a company grows very quickly. The owner is busy with the daily operations of the business and may be more inclined to pay attention to the financial health of the company instead of its legal health. Having a business lawyer perform a legal audit ensures that your company is legally “healthy” in addition to being financially successful. 

Think of a legal audit as preventive measures to protect your business by minimizing legal risks. 

What Is Covered by a Legal Audit?

The items covered by a legal audit depend on the type of company being audited and the type of service or product the company provides. However, there are some standard issues and items that most legal audits include.

A checklist of some issues a legal audit should review include:

• Protection of Personal Assets — Do you have a company structure and entity that limits personal liability for the owners? Do you maintain your business entity properly to avoid personal liability for company debts and obligations? 
• Contracts — Are you using standard contracts that limit the company’s risk and protect the company’s best interest? Do you have contracts related to all aspects of your business? Are your contracts outdated? Do your contracts have the correct language required by current laws that make the contracts legally enforceable? 
• Employee Matters — Does your company have a comprehensive employee handbook? Do your policies and procedures comply with federal and state employment and discrimination laws?
• Tax Compliance — Are you in compliance with local, state, and federal tax laws, including sales, employment, and corporate taxes?
• Intellectual Property and Trade Secrets — Do you have the necessary copyrights and trademarks to protect intellectual property? Do you use nondisclosure agreements in each situation in which trade secrets might be disclosed?
• Websites — Do your websites have copyright notices, terms of use, and privacy policies?
• Recordkeeping — Are your recordkeeping policies sufficient to protect yourself and the company if you are audited by a tax authority, named in a lawsuit, or investigated for compliance issues? Do you maintain accurate books and records and have redundant backups?
• Customer Data Protection — Do your policies and procedures for protecting customer data and information comply with state, federal, and international privacy laws? Are there safeguards in place to prevent data from being shared, leaked, or hacked?
• Compliance — Do you have any compliance issues? Does your company have the required permits and licenses? Are you complying with all federal and state regulations required for your specific enterprise?

The above checklist is not intended to be an exhaustive checklist for a legal audit. You should work with an attorney to determine the items that need to be included in your legal audit to protect your company. 

Contact a South Carolina Business Attorney for More Information 

If you have questions about a legal audit or want to schedule a legal audit for your company, contact Willcox, Buyck & Williams, PA to discuss this important legal checkup in greater detail.

Having an idea for a new business is just the first step in starting your own company. Startups have many legal issues to consider before selling their first product or service. A South Carolina business attorney helps entrepreneurs turn their ideas into companies. Below are a few of the legal issues that every start-up faces.

Legal Issues and Start-ups – What Do You Need to Know Before You Begin Business?

Failing to Have a Founder’s Agreement

Many new start-ups are the result of the ideas and contributions of multiple individuals. A detailed Founder’s Agreement can avoid common legal issues regarding ownership, responsibilities, and duties among a group of individuals. It also dictates how an interest in the start-up or equity in the start-up may be dissolved, sold, or transferred.

Business Entity and Structure

If you do not do anything to create a formal legal entity, state laws recognize your company as a sole proprietor in South Carolina. If you have a partner, state law treats your company as a partnership. However, it might not be in your best interest to operate under these default business entities. Sole proprietors are personally liable for all business debts and obligations. The same is true for partnerships created under state law. 

You must give careful consideration to the type of legal entity you choose for your company. The legal entity you choose for your company impacts your personal liability, taxes, management structure, financing options, and daily operations. 

Protecting Intellectual Property

Failing to apply for patents, trademarks, and copyrights could result in your ideas being stolen by competitors. Protecting your trade secrets is also another important step in protecting your business from being stolen from you. Creating detailed nondisclosure agreements and confidentiality agreements are as essential as applying for patents and trademarks.

Licenses and Permits

Depending on the type of business you create, you may need one or more licenses and permits, especially if you intend to operate a brick and mortar shop. Compliance regulations for some industries are rigorous. Failing to comply with regulations can result in serious legal issues for your start-up.

Using Generic Contracts, Policies, and Agreements

It may be tempting for a start-up to use generic forms found online to save money. However, generic agreements, contracts, website policies, privacy policies, employment agreements, and other documents can create legal liability for the start-up and the owners. Generic forms do not contain the detailed information needed to protect the company and the owners because they are not customized for the company to cover specific state and federal laws applicable to the business. 

Failing to Protect Customer Data

The protection of customer data is a huge legal issue that many start-ups fail to give adequate consideration. If a start-up collects any data from customers or clients, including anyone visiting their website, the company is legally obligated to protect that data. Many federal and state laws in the United States cover the privacy of data and information. Also, a start-up that offers services or products overseas must be aware of international privacy laws, such as the General Data Protection Regulation (GDPR) for the European Union.

Contact a South Carolina Business Attorney for Help

The above legal issues are just some of the things you must consider when starting a business. Many other legal issues may apply, depending on the type of business you create. 

However, you do not need to try to tackle the legal issues a start-up faces alone. Contact Willcox, Buyck & Williams, PA to discuss this important legal checkup in greater detail. Our South Carolina business attorneys can help you ensure that all legal matters are addressed correctly. We help you protect yourself, your ideas, and your company.

Being a board member for a nonprofit organization means that you will likely be called upon to assist with fundraising. While it may be easy to write a check, the organization benefits greatly from fundraising. In addition to raising capital, fundraising also increases awareness about the nonprofit’s mission. Fundraising may also generate non-financial assets for the organization in the way of volunteers and donations of goods and other items. In the blog below, our South Carolina business attorneys review tips that can help your board members become successful fundraisers. 

Fundraising 101 for Nonprofit Board Members

Eight tips that can help you become an effective fundraiser as a board member for a nonprofit include:

• Education Board Members — Fundraising is a learned skill. Some board members may not be as effective at fundraising because they have never learned these skills. Share fundraising ideas with other board members. Consider hiring an experienced professional to train board members on fundraising techniques.
• Set Quarterly Goals for Fundraising — Fundraising should not be a “one and done” annual event. Instead, set quarterly goals for fundraising to encourage board members to engage in fundraising throughout the year.
• Set Up a Fundraising Committee — Choosing the best fundraisers on your board to sit on the fundraising committee. The committee can help train other board members and help them improve their fundraising skills, in addition to planning key fundraising events.
• Seek Donations for Silent Auction — If you are unable to host a large event, ask your friends, family, and associates to donate items for a silent auction.
• Contact Past Donors — Obtain a list of lapsed donors from the organization. Some people who have donated in the past may have gotten busy and forgot to donate again this year. A call or letter may be all it takes to renew the contribution. 
• Cash in on Favors — When someone asks how they can return a favor, give them a pre-printed donation card and request that they donate to the nonprofit as a way to return the favor.
• Develop an Event Follow-Up Plan — Holding a successful fundraising event is just the beginning. You need an event follow-up plan to ensure that all donations are received. Also, connecting with event attendees after the event can help encourage them to make additional contributions and possibly work to raise money for the organization on their own.
• Ask for Matching Donations — Contact companies and business owners that you know and ask them to match donations for a specific event or period. For example, a company may agree to match donations to the nonprofit made by its employees or match a percentage of the profits raised by a specific event held to benefit the nonprofit. Companies can place maximums on their matches to help them feel more comfortable and willing to participate. 

Contact Our South Carolina Business Attorneys to Discuss Your Nonprofit

Our South Carolina business attorneys work closely with nonprofit organizations on numerous issues, including fundraising. Schedule a consult today. Before you embark on a fundraising activity, seek legal advice from an experienced business lawyer to ensure you comply with all state laws and regulations for fundraising in South Carolina. 

When you borrow money, the lender may require you to provide collateral for the loan. If you default on the loan, the lender can exercise its legal right to claim the asset as payment for the debt. A security instrument is filed in the public records where the property is located to ensure that other parties are aware of a creditor’s lien on the property. South Carolina business attorneys assist creditors and lenders in properly securing liens on collateral to protect their rights in case a borrower defaults on a loan. 

What Is a UCC Financing Statement? 

The Uniform Commercial Code (UCC) regulates business transactions. Revised Article 9 of the UCC governs security interests in property owned by the borrower. In a secured transaction, the borrower pledges property as collateral to secure the loan. 

A UCC financing statement is the form used to file notice of the security interest. The forms are filed with the South Carolina Secretary of State’s Office. The public can search for UCC statements online or in person. Some UCC statements must also be filed in the county in which the property exists, including statements securing an interest in mineral rights, real estate fixtures, and timber.

UCC statements are active for five years; however, filing a UCC-3 statement continues the security interest for an additional five years. The security interest expires five years from the date of filing without a continuation statement. 

What Type of Property Can Be Secured by a UCC Statement?

An individual or business can grant a security interest in its property by signing a UCC statement. Lenders may require a business to sign a security agreement for the specific property being purchased or pledge additional collateral to secure the lien. In some cases, a lender may require a “blanket” UCC statement. A blanket UCC filing gives the lender a security interest in all of the business assets.

Examples of business assets used to secure a UCC lien include, but are not limited to:

• Accounts receivable
• Vehicles
• Equipment
• Inventory
• Office equipment
• Real estate fixtures
• Investment Securities

The property doesn’t need to be free and clear of previous UCC liens for a creditor to file a UCC statement. Likewise, a UCC statement does not prevent other lenders from using the same collateral to secure another loan. 

A UCC statement creates a lien on the collateral as of the date of filing. The first lender to file a UCC has priority over lenders with subsequent UCC statements. The UCC statement serves as notice to other lenders that their interests are subordinate to other liens of record. 

Rights After Default on Debt Secured by UCC Statement

If the borrower defaults on the loan secured by the UCC financing statement, the lender has several options. The secured party may petition the court for a judgment against the borrower. It may also utilize available judicial procedures to repossess, foreclose, or otherwise enforce the claim against the property secured by the UCC statement. 

How the secured party enforces the lien depends on the type of property secured by the UCC statement and who has possession of the property. 

Contact Our South Carolina Business Attorneys to Discuss UCC Filings in More Detail

It is crucial that a lender correctly completes and files a UCC statement to secure an interest in collateral. Schedule a consult today. Our South Carolina business attorneys advise lenders and companies regarding the execution, filing, and enforcement of UCC statements in South Carolina.