Businesses, like our government are generally controlled by their “Governing Documents.”
The best way to avoid problems in the operation of any business venture is to spend time, before you start your business, developing a set of “governing documents” that will control how the business will be run, what shares will be valued at, and most importantly, how the business will be split up should a partner/shareholder become ill, pass away, or desire to leave the business. Forming a business is an exciting step, and in my experience, business owners are rarely thinking about the end of a business when they start a company, but “an ounce of prevention, is worth a pound of cure.”
Taking the time to retain an experienced business attorney to help with the creation of your business--as well as drafting “governing documents,” which set out the rights and obligations of the shareholders, can prevent a whole host of problems should a shareholder desire to, or be forced to, leave the business.
When a business does not have its own “governing documents,” state law will impose how the business is to be valued, split and sold. Take control of your business, by preparing a set of governing documents when you first create the business, which can help avoid costly disputes, or court intervention down the road. Contact Ashmore & Ashmore for a private consultation today.