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Hackensack Business & Commercial Law Blog

What is an LLC and what are its advantages and disadvantages?

There are several advantages and disadvantages to choosing a limited liability company for a business's chosen structure in New Jersey. This entity type, a hybrid structure that blends the limited liability features of a corporation with the operational flexibility and tax features of a partnership, is popular in the state for small businesses.

The LLC structural advantages include the limited liability features, inexpensive set-up, fewer required records and profit-sharing features. Limited liability means that the individual's personal assets are protected from the indebtedness or liabilities of the company. The business structure is generally less expensive to start and has significantly fewer record-keeping requirements than do structures such as an S-corporation. When there is more than one owner of an LLC, the profits can be shared as the owners see fit, so if one person contributes more time or energy, he or she may be provided with a correspondingly higher share of the profits to compensate for that.

Limiting legal action against New Jersey businesses

In today's world, defending against lawsuits may be a routine cost of doing business. People today are quite litigious and many readily sue businesses for a number of reasons. Even if a lawsuit that is filed against a business ultimately fails, the business will still have incurred expenses and spent time defending against allegations, and these expenses can be difficult to handle for a small business. There are preventative measures businesses may be able to take in order to lessen the chance that a lawsuit will be filed against them.

First, all agreements should be in writing. When a written contract exists, the details are easier to enforce. In addition, in some states, some agreements are not enforceable if they are not made in writing. In addition, written agreements should include clauses that specifically outline how any disputes that may arise will be handled. Having a written agreement that a dispute may be resolved through arbitration or mediation prior to any litigation may help prevent expenses associated with court intervention.

Are there different types of mergers?

In some cases, it may be beneficial for two companies to combine their resources. There are many advantages to combining successful enterprises and building a larger company. New Jersey entrepreneurs with an interest in business startup or acquisition may wish to review the different ways that companies can be combined into new enterprises.

The five major types of business mergers are conglomerate, horizontal, vertical, market extension and product extension. A conglomerate is formed when two utterly unrelated businesses are combined. Pure conglomerates have no similarities between the merging corporations but mixed conglomerates occur when the firms want to extend their markets or product lines. Horizontal mergers combine corporations in the same industry, creating a larger business with more market share and opportunities. Vertical mergers combine corporations along the supply chain, merging companies that produce different parts or different stages of the same finished product. They provide for more efficient production of the product and give the benefits of synergy to management and product development.

Selling a business requires thorough preparation

Authorities state that comprehensive planning is essential to successfully selling a business in New Jersey. The process needs to involve an honest and thorough assessment of the business, the marketplace and the desired outcome. In most situations, it is prudent for prospective sellers to retain advisors and legal counsel, who may help plan the sale and ensure that it transpires in a favorable manner, without incident.

According to authorities, pre-sale priorities ought to include a complete business valuation and market assessment. Investigating records of recent and similar business transfers may provide data for which a close estimate of value can be extrapolated. This is critical knowledge to possess when establishing an asking price, authorities say. For, disparities between a business' true market value and its asking price may forestall the sale and inspire doubts about the business as well as the seller.

14 million Dish customers lose access to 7 channels

14 million customers of Dish, including residents of New Jersey, recently lost access to seven channels offered through Turner Broadcasting after contract negotiations between the two companies failed. Popular programming including CNN, CNN en Espanol, truTV, Headline News, Cartoon Network, Boomerang and Turner Classic Movies were all yanked from Dish's lineup following the companies' failure to reach an agreement, according to reports on Oct. 20.

Dish responded by putting MSNBC news programming in their lineup instead of CNN and Headline News, while replacing Turner Classic Movies with FXM Retro. The companies each blamed one another for the channel blackout, with Dish blaming Turner by stating they failed to make a reasonable offer, and Turner blaming Dish by saying they had made numerous concessions. There is no word on whether they will reach an agreement at some point, but for now, Dish's customers will have to go without the seven missing channels.

Things to consider before beginning a business relationship

Entrepreneurs in New Jersey often have occasion to consider taking on a partner at some point during the life of a business. Partnership discussions may occur at the outset of the venture, but they are just as common later. In any case, business owners and prospective business owners must consider many of the same things when joining forces with another person.

It may seem counterintuitive, but it is important to consider exit strategy even before the relationship begins. Because of the zeal and lofty expectations with which many approach partnerships, this can be akin to considering divorce on the wedding day, but a business relationship is likely to end somewhere down the line. A quality exit strategy should cover as many eventualities as the individuals can imagine, but the big points are division of assets and what will happen in the event that a partner dies.

Statute of limitations in contracts for the sale of goods

Under the Uniform Commercial Code, as adopted by New Jersey, any party claiming a breach of a contract for the sale of goods has four years to pursue a legal claim from the time that the breach occurred. The parties to the contract can agree to reduce the statute of limitations to as little as one year. However, the statute of limitations may not be extended beyond four years, even if the parties so agree.

The statute of limitations begins from the time the breach occurred even if the breached party doesn't know about the breach until a later date. An exception to the rule is if there is a breach of warranty and time must pass before any such breach can occur. Furthermore, if an action is taken within the statute of limitations and is terminated, another action may be taken after the time limit expires.

Are there penalties for not dissolving a corporation?

When the owners of a New Jersey business decide to move in a different direction and close the doors of their corporation, it is not enough to simply stop offering goods or services. The owners must go through the formal, legal steps of dissolving the corporation. Otherwise, the corporation will still owe the minimum tax of $500 annually, even if it did not turn any profit or engage in any business activities

Every corporation that is subject to the New Jersey Corporation Business Tax Act is required to pay this minimum tax. The corporation must be dissolved through the Division of Revenue of the New Jersey State Treasurer. The effective date for the dissolution will be the date of receipt by the division of a properly completed and executed articles of dissolution, the final payment of all fees, and the notice of Tax Clearance from the Division of Taxation.

New Jersey company maintains venue in contract dispute

Choices of venue and requirements for arbitration are often spelled out in contracts between international business partners. A recent breach of contract dispute involving a New Jersey sales agent for Croatia Airlines that is making its way through the courts is showing that contractual language may be overridden by other concerns. The dispute between Networld Communications Corp. and the airline stems from an abrupt contract termination by the airline. A provision of the agreement requires that any conflict between the parties be resolved in the Croatian courts.

The plaintiff argued that the case should be adjudicated in New Jersey. One of the company's reasons for the request is that the Croatian government has a controlling interest in the publicly-traded airline. It was also argued that Croatian courts lack the authority to enforce subpoenas for documents, and backlogs in the Croatian courts mean the case could drag out for a decade. Though ruling in the plaintiff's favor, the judge found most of the arguments unacceptable.

What is needed to defend an eviction lawsuit in court?

When a New Jersey landlord tries to evict a tenant, there are some things that the tenant may do in court to defend against the action. This may involve providing receipts as proof of rent payments or, if rent has not been paid, proof of any allegations against the landlord for which the tenant refused to pay rent. Such a reason might involve the landlord not making necessary repairs to the property.

The tenant should consider presenting witness testimony in court. The witnesses would have to appear in court to provide such testimony, as written statements are not allowed. Any written notices either to or from the landlord could be used as evidence, as could photographs of property conditions and other relevant documentation. Even if rent has not been paid because of a valid reason, such as serious infractions on the part of the landlord, the tenant should bring the owed amount in the event the ruling does not go its way.

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Albert Buzzetti & Associates,
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New York, NY 10121

Telephone: 212.564.9009
Toll Free: 866.237.8202
Fax : 201-816-3644
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