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Howard County MD Business Law Blog

Buyout agreements in Maryland

Buy-sell agreements, which are also called buyout agreements, are used in business structures with multiple shareholders as a means of passing shares from one shareholder to another. Depending on the size of the company and the type of corporation, buyout agreements may be more limiting or restrictive. These business planning agreements generally go into effect when events, such as the death of a shareholder, occur. The purpose of the agreement is to protect other shareholders from complications and to deal with the disbursement of assets held by the departing shareholder.

Broadly speaking, the events that may trigger a shareholder agreement include death, divorce, retirement, personal bankruptcy, incapacitation or disability, and termination of employment with a company. They determine a wide range of details, including whether the company must buy out the shareholder's stock, who may buy it, how to measure its value and how payment will be made.

Using a notary to avoid potential contract disputes

Business owners in Maryland will likely be involved in some sort of contract dispute at one time or another. While some of these disputes may be complex in nature and difficult to anticipate, others could be avoided by taking a few straightforward preventative steps. Individuals may sometimes attempt to avoid their contractual obligations by claiming that they never signed the document in the first place, and proving that they did could take time and cost money. This is why it may be prudent to have all signatures on a business contract notarized.

Notaries have a commission from state or county authorities to witness and acknowledge a signature. They check the identification of the individual signing the document and then sign the document themselves before affixing a seal. Should the individual later claim that they did not sign the contract, a notarized signature will usually be sufficient evidence for a court to consider the document valid.

Hormel Foods facing AgFeed lawsuit

Many Maryland residents and businesses have shown interest in the outcome of a lawsuit against Hormel Foods. The suit alleges that Hormel Foods did not disclose issues about a company responsible for raising the livestock used in their products.

The issues that lead to the suit dated back to 2010 when AgFeed Industries was in negotiations to buy M2P2, a pork supplier. Officials from Hormel Foods reportedly gave AgFeed Industries assurance that the company was in compliance with contracts. The suit alleges, however, that Hormel was aware of problems with M2P2 and filed a request for arbitration over a dispute about the reimbursement amount from Hormel. AgFeed Industries shareholders have stated that they would not have gone through with the purchase had they been aware of the M2P2 problems.

Confidentiality agreements can protect sensitive information

Maryland businesses who have important and sensitive information as part of their business process may be reluctant to engage in ventures with other companies. They may be afraid that their proprietary technology or information could be compromised. However, they may also need share that information with other parties. They may need consultation from an outside company or they may need to share that information as part of their sales process to a potential client. One effective way to manage this problem is with a confidentiality agreement.

A confidentiality agreement can help two businesses work together without fear of information being compromised. It can also reduce the risk of future business litigation. An agreement generally specifies who is disclosing the information and who is receiving it. It should also specify exactly which information is confidential and it should define exactly what the term confidential means. In some agreements, confidential could mean that the information has to stay within the company and out of public domain. In other agreements, terms could be more narrow and state that only certain departments or individuals can have access to the information.

Waiver of remedy for a breach of contract

Maryland business owners might be interested to learn about special circumstances when a breach of contract does not require a remedy. In general, a party who was involved in a contract that was breached by another party would be entitled to claim remedies for the material breach. However, the aggrieved party may waive its right to receive remedies in some instances.

One way that remedies for a breach of contract are waived is through a mutual agreement by both parties to the contract. After the breach occurs, the party making the breach and the aggrieved party may sign an agreement that assures no claim will arise as a result of the breach.

Enforcement of the ADA in Maryland

Employers in Maryland are required by federal law to comply with the Americans with Disabilities Act. The law allows employers to offer reasonable accommodations to employees who have a disability. Providing reasonable accommodations protects employers against employment litigation while also maintaining the civil rights of anyone with a disability. The law does provide exceptions for undue hardships regarding an employer's legal obligations to provide accommodations.

Under the federal employment law, a reasonable accommodation may include a change in the physical work environment or in the way that the workplace usually does things in order for an applicant or employee to function in the workplace. The three levels of reasonable accommodation include modifications to the job application process, modifications to the work environment and provision of equal benefits and privileges as employees without disabilities. Examples of what a reasonable accommodation could include are modification of work schedules and enhancing facilities access, such as building handicapped ramps.

Registering a trademark for a new business

Many entrepreneurs involved in a business start-up in Maryland may pride themselves on attending to the myriad details of running a new venture. One thing that even the most conscientious entrepreneurs might overlook during business formation is the registering of a trademark. Having a registered trademark can help a start-up business increase its profile, gain clients or customers and prevent competitors from unfairly taking business away from a start-up company.

A trademark can be anything that members of the public associate with a specific business entity. The U.S. Patent and Trademark Office has registered trademarks for music, words and phrases, and scents. These trademarks are used on packaging, letterhead and other communication and advertising. The USPTO receives hundreds of thousands of trademark filings each year and registers less than two-thirds of these filings. They may decide not to register a trademark for a new business for several reasons.

What tax year do I use for my business?

A business owner in Maryland or any other state may choose a calendar tax year or a fiscal tax year. A tax year is selected based on when a company submits its first tax return, ask for an extension on a tax return or pays estimated taxes. Unless a company is subject to a required tax year, it is free to choose between a calendar or a fiscal year.

As its name implies, a calendar tax year begins on the first day of January and ends on Dec. 31. Fiscal tax years are 12 consecutive months that end on the last day of any month except January. Companies that keep no records, have no accounting period or do not have a tax year that qualifies as a fiscal year must use the calendar year.

Pros and cons of buying an existing business

Purchasing an existing business is an option for Maryland residents who would like to become business owners. Before going ahead with the purchase of an existing business, however, it us important to consider the benefits and drawbacks of purchasing an established venture. Although there are many advantages of buying a business that has already gone through its startup phase, the disadvantages could give some potential buyers pause for thought.

The obvious advantage of purchasing an existing business is the fact that startup costs will be significantly reduced. An existing business may already have inventory, a trained staff and a loyal customer base. If the business is profitable, the new business owner might also gain immediate access to cash flow that can be used for any improvements they would like to make to the business.

What is the process to start a new business in Maryland?

The first step in establishing any business is coming up with a business plan and structure. The prospective owner of the new business should consider what type of business is ideal for the market and find out as much information about that type of business as possible. After deciding on the type of business, the owner should decide the structure of the business, such as a sole proprietorship, partnership, or corporation.

The next step involves registering the business, which requires a name and location. Checking with local and county zoning requirements is an important part of the location selection process because violations can be expensive. Once the name and location are ready, the business owner can use the Maryland Central Business Licensing and Registration Portal to register a business trade name, form a business entity and establish a business tax account.