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Don’t Let a Bad Contract Ruin Your Business!

ward-angela-Lancaster-County-PennsylvaniaBy Angela M. Ward, Attorney

Contracts are an essential part of small business life in Lancaster County, whether you are hiring employees, working with vendors, or leasing office space. While you may hope to save money by writing your own contracts or using online resources, that could be a big misstep. It is also a mistake to think you can simply sign on the dotted line without a thorough understanding of the terms and conditions of the agreement.

Contracts are official, legal documents. A poorly written agreement can result in a host of legal problems that can cost you money or even your business. Before you ask someone to sign an agreement or put your signature on one yourself, contact a qualified contract lawyer who can help you avoid pitfalls like unclear language and problematic clauses that won’t stand up under legal scrutiny.

Poorly-written contracts, whether you create them or sign them, can get you into trouble. With the help of an experienced business attorney, you can avoid the dire consequences of a bad contract, including:

Bad Contracts Don’t Address Breach of Contract

To be a valid contract, both parties must exchange something of value, such as money for goods and services. When one of the parties fails to deliver the expected goods and services, it is considered a breach of contract. A breach can occur anytime one party doesn’t live up to its end of an agreement. That is even more likely with a poorly written document that includes language that is either too vague or too complex. If your business is the victim of a costly contract breach, you may find it difficult to prove if the terms of the agreement are unclear. If you’ve been accused of breach of contract, an experienced contract lawyer can review the contract to determine if a breach took place and if you have a valid defense for not holding up your end of the agreement.

Bad Contracts Don’t Prevent Contract Disputes

A contract dispute often results from a misunderstanding or a disagreement over the terms of the document. This can occur when the language contains mistakes, complicated or unclear terminology, or poorly-explained technical terms. While disputes are possible with any contract, a well-written agreement will include an unambiguous dispute clause that outlines the procedure for handling, including everything from how and to whom a dispute will be reported to a timeline and a process by which it will be resolved. If you create or sign a legal agreement without a clearly-worded dispute clause, you may find yourself in a nuisance lawsuit, paying thousands in legal fees.

Bad Contracts Can Include Unreasonable Terms That Jeopardize Your Business

When you enter into a contract without the guidance of an experienced business attorney, you could find yourself agreeing to terms and conditions that are unreasonable, or even unachievable. Unusual or unreasonable terms in business documents can relate to a variety of issues. A non-compete clause might severely limit your company’s opportunities once the contract term has ended. Mistaken or intentional misinformation could mean your business has agreed to perform a task or service that will be far more costly or difficult than reasonably expected. Unreasonable arbitration clauses may make it difficult for you to find relief in a contract dispute.

Bad Contracts Can Put You at Risk for a Lawsuit

There are many ways in which a poorly-written document can put you at risk of a lawsuit. One study found that 43 percent of small business owners reported being threatened or involved in a lawsuit. Most litigation related to business contracts concerns breach of contract, contract disputes, and other issues surrounding the interpretation or enforcement of the terms of the agreement.

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Sometimes, however, your legal agreement can put you at risk because of what it is missing. Without an arbitration clause, for example, any disputes that may arise will have to be handled through costly and time-consuming litigation.

While it may seem easier and cheaper to use online resources to create your contract, online templates are no substitute for a well-written agreement. An experienced business attorney can ensure that all of your arrangements note contingencies and contain legal protections that can save you from costly lawsuits.

Bad Contracts Can Keep You Locked Into an Agreement

While you may find it tempting to enter into longer-term contracts, the strategy may backfire on you in the long run. Initially, a long-term agreement may seem like a sound financial decision, especially if it appears to protect you from high annual rate increases. However, getting locked into commitments for extended periods can also limit you from meeting your changing business needs. For instance, being locked into a long-term contract for a certain type of technology may make it impossible to take advantage of an improved technology when it comes along. Long-term arrangements can also leave you stuck in a business relationship that’s gone sour.

Sometimes, you can find yourself locked into a long-term contract without even realizing it. Such is the case with documents that contain an auto-renew clause. This clause perpetually renews the agreement for an extended length of time unless the party gives written notice 30 days before the end of the current contract term. These clauses may go unnoticed when you sign a contract. Or, due to the length of the engagement, you may simply forget about them. Either way, they can keep you from pursuing a better deal or bind you to an agreement that no longer serves the best interests of your business.

Bad Contracts can Lock You Into an Unfair Agreement

A long-term contract may be a bad idea from a practical standpoint, but if the contract includes unfair terms, it could also be a very costly mistake. Unfair agreements are not necessarily illegal, but they could put you at a distinct disadvantage, especially if one party has all the bargaining power. Business agreements can also include unfair surprises or hidden terms included by one party that are not in line with the other party’s expectations. An experienced business lawyer can ensure that your contracts do not contain unfair surprises. As an additional safeguard, a lawyer also can ensure that any document you create or sign includes a termination clause that spells out the conditions under which it can be legally terminated, as well as the legal and financial consequences of failing to do so.

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Bad Contracts Contain Unfair or Unreasonable Terms

One-sided contracts can include unfair terms that favor the party that drafted the agreement. For instance, an agreement may include an indemnity clause in which one party is left with all the risk. The party writing the document may demand to be held harmless for any losses, even if those losses were within their control. If you sign such a legal arrangement, you could set yourself up for huge financial losses with no avenue for recouping that loss. On the other hand, if you write such a contract, you could end up in court.

Bad Contracts Can Result in Loss of Revenue, Money, or Loss of Your Business

Small businesses are particularly vulnerable to the consequences of a bad contract. Poorly written agreements with problematic and unclear language or unreasonable terms are more likely to result in lawsuits. Litigation will always cost your business, not only in legal fees and possibly damages but also in company resources.

Even without litigation, bad contracts can cost you money, or even your business if you bear an unfair share of liability should something go wrong. An attorney experienced in contract law can ensure you have a sound document that mitigates risk, spells out contingencies, and creates legal protections to help you avoid significant losses down the road.

Contact Going and Plank to create, review, revise, and remediate all your business contracts.

Want to find out more about business law? Read these articles and blogs:

Why You Need an Experienced Business Attorney

The ABCs of Business and Association Formations

9 Reasons Lawyers Should Review Contracts

5 Key Points to Include in Business Contracts

Retain an Attorney to Secure Business Contracts

Choose the Business Form That’s Right for You

Lancaster County Employee Handbooks

Or click here to discover an even wider range of legal topics in our legal blog.

Why Your Lancaster County Business Needs an Experienced Business Attorney

ward-angela-Lancaster-County-Pennsylvania

By Angela M. Ward, Attorney

As a business owner, you face many potential legal pitfalls, but with the help of a qualified attorney, many of them are avoidable. A business attorney can protect you by making sure you see the legal ramifications of your business decisions, helping you to draft sound bylaws, contracts, and agreements, and guiding you should a legal issue arise.

If you are thinking of starting a big or small business in Lancaster County, an experienced lawyer can not only help you choose the right business structure, such as a limited liability corporation or a general partnership, but they can also help you secure other necessities like EIN tax numbers and company seals.

Perhaps most importantly, a business lawyer can help you avoid common mistakes that may result in costly legal battles. Here are a few common focus areas we recommend for Lancaster County businesses.

Avoid Employee Issues With a Well-Written Employee Handbook

It may seem like a small thing, but crafting a concise, well-written employee handbook is one of the most important steps you can take to protect your business from legal problems now and in the future. An employee handbook can map out a host of company policies that might otherwise result in legal disputes. Handbooks are often cited in legal actions and should be viewed as legal documents.

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The most basic employee handbook should include information about probation periods, employee health benefits, hours of work, payday schedules, overtime policy, dress code, paid time off, and attendance expectations, as well as the use of personal phones and social media.

Other points to include in your employee handbook are policies on jury duty, military leave, and unpaid leaves of absence, employee safety, discrimination and harassment policies, the process for addressing grievances, disciplinary guidelines, and termination procedures.

Pennsylvania is an at-will state, meaning employers generally can terminate employees at any time, and employees can quit at any time, without fear of legal liability. However, a poorly written employee handbook, or the absence of a handbook altogether, may make it easier for an employee to establish a case for wrongful termination.

Contact Going and Plank for help in reviewing your existing employee handbook or crafting a new one that can stand up in court and offer a measure of protection against legal action.

Even the best employee handbook will not fully guarantee protection, but well-written policies are often an important defense should a legal issue arise.

Avoid Claims Against Employers Claims of Discrimination

Numerous federal and state laws offer protection against employment discrimination based on a host of factors, including race, color, religion, sex, national origin, age, disability, political affiliation, pregnancy, and caregiving responsibilities. The law explicitly prohibits discrimination in hiring, firing, failure to promote and failure to protect from harassment by co-workers or supervisors.

Protect yourself and your business from claims of discrimination by ensuring that all managers and employees are familiar with Equal Employment Opportunity laws and by creating a professional and inclusive environment that fosters open communication.

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In terms of recruitment, hiring, and promotion, be sure to establish neutral and objective criteria in order to avoid subjective employment decisions. The Law Offices of Going and Plank can guide you in developing sound recruiting and hiring practices that not only comply with EEO laws but also help you find and retain good employees. Contact us today.

Claims of Defamation

Defamation occurs when a false statement, presented as fact, harms the reputation of another person. Defamatory statements are considered slander if they are spoken and libel if they are made in writing. Workplace defamation claims are most commonly brought against an employer by a former employee who believes a false reference or statement about his performance hurt the employee’s chances of getting another job.

The best way to avoid a defamation claim is to always be truthful. Never make a statement about an employee or former employee that you could not substantiate if sued. Never exaggerate an employee’s misconduct or disclose information or suspicions about an employee to those who do not have a legitimate business interest.

Claims of Hostile Work Environment

A hostile work environment occurs when unwelcome or offensive behavior makes one or more employees feel uncomfortable, frightened or intimidated, affecting their ability to do their job. While many factors can create an unpleasant work environment, from a grumpy boss to an annoying co-worker, most do not rise to the legal definition of hostile. In order to be considered hostile, the behavior must be discriminatory, pervasive, long-lasting, and such that a reasonable person would find it offensive.

A well-written, thorough anti-harassment policy is the best defense against a hostile work environment. Employers should make sure the policy is well communicated and that a procedure is in place for filing a complaint. They should also investigate any complaint promptly and take appropriate action when necessary.

Claims of Harassment

Workplace harassment occurs when an employee suffers from unwanted conduct because of a trait protected by state or federal anti-discrimination law, such as sex, religion or national origin.

It could be anything from verbal comments, such as racial slurs, inappropriate jokes or comments about an employee’s body, to physical abuse in the form of groping or hitting.

To prevent harassment claims, contact Going and Plank to ensure your employee handbook includes a clearly written policy that explicitly defines harassment according to federal, state, and local law. The policy should also include your company’s position on harassment, along with the procedure for reporting, investigating and resolving such claims.

Claims of Invasion of Privacy

In some respects, employees have a very limited right to privacy in the workplace, especially in the age of internet and social media. As an employer, you typically have the right to search through anything on a company computer, including internet usage and email communications. However, there are some instances where an employee has a legitimate expectation of privacy, such as dressing rooms or restrooms.

An employee may also claim an invasion of privacy if an employer publicly discloses personal information to a wide audience without the employee’s consent. Since there is often a fine line when it comes to certain privacy issues, such as video surveillance, drug testing, and physical searches, it is always best to consult an experienced employment attorney. Contact Going and Plank and let us help you craft a detailed privacy policy that you can communicate in writing to all employees.

Claims of Retaliation

If you or someone who works for you takes action against an employee because they filed a complaint about harassment or discrimination, that employee may have grounds to win a retaliation claim. Under Equal Employment Opportunity laws, participating in a complaint process, whether as a complainant or a witness, is protected from retaliation under all circumstances.

Any adverse action, such as a demotion, salary reduction, job reassignment or poor evaluation, can be viewed as punishment for making a complaint. You can avoid such claims by establishing a clear policy against retaliation, always disciplining employees consistently, and keeping all complaints as confidential as possible. That does not mean you do not have the right to discipline or discharge such an employee now or in the future for legitimate reasons unrelated to their participation in a complaint. Thorough documentation is crucial in such cases. Contact the Law Offices of Going and Plank for help in drafting an anti-retaliation policy. We can also offer sound legal advice on issues of employee discipline.

Even the best businesses can encounter legal problems, but an experienced business attorney can ensure you are complying with employment laws, minimize the risk of legal action, and defend you should legal issues arise. Contact Going and Plank today.

Want to learn more about Business Law?

Check out these blogs;

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Retain an Attorney to Secure Business Contracts
Choose the Business Form That’s Right for You

Lancaster County Employee Handbooks

5 Key Points to Include in Business Contracts

ward-angela-Lancaster-County-Pennsylvania By Angela M. Ward

Attorney

A sound contract is at the heart of every business agreement in Lancaster County and beyond, whether you’re a buyer and seller, an employer and employee, a private club owner and member, or partners in a new venture. But while you may think a simple oral agreement with a firm handshake is enough, it is much safer – and more sound – to seal any business agreement with a formal, written business contract.

An easily enforceable business contract benefits everyone by detailing the goods or services to be provided, clarifying costs, and stating the expectations of both parties. It also maps out resolution strategies should any disputes arise.

Most importantly, a sound business contract protects you and your business by clearly spelling out contingencies and creating legal protections that can save you from costly lawsuits down the road.

While it may be tempting to write your own business contracts or use online sources, it is always a good idea to consult a qualified attorney at Going and Plank in downtown Lancaster before signing contracts or asking others to sign them. A business attorney with experience in contract law can help you avoid business contract pitfalls such as unclear language or problematic clauses that will not hold up under legal scrutiny.

A qualified business lawyer at Going and Plank also can ensure that you include these key points in your business contract:

State Performance Expectations for all Parties in the Business Agreement

Among the most essential elements of a business contract is a detailed explanation of what is expected from both parties signing the contract. In order to be a legal, valid contract, both parties must exchange something of value, such as money for goods and services. While that may seem straightforward, a business contract that does not include clear, detailed and mutually understood performance guidelines can lead to confusion and, potentially, legal action should a dispute arise.

Specify Consequences for Breach of Contract

Along with the expectations of both parties, a sound business contract will include the consequences should one of those parties fail to meet those expectations. Those consequences may vary depending on the degree to which expectations were not met. For example, a party may complete a contracted service satisfactorily, but there may be a penalty for not completing it on time. When a party fails partially or completely to deliver the contracted goods or services, or the monetary compensation, it is considered a breach of contract. To make sure your contract covers breach of contract fairly, contact Going and Plank.

Detail the Dispute Resolution Process

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While disputes are probably not the first thing on your mind when you enter into a business agreement, ignoring the fact that they may occur could be a costly mistake. A business contract’s dispute clause outlines the procedure for handling a dispute, including everything from how and to whom a dispute will be reported to a timeline and a process by which it will be resolved. If you create or sign a contract without a clearly worded dispute clause, you may find yourself paying thousands in legal fees. Consult a business lawyer at Going and Plank to help you develop a fair and complete dispute resolution clause.

Define the Terms of the Business Agreement

The terms of engagement outline when the business agreement begins and for how long it will last. A business attorney will help you ensure that this part of the business contract includes specific details regarding compensation for goods and services, such as the amount of the payment or the rate, the conditions of payment, the method and the frequency.

Specify Terms for Terminating the Contract

Since a sound business contract is a legally binding agreement, it should spell out conditions under which it can be legally terminated by either party, as well as the legal and financial consequences of failing to do so. For instance, a lease agreement should include the amount of notice a tenant must give in order to terminate the contract without penalty. An employment contract should outline the circumstances under which you can fire an employee, as well as the procedures you must follow. Pennsylvania is an at-will employment state, meaning employers generally can terminate employees at any time, and employees can quit at any time, without fear of legal liability. However, that doesn’t protect employers from wrongful termination lawsuits. In addition to sound terms of termination in their employment contracts, a well-crafted employee handbook can offer employers an added measure of protection. Contact a business attorney at Going and Plank today to review your existing employee handbook or to help you create a new one.

An experienced business lawyer can ensure your contracts not only include these key points but also that they avoid problematic clauses, unreasonable terms or unclear language that could lead to dire consequences. Contact Going and Plank to review service contracts, employment contracts, leasing or real estate contracts, home improvement contracts, severance and non-compete agreements, business partnerships and more. They can also help you start your Lancaster County business and ensure it is meeting all legal requirements. Make a wise business decision today and contact Going and Plank to create, review, revise or remediate your contracts, and address your other business needs.

The Law Offices of Going and Plank are proud to participate in the Hyatt Legal Plan. 

Retain a Lancaster Business Attorney to Secure Your Business Contracts or Theirs!

Business-Employee-Handbook-Legal-HR-Lawyer-attorney-Lancaster-PABy Angela M. Ward, Attorney

As a Lancaster County business attorney, I know that your business is most efficient if you have sound contracts in place. Whether you are buying, selling, renting, merging, leasing, hiring, starting a new job, or starting a new partnership, a sound contract is at the heart of every important business transaction.

While many business agreements are sealed with an oral agreement and a handshake, it is much safer for all parties if they start with a more easily-enforceable written contract. A Lancaster business attorney can help you create formal, written contracts that can effectively state the expectations of both parties, clarify costs and deliverables, and map out resolution strategies.

Sound contracts protect you and your business. While it’s tempting to trust in the good nature of your colleagues, employees, partners, or vendors, understanding the deal actually reviewing every part of a contract and obtaining advice on unclear terms is the only way to ensure mutually-understood performance terms and the consequences when those terms are not met. With sound business contracts and advice, both parties are protected from confusion, frustration, disagreement, and liability for breach of duties.

A Lancaster Business Attorney can Help You Avoid Confusion and Problematic Clauses

While some Pennsylvania businesses write their own contracts or get forms from online sources, it’s always a good idea to have a qualified business attorney, with experience in contract law, review contracts before signing them or before asking others to sign them. A qualified Lancaster business attorney can identify problematic causes that may be unclear, unusual, or that will not hold up to legal scrutiny.

The recent lawsuit from Penn State against former Coach Shoop highlights the issues of contracts with unusual or exceptional clauses. Penn State sued for breach of contract because Coach Shoop left before the term of his contract was completed. Shoop’s lawyers charged the terms were so unusual as to be unenforceable and won a countersuit. If the contract had been written more clearly, and with greater consideration for conventional contract terms, the contract may have been more defensible when contested.

A Lancaster Contract Lawyer Helps Identify Missing or Conflicting Elements

While the heart of an agreement is often straightforward – I do this, and you do that – the power of a contract often lies in the language around contingencies and legal protections. For example, if you create or sign a contract without a clearly worded dispute clause, you may find yourself in an expensive lawsuit. Well-written dispute clauses will clarify the dispute resolution process, and avoid unfavorable legal situations down the road.

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Non-explicit, default and dispute resolution clauses could cost a business thousands in avoidable legal fees.  In 2017 a Finnish company and a Pennsylvania biotech company found that their contracts had conflicting arbitration clauses. When a patent dispute arose, courts ruled that the PA business had to comply with the Finnish company’s preferred arbitration process, and dispute the patent before the International Chamber of Commerce. This unfamiliar, and expensive, legal venue resulted in enormous legal fees for the Pennsylvania company.

Have a Lancaster Business Attorney Review Your Contracts

As a business owner or senior executive, you will be asked to sign contracts on a regular basis. You will sign contracts for everyday items like phone services and the internet, but also be asked to sign vendor agreements, employment agreements, non-compete agreements, loan documents, leases, and more.  While many Pennsylvania business owners sign contracts quickly and automatically, reviewing contracts in detail is important.

By using a Lancaster business attorney for contract review, you’ll ensure you fully understand any unusual clauses, hidden terms that are buried in legal language, and consequences for an action you may take, such as terminating an employee, a service provider, or vendor.

In the world of contracts, understanding details is essential. Going and Plank can review contracts before you sign them, and help you identify unusual or potentially problematic language. It’s prudent to use the services of an experienced business attorney to review employment contracts, leasing or real estate contracts, home improvement contracts, service contracts, vendor agreements, leasing and purchasing agreements.

If you’d like to find out more about how Going and Plank can help you create, review, revise, or remediate contracts and contract issues, contact us for a customized approach to your business needs.

Want to read more about business contracts in Lancaster County, PA? Check out these articles and blogs.

Don’t Let a Bad Contract Ruin Your Business

Why You Need an Experienced Business Attorney

The ABCs of Business and Association Formations

9 Reasons Lawyers Should Review Contracts

5 Key Points to Include in Business Contracts

Or click here to discover an even wider range of legal topics in our legal blog.

5 Questions to ask if You’re Considering Bankruptcy

Dennis-Plank-Lancaster-County-Attorney-PA By Dennis Plank, Attorney

If you’ve been struggling with a mountain of debt, you may be considering bankruptcy as one way to remedy your financial challenges. Bankruptcy is a good solution for many people in Lancaster County, but it is not right for everyone. Each person’s issues and needs vary, so you may want to consult a bankruptcy attorney before making your final decision.

As you consider your financial options, there are some questions many clients ask. If you wonder if bankruptcy is right for you, take some time to consider these questions, and see if they apply to your situation.

Will I Have to Liquidate my Assets if I Declare Bankruptcy?

Every situation is different, but bankruptcies usually don’t require you to sell everything to pay off debts. Much depends on whether you will file Chapter 7 or Chapter 13 bankruptcies. Your income and personal situation will dictate whether you qualify for Chapter 7 or Chapter 13, but in both types of bankruptcy, certain classes of property are exempt. Contact the team at Going and Plank and we’ll explain how property is treated in bankruptcy, and give you all the facts before you make a decision.

Is it Too Late to File Bankruptcy?

People often wait to file bankruptcy, hoping they may be able to convince creditors to hold off until they can repay their debt. That’s why some people are surprised by notices of foreclosure, repossession or lawsuits. Even if you’ve been served notice, it’s not too late to declare bankruptcy. In emergency situations, Going and Plank can often file an emergency bankruptcy, that allows us to stop actions like foreclosure, repossession, eviction, garnishment of wages, or lawsuits. An emergency bankruptcy stops legal actions against you and allows you time to get all the required filings and paperwork in order.

Emergency bankruptcies can help you if you are facing;

  • Foreclosure

  • Car repossessions

  • Eviction

  • Garnishment of wages

  • Lawsuits

Contact Going and Plank to discuss your options, and find out if an emergency bankruptcy makes sense for your situation.

Can Bankruptcy Help Eliminate Medical Bills?

Over 700,000 households declared bankruptcies last year, and many of those were due to the financial consequences of overwhelming medical expense and long-term illness. Having health insurance doesn’t mean you won’t be hit with huge medical bills. If a wage-earner is out of work or ill for long periods of time, financial hardships can be multiplied.

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That’s why, after a major or long-term illness, some people find they are facing insurmountable amounts of medical debt. While medical debt can be reduced or even eliminated in a Chapter 7 bankruptcy, in Chapter 13, it may be restructured into more manageable payments.

If you feel overwhelmed by medical debt, Chapter 7 or Chapter 13 may be a smart way to manage or eliminate debt.

Do I Have to Take a Credit Counseling Course?

The short answer is yes. No matter what type of bankruptcy is filed, Pennsylvania state law requires you to complete a credit counseling course with an approved agency. These mandatory courses are designed to help you evaluate and reformat your finances in ways that help you understand ways to pay down debt and avoid bankruptcies in the future. Going and Plank can connect you with a course that meets the state requirements.

What Happens After Bankruptcy?

Many clients wonder if they will be able to refinance mortgages or get a mortgage after declaring bankruptcy. Other are concerned about bankruptcy’s effect on their credit rating. The answers to those inquiries depend on the type of bankruptcy filed and if debts were eliminated or if a repayment plan was formed.

Bankruptcies do affect your ability to refinance a  mortgage or get approved for a new mortgage. As of this writing, you should be able to refinance or obtain a new mortgage two years after declaring bankruptcy, but underwriting requirements and legislation change frequently so this timeframe may change.

Your bankruptcy will be reported to a credit agency and can stay on your credit report for up to ten years. You will find that it will take time to regain a good credit score. But for many people bankruptcy provide a fresh start for their personal finances. By relieving some types of debt, eliminating some debt, and restructuring other types of debt, bankruptcy can give you the time and space you need to change your financial outlook.

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While it may seem like a bankruptcy lawyer is just another expense, an experienced bankruptcy lawyer is dedicated to helping you find the financial solutions that make the most sense for your situation. In addition to helping you through a complicated, paper-intense process, a bankruptcy attorney can steer you away from activities that may be seen as deceitful or fraudulent.

The team at Going and Plank can also help you determine which type of bankruptcy is right for you, help you protect your most important assets, and help you map out an improved financial future. Contact us today for a free consultation, and find out if bankruptcy makes sense for you.

The Law Offices of Going and Plank are located in downtown Lancaster, PA. We are proud to participate in the Hyatt Legal Plan.

Choose the Business Form That’s Right for You.

Choose to Incorporate for Liability Purposes. Chose the Form of Your Corporation for tax Purposes.

There are very few businesses that do not face exposure to claims from unhappy customers, vendors, or suppliers. As a business owner, it is important to protect your personal assets from claims that may be made against your business. Incorporating the business is the most effective way of getting protection from liability for claims against the business.

Incorporating your business creates a separate legal entity for liability purposes. Whether it creates a separate entity for tax purposes depends upon the form of corporation that is created. The type of corporation that a business should form is more of an accounting question than a legal question. An accountant should be consulted to be sure that you create the most tax-advantageous form for your business.

Angela Ward is an Associate and business attorney at Going and Plank. With more than 20 years of experience practicing business law, Ms. Ward is a regional expert in business formation and representation. Below, she provides some basic differences in the forms of corporations that can be created.

Which Corporation Form is Right for Your Business?

by Angela Ward

C Corp

Business-Employee-Handbook-Legal-HR-Lawyer-attorney-Lancaster-PAA C Corporation is formed by filing articles of incorporation with the Corporation Bureau of the Pennsylvania Department of State. It is owned by one or more individual or entity shareholders. Management of a C Corp involves three stages: shareholders, a board of directors, and officers. Shareholders vote for a board of directors who make the major business decisions. Members of the board of directors elect officers to take care of day-to-day operations.

For tax purposes, a C Corp is taxed as a separate entity which pays tax on its income. Profits are distributed as dividends to its shareholders who then pay income tax on the distribution. This is why they say that C Corps suffer double taxation. Despite this, C Corps are often chosen because the company pays a low tax rate on the first $75k in profit. C Corps also provides various tax and cost advantages for owners such as paying non-reimbursable medical expenses and disability insurance. A C Corp can be changed to an S Corp whenever the shareholders choose.

S Corp

An S Corporation is also formed by filing articles of incorporation with the Department of State. It is owned by no more than 100 shareholders but cannot be owned by other corporate entities. An S Corp is managed by shareholders, directors and officers.

For tax purposes, an S Corp is a pass-through entity, meaning that it is not a separate tax entity and does not pay corporate income tax. Instead, the shareholders of a C Corp pay tax on business income on their individual tax returns at their individual tax rate. Shareholders also have the advantage of being able to offset non-business income with business losses.

LLC – Limited Liability Company

A limited liability company is formed by filing a certificate of organization with the Corporate Bureau of the Department of State. An LLC has members instead of shareholders, and members are issued certificates showing their percentage ownership instead of stock certificates. An LLC can be owned by one or more member and has a flexible management structure. An LLC can be member-managed, meaning each member has a say in all management, or the members can elect to be manager-managed, where only the persons selected as managers can have a say in the operations of the business.

For tax purposes, an LLC can be either taxed separately or taxed to the member-owners as pass-through taxation. Many LLCs are single member-owned and taxed as the individual taxation rate. however, LLC’s can and often choose to be taxed separately (by filing an S Corp tax election) in order to avoid the imposition of self-employment tax.

Each business and situation differs. If you have questions about how to form and structure your business, contact me to talk more. 

The Law Offices of Going and Plank are located in downtown Lancaster, PA. We are proud to participate in the Hyatt Legal Plan.

Lancaster County Employee Handbooks: Communication, Remediation, and Protection

There are many reasons to create an employee handbook that are predicated on sharing company missions, aligning the workforce, creating a shared sense of purpose, and simply providing a set of answers to common human resource and employment questions.

In this blog entry, we’ll focus on the lawful roles of employee handbooks, and hone in on the legal benefits and challenges of creating a comprehensive employee handbook. Angela Ward is an Associate at Going and Plank and has over 20 years of experience in business law in Lancaster County and throughout the Commonwealth of Pennsylvania. Ms. Ward has agreed to help us explain why creating sound employee handbooks can protect your company from lawsuits.

Legal Considerations for Employee Handbooks

By Angela M. Ward

Business-Employee-Handbook-Legal-HR-Lawyer-attorney-Lancaster-PAMost businesses in Lancaster County and throughout our area are aware that Pennsylvania is an at-will employment state. At-will generally means that an employer can terminate employees at any time, or that employees can quit at any time, without fear of legal liability. However, Pennsylvania’s at-will status does not protect companies from wrongful termination suits or discrimination charges. That means that employers must ensure that employment decisions are fair, thoroughly documented, and supported by well-communicated policies and procedures.

Whether you’re a large or small Pennsylvania business, you’ll need to share company policies with your employees. Mapping out basic information such as introductory or probation periods, employee benefits, hours of work, overtime policy, dress code, paid time off such as personal days or vacation days, and the use of personal phones and social media are at the foundation of even the simplest handbooks.

Employee Handbooks are an Incredibly Practical Tool

Many Lancaster County companies also find that an employee handbook is a great place to share a mission statement, a vision for their industry, expectations for attitude and customer services, and company values.

Your handbook is also a good place to share that you are an Equal Employment Opportunity (EEO) employer, include legally-mandated language on pay deductions, publish payday schedules, outline benefits, state policies on jury duty and military leave, communicate your policy on unpaid leaves of absence, and, if you have more than 15 employees, discuss your compliance with the American with Disabilities Act (ADA).

Explain Redress of Grievances

By thoroughly explaining procedures for submitting complaints, protests, accusations, or whistleblowing, you give your employees a clear path for sharing unethical or illegal behavior. Employee handbooks in Lancaster County should offer a practical way to address workplace issues before they grow into legal problems. When our team at Going and Plank helps companies with employee handbooks, we review your procedures to make sure processes comply with state and national employment law. We may also recommend additional systems and methods that you can put in place to ensure your management team is able to deal with conflicts effectively and legally.

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Can Provide Legal Protection in PA

Pennsylvania businesses can protect themselves in some measure from wrongful termination suits if they create and share well-crafted employee handbooks. These companies can protect themselves legally by requiring that all employees review and sign handbooks when hired. Companies should also require similar reviews and signatures whenever handbooks are edited or updated.

When creating or editing your company’s employee handbook, it’s critical that you clearly state that your handbook is NOT an employment contract. If your handbook is not clear on this point, plaintiffs may charge that the handbook substituted as an employment contract and may use it as a tool to override the at-will relationship. Employees can also use the lack of an employee handbook as the basis for a wrongful termination action.

There is a long list of Pennsylvania court cases challenging the role of the employee handbook. The well-documented legal liabilities created by the lack of an adequate handbook should convince companies to take handbooks seriously. An employee handbook is the foundation of a legally-sound approach for dealing with at-will employment, company expectations, discrimination and harassment policies, and termination procedures.

Essential to Protect Your Central PA Business

Some Pennsylvania companies consider an employee handbook as an optional tool that’s “nice to have” but not essential. As numerous Pennsylvania lawsuits can illustrate, an inadequate handbook can fail to protect you in court. Operating without a handbook leaves you even more vulnerable to legal action. That’s why creating a solid, comprehensive employee handbook is an excellent investment of time and money.

A Contract and Legal Document

Because employee handbooks in Pennsylvania are often cited in legal actions, companies should consider a handbook to be a legal document. Whether you ask your business lawyer to create a handbook or to examine existing documents, legal review is essential. If you’d like to talk to Going and Plank about creating or reviewing an employee handbook, contact us today.

Want to read more about business law? Check out these blogs.

Why You Need an Experienced Business Attorney

The ABCs of Business and Association Formations

9 Reasons Lawyers Should Review Contracts

5 Key Points to Include in Business Contracts

Retain an Attorney to Secure Business Contracts

Choose the Business Form That’s Right for You

Or click here to discover an even wider range of legal topics in our legal blog.

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