Bethesda Business & Commercial Law Blog

Entity formation requires careful consideration

Starting a business requires a plethora of decisions to be made. Many Maryland business owners would say that entity formation is one of the most crucial aspects of the process. The type of entity under which the company is formed could have a significant impact on its future.

There are numerous ways in which a new business can be formed, and each of them comes with varying degrees of liability. Furthermore, each comes with certain tax implications. Many factors need to be considered when deciding which type of entity will provide the best benefits to the owner, or owners, of the business.

Apple becomes the target of business litigation once again

Many people here in Maryland use -- or have used -- an Apple product at some point in recent years. Not surprisingly, Apple's success with iPods, iPads and iPhones, among other devices has opened it up to numerous lawsuits over the years. Many of those cases have to do with patents, and recently, yet another piece of business litigation was filed against the technology giant. This time, a man is claiming that Apple owes him $10 billion and a piece of the action for every Apple device sold.

Why would he make this claim? The man insists that he invented the iPhone back in 1992 and that Apple stole his patent. He claims that he designed an iPhone-like device in that year, and even began the process to have it patented. However, according to the records of the U.S. Patent and Trademark Office, he failed to pay the required fees, and the agency considered his application to have been abandoned.

Dealing with the issues that come with starting a new business

Maryland entrepreneurs are often so excited about the future that they might underestimate the number of potential obstacles that can arise. Starting a new business requires a multitude of financial choices that can affect the course of the business. Many of those choices might not be in the hands of the entrepreneur, so there needs to be some consideration of how to deal with unforeseen issues.

For example, investors might pull back some or all of their financial backing if they do not believe that the business is moving in the right direction. Furthermore, suppliers could raise their prices, unions that deliver your supplies could go on strike or shipments could be stalled for a variety of reasons. All of these unforeseen events could cripple a new business if there is no plan.

Business debt collection can be a tricky area to navigate

Nearly every Maryland business operates in order to make a profit. When a client does not pay for services rendered or delivered goods, that primary objective is put into jeopardy. Businesses that do not get paid are also not able to pay their own debts either, which could also threaten the success of the company. Business debt collection is a vital part of any company, but it can be tricky to navigate.

An attorney who handles the collection of business debts could tell you what your rights and responsibilities are when it comes to getting a client to pay. If a customer says that it is unable to pay, you can file a lawsuit to obtain a judgment. Once a judgment is received, it can be used to seize the defendant's assets to cover the debt owed.

What to do when facing business litigation

Some Maryland businesses are fortunate enough to never be the subject of a lawsuit. However, many others find themselves involved in disputes that result in the filing of business litigation. The question then becomes what steps need to be taken in order to deal with the legal claims.

One of the first things that the owners and/or managers of the business need to do is stop and take a breath. Just because the company is facing a lawsuit does not mean that it will ultimately face any liability. The natural instinct of most people facing litigation is to panic and/or retaliate against the plaintiff or plaintiffs, which would be inadvisable since it will most likely only make matters worse. 

IBM and Groupon file business litigation against each other

Technological advances happen at a rate that many companies here in Maryland and elsewhere are unable to keep up with on their own. In order to remain current and profitable, companies use technology patented by other companies. If the company using the technology does so without the permission of the company holding the patent, business litigation could be filed.

Patent infringement, as it is called, is at the center of the litigation between IBM and Groupon. Back in March, IBM filed a lawsuit alleging that Groupon used its patented technology from the 1980s. Recently, Groupon filed a lawsuit alleging that IBM used its patented technology that allows merchants to offer customers certain products and services based on social media usage and geographical location.

Woman alleges illegal business practices by car dealership

Buying a used car in Maryland or any other state can be a nerve-wracking process. Because the vehicle was pre-owned, there is no way to guarantee that the vehicle was properly taken care of by the previous owner or owners. Adding to that is the fact that used car sales people have the reputation of using illegal business practices to sell cars -- even though most are just trying to make a living and are not deceitful.

A woman from a neighboring state is convinced that she was defrauded when she purchased a used car from a dealership in her area. When she was shopping for the vehicle, it was listed as "certified pre-owned," which is a testament to its condition. Even so, she claims that when she took it for a test drive, the vehicle had a shimmy.

Don't underestimate what it takes to start a new business

Many Maryland entrepreneurs are lucky enough to embark on the adventure of starting a small business. However, it can be easy to underestimate the commitment that it takes from the owner and family members while the new business gets off the ground. Without proper planning, an entrepreneur could end up inadvertently sabotaging the company's chances at success.

One of the biggest surprises that most Maryland entrepreneurs encounter is the amount of time that needs to be devoted to the company -- especially at first. It often takes a great deal of time and effort to find a balance during which the business can grow and those involved can have a personal life. Furthermore, personal and business finances could be challenging.

Creating an online presence should be part of any business plan

With the technological advances of the past couple of decades, people spend more time shopping for goods and services online then at any other time in history. Thus, in order for a new -- or existing -- Maryland business to thrive, it would most likely need to take advantage of being online. This is why creating an online presence should be part of any business plan.

When most Maryland businesses think about being online, they think about web content, search engine optimization and sending the right message to prospective customers and/or clients. They focus on whether to have a mobile app, to be on social media such as Facebook or Twitter and even how to monitor the online presence of the competition. However, there is more to being online than just what will attract traffic.

Structuring a new business with equity investors

Some Maryland entrepreneurs might want to avoid taking out a loan in order to get their businesses off the ground. Therefore, they seek out and partner with equity investors. Choosing how to structure a new business involving equity investors requires careful consideration.

Equity investors are often what people refer to as the "silent" partners in a business. They own a part of the company, but they are not directly involved in the day-to-day management and operations of it. Fortunately, the entity structure of the business is not restricted to one type or another. Unfortunately, that still means that the pros and cons of each type of entity will need to be weighed.

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Daniel S. Willard, P.C.
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Bethesda, MD 20814

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