Blog

When you operate a business, your everyday decisions can carry financial risks that reach beyond the company itself. In business law, LLC asset protection is one of the best mechanisms available to separate your personal assets from those risks, so you can feel more confident as you move forward. LLC Asset Protection in Business Law An LLC creates a distinct legal entity so that the company itself, rather than its owners, is responsible for business debts, contracts, and certain legal claims. The result is that your personal home, savings, vehicles, and other individual property stay out of reach in most situations where the business could face trouble. In most cases, your personal assets like your house and bank accounts are protected should your business go bankrupt or be involved in a lawsuit. This is in contrast to a sole proprietorship, where no such barrier exists. How Does This Play Out in Day-to-Day Operations? When a supplier delivers late or a customer disputes a service, their claim will target the LLC's assets and any insurance it carries rather than you personally. The same applies if the business borrows money or faces a judgment from a commercial dispute. Under Texas law, unless the company agreement provides otherwise, a member or manager is not liable for a debt, obligation, or liability of the limited liability company. How Does This Affect Financing? Many banks and landlords ask for a personal guarantee on loans, credit lines, or commercial leases, even after the LLC forms. In those cases, you would remain personally responsible for that specific obligation if the business cannot pay. The LLC still protects you against other business debts where you didn't make such a guarantee. What About Lawsuits? If a customer is injured on your business premises or a contract breach claim is brought against you, it usually proceeds against the LLC, not against you personally. In addition, if one of the members of your LLC gets in trouble, the creditors of that member cannot simply reach inside the LLC to seize its property or force control. The exclusive remedy in most judgment situations is a charging order against the member's interest. The creditor receives only any distributions the LLC would otherwise pay to that member; the creditor cannot foreclose on the interest or take the company's assets directly. How Does an LLC Affect Taxes? An LLC itself does not create personal liability for ordinary business income taxes because of pass-through treatment. However, if the business withholds payroll taxes from employee wages and fails to pay them over to the IRS, those responsible (who are often the owners who control the funds) can face personal assessment through the Trust Fund Recovery Penalty. The IRS is going to look at whether a person had the duty and authority to direct payment and willfully failed to do so. This applies regardless of the LLC structure, so when it comes to taxes, it's absolutely essential to get things right. Reach out to the Artie Pennington Law Offices in Kyle or Austin, TX for the legal guidance you need for your business planning.

Forming a business partnership means carefully managing intellectual property (IP) rights to protect everyone's interests. Getting advice from a business attorney in Austin early on will allow you to create clear terms and prevent disputes down the line. Drafting Your Partnership Agreement to Address IP Under the Texas Business Organizations Code, your partnership agreement governs both the relations among the partners and between the partners and the partnership itself. If you don't use specific language in your partnership to address IP, then the default rules will apply, and those defaults may not match what you and your partners intend. The code treats property that's acquired in the partnership's name or with any partnership funds as partnership property. Intellectual property developed during the partnership usually falls into that category unless your agreement says otherwise. Sit down with your partners and a lawyer and decide upfront what should belong to the partnership and what should remain the property of the individuals, and be sure to decide whether new inventions or creative work will be owned by the partnership, assigned to one partner, or shared in some other way. Remember that partners are not employees, so the “work made for hire” concept that automatically gives employers ownership of employee-created IP would not apply here. Contributing Pre-Existing IP to a Partnership When you contribute existing intellectual property, document it carefully. List each piece of IP that's being contributed in a schedule attached to the agreement. State clearly whether you are assigning full ownership to the partnership or granting a license for its use, and be sure to define the terms of that license, including how long it lasts, the scope, what to do if the license ends or the partnership dissolves, and what to do with any royalties. IP Created During the Partnership You might agree that anything one partner develops while working on partnership business belongs to the partnership, or you could let the creating partner keep ownership but require a license back to the partnership on favorable terms. For patents, federal law lets joint owners exploit the invention independently without accounting to the others in a partnership, unless you specifically contract around that rule. The same holds for copyrights. Your partnership agreement can override these defaults with buyout provisions, exclusivity requirements, or profit-sharing formulas. Protecting Trade Secrets Texas has adopted the Uniform Trade Secrets Act, which defines a trade secret as information that derives independent economic value from not being generally known and that the owner has taken reasonable measures to keep secret. Build protection into your agreement with confidentiality clauses and nondisclosure requirements that apply to all partners, employees, and contractors. Keep access to sensitive information on a need-to-know basis, and require partners to return or destroy materials containing trade secrets when they leave or when the partnership ends. Talk With a Business Attorney in Austin If you're building a business, take steps now to protect your intellectual property, your rights, and your company. Call the Artie Pennington Law Offices in Kyle, TX at 512-596-0534 now for a free 15-minute consultation.

M&A agreements need to be approached carefully, and ideally with the advice of an Austin, TX corporate law attorney. With the help of a lawyer and a careful approach, you can mitigate risks, stay in regulatory compliance, and protect all parties to the mutual benefit of everyone. How to Navigate Merger and Acquisition Agreements to Ensure Compliance 1. Engage an Experienced Corporate Law Attorney Start by hiring an M&A attorney who is familiar with Texas law and the local courts and business situation. A good attorney will be an asset at every stage, from planning to closing, and can make sure you're in compliance with all federal and state-specific requirements. The state of Texas actually recommends that you work with attorneys since not all scenarios are covered by the Secretary of State's standard forms. Your attorney will also handle all negotiations, do a risk assessment, let you know the tax implications, and look into any ESG (environmental, social, governance) considerations that may apply. 2. Decide the Transaction Structure Is this a merger, where entities combine; an acquisition, where stock is purchased or assets are sold; an interest exchange; or a conversion? Under TBOC Sec. 10.001–10.010, mergers must be permissible under your governing documents and laws. Asset sales generally don't require owner approval unless you're talking about selling all or substantially all assets, or unless something different is specified in business documents. Be careful that, as you go through with this, no owner becomes personally liable without consent. 3. Conduct Thorough Due Diligence Have your lawyer carefully review the target company's financials, operations, legal compliance history, contracts, intellectual property, employment agreements, and regulatory issues. Key risks to look for include any ongoing litigation, issues with compliance, or environmental liabilities. Don't forget to check that the tax history is solid, too. 4. Prepare the Plan of Merger or Acquisition Agreement Your attorney will help you draft a written plan. The precise plan will depend on the type of transaction, but generally it should include the names of parties, the conversion/exchange terms, governing documents for the new or surviving entity, and liability allocation. Some of the key clauses in these agreements include: Representations and Warranties Covenants Conditions to Closing Indemnification Termination Rights 5. Get Approvals and Consents The type of approval you'll need depends on the type of company involved. For corporations, you'll usually need board approval and then shareholder votes (if required). For LLCs, the approval procedure should be laid out in the governing documents. You'll also need third-party consent in some cases, like from lenders, vendors, or regulations. 6. File with the Texas Secretary of State Finally, your lawyer will help you submit a Certificate of Merger/Exchange/Conversion with the state. This needs to include the plan details, approvals certification, and franchise tax confirmation. Talk to Us for Help in Austin, TX To make sure your transaction goes smoothly, contact the Artie Pennington Law Offices in Kyle, TX for a free 15-minute consultation and help anywhere in the larger Austin area.

When you're looking to get your tech startup off the ground, working with a business lawyer in San Marcos, TX could make all the difference between a smooth climb to profitability and a rocky, frustrating journey with an unhappy ending. From a Business Lawyer in San Marcos, TX: Legal Issues Tech Startups Should Be Aware Of Choosing the Right Structure This is really your foundational legal decision and will make a big difference to everything else. It's common for a tech startup to form initially as a Limited Liability Company (LLC) because this allows you a lot of flexibility in taxation and gives your personal assets legal protection from business debts. However, for some companies, a C Corporation structure will be better: this is a good choice for those who want scalability and need to attract venture capital. more There are other models available, as well, but it's always advisable to have legal counsel to ensure that you are in compliance with the Texas Business Organizations Code, properly registered with the state, and in alignment with any local regulations that might affect you. Your business lawyer will also help you understand the tax and other implications of each structure so you can make the best decision. Core Contracts Your core contracts, like your terms of service, are going to influence what you choose in terms of subscription models, data usage policies, and liability limitations. They will also protect you (or not, if not formulated correctly) against disputes over service delivery and intellectual property rights. Your vendor contracts need to be clear in specifying pricing and timelines and contain the confidentiality clauses you need to protect your property. Employment agreements have to properly cover the scope of the job and exactly who has ownership of proprietary ideas and inventions. The risk here, if you mess any of this up, is that you lose control of your core assets. Licenses, Permits, and Regulations Texas is a very business-friendly state, relatively speaking, yet there is still a minefield of licensing and regulation to get through if you want to have a successful startup. On the local level, you'll need general business licenses, and you might need zoning permits. At the state level, everything needs to follow the Texas Business Organizations Code in terms of registration and ongoing compliance filings. If you're handling any personal data or offering financial services, you're going to have extra oversight from other regulatory agencies here in Texas and possibly federal as well. If you have any European clients or users, the European General Data Protection Regulation (GDPR) rules apply. If you're making software targeted at minors, there's the Children's Online Privacy Protection Act (COPPA) to be aware of. For payment processing, you need to meet Payment Card Industry Data Security Standard (PCI DSS) rules. Ignoring any of these, at any level, can mean fines at best and the loss of your entire business at worst. All this is just a sample of the legal pitfalls facing a startup, but you can thrive if you tackle these issues proactively. Talk to us at the Artie Pennington Law Offices today in Austin or Kyle, TX for help in San Marcos and throughout the state.

A breach of contract claim can devastate a small business in Texas, but there are ways to protect yourself. The most important thing is to contact a business lawyer in San Marcos, TX as quickly as possible. How Can Small Businesses in Texas Protect Themselves Against Breach of Contract Claims? Contacting a Business Lawyer in San Marcos, TX more While it might seem most cost-effective to take care of things yourself, that's rarely wise. In the end, the risks are too high, and trying to address a breach of contract claim without legal advice and assistance could be the death of your company. Our knowledge of Texas law and our experience allow us to develop a strategy that's unique to each client to offer a strong defense on your behalf. Showing There Was No Valid Contract For a breach of contract claim to go forward, the party bringing the claim has to prove there was a valid contract. A valid contract under Texas law must have an offer by one party, acceptance by the other party, and something of value has to be exchanged by mutual agreement. If we can show that any of these elements are missing from your contract, then the contract is invalid and there is no claim. Showing the Other Party Started the Breach You may be able to show that the other party violated the contract before you did. If that's the case, then you should not be expected to follow through with your obligations. Showing the Contract Wasn't Clear Another possible defense in these situations is to show that the terms of the contract can be interpreted in more than one way, so there is no agreement about what was required. If you are the one who drafted the contract, then this is probably not the defense you want to use. If the other party drafted it, this is a great defense. Showing You Have Mostly Performed What's Required Another defense that works well is to show that you have either already done what was required or have come so close to it that the failure is very minor. A small or extremely technical violation of a contract isn't enough for a breach of contract claim. Showing You Had a Legal Reason to Breach In some cases, your best defense is not to argue that you did not breach the contract but to show that there's a valid reason you did, and thus you should not be held liable for breach of contract. For example, if something completely out of your control, such as a natural disaster, prevented you from acting, then you could not have performed what you agreed to do. If the other party signed a waiver saying that they accepted what you provided, even if it wasn't exactly what was required in the contract, this is also a valid affirmative defense. For help with your defense, contact the Artie Pennington Law Offices in Kyle, TX for help in Kyle, San Marcos, Austin, and beyond.

Litigation can destroy any business, and a small business is even more vulnerable than most. If you own a small business and want to protect it, talk to a business lawyer in Kyle, TX right away to develop the best strategies to ensure that all the investment of hard work and money you've put into your business is safe. What Legal Strategies Can Help Protect a Small Business from Litigation? more Work With a Skilled Kyle, TX Business Lawyer The most important strategy of all is to always work with a qualified and experienced business law attorney in Katy, TX who knows Texas law and our local situation, and get connected right from the beginning. As they say in war and football, "the best defense is a good offense." When you work with a lawyer right from the jump, then everything you do and plan comes from place of knowledge and experience, and you can proactively prevent issues. Get a Good Business Insurance Policy The second most important thing to do is get the right business insurance and keep that policy active. Yes, it's another expense, but it's an expense that can save your business and everything you've poured into it. Make sure you talk to your lawyer about the right insurance policy so you can be sure of having the coverage you need. Keep Clear, Accurate Records One of the best ways to defend your business against litigation is to ensure all your recordkeeping is perfect. This means keeping records not just about finances but also records of due diligence in background checks on employees, if that's necessary, and a record of all interactions that you have with your customers or employees or which they report. If an employee reaches out to you or HR about a concern, make sure that it's carefully noted down. If you have to take any disciplinary action, make sure it's clear why and how that discipline fits into your business policies. Be Careful and Legal in All Hiring Practices Again, working with a lawyer will be a big help here. You want to make sure you don't run afoul of any federal or state laws in checking a potential employee's background, yet you also need to do due diligence. If there ever is an issue with an employee, it needs to be clear that you were careful. Treat Your Employees Well Treating your employees with respect and dignity is one of the best things that you can do to avoid any employee lawsuit. Employees who feel they are valued members of the team are much more likely to come to you and try to resolve things rather than make a complaint with the state or bring a lawsuit. Part of treating your employees well is also being clear with them about all policies and procedures that affect them. Your business is valuable, and you need to take proactive steps to protect it. Reach out to the Artie Pennington Law Offices in Kyle, TX for experienced business legal help.

Trademarks are a type of intellectual property that is usually protected fiercely because of its importance to a brand. If you have been accused of infringing on another party's trademark, it's vital to consult an intellectual property attorney in San Marcos, TX, swiftly. Allegations of trademark infringement may lead to a claim for compensation, so it's critical to properly defend yourself against accusations without delay. more How Can You Defend Against Accusations of Trademark Infringement in San Marcos, TX? Understanding the Allegations A trademark can be made up of a color, phrase, shape, word, logo, or symbol, and it is used to uniquely identify a company or a brand. Infringement occurs when another company uses a similar mark that could potentially cause confusion in customers. If you have been accused of trademark infringement, it's important to understand the basis of the allegations so you can mount an appropriate defense. Potential Defenses There are many potential defenses against trademark infringement that can be used successfully. Not everyone who tries to assert trademark infringement has a valid case. Your lawyer can help you construct an appropriate defense, which may include: Fair Use If you use a trademark as part of a genuine effort to describe your own brand, you may be able to claim fair use. For example, using a word according to its dictionary meaning rather than referencing a trademarked brand of the same name could be considered fair use. To use this defense, your reliance on the trademark must generally be descriptive rather than a method of identification. Lack of Customer Confusion If you can prove that customers would not be confused by the similar trademarks, you may have a strong defense. This could include having a vastly different product range, different markets, or separate geographic areas. If the case goes to court, all factors will be taken into account to determine whether a customer is likely to find it difficult to differentiate between the brands. Prior Use Being able to defend a trademark relies on using the mark first. If you can show that you were using the trademark before it was registered by the other party, they cannot prevent you from using it. You may even be able to make a claim for infringement against them to ensure your exclusive use. Weak Trademark Enforcement The law allows trademarks to be protected on the basis that they act as a unique identifier. If you can demonstrate that the other party has failed to protect their trademark, you may be able to successfully claim abandonment. Once a trademark is used by multiple parties without being defended, it is no longer acting as a unique identifier. Hire an Intellectual Property Attorney There can be serious consequences for breaching another party's intellectual property, including hefty financial penalties. It is therefore critical to robustly defend your case as soon as the accusations are made, with the help of an experienced legal professional. A lawyer will be able to present your strongest defense and can negotiate with the other party to reach a fair outcome. Our extensive experience in business law means we understand the importance of intellectual property. If you have been accused of trademark infringement, contact us today at Artie Pennington Law Offices in Austin, TX. We also have an office in Kyle, TX for your convenience.

Starting a business in Austin is an exciting venture. Here's a short guide from a business attorney in Austin, TX, on the steps a startup can take to lay a solid foundation for growth. What Are the First Steps in Establishing a Startup in Austin? Answers from a Business Attorney in Austin, TX 1. Validate Your Business Idea Make sure there's a genuine need in the market for your product or service. Conduct research on local competitors, customer demographics, and demand in Austin's market. Talk to potential customers, test your product, or survey target audiences to confirm interest and refine your concept. 2. Develop a Business Plan Outline your goals, strategy, target market, financial projections, and operational needs in your business plan. Break down your timelines for launching and lay out details of your approach to competition, market entry, and customer acquisition. more 3. Choose the Right Business Structure When choosing the business structure that works best for your business, consider factors like the structure's liability protection, management flexibility, and tax benefits. The primary business structures are sole proprietorship, partnership, limited liability company (LLC), and corporation. Many entrepreneurs opt for an LLC because it provides liability protection without the formalities required for a corporation. 4. Register Your Business and Obtain Licenses Texas requires businesses to be registered with the Secretary of State. If you have a sole proprietorship, you can file a DBA (Doing Business As) name at the county level. Partnerships, LLCs, and corporations must file formation documents with the state. You can find detailed information on industry-specific permits at the Texas Department of Licensing and Regulation. 5. Apply for an Employer Identification Number (EIN) You need an Employer Identification Number (EIN) if you plan to hire employees, open a business bank account, or file federal taxes. Even if you're a sole proprietor, an EIN is often required by banks and vendors for business transactions. Applying for an EIN is free and can be done through the IRS website. 6. Open a Business Bank Account A business bank account makes it easier to plan and track your business expenses. Look for a bank that offers small business accounts and services tailored to startups, such as flexible loan options, low fees, and online tools. 7. Secure Funding and Financial Support Organizations like the Austin Technology Incubator and Capital Factory provide mentorship and funding opportunities for local entrepreneurs. You may also be eligible for grants or loans through government programs like the U.S. Small Business Administration (SBA). 8. Set Up Your Accounting System Maintain accurate financial records to keep your business organized and prepared for tax season. Many startups use software like QuickBooks or Xero to simplify bookkeeping or they work with local accounting firms that understand the unique needs of small businesses. 9. Build a Network and Find Mentorship Connect with other local entrepreneurs, attend startup events, and join industry-specific organizations to expand your network. Capital Factory, Austin Startup Week, and the Austin Chamber of Commerce are excellent resources for forming valuable connections. If you're ready to get started and would like support in establishing your startup, reach out to Artie Pennington Law Offices, PLLC, in Kyle or Austin, TX.

​​​​The prospect of a contract with a large corporation may be exciting, but the process of navigating the various hurdles can be challenging. Negotiations with a sizable organization may even present obstacles that you haven't encountered before. A skilled business lawyer with experience of operating in Austin, TX can help to manage negotiations to deliver a compliant and legal framework that forms the basis of a successful working partnership. Here's a closer look at some of the factors that need to be considered when dealing with a larger corporation. How To Successfully Negotiate Contracts with Larger Corporations in Austin, TX Allow Sufficient Time for Every Step When you're negotiating with smaller companies, deals can be done quite quickly. This is because the decision-makers are often directly involved in all conversations and hold the necessary authority for sign-off. With larger companies, progress can be much slower, and you may find there's more red tape. This is because there may be multiple levels of approval required and information may need to be circulated to key individuals who weren't directly involved in the negotiations. Having a realistic expectation of the timescale is vital to enable you to accurately plan your resources and finances in advance. more Get the Contract Terms Reviewed By Your Business Lawyer Large corporations may have negotiated these types of deals before, and may have standard terms and conditions already prepared. There may be plenty of elements that work well for you, but don't feel obliged to accept the contract terms as they have been written. You should always ensure your business attorney is given the terms and conditions to assess in detail. Bespoke terms and conditions which are specific to your contract are preferable, and that includes the language used. The terms and conditions must be unambiguous in their meaning, and without unnecessary jargon. Your lawyer will be able to draft contract terms that deliver what you need in clear language. Prepare for Future Conflict If negotiations are progressing well, it may seem strange to think about future conflict, but there's a very good chance there will be issues in the future. Points of conflict can arise in even the very best of working partnerships, and without a clear resolution, problems can quickly escalate. Your contract negotiations should cover how often you'll review the provision, and how any issues will be raised. There should also be a clear path for dispute resolution that includes mediation to ensure conflict can be fairly resolved. Remember: You Are an Equal Party When you're dealing with a large corporation, it's easy to feel intimidated by their experience and established structure. This may be particularly the case if you're negotiating numbers that are much larger than usual for your business. However, one of the most important points to always keep in the forefront of your mind is that you are an equal partner in negotiations. No matter how large the corporation is, you have something that they want, and this gives you an advantage. They are not doing you a favor by agreeing a contract and you can simply walk away if the details don't work for your business. The lawyer that you use for business negotiations is one of the most powerful assets you have. With experience in handling complex negotiations, a skilled lawyer can ensure the deal is secured with your interests properly safeguarded. To schedule a meeting to discuss how we could help with any area of business law, contact us today at Artie Pennington Law Offices, PLLC in Austin, TX or Kyle, TX.