CONTRACTS

Contracts are a part of our everyday lives.  Leases, home mortgages, employment, cell phones and even buying a cup of coffee are examples of contracts.  A contract is a type of agreement where there is an exchange of legally enforceable promises between two or more parties.  Drafting a well written contract, free of ambiguities, is the challenge.  The goal of a written contract is to describe with precision the substances of the meeting of two minds, in language that will be interpreted by each subsequent reader in exactly the same way.  We take pride in our ability to deliver specialized services in contract formation and negotiation that meet the personalized needs of our clients.

We assist clients with various business transition contracts.

LETTER OF INTENT

A Letter of Intent (LOI) sets forth the basic terms in a buy-sell transition or premises lease with some key deadline dates.  It often helps to have key points, such a purchase price or base rent, agreed upon prior to drafting a definitive purchase-sales contract or premises lease.

PURCHASE/SALES CONTRACT

The purchase-sales contract contains all the key terms of the agreement between the parties.  Some of the essential elements contained in the contract are the purchase price, the allocation of the purchase price between the various assets of the practice or business, accounts receivable purchase or post-sale collections and a restrictive covenant or covenant not to compete.

LEASES

Either a new lease will need to be drafted or a lease assignment will be drafted with the purchase of a practice.  We can draft the lease or assignment.  Often we will assist in a real estate purchase agreement should the practice owner also wish to sell the building or premises suite.

SPACE SHARING

Often times it is advantageous for a practice to share office space with another practice.  One of our services offered is drafting a space sharing agreement.  If one of the parties is not the owner of the premises, then the landlord will have to be involved in the arrangement.  Elements to negotiate in a space sharing agreement including compensation to paid from one party to the other, insurance policies, responsibilities for utilities and sharing staff and employees.

DENTAL SERVICES ORGANIZATION

Dental Services Organizations (DSO) are a relatively recent entity but one that is becoming rather common in the dental professional.  Through a Business or Management Services Agreement, a licensed California dentist owns the clinical aspects of a dental practice, such as patient charts, while the DSO owns the non-clinical assets of the practice and provides management services such as obtaining and being the tenant of a premises lease.  The DSO will often employee the non-clinical staff of the practice while the dentist provides direct and non-direct supervision of the clinical staff.

BUSINESS ENTITY SELECTION

In order to run a business in California you will have to select a legal entity for your business structure and we can help in selecting the best type for your business.  The most common types of business entities are sole proprietorship, corporation (S-Corp or C-Corp), general partnership and limited liability company (LLC).

One caveat is that in California not all businesses can be an LLC.  Accountants, architects, attorneys, chiropractors, clinical social workers, court reporters (shorthand reporters), dentists, dental hygienists, physicians, marriages and family counselors, nurses, optometrists, pharmacists, physical therapists, psychologists, and veterinarians cannot form an LLC.  However, often times health care providers, such as dentists or optometrists, who own the building in which the doctor’s practice is located, will form an LLC to hold and manage the real estate.

The following is the California Secretary of State’s definitions of the most common business entities:

Sole Proprietorship

A sole proprietorship is set up to allow an individual to own and operate a business. A sole proprietor has total control, receives all profits from and is responsible for taxes and liabilities of the business. If a sole proprietorship is formed with a name other than the individual’s name (example: John Smiths Fishing Shop), a Fictitious Business Name Statement must be filed with the county where the principal place of business is located.

Corporation

A California corporation generally is a legal entity which exists separately from its owners. While normally limiting the owners from personal liability, taxes are levied on the corporation as well as on the shareholders. The sale of stocks or bonds can generate additional capital and the longevity of the corporation can continue past the death of the owners. Legal Counsel should be consulted regarding the variety of options available. To form a corporation in California, Articles of Incorporation must be filed with the California Secretary of State’s office.

Limited Liability Company (LLC)

A California LLC generally offers liability protection similar to that of a corporation but is taxed differently. Domestic LLCs may be managed by one or more managers or one or more members. In addition to filing the applicable documents with the Secretary of State, an operating agreement among the members as to the affairs of the LLC and the conduct of its business is required. The LLC does not file the operating agreement with the Secretary of State but maintains it at the office where the LLC’s records are kept.

General Partnership (GP)

A California GP must have two or more persons engaged in a business for profit. Except as otherwise provided by law, all partners are liable jointly and severally for all obligations of the partnership unless agreed by the claimant. Profits are taxed as personal income for the partners.

To register a GP at the state level, a Statement of Partnership Authority (Form GP–1) must be filed with the California Secretary of State’s office. Note: Registering a GP at the state level is optional.

BUSINESS MAINTENANCE

Once your business is formed and running, there are certain legal requirements that must be met to maintain the business.  This is particularly true with a corporation or LLC.  Many of our business clients desire ongoing representation to assist with such things as filing a Statement of Information every year or every other year with the Secretary of State, annual corporate meetings and preparation of corporate minutes.  We also assist clients with catching up on corporate housekeeping if such legal formalities had not been followed in prior years.