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Detroit & Chicago Business Organizations Legal Blog

Understanding LLCs

Entrepreneurs in Illinois and Michigan must choose how they would like new ventures to be managed and how they prefer their businesses to be taxed. A company may be established as a sole proprietorship, a partnership, a corporation or a limited liability company. Each framework has its own sets of pros and cons, so people should review each one carefully.

As explained by Forbes, a limited liability company really is a business structure unlike an S corporation which is essentially just a choice in how a company is taxed. In fact, an LLC can choose to be taxed as an S corporation. Companies that provide professional services may not be able to take advantage of the new corporate tax rate reduction and may find that an LLC works well for them.

Arguments surrounding non-compete agreements

Businesses in certain industries often ask employees to sign non-compete agreements as a part of the hiring process. These agreements restrict employees from working in similar industries or for companies that are in direct competition with the business once workers have terminated their employment with the company. If an employee should quit and go to work for an opposing company, they may share information that could hurt their current employer. Non-compete clauses are implemented as a way to keep trade secrets and other company information private.

Some employees argue that by signing a non-compete agreement, they are essentially giving away their right to work in the industry should they get fired or lose their job. Although their work experience and skill set may be focused in one industry, they are not able to pursue employment in that industry and are forced to look elsewhere, even though the jobs may pay less or cause them to relocate. In some cases, that may be the only job they know how to do. Once a non-compete agreement is signed, they are not able to perform at that job anymore if they are terminated.

Media merger denied by FCC, lawsuits begin

Companies in the greater Detroit, Michigan area and the Chicago metropolitan area who engage in discussions with other businesses about potential mergers should always know that such deals may turn south even when they begin in a friendly and positive manner. In some cases, the change of tune regarding merger discussions might even involve a third party. The decisions or actions of that third party may even be said to be influenced by one of the potential merging companies.

Such is the case today in a dispute that has arisen between two media corporations that had been attempting to merge but that now find themselves embroiled in multiple lawsuits against each other. As reported by the Chicago Business Tribune, the Federal Communications Commission failed to approve the requested merger between the two corporations, one based in Chicago and the other in Maryland. The FCC referred the matter to a judge who put the final kibosh on the deal.

Leadership for merger success

Businesses of varying sizes and across any industry in Chicago or Detroit may at some point entertain the idea of merging with another company. They may also eye the possibility of an outright purchase of another company in an acquisition. These transactions may be very beneficial to an organization and even allow it to compete better in a changing marketplace. Certainly, there are many financial issues to contend with when navigating a merger or acquisition but this is not the only element that contributes to the ultimate success of these deals.

As explained by Forbes, strong leadership support and alignment across all groups is essential. It is also not wise to assume that functional leaders know how to work through the varying steps of organizational change at this level. Therefore it might be important for a company to provide training and workshops to guide leaders so they may effectively guide their employees through the transitions.

Former co-defendants now on opposing sides

People who have to look out for their professional or business interests know that many things can change a person's perspective at any time. Who may seem a strong ally one moment could well end up as an adversary down the road. Such seems to be the case for two professional fighters as one of them has just initiated legal action against the other in Cook County, Illinois. 

Interestingly, the current lawsuit that pits the two men against each other stems from a prior lawsuit in which they were joint defendants. Together, the two men were sued for alleged defamation by a physician who was apparently displeased with comments the men made on a podcast regarding issues with medical care. The Chicago Sun Times has reported that the two defendants won this lawsuit.

Business' options under new tax law

Business owners in and around Chicago or Detroit know that they have to watch their bottom line and many things go into this. Taxes are one of the factors that can make a big difference to a company's profitability and vice versa. In light of the new tax law that went into effect this year, some companies might be looking at making some changes to take maximum advantage of the law or to avoid paying even more tax.

As explained by Inc. Magazine, until this year, many people found it advantageous from a tax perspective to create limited liability companies or S corporations instead of C corporations. Today, however, many may be re-evaluating this decision and might even be considering converting their LLCs or S corporations to C corporations. Doing so would give them the ability to enjoy the dramatically reduced corporate tax rate.

Couple files lawsuit after being barred by senior community

Michigan residents may be aware that the Fair Housing Act protects individuals against discrimination based on gender and other attributes. However, a Missouri retirement community called Friendship Village recently rejected a lesbian married couple citing the fact that they were married. This was after they toured the facilities and made a $2,000 deposit. Friendship Village reportedly believes that marriage is between a man and a woman as stated in the Bible.

In a lawsuit, the couple claims that this violates the Fair Housing Act. One of the women says that she didn't check to see if the couple's lifestyle would be an issue because other facilities had said it would not be. They chose Friendship Village over the other options because of cost and the care that was made available to them. Legal professionals have mixed opinions as to how the case will be decided. One said that the law will probably side with the retirement community as it is a private organization.

Contract negotiation tips

Entrepreneurs and company executives in Michigan and Illinois know that negotiation is part and parcel of getting business done. Hammering out the details of contracts such as lease agreement, purchase deals, vendor or distributor agreements and more can be intimidating to some but there are ways to make it work effectively. 

As explained by Entrepreneur magazine, one of the most important things for people to do is to prepare for the contract negotiation process to take some time. It should be remembered that a contract is a legally binding document and rushing into a contract may have many negative consequences down the road.

Minorities more likely to live in dangerous conditions

People of color in Michigan and throughout the country are often shown homes in areas with poor environmental quality compared to white people. This is the finding of a study prepared for the National Bureau of Economic Research. Its results show that people of color are often steered into neighborhoods that are close to toxic sites or that have high levels of air pollution.

The research was based on data collected by the U.S. Department of Housing and Urban Development during its own housing discrimination study. That study looked at neighborhoods in 28 American cities and found that certain characteristics determined where individuals were most likely to live. The HUD study used both white and minority actors who presented themselves as similarly qualified to buy a home. Information about the homes suggested to them was then compared with Environmental Protection Agency data.

When is a contract legally binding?

Contracts are part of doing business, whether you are an individual or a corporation in Chicago or elsewhere. Although it is always a good idea to put any agreement in writing, oral contracts are enforceable under Illinois law if there is enough evidence to support that a deal was made. However, there are exceptions, which are covered by the statue of fraud 

The Chicago Tribune explains that the statute does not apply to real estate contracts. The three elements that are needed to make a contract legally binding are an offer, an acceptance and consideration. The process begins with the buyer making an offer. Most courts agree that merely advertising a house for sale at a set price does not make it an offer. Instead, it is asking others to make an offer.


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