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Small Business Law

Letter of Intent: What Is It and Do You Need One?

Letter of Intent: What Is It and Do You Need One?

Letter of Intent: What Is It and Do You Need One? There is much at stake in most business deals. It often makes sense to use a letter of intent to clarify the parties’ intentions. What is a Letter of Intent (LOI)? A Letter of intent (LOI) is a letter between two (sometimes, even three or more) parties or companies outlining the basic terms of a prospective business transaction. Essentially, one company uses the document as a declaration of commitment to do business with another. While businesses can draft similar agreements in many formats, an LOI’s distinct feature is its letter format. Businesses can...

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Confession of Judgment: Why You Should Be Careful

Confession of Judgment: Why You Should Be Careful Imagine losing a case even before the other party files a complaint. At first blush, the possibility seems stunning, even unconstitutional. But, this is precisely the point of a confession of judgment. These types of clauses are commonly found in commercial leasing and commercial lending agreements in Pennsylvania. In fact, Pennsylvania is among the few states that still allow the enforcement of such a provision. What is a Confession of Judgement and Who Uses It? It is important to note that confession of judgment clauses are permitted only in commercial leases and loans, with the...

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New Changes to Non-Compete Agreements on the Horizon

New Changes to Non-Compete Agreements on the Horizon

New Changes to Non-Compete Agreements on the Horizon From federal to state laws, there has been a non-compete reform agenda across the country. While non-compete regulation is historically a preserve of state government, there are some federal proposals, including a recent executive order. On July 9, 2021, President Joe Biden signed an Executive Order intended to promote competition and innovation in the American economy. The wide-ranging executive order also directed the Federal Trade Commission (FTC) to regulate non-compete agreements. According to the executive order, FTC should “curtail the unfair use of non-compete clauses and other clauses or agreements that may unfairly limit...

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C Corporations and S Corporations Are Not the Same: Know Before You Choose

C Corporations and S Corporations Are Not the Same: Know Before You Choose

C Corporations and S Corporations Are Not the Same: Know Before You Choose If you are considering incorporating a business in Pennsylvania, it is not enough to simply file articles of incorporation and obtain an EIN number. You must also determine which corporate status is right for your business. Under IRS rules, the default corporate designation is C corporation. A corporation wishing to conduct business as an S corporation must elect S corporate status prior to filing its initial corporate return. Failing to do so could cost the corporation and its owners dearly. Before forming a corporation, the owner(s) should carefully consider...

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CONTRACTS AND CORONAVIRUS: Is the Coronavirus a Valid Excuse for Missing a Contract or Lease Payment

CONTRACTS AND CORONAVIRUS: Is the Coronavirus a Valid Excuse for Missing a Contract or Lease Payment? These are extraordinary and uncertain times. The one near certainty we have about the future is that it will take a long time to get back to business as usual. In the meantime, most businesses have had to severely curtail or completely shut down operations. To make matters worse, business owners can only guess when they will be able to reopen. All this has had a devastating effect on cash flow. As a business owner, chances are, you have contracts to fulfill and rent to...

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BANKRUPTCY HELP FOR SMALL BUSINESSES

Small businesses have long struggled to reorganize under the bankruptcy law. Often times, they have intentionally steered clear of filing for bankruptcy protection because of the daunting costs and long shot odds of successful reorganization. The Small Business Reorganization Act of 2019, enacted on August 23, 2019 and taking effect this month, may prove to be the best thing that happened to small business when it comes to reorganization. It created a new subchapter V for chapter 11 small business debtors. I am excited about the prospect of using this tool for two significant reasons. First, it should streamline the existing...

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