Venue - The Legacy Hotel & Meeting Centre | 1775 Rockville Pike Rockville MD 20852
Reneé Moore-Powell, Sr. Sales & Catering Manager
Rosalind Bland-McCollough, Dir. of Sales & Marketing
A luxuriously renovated boutique property focused on the upper-mid level market, featuring creature comforts to meet the needs of today's evolved travelers. Banquet capacity here is for 206 people. We were hosted in their meeting centre, which was decorated with fresh tones of aqua and white table and chair linens, with fresh white calla lilies. Each guest was treated to a Legacy sports bag, filled with sample amenities, even including a cannister of Philips seafood seasoning. The setting was complemented by a gorgeous 4-tier white-and-aqua wedding cake from Custom Cake Design of Gaithersburg MD.
SpeakerRick Einhorn, Attorney for 35 years
In his talk on
Legal Issues for Small Businesses, Rick focused on two main topics - incorporation vs. sole proprietorship, and limiting exposure from customer contract issues.
Regarding types of businesses, Rick stressed that no can avoid professional negligence liability, no matter what form of business you operate - negligence is negligence and it can be prosecuted against individuals and business entities. What business entities (corporations, LLC's, LLP's) enjoy that sole proprietors don't is that their personal assets cannot be claimed if damages are awarded in a civil suit. For sole proprietors, civil suit damages may lay claim to ANY assets owned by the named individual.
In Maryland, individuals can file their own incorporation and limited liability papers themselves - there is no requirement to have an attorney. Go to
www.blis.state.md.us/BusinessStartup.aspx and follow the steps under registering a business name, corporation, LLC, LLP, LP. Note - the laws governing the formation and operation of business entities and the effectiveness of a UCC Financing Statement are rather involved, and an attorney's guidance is a worthwhile investment for those who are unfamiliar with the requirements.
Rick also recommended that when considering which type of business to operate (sole proprietor, corporation, partnership) to consult with an accountant to understand the significant differences in tax status for each. The types of expenses you anticipate for your business and your ability to sell the business in the future are treated differently for tax purposes depending on the form of your business.
There are damages that all businesses should look to insulate themselves from via appropriate forms of insurance. Each business is different, so speak with a business insurance agent about coverage for your business entity and each person in the entity by name. Home based businesses need riders that cover business transactions, equipment and business invitees. Guest Shawn Leonard, who works in the field, recommends checking your policy's caps because at typical levels, they can quickly be exhausted. Businesses should look for policies that specifically cover "miscellaneous professional insurance liability coverage." While expensive if purchased individually, this coverage is often available more economically through trade associations' master policies.
If taken to court, in Maryland a business entity must retain an attorney if the damages claimed are $5,000 or more. An individual being taken to court may represent him or herself in Maryland regardless of the amount claimed.
Rick's second main subject covered contracts and cancellations. Legal actions are best avoided by clearly written and agreed upon documentation upfront. Be very clear about all amounts and dates of service, and the amounts and dates of all monies involved. Contracts must be clear about what happens to deposits in the event of non-performance by you, by the client, or by events beyond the control of you or your client. Deposits, when accepted, should attach clear terms about what amount will be applied to costs, and until what dates will which amounts be negotiable.
A number of members noted that their contracts clearly state that the money due at signing is an "engagement fee," and that by engaging their service, they are foregoing other income they could have earned, and that that amount is non-refundable. Rick suggested that courts would still expect you to make reasonable (not extraordinary) attempts to replace that business, and that, if successful, to return the deposit, up to the value replaced.
He clarified that customers doing business with a company are normally contracting only with the person or entity named as the business on the signed contract - a customer contracting with an agency may pursue the agency but not its subcontractors, even if named on the contract.
Businesses selling products that do not require contracts (invitations, etc.) can add text to their invoices to state that "as of X date, these monies have been committed in full to secure the necessary materials to fulfill your order. In the event of a cancellation by you, every attempt will be made to pull your order from production. You will be charged for expenses to date, plus a cancellation fee of X% or $X, whichever is greater."
Rick noted that he understands that it is in a business's interest to write contracts that are as limiting as possible, but while some clients may sign them, others will balk. He concluded on a positive note, "If two competent parties sign a contract, courts will enforce it."
