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Posted by William Wolfson | Apr 21, 2020

In my last post I described the first three things that lawyers want you to know about starting a new business: 1) Keep your business finances separate from your personal finances; 2) Be wary of giving personal guarantees; and 3) Talk to your accountant and insurance advisor. Now we turn our focus to things to keep in mind to protect yourself from customers, lenders, vendors, and landlords, such as:

4. Think carefully about the prices you charge and the services you perform.

Get these details in writing, signed by your customer. This makes it clear to everyone what the expectations are. Be specific about what you are going to do and how much money you will require to do it. If a disagreement arises that lands you in Court, it's a lot easier to prove to a judge what the deal was if you have it in writing. This is particularly important for “techies” and others in IT businesses.

5. Giving customers credit and protecting yourself and your business from unhappy customers.

Managing expectations: Always stay in touch with your customers while you are working a on a job for them. Keep them “in the loop.” This is especially important when you learn the work will take longer or cost more than you expected. It is better to involve the client or customer in the decision making process or let them know what the new problem you have encountered that needs to be solved is. Excavators digging a foundation or doing grading, for example, never know if they will hit bedrock or a spring. Always tell the customer about any delays and additional expenses they should anticipate. Put it in writing. Get them to sign off that they are accepting this new change in work or other plans. Honesty is the best policy.

How can you be sure you get paid if you offer credit to your customers or clients? As Popeye's friend Wimpy has said, “I will gladly pay you Tuesday for a hamburger today.” Courts and Small Claims Court: The New Jersey Court system maintains an excellent web site called New Jersey Courts Online. You can find it with any internet search. The site explains small claims court procedures and how the court collects money for successful parties. It is well worth reading. Small claims lets you appear without a lawyer for claims up to a certain amount. Thereafter, if you have incorporated or have a limited liability company, you are required to have an attorney help you. If you do business as an individual, you can represent yourself.

If you are ‘in the right' and a judge rules in your favor, getting the judgment is the easy part. Any lawyer will tell you this. Finding the money, directing the Court Officer and or County Sheriff to seize a bank account or other assets, turn them into cash and getting a Judge to order the money be turned over to you, requires tenacity, focus and a little bit of luck.

6. Leases, renting business space and dealing with lenders.

When considering whether to rent space, lease equipment or get a loan, ask yourself whether you really need it. Pay attention to the proposed contract, lease or other legal documents and be sure you know what it is in it for the landlord, equipment seller, or banker. Read the fine print and have someone explain it to you. If the other party tells you “it's just standard language,” and “everyone signs it,” be careful.

Commercial tenants do not have the same protections as do residential tenants in New Jersey. Be sure you know your status and how the laws may affect you if you can't pay rent, need to exit a lease or return equipment.

Often equipment leasing companies expect you to pay whether the equipment works or not, and expect you to repair it if it does not. They have you sign an “acceptance” certificate. This means you agree that what you leased works, meets your needs and you owe the money to the leasing company even if there is a problem with the leased item. You are agreeing that no matter what happens to disappoint you, you owe the leasing company the money and will pay every month. The seller who got you into the lease may be your only one to complain to. They may not be around to deal with your problem.

My next post will focus on tax obligations and other such requirements.


I encourage you to contact me to discuss issues related to your current business or the one you are thinking about starting.

About the Author

William Wolfson

I am a third-generation resident of Hunterdon County, New Jersey. My family has lived and worked here since 1918 when my grandfather bought a farm near Frenchtown. In 1938, he and my uncle started a farm equipment sales and service business. I have lived and worked in Hunterdon County practically...


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