One café owner learned hard way
I don’t want this to come off as preaching or scolding: Just good solid advice. In life, you get what you pay for.
Our legal environment has individuals who scout around for free advice and then disappear into the woodwork when they have either obtained no satisfaction from the lawyer or they have obtained a snippet of information that they can use to move onto the next practitioner and obtain more information about their issue or problem. This is why most lawyers will not provide any information over the phone (aside from their exposure to liability issues).
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In business, one of the hardest learning curves in developing an enterprise is the need and use of legal counsel. Some would say we are a necessary evil; others would say that good lawyers can save them many heartaches and serious dollars in the long run.
Take, for example, an unwitting client who wanted to buy a small 20-seat café and set up business. She thought all that was required was to talk to the landlord so she could take over the business lease, pass over a payment to the vendor and then the keys would be provided. Deal done. No need for expensive lawyers and real-estate agents.
Well, deal not done. That vendor owed $30,000 in provincial sales tax that was unpaid and — according to the Bulk Sales Act and the Retail Sales Act — if you purchase substantially all the assets of an ongoing business enterprise, you are responsible for all back taxes. Imagine the surprise of the person who purchased the business for $6,000, then found out $30,000 was owed in taxes. Of course, the former owner could not be found.
The reality is that one of the costs of doing business is obtaining solid, and not necessarily costly, legal advice. Getting yourself out of trouble is much more expensive than avoiding it.
Jeffrey D. Cowan, B.A., B.Comm, LL.B., M.B.A., is the principal of Cowan & Taylor, Barristers & Solicitors which practises in the areas of business and real-estate law. Cowan appears in Your Money every other week. E-mail firstname.lastname@example.org call 416-363-5046 with questions for future columns. The information contained in this article should not be relied upon as legal advice.