Articles Posted in Corporations

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One of the legal services that corporate attorneys provide is advising startups with strategies to protect their long term interests. Each business entity has specific tax requirements and a San Jose business attorney can help you determine which is best for your venture. In this article, we’ll discuss specific business entities and how they’re taxed.

  • Sole proprietorship

A sole proprietorship is not a business entity. It’s the default state of an individual who owns a business. Those who run sole proprietorships are taxed as individuals with assets and profits. The biggest pitfall of the sole proprietorship is that you end up paying both the employee and the employer side of social security. These are typically split between employer and employee.

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AdobeStock_308752576-300x200Many business owners form limited liability companies (LLCs) or corporations specifically to create a business entity that will be separate from themselves and spare them personal liability. The alter ego theory often applies in many cases in which parties seek to “pierce the corporate veil” and hold a corporate officer accountable for their company’s misdeeds, and any person facing these types of issues will want to quickly contact a Texas corporate attorney.

The alter ego theory establishes that people can be liable when they are using a corporation to engage in fraud and shield themselves from liability. While courts have long recognized most business entities as being legitimately free from liability, the alter ego theory allows courts to impose liability on bad actors.

Texas Laws Relating to Alter Ego

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AdobeStock_283452126_Editorial_Use_Only-300x189It doesn’t take long on the internet to find extremist language, hate speech, and accusations of censorship. Often these are all found within the same post. Business owners have free speech rights, but free speech from any employee can expose a company to liability for false statements. It is important for business owners to create clear corporate policies about employee communications both on company websites and personal social media channels.

The Current Legal Standard

Current case law on this issue dates back a few decades. In 1964, the Supreme Court decided New York Times Company v. Sullivan, a First Amendment case involving published criticism of public officials. The Court found that Sullivan had indeed proven that the New York Times had published inaccurate statements about his office and subordinates. The fact that the statements were false did not, however, support his case for libel. The Court enacted a new standard of “actual malice.” This new rule means that an official must prove the false statement was published with the knowledge that it was false – or with gross recklessness – to sustain a libel case. Unless this legal definition of “actual malice” exists, the false statements are protected as free speech under the First Amendment.

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AdobeStock_232564567-300x200Many small business owners in Texas need to account for the future of the ownership and continuity of their business, and a buy-sell agreement will often accomplish these goals. When you need help crafting a buy-sell agreement, make sure you are working with a skilled Texas business attorney.

Texas Buy-sell agreements can come into play for both unforeseen and foreseen events among owners, including a business partner dying, becoming disabled, getting divorced, or declaring bankruptcy. Other complications can include a business partner changing their vision for the company, losing interest in the business, needing a cash infusion, or acting in bad faith.

Necessary Elements of a Buy-Sell Agreement

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AdobeStock_360567140-300x200California Governor Gavin Newsom signed several laws in 2022 that will have a significant impact on employers throughout the state, with some laws becoming effective the moment they were signed and others becoming effective as of January 1, 2023. It is important for all employers to know that New Year’s Day marked the first day of the state’s new minimum wage for all employees that is set to be $15.50 per hour, regardless of employer size. As a business owner in California, you should be aware of the following new laws that have gone into effect in 2023. By familiarizing yourself with these new laws, you can help ensure that your business remains compliant and up to date with the latest regulations.

New employment laws in California relate to many different topics, ranging from off-duty marijuana use to leaves of absence to reproductive rights. If you’re facing a business litigation concern, make sure you seek out an experienced California business attorney at Structure Law, Group, LLP. With so many changes in the law, it’s important to stay informed and get the help you need to make sure you’re in compliance with all relevant laws.

To help you stay informed, here is a brief overview of some of the new laws that have gone into effect in 2023:

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AdobeStock_244916454-300x200A limited liability company (LLC) is a type of business entity. When formed properly and managed correctly, this business type can offer some protection from liability. Many business owners prefer the LLC because it can protect their personal assets from being used to satisfy the debts of the business. An LLC is not, however, the only business entity type that exists. Los Angeles business owners should consult with a business formation lawyer to explore the different options. A Los Angeles business formation attorney can help you select the business entity that best meets your specific business goals. At Structure Law Group, LLP our experienced Los Angeles LLC lawyers help entrepreneurs form LLCs to protect their assets and run these businesses in ways that minimize the LLC owners’ personal liability.

What Are the Benefits of an LLC?

There are many benefits to forming an LLC. When one or more owners – also referred to as “members” – form an LLC, these members can protect their personal assets from being used to satisfy business debts. Only their initial investments are placed at risk. However, there are many legal formalities that must be observed to enjoy this protection. The LLC must be formed properly under state laws. Here in California, doing so means filing the required paperwork with the California Secretary of State’s office. The business must also observe certain formalities in the way it is run post-formation. This observation of formalities requirement means that LLC owners do not simply get automatic protection as soon as they have filed the LLC paperwork with the relevant state.

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AdobeStock_301407508_Editorial_Use_Only-300x200Digital currency is becoming an increasingly popular way of conducting business, particularly due to the rise in contactless payments brought about by the COVID-19 pandemic. The Office of the Comptroller of Currency (OCC) has issued new guidance to ensure that financial institutions use digital currency safely. The OCC’s requirements include the need for banks to understand the risks associated with digital currency, to have an effective risk management program in place, and to ensure that anti-money laundering and consumer protection laws are followed.

Business owners should make sure they understand the OCC’s requirements and how they affect their business. Structure Law Group, LLP’s California corporate lawyers can help business owners stay compliant with the OCC’s requirements and ensure they are safely engaging with digital currency. Our highly skilled corporate lawyers can also provide advice on how to protect your business from potential risks associated with digital currency transactions. Learn more about the OCC’s requirements, what they mean for business owners.

What the OCC Rule Says

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AdobeStock_185592300-300x200Most attorneys are familiar with the Model Rules of Professional Responsibility.  Beyond studying for the MPRE, these rules are important in practice and attorneys who do not understand how they apply can face disciplinary issues with the State Bar.

A new change to an old rule may allow pro bono providers to help their clients in more effective ways.  Learn more about the changes to ER 1.8(e) and how they can affect your organization’s pro bono policies.

The History of Model Rule 1.8(e)

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AdobeStock_273133653-300x200California business owners face many different types of litigation. It is important to mitigate the risk of liability by consulting with a California business litigation attorney before your business is even established. The experienced California business litigation lawyers at Structure Law have helped entrepreneurs in all types of industries protect their companies from preventable losses. What follows are some of our tips to protect your business from litigation.

Have a business litigation attorney in California draft an operating agreement.

An operating agreement is not required to form a business in California. As a result, some business owners make the mistake of starting business operations without them. Without an operating agreement, the business is exposed to litigation and liability. An experienced business lawyer can draft an agreement that will reduce the likelihood of future liability. According to the Small Business Administration, an operating agreement sets the rules that guide a company’s decisions. Having an operating agreement can set decision-making processes that reduce the likelihood your company will face litigation. This agreement can even reduce the risk of future costly conflicts between owners of the company.

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AdobeStock_398358954-300x200Most businesses in California have confidential and valuable information to protect. Ensuring its protection is often a vital priority. In the ordinary course of business, companies will enter into numerous consulting agreements, service agreements and strategic alliances. These agreements are best made with the advice of a Los Angeles employment attorney who can help protect proprietary information by drafting enforceable non-disclosure agreements.

NDAs and best practices

The proper use of NDAs and noncompete clauses is to protect your company’s valuable proprietary information. NDAs can be used to safeguard trade secrets, and this is their preferred mode of operation. Nonetheless, if your company wants to protect trade secrets, you must show that you made some effort to protect those secrets. Informing hires that they will have access to proprietary trade secrets and signing an agreement not to divulge those trade secrets makes the effort enforceable and shows your company took measures to protect their intellectual property.

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