Business Law

Business law, also known as commercial law, encompasses the legal principles and regulations that govern the formation, operation, and management of businesses. It plays a crucial role in maintaining a fair and orderly marketplace, protecting the rights of individuals and organizations, and ensuring that businesses operate in a responsible and ethical manner.

The scope of business law is broad and encompasses a diverse range of legal areas, including:

• Contract Law: Governing the formation, interpretation, and enforcement of contracts between businesses and individuals.
• Corporate Law: Regulating the formation, governance, and dissolution of corporations, including shareholder rights, board of director duties, and mergers and acquisitions.
• Property Law: Protecting the ownership and use of tangible and intangible property, including intellectual property rights such as patents, trademarks, and copyrights.
• Employment Law: Establishing standards for workplace practices, including hiring, firing, discrimination, and employee benefits.
• Consumer Protection Law: Safeguarding consumers from unfair and deceptive business practices.
• Environmental Law: Regulating business activities to protect the environment from pollution and degradation.

Business law is an essential component of the modern business world, providing a framework for conducting commercial transactions, resolving disputes, and ensuring compliance with legal obligations. Understanding business law is crucial for business owners, managers, and professionals who interact with businesses in various capacities.

This article is for general informational purposes only and is not legal advice. Contact us today to discuss your specific situation.

The Legal Information Institute of Cornell University defines an agreement as a manifestation of mutual assent by two or more persons to one another. It is a meeting of the minds with a common intention, and it is achieved through offer and acceptance.

Commonly associated with contracts, agreements generally have a broader definition. In business, a negotiated agreement often results in a contract, which requires additional elements, such as an offer, consideration, capacity, and legality.

People negotiate every day. Toddlers negotiate how many peas to eat, what time to go to bed, and pledge to be “really good” if their parents buy them the toy they are desperate to have. To some extent, we grow up negotiating agreements. Honing those negotiation skills as adults and knowing when to use them can yield great outcomes when applied to business. 

If you have an agreement to negotiate and are unsure if you or your team have the expertise to negotiate a legal and favorable ag

This article is for general informational purposes only and is not legal advice. Contact us today to discuss your specific situation.

In the course of your career, you are likely to perform many duties that were not explicit in the job description at the time of hire. If you are an entrepreneur, you are probably quite familiar with the concept of wearing many hats in your business. 

Negotiations

Negotiating business agreements is one of those tasks we don’t think about when launching our professional lives, yet it comes up quite often. As an entrepreneur, you are constantly negotiating agreements with clients, even in the most straightforward sales exchange. 

As a corporate professional, negotiating agreements can occur internally with leaders of various business units. Negotiations will also occur with external entities, including clients, strategic partners, third-party vendors, and suppliers. 

Understanding what is involved in a business negotiation can make you a savvier professional or business owner, becoming skilled in delivering cost savings, mitigating risks, landing big clients, and generating more revenue.

This article is for general informational purposes only and is not legal advice. Contact us today to discuss your specific situation.

The Harvard Law School Program On Negotiation describes a negotiation as a process of finding your counterparts’ interests and reconciling them with your own to achieve a specific outcome. Negotiated agreements happen through back-and-forth communication to reach a deal.

Power and Authority

Negotiation has a lot to do with power and authority. In situations and organizations where one person or a group holds all the power, terms may be dictated according to their desired outcome. Others may attempt to negotiate; however, unless they have something that those in control want, their ability to negotiate is likely limited.

Good negotiation skills become important in more equitable environments or situations where all parties must collaborate or engage to achieve the desired outcome. In business, skilled negotiation can make the difference between a business thriving or a failing business.

This article is for general informational purposes only and is not legal advice. Contact us today to discuss your specific situation.

In the corporate world, the person in charge of negotiations is often, by default, a department leader, the person in charge of the project, the CEO, or the business owner. Yet, there is no guarantee that they are most skilled in negotiation.

Have you ever gone to buy a car and invited a relative or friend to go with you because they are the best negotiator?

Following that example, it seems like the answer is simple, the best negotiator on the team should lead the negotiations. Yet, that isn’t always the case either. Notice that in the car example, the person buying the car doesn’t send the negotiator on their own. They go together.

That is because while the friend possesses deal-making skills, the buyer is the true stakeholder and decision-maker. No matter how great of a job the negotiator does, the deal cannot be fulfilled without stakeholder input and decision-maker approval. When negotiating an agreement, be sure to include the following people, if not directly at the negotiating table, at least in the process:

Relevant Stakeholders

Who will the agreement impact? What insight can they lend on requirements, including must-haves and nice-to-haves? Stakeholders often have key knowledge into what constitutes a favorable agreement.

Decision Makers

Who gets to decline or approve the agreement? The person or group with ultimate decision-making authority does not need to be present in the negotiations. However, they will need to be presented with all the terms of the agreement to provide final approval. To save time and avoid unnecessary back-and-forth discussions, it is essential that the person or team in charge of negotiations keenly understand the decision-maker and stakeholder needs, wants, and deal breakers.

Subject Matter Experts

There are situations in which the topic of negotiation is complex and not within your team’s collective knowledge. In those cases, you can benefit from seeking guidance from experts such as CPAs, Financial advisors, Tax Advisors, Attorneys, Technology Consultants, etc. Investing in expert knowledge can save you time, reduce risk, and save thousands, perhaps even millions, in costs.

This article is for general informational purposes only and is not legal advice. Contact us today to discuss your specific situation.

There is a lot of “buzz” in the media about always renegotiating and striving for better terms in new or existing agreements. However, negotiating agreements takes energy, knowledge, and time in a business. Knowing when it is worth it to negotiate can ensure that company resources are used wisely. Here are some scenarios in which negotiating may not be appropriate or useful.

The Work Is Already Covered

If the matter under consideration is already covered by an existing agreement, renegotiation may be detrimental, especially if the original agreement is favorable. It may be worthwhile to ensure all parties know the new “matter at hand” is covered under the XYZ agreement. Anything more may be an unnecessary expenditure of time and energy.

You Are Renewing An Established Contract

You or your organization may have an agreement that automatically renews periodically. If a member of your team reviews the agreement and determines that better terms are not possible or that any gains would be worth less than the effort to negotiate, then simply allowing the automatic renewal may be the best position in the agreement. Your organization may also be grandfathered into favorable terms or rates that would be null if any part of the agreement changes.

Short-Term Project With A Trusted Partner or Group

Let’s say you are in Operations and have engaged the IT team to install four new workstations. You have worked with your IT department before, and they have always been reliable and delivered on commitments. This type of agreement may only need a simple email confirming the scope of work and the timeline. There is no need to negotiate how many staff members will be assigned, what uniforms they will wear, etc.

Similarly, if you have a third-party vendor already delivering a negotiated body of work, and there is a minor adjustment that can be done in a quick phone call. In this example, a detailed negotiation may be unnecessary. A quick note in the project records is likely all that is needed. Documentation is useful. Bringing in teams to negotiate a 3-minute task is likely a waste of resources.

The Price is Set

Sometimes, the price and terms are set. This can be true for a highly on-demand consultant, software, hardware, art, venue, etc. Think of concert tickets. The artist and promoter set the schedule, location, duration of the event, and the process of buying tickets. You get to decide if you can accept the terms available and the advertised price. In these “take it or leave scenarios,” the best negotiators know when to recognize it’s not a negotiation.

This article is for general informational purposes only and is not legal advice. Contact us today to discuss your specific situation.

Regulations at the local, state, and federal levels cover a vast span of industries, sectors, materials, and situations. Some regulations, such as Child Labor Laws, Minimum Wage, Pollution, and Food Safety, may feel familiar.

Regulations in Business

Yet, regulations in business are far-reaching and sometimes obscure, such as minimum standards of testing for specific industries, operating licenses and fees, business hours of operations, and even cleaning your store’s entryway. Human Resources teams manage compliance with dozens of regulations daily, ranging from legal break times to payroll practices, employee rights, and more.

Some companies are in industries so regulated that they have a Compliance Officer or an entire Compliance department. This level of compliance oversight is common in financial organizations, investment banks, healthcare companies, and energy and telecommunications sectors.

In building and operating your business, it is critical to be aware of the regulations that impact your business and have a precise method for ensuring constant compliance. If your company operates in different markets or countries, know that each area can have unique regulations that are your responsibility to learn and enforce compliance.

This article is for general informational purposes only and is not legal advice. Contact us today to discuss your specific situation.

Corporate leaders and business owners are responsible for ensuring that their organizations comply with relevant regulations. Depending on the size of your organization and the resources available, you may take any of these actions to ensure regulatory compliance.

Do It Yourself

If you are a solopreneur and feel confident that your business’ regulatory landscape is relatively simple, you may own compliance all by yourself. Your work may be as simple as submitting a licensing form once a year or as complex as periodically submitting to a detailed inspection or audit. Be ready to conduct due diligence, identify relevant regulations, and then implement systems for compliance

Third-Party Support

Hiring an attorney, compliance consultant, or auditing firm may be a worthwhile investment that can mitigate your risk of fines, business closure, or even incarceration for violating regulations in your business.

There are three ways these resources can support your business. Your business may need a one-time consultation to identify relevant regulations and implement compliance systems. Your business may need periodic reviews to ensure systems are working as intended, or your organization may need ongoing support that fully oversees your regulatory compliance.

Internal Resources

Similar to hiring outside support, leveraging internal resources may mean establishing an interim project team to launch compliance systems, assigning compliance to a specific employee or team, or establishing a full-time Compliance Officer or Compliance department.

This article is for general informational purposes only and is not legal advice. Contact us today to discuss your specific situation.

Indeed.com, a premier digital job board, describes the role of a Corporate Compliance Officer as an individual who “is responsible for overseeing an organization’s compliance with government laws and regulations. Their duties include coordinating with company management to identify potential risks, implementing policies and procedures to uphold laws and regulations, and monitoring the company’s adherence to those policies and procedures.”

Glassdoor.com, also a job board, adds that a Compliance Officer “avoids lawsuits by ensuring business operations are performed in compliance with state and federal laws. They must also continue studying state and federal laws related to their industry and ensure that the company conducts business according to new regulations that arise.”

Chief Compliance Officer

In large organizations or heavily regulated organizations, the Compliance Officer may be a member of the executive team, known as the Chief Compliance Officer. According to the International Association of Risk and Compliance Professionals (IARCP), a Chief Compliance Officer (CCO) “is responsible for establishing standards and implementing procedures to ensure that the compliance programs throughout the organization are effective and efficient in identifying, preventing, detecting, and correcting noncompliance with applicable laws and regulations.”

The CCO typically leads a team, from a small group to a large organization, that can include Compliance Directors, Subject Matter Experts, Attorneys, Auditors, Business Liaisons, Risk Analysts, Compliance Administrators, and more.

Together, they identify current regulations relevant to the business and anticipate new or changing laws that may impact the business. Once the regulations are known, they develop systems, policies, procedures, monitoring, audits, reports, risk mitigation plans, and communication strategies to ensure every person in the organization is aware of and in compliance with regulatory requirements.

This article is for general informational purposes only and is not legal advice. Contact us today to discuss your specific situation.

The consequences of violating a regulation that applies to your business can vary from a mild notice to comply, to fines, to the closing of the business, and even incarceration. Legal action from violations can come from government agencies in the form of investigations, cease and desist orders, lawsuits, and criminal charges.

However, consequences of compliance failures can come from other sources too. Employees can file lawsuits, whistleblowers can confidentially report companies to regulators, and even the public can get involved with anything from media outcries to formal lawsuits.

The Federal Financial Crimes Enforcement Network, lists thousands of cases involving regulatory violations and criminal activity in the financial sector. These cases overwhelmingly involve intentional, criminal behavior that results in significant fines and imprisonment.

The Bernie Madoff case

Yet, not all violations are deliberate or as clear-cut. Remember the Bernie Madoff case in 2009? He was the person behind the largest Ponzi scheme in history, worth an estimated $65 billion, and in 2009, was sentenced to 150 years in prison. He defrauded investors over decades and, in that time, funneled hundreds of millions of dollars through accounts at J.P. Morgan Chase.

After an extensive investigation, the FBI determined that J.P. Morgan Chase, while not criminally charged, was found to have failed to follow compliance guidelines in reporting suspicious financial activity. The company was ordered to pay $1.7 billion to the victims of the Madoff fraud.

Paychex, Inc, a leading provider of integrated human capital management solutions for payroll, benefits, human resources, and insurance services, published a list of the Top 10 Regulatory Issues Facing Businesses in 2022. The list includes new regulations applying to Workplace Safety, Cybersecurity, Paid Leave, and even Cannabis in the Workplace.

Businesses and laws are constantly evolving. As a corporate leader or business owner, it is important that you identify the laws and regulations applicable to your company and implement strict compliance systems. If you don’t know how to determine which regulations apply to you or are not certain how to maintain compliance, consider consulting with an attorney or law firm that specializes in regulatory compliance for your industry.

This article is for general informational purposes only and is not legal advice. Contact us today to discuss your specific situation.

Have you ever heard the phrase “pierced the corporate veil” in the media and wondered what it really meant? The phrase refers to a situation in which the court system looks beyond the corporate identity and instead focuses on the individuals leading the organization. This may apply to a criminal investigation, a civil lawsuit, or even a tax fraud case.

Over history, some companies have become so large, so consistent, and so much of a household name that they take on a persona of their own. Think of global brands such as Coca-Cola, Nike, and McDonald’s. If you asked people on the street to name the CEOs or executive teams of these companies, most people couldn’t. The companies themselves are perceived as an entity.

When looked at from a legal perspective, this abstract concept becomes a fact. A company that is formed and operated as a corporation becomes a legal entity that takes liability and accountability away from the founders or current leaders. Two major forms of corporations are a C-corporation and an S-corporation.

How Are C-corporations And S-Corporations Similar?

Both C and S-corporations are unique legal entities that offer founders and owners liability protection. In most cases, owners are not personally responsible for debts, fines, or legal issues the company incurs.

Unless they were to dig into how the organization is taxed, outsiders generally could not tell if a company is a C or S-corporation. A C and S-corporation may have the same org chart, business model, operational strategies, marketing, sales process, human resources policies, etc.

This article is for general informational purposes only and is not legal advice. Contact us today to discuss your specific situation.

When an individual files with their state to form a corporation, the company will automatically be a C-Corporation, unless the person filing chooses to be an S-Corp.

Shareholders

By structuring the business as a C-corporation, owners benefit from separating the company’s assets from their own personal assets. The owners of a C-corporation are considered shareholders, and they are protected from most liability incurred by the business.

As defined by the Legal Information Institute of Cornell Law, “shareholders contribute the money or assets the corporation uses to conduct its business, and the corporation issues shares of its stock to shareholders as evidence of ownership.”

C-corporations allow owners great flexibility in raising capital as they can issue different forms of stock and can have an unlimited number of shareholders. These shareholders can be other business entities and non-U.S. citizens. Most stock corporations, especially publicly traded stocks, are C-corporations.

Double-taxed Entities

The flexibility in stock and unlimited growth potential comes with a price in the form of taxation. C-corporations are considered double-taxed entities in that they pay income taxes at the corporate level and also pay taxes on dividends paid to shareholders.

Historically, C-corporations have been the preferred company structure for high-income/high-tax bracket owners. However, a C-corporation can have disadvantages. When forming your corporate entity, keep in mind that C-corporations are subject to double taxation, may incur high start-up costs, and may be subject to complex regulations and formalities.

This article is for general informational purposes only and is not legal advice. Contact us today to discuss your specific situation.

Company founders filing their business at the state level can choose to incorporate as an S-corporation. This type of company structure provides similar liability protections as a C-corporation; however, they are taxed on a “flow-through” basis.

Taxes

Rather than paying a corporate tax, all income or losses are passed on to the company owners, also known as shareholders. An S-corporation may have one single shareholder or up to 100 shareholders as long as they are individuals, not businesses, and they are U.S. citizens.

Shareholders may hold company stock. However, the organization may only issue one type of stock. These restrictions are why start-ups looking for external funding, either from shareholders or capital venture investors, usually choose to incorporate as a C-corporation.

According to IRS.gov, certain companies cannot be structured as an S-corporation, including certain financial institutions, insurance companies, and domestic international sales corporations.

This article is for general informational purposes only and is not legal advice. Contact us today to discuss your specific situation.

Before filing your corporate structure, ask yourself questions to determine which form is most aligned with your business model. For example (not a comprehensive list):

• Will you need to sell diverse types of stocks?
• Will you need more than 100 investors?
• Will your company sell stock to other companies or entities outside the U.S.?
• Is your business prohibited from filing as an S-corp?
• Will your company publicly trade stocks?

If you are not certain which corporate entity to choose, consider consulting with an attorney or law firm that specializes in corporate law.

This article is for general informational purposes only and is not legal advice. Contact us today to discuss your specific situation.

The federal government of the United States aims to keep capitalism healthy and fair by ensuring businesses have the most level and competitive playing field possible. One of the tools used to enable fair access in the free market is the selection of a business entity.

In 1958, the U.S. government passed legislation creating the S-corporation, which gave small businesses the liability protections of a corporation without the double taxation of C-corporations.

Limited Liability Company

In 1977, the state of Wyoming created the first Limited Liability Company, a new type of business entity that offered better liability protection and more flexibility around management and taxation. The IRS recognized this business status 11 years later. Still, business owners were slow to adopt this new business structure until the early 2000s.

Today, LLCs are a popular choice for new business startups. Data from the Internal Revenue Service shows that in 1993, there were 17,000 LLC tax filings. By 2015, that number surged to 2.5 Million LLC tax filings.

This article is for general informational purposes only and is not legal advice. Contact us today to discuss your specific situation.

Part of the popularity of the LLC business structure is its ease of creating, launching, and operating the company. Once you have your business name selected and have secured an EIN number from the IRS, you follow your state’s process for filing the business.

For an LLC, you will likely need to prepare Articles of Organization and an Operating Agreement. Big words, yet most states make the process very easy with drop-down and check-the-box menus on their website.

Articles of Organization

Articles of Organization or a Certificate of Formation are not required by all states. While the name can seem intimidating, it primarily describes the purpose of the business, identifies the founding members, and identifies the Registered Agent. The Registered Agent is the person who receives correspondence for the business and serves as the “voice” of the business.

Operating Agreement

The Operating Agreement, also not required in all states, is a declaration that outlines how the business will be run. It can include a brief description of who makes decisions, how shares (if any) are handled, how profits and losses are managed, what happens if the company is dissolved, etc.

The Small Business Administration advises that even if not required by your state, it is wise to have an Operating Agreement. It can prevent misunderstandings between company leaders, and it documents all verbal agreements made in connection with the business.

This article is for general informational purposes only and is not legal advice. Contact us today to discuss your specific situation.

Over the past twenty years, the rapid growth of LLC filings is evidence of advantages that are popular with new and existing business owners. Below are the top advantages of an LLC business entity.

Taxation Options: Many business owners choose an LLC over a corporation because it avoids the double taxation that exists for C-corporations. Instead, the operators of the LLC chose to be taxed as a sole proprietorship, an S-corporation, or a partnership.

Flexible Ownership: An LLC can have one owner or many owners (sometimes called members). The Operating Agreement designates the duties of each owner or group of owners and names a Registered Agent as an official point of contact. Unlike an S-corp, which sets strict limits around owners and investors, in an LLC, businesses, as well as individuals, can be owners of an LLC. Owners do not have to be U.S. citizens, which opens the company to foreign investors and global capital.

Owner’s Protections: In an LLC business entity, the owner’s personal assets are protected from business debts and lawsuits against the business. This is not absolute, yet in the past 40 years of court cases, the protections have remained strong.

Simple Set Up & Maintenance: Every business entity has a process to start and maintain the business. Sole proprietorships offer the least liability protections, yet they are the easiest to file and operate. LLCs tend to be the second easiest to file and operate. The filing process is typically straightforward, and the annual maintenance usually involves a filing form and a low annual operating/licensing fee.

Credibility: For small business owners, the establishment of a formal Limited Liability Corporation (LLC) lends credibility over a sole proprietorship. It can make potential customers and investors feel the business is legitimate and unlikely to be a “fly-by-night” operation.

This article is for general informational purposes only and is not legal advice. Contact us today to discuss your specific situation.

With the popularity of LLCs as a business entity, growing from 17,000 in 1993 to over 2.5 million in 2015, you might think there were no disadvantages. However, there are a few to consider when choosing a business entity for your company.

Changes In Ownership

In some states, if an owner exits the LLC, either by choice or due to due death, the state will require that the LLC be dissolved, and a new entity be created and filed. This is not the case everywhere, so make sure you understand the laws and regulations of the state in which you filed (or intend to file) your LLC.

Liability May Not Be Ironclad

As a new business entity, the strength of the “corporate veil” is still being tested in courts. The protections can weaken if owners have not established or do not follow an Operating Agreement. If the court determines that the LLC is operating as a sole proprietorship, the liability protections may not hold, leaving the owner’s assets at risk.

Cost to Incorporate

The investment to file an LLC varies from state to state. While generally considered an affordable option compared to a C-corporation, for some small business owners, the cost may be a hurdle. According to a 2022 Forbes article, the cost can run from $10 and $800 or more to file annual reports and pay annual fees.

According to Inc.com, because the LLC is a relatively new entity type, the laws governing LLCs are still emerging from court cases, and each state has its own LLC statutes. Fresh court decisions and nuance between states can make the legal interpretations of do’s and don’t’s with LLCs complicated. That’s why it’s worth it to consult with knowledgeable and up-to-date legal and tax advisors.

This article is for general informational purposes only and is not legal advice. Contact us today to discuss your specific situation.

When two or more people decide to build a business together, one of the business structures they can elect is a Limited Liability Partnership (LLP). An alternative to forming an LLC or a C-Corpporation, the LLP allows partners to invest while limiting each partner’s liabilities to the amount they invested into the business.

Partnerships

Partnerships are a great way to leverage distinct skill sets that, together, create innovative, cutting-edge companies that offer unique products and services. While most LLP structures are used for professional services, such as attorneys, accountants, and financial advisory firms, it is interesting to note that Apple, Microsoft, and Google are products of two partners collaborating to build something amazing.

This article is for general informational purposes only and is not legal advice. Contact us today to discuss your specific situation.

According to Forbes.com, in some states, licensed professionals cannot form C-corporations. LLPs give these professionals the ability to build a business with partners and investors while limiting their risk.

The process for forming an LLP varies from state to state. In general, partners file legal documents through their state (or eligible state) portal. It is recommended that you research state and local laws that impact your business.

This article is for general informational purposes only and is not legal advice. Contact us today to discuss your specific situation.

Every business entity available was designed to provide advantages to certain types of owners and business models. LLCs and LLPs have similarities that can make it confusing to know which is best to choose. Here are five differences between the two that can help understand each entity better.

Ownership

In an LLC, all owners are called members, and one member, in particular, is named the Registered Agent and serves as an official point of contact for the company. In an LLP, owners are partners, and there is greater flexibility in assigning control and proceeds for each partner. Typically, certain partners are designated as decision-makers in the day-to-day operations, with certain decisions, such as partnership changes, requiring the approval of all partners.

Longevity

An LLC may have to be dissolved if a key owner dies or exits the business. In an LLP, partnerships can survive such a loss and continue operating. This is ideal for businesses, such as law firms, that are often passed on to heirs or successors.

Taxation

LLPs are taxed as a pass-through entity and, unlike an LLC, cannot elect to be taxed as an S Corporation.

Liability Protection

In an LLC, the owner’s liability for business debts is limited to the amount the owners have put into the business and are fully liable for their own negligence, but not necessarily that of other members. Protections for LLPs vary per state, and while partners may not be liable for other partners’ negligence, they may be fully liable for general business obligations.https://www.forbes.com/advisor/business/llp-vs-llc/

Regional Acknowledgement

For the most part, LLCs are recognized throughout the United States. Conversely, the recognition and administration of LLPs vary from state to state. If an LLP, say a dental practice, wanted to open offices across a state line, they might find that their existing business structure is not acknowledged by that state.

A Limited Liability Partnership may be ideal as your business entity if you are in the professional services industry or have at least one partner that contributes to the financial and operational health of the business. States make forming this type of business entity relatively easy and affordable, giving professionals a quick path to building a company with ideal operating flexibility and liability protection.

This article is for general informational purposes only and is not legal advice. Contact us today to discuss your specific situation.