Understanding Business Law In California

In this article, you will learn about:

• Key considerations in starting a business in California.
• How to protect your California business from litigation.
• The steps you’ll take when dissolving a California business entity.

What Are Some Important Questions I Should Consider When Starting A Business In California?

Embarking on the journey of starting a business is thrilling, yet it demands a significant investment of time and unwavering commitment. For those who are earnest about venturing into entrepreneurship, certain factors require careful consideration.

The best first step to starting any business is to speak with an experienced business law attorney. During your consultation, you might consider the following questions:

• Are you going to be raising funds for your business?
• How many people are involved in the business?
• Do you plan on expanding or selling your business?
• What kind of entity will your business be?

As you explore each question with your attorney, you’ll gradually refine your business objectives and strategies.

For instance, different business structures come with distinct advantages and drawbacks, underscoring the importance of thorough discussion with your business attorney. If you’re considering an IPO to raise capital through stock sales, the choice of incorporation becomes significant. Meanwhile, smaller ventures like family-owned enterprises or small-scale businesses will find that an LLC (limited liability company) offers favorable personal asset protection.

How Do I Determine The Business Model Will Work In My Situation?

The best business model for your enterprise will depend on how big your company will be and what your long-term plans are. This is one of the essential questions you should discuss with your attorney when setting up your business.

Remember, there are advantages and disadvantages to each business model depending on your business type, industry, and goals. As such, getting down to the specifics of your business organization can save you time and money in the long run.

If you’re just getting started, you can always do preliminary research based on the industry you want to enter or the product or service you’ll be providing. That way, you will have a good starting point for discussions with your attorney.

What Other Proactive Measures Should We Have In Place To Protect Ourselves From Potential Litigation Or Other Issues That Can Arise?

Certainly, the industry you are in will impact what kind of full-length measures you should take to protect your business from litigation. Still, there are a few general considerations to take into account that may offer some initial protection no matter what your business is.

Some of those considerations include:

• Keep the proper organizational documents. These include any other third-party agreements signed and executed and in place.
• Ensure your entity is formed by an attorney, not a third-party software system.
• Make sure all proper state or regulatory filings are made with appropriate entities.
• Pay all taxes and any other third-party fees are paid to date.
• Ensure business assets are separate from your personal assets.

In addition to ensuring you have the necessary paperwork and adhering to protocols, it’s crucial to document everything in writing. Relying solely on verbal agreements can lead to misunderstandings and potentially result in legal disputes. When establishing your organization, it’s highly advisable to enlist the assistance of a qualified lawyer to draft these documents.

A fundamental principle for managing a company effectively is to treat it as a distinct entity separate from your personal assets. Failing to do so can expose you to the risk of “piercing the corporate veil,” where your personal assets may be used to settle debts and liabilities incurred by your corporation. To safeguard against this scenario, it’s essential for both you and your business to maintain separate identities.

How Can A California Business Attorney Assist Me In Legally Dissolving Or Closing A Business In California?

While every business situation may differ, there are a few protocols to follow to dissolve or close your legal entity in California. Some common steps are:

1. Vote on dissolution. Proper voting should be made by either the members if it’s an LLC or the shareholders if it’s a corporation can be dissolved first by
2. Repay debts. Paying all debts to third parties, including government entities such as the California Franchise Tax Board, helps avoid fines and litigation. In addition, ensuring corporate taxes and any third-party liabilities are paid to date is required and helps avoid litigation later on.
3. File the correct paperwork. Proper dissolution documents should be filed with the California Secretary of State.

If you are in the process of dissolving or closing your business, it is best to get in contact with a business attorney to go over some of your options.

For More Information On Business Law In California, a free initial consultation is your next best step. Get the information and legal answers you are seeking by calling (510) 916-2100 today.