Business Law
Do you want to be a savvy business owner? Then knowing when to hire an attorney can be an incredible asset, especially when avoiding expensive lawsuits is of interest to you. Business laws were formed to govern the starting and running of a business. As fun as it sounds to create and sell your own product, there are standards and practices in place for business owners to abide by in order to run ethically. Below are a few basic processes you’ll want to understand to ensure you make the right decisions for your company when just starting out.
Business law is all about being compliant with each regulation to make ethical decisions for your organization and protecting the company’s legal rights. This includes knowing which legal entity is right for your business, creating proper contracts for business transactions and employee relationships, understanding how your company is taxed, and depending on what type of product you’re selling, you’ll want to know how to protect your intellectual property. Although there are many concepts to learn, you don’t need a law degree to comprehend the fundamentals, and your company will benefit greatly both in the short and long term by understanding them. With that said, let’s take an in-depth look at some of the concepts you will need to be aware of as a business owner.
Business law is all about being compliant with each regulation to make ethical decisions for your organization and protecting the company’s legal rights. This includes knowing which legal entity is right for your business, creating proper contracts for business transactions and employee relationships, understanding how your company is taxed, and depending on what type of product you’re selling, you’ll want to know how to protect your intellectual property. Although there are many concepts to learn, you don’t need a law degree to comprehend the fundamentals, and your company will benefit greatly both in the short and long term by understanding them. With that said, let’s take an in-depth look at some of the concepts you will need to be aware of as a business owner.
Filing the Right Legal Structure for your Business
So let’s say you are getting ready to start a business, but don’t know which entity is appropriate for the type of product or service you want to sell. Here are the most common types of entities to understand:
Sole Proprietorship - The easiest legal structure to form, where an individual is responsible for all the firm's debts and profits.
Partnership - As the name suggests, this form of business involves 2 or more individuals. However, a partnership will either be filed as a general or limited partnerships. As a general partnership, all individuals associated share in the profits and debts equally, while a limited divides responsibility where one person is responsible for the operation of the business while the other persons only contributes and receive a portion of the profit
Limited liability Company (LLC) - With a sole proprietorship or partnership, all individuals involved are held personally liable for the debts of the company. An LLC separates company and personal assets, meaning individuals will only be held liable up to the assets that were invested in the company.
Contract Guidelines
As previously mentioned, contracts are one of the most important aspects of a business. In order for a contract to be legally enforceable, they must meet the following requirements:
The Uniform Commercial Code & Common Law
The Uniform Commercial Code (UCC) is one of the main sources of contract law, and Article 2 of the UCC specifically focuses on transactions for the sale of goods. The UCC is also a model law, meaning each state can decide which laws to adopt or reject. However, nearly every U.S. jurisdiction has adopted all articles, with only a few exceptions. For example, California enacted their own version known as the CA UCC. As a business owner, always make sure the state in which you’re conducting business has enacted all laws of the UCC and if not, learn which differences may apply to your business. While the UCC governs transactions for the sale of goods, Common Law is the foundation of law in the United States. For business purposes, it governs many other contract types such as real estate, employment, and insurance contracts.
Business Properties
Properties not only come in the form of both tangible and intangible products, but also in the collections of responsibilities and rights correlated with the property. Some of the most common examples in business include the following”
Intellectual Properties
Patents - A 14 to 20 year exclusive right to the manufacturing and distribution of novel and useful inventions such as a unique system process.
Copyrights - Lasting up to 75 years, the protection of written work such as a book or song should be filed as a copyright.
Trademarks - A symbol or logo will be filed as a trademark and become renewable 20 year rights.
Trade secrets - Once a trade secret is filed and confirmed, there is no expiration date as long as it remains protected. An example of a trade secret would be a secret formula or recipe, such as the famed Coca Cola Recipe.
Other
Real properties - The rights to a designated piece of Land
Personal properties - Property not attached to buildings or land, such as automobiles.
Fixture properties - Property that is attached to the premises of an establishment, such as an oven in a restaurant.
Depending on the business, it’s important to understand which category your product or service will fall under. The overall purpose is to ensure your unique inventions are protected from misuse and duplication.
Acts of Ethical Business
Conducting ethical business practices should be at the cornerstone of every business and a priority for every business owner. However, that’s unfortunately not always the case in the real world. The following are several acts business owners need to be aware of that govern ethical business behaviors.
Sherman Antitrust Act - This act essentially prohibits attempted monopolies in an industry that cause price fixing, tying relationships, setting production quotas and so forth.
Federal Trade Commission Act - The FTC governs the actions that promote deceptive and unfair practices, such as false claims in advertisements.
Robinson-Patman Act - This legislation prevents price discrimination of a product based on aspects not related to the delivery and manufacturing of the product.
Clayton Act - The Clayton Act prohibits the monopolization of an industry through anti-competitive mergers that may lead to diminished competition.
As a business owner, it’s important to focus on the key components that are related to the industry in which you’re involved so that you can effectively run an ethical and profitable business.
So let’s say you are getting ready to start a business, but don’t know which entity is appropriate for the type of product or service you want to sell. Here are the most common types of entities to understand:
Sole Proprietorship - The easiest legal structure to form, where an individual is responsible for all the firm's debts and profits.
Partnership - As the name suggests, this form of business involves 2 or more individuals. However, a partnership will either be filed as a general or limited partnerships. As a general partnership, all individuals associated share in the profits and debts equally, while a limited divides responsibility where one person is responsible for the operation of the business while the other persons only contributes and receive a portion of the profit
Limited liability Company (LLC) - With a sole proprietorship or partnership, all individuals involved are held personally liable for the debts of the company. An LLC separates company and personal assets, meaning individuals will only be held liable up to the assets that were invested in the company.
Contract Guidelines
As previously mentioned, contracts are one of the most important aspects of a business. In order for a contract to be legally enforceable, they must meet the following requirements:
- The parties involved must have the mental capacity and legal authority to form the agreement.
- A binding agreement where the offer is valid and accepted must be created. This means the offer needs to definitively state an intent to create a contract.
- Consideration must be provided for the terms to be enforceable. Anything of value such as service, a form of money, or promise is allowed.
- No illegal good or actions can be part of the contract terms.
The Uniform Commercial Code & Common Law
The Uniform Commercial Code (UCC) is one of the main sources of contract law, and Article 2 of the UCC specifically focuses on transactions for the sale of goods. The UCC is also a model law, meaning each state can decide which laws to adopt or reject. However, nearly every U.S. jurisdiction has adopted all articles, with only a few exceptions. For example, California enacted their own version known as the CA UCC. As a business owner, always make sure the state in which you’re conducting business has enacted all laws of the UCC and if not, learn which differences may apply to your business. While the UCC governs transactions for the sale of goods, Common Law is the foundation of law in the United States. For business purposes, it governs many other contract types such as real estate, employment, and insurance contracts.
Business Properties
Properties not only come in the form of both tangible and intangible products, but also in the collections of responsibilities and rights correlated with the property. Some of the most common examples in business include the following”
Intellectual Properties
Patents - A 14 to 20 year exclusive right to the manufacturing and distribution of novel and useful inventions such as a unique system process.
Copyrights - Lasting up to 75 years, the protection of written work such as a book or song should be filed as a copyright.
Trademarks - A symbol or logo will be filed as a trademark and become renewable 20 year rights.
Trade secrets - Once a trade secret is filed and confirmed, there is no expiration date as long as it remains protected. An example of a trade secret would be a secret formula or recipe, such as the famed Coca Cola Recipe.
Other
Real properties - The rights to a designated piece of Land
Personal properties - Property not attached to buildings or land, such as automobiles.
Fixture properties - Property that is attached to the premises of an establishment, such as an oven in a restaurant.
Depending on the business, it’s important to understand which category your product or service will fall under. The overall purpose is to ensure your unique inventions are protected from misuse and duplication.
Acts of Ethical Business
Conducting ethical business practices should be at the cornerstone of every business and a priority for every business owner. However, that’s unfortunately not always the case in the real world. The following are several acts business owners need to be aware of that govern ethical business behaviors.
Sherman Antitrust Act - This act essentially prohibits attempted monopolies in an industry that cause price fixing, tying relationships, setting production quotas and so forth.
Federal Trade Commission Act - The FTC governs the actions that promote deceptive and unfair practices, such as false claims in advertisements.
Robinson-Patman Act - This legislation prevents price discrimination of a product based on aspects not related to the delivery and manufacturing of the product.
Clayton Act - The Clayton Act prohibits the monopolization of an industry through anti-competitive mergers that may lead to diminished competition.
As a business owner, it’s important to focus on the key components that are related to the industry in which you’re involved so that you can effectively run an ethical and profitable business.
