DISCLAIMER: The following material is intended to answer some of your questions about business law in general. It is not intended to answer specific questions about your particular case, since each case is different.

Definition of Business Law

Business law encompasses all of the laws that dictate how to form and run a business. This includes all of the laws that govern how to start, buy, manage and close or sell any type of business. Business laws establish the rules that all businesses should follow. A savvy businessperson will be generally familiar with business laws and know when to seek the advice of a licensed attorney. Business law includes state and federal laws, as well as administrative regulations. Let's take a look at some of the areas included under the umbrella of business law.

Starting a Business

Much of business law addresses the different types of business organizations. There are laws regarding how to properly form and run each type. This includes laws about entities such as corporations, partnerships and limited liability companies. For example, let's say you decide to start your own business. I need to decide what type of business you want to be. Will this be a partnership? Will it be a sole proprietorship? What papers do you need to file in order to start this business? These questions fall under the laws that govern business entities, which are state laws. The type of entity you pick will also affect how you pay my federal income taxes. These, of course, are federal laws.

Next, what will your business be called? You need to know if anyone else already has the name you have in mind. This is a trademark question. Patents, copyrights and trademarks are part of intellectual property law. The federal law governs most intellectual property law. Then you need to know if you'll require any special type of license for this business. Do you need a license? Do you need some sort of special permit? You'll need to check your local and state laws to find out. How will you advertise your business? Are you allowed to say that I'm the 'best in town?' This question falls under consumer protection law, which can be federal or state law.

Buying a Business

Now let's say you decide to buy a business instead. There are many business laws that govern how to buy a business. If you buy a business, do you now own the actual store? This is a real estate law question. Do you own the equipment in the store? This is a property law question. Both of these fall under state law. Are you now the boss of the former owner's employees? This is an employment law question.

Can you start hiring your own employees and ordering supplies? This will involve contract law, since you'll be making new agreements with people regarding your business and determining which of the previous agreements you need to uphold. Contracts are legally binding agreements made by two or more persons, enforceable by the courts. Businesses are involved in many different types of contracts, and as a result, there are many interesting cases involving breach of contract. A breach of contract is when one party doesn't hold up his or her end of the bargain. It's common for parties to dispute the terms of a business agreement or disagree on how the agreement should be performed.

Selling a Business

In order for an attorney to be able to provide you with the best financial advice regarding the sale of your business, you must ensure that your attorney has copies of all the relevant business documents. The following list details the documents you should provide to your attorney when discussing the sale of your business.

Your company's current financial statements, including its balance sheets, profit and loss statements, cash flow statements, and projections.
A list of stockholders or shareholders, the number and percentage of shares owned, and the total amount of stock issued.
A list of the names and titles of the persons authorized to sign documents for your company.
Copies of your company's incorporation, partnership, or limited liability company documents.
Copies of your company's insurance policies.
Copies of all employment contracts.
A list of all of the company's employees.
Copies of any pending lawsuits against your company.
Copies of your company's federal and state tax returns for the last three years.
The legal description of any real property owned by your company.
Copies of your company's real property lease(s).
Copies of all leases for vehicles, equipment, computers, telephones, etc.
A list of your company's bank and investment accounts.
A schedule of your company's assets.
A list of creditors.
Copies of all notes, mortgages, security agreements, loan agreements, and U.C.C. financing statements.
Copies of any outstanding state or federal tax claims, audits, or actions.
Copies of business registrations, licenses, and permits.
Copies of "key-person" insurance policies.
Copies of all outstanding contracts with vendors and customers.

Please keep in mind that this list is not meant to be exhaustive, as you may have other documents that will be relevant to your particular business and/or situation. If you're not sure whether a certain document or other information is relevant to your business, you should err on the side of caution and provide the information or document to your attorney so that he or she can decide if it's relevant.

Starting your own Business

When starting a business there are federal small business requirements that must be met by all start-ups. Both state and federal governments place certain requirements on small businesses in order for the companies to function properly. From a federal perspective, there are several major small business requirements that the government imposes upon businesses.

Business Structure and Taxes

One of the very first decisions of a business will be to decide what kind of business structure it will adhere to. The type of structure will determine how much regulatory paperwork the business will have to file as well as the taxes it will pay. The different structures for small businesses include:

Sole Proprietor (taxes paid through personal income tax return of owner);
Partnership (taxes paid through personal income tax return of owners);
Corporation (taxes paid by corporation);
S corporation (taxes paid through personal income tax returns, but owners must be paid "reasonable compensation");
Limited Liability Company (LLC) (hybrid legal structure, taxes paid like a partnership, but receive personal liability shield);
Non-profit (may be tax exempt).

The tax and regulatory implications of the various business structures increase the more the business heads toward being classified a corporation. Corporate taxes are more complicated than paying taxes on business profits and professional assistance from a tax attorney or accountant should be obtained. The specific tax forms required by the IRS for each of the above business structures can be found on the IRS website or the U.S. Small Business Administration site.

Employer Identification Numbers

Employer Identification Numbers (EINs) are typically required of all businesses (although most sole proprietors with no intent to hire employees are exempt - - check the IRS website to confirm whether your business needs to apply). An EIN is used by the IRS to identify a business entity for purposes of tracking the business and determining what taxes it and the parties related to the business (employees, suppliers, etc) owe the government. Businesses can now apply for EINs online, with the EIN being issued immediately during the application session.

Licenses and Permits

In addition to the requirement of obtaining an EIN, businesses in certain industries are required to apply for licenses and permits to do business. While a majority of businesses don't have to register with the federal government (but do with state agencies), if your business falls into the following categories, you should consult with the governing federal agency to determine whether you need a license or permit:

Agriculture - the U.S. Department of Agriculture issues permits for business involved in the importation and interstate transportation of animals, animal products, biologics, biotechnology and plants.
Alcoholic beverages - manufacturers, wholesalers, importers and retailers of alcohol beverages must register, pay special taxes and maintain certain records with the Alcohol and Tobacco Trade Bureau (ATTB).
Aviation - the Federal Aviation Administration (FAA) issues licenses for pilots, aircraft, airports, and medical aviation services.
Environmental - the Environmental Protection Agency (EPA) imposes environment regulations at the federal level. If your business buys or sells land that is contaminated, you'll need to go through the EPA to get rid of the contaminants.
Firearms, ammunition and explosives - manufacturers, dealers and importers of firearms and ammunitions are controlled by the Bureau of Alcohol, Tobacco and Firearms (ATF).
Fish and wildlife - businesses engaged in any wildlife activity, including the importation of any wildlife or their derivative products, must receive a permit from the U.S. Fish and Wildlife Service.
Investment Advising - the Securities and Exchange Commission (SEC) requires those who professionally counsel on investments to be licensed.
Mining and drilling - Minerals Management Services (MMS), a bureau in the U.S. Department of the Interior, is the federal agency that manages the nation's natural gas, oil and other mineral resources.
Radio and television broadcasting - If your business broadcasts information by radio, television, wire, satellite and cable, you are required to obtain a license from the Federal Communications Commissios (FCC). The FCC doesn't regulate the internet.
Interstate ground transportation - you must register if your business will cross state lines.
Maritime transportation - the Federal Maritime Commission issues licenses for businesses that transport freight or passengers on the ocean.

Naming Your Business and Protecting Your Property

Once you've decided on your business structure and determined whether the business falls under the purview of a federal agency, you'll need to choose a business name and see whether it violates another business' federally protected trademark. You can do a simple search with the U.S. Patent and Trademark Office (USPTO),as well as a search for similar businesses using internet search engines.

You may have already picked a business name, but because of the potential waste of time and money related to marketing a name that you ultimately can't use, you should take at least a few precautionary steps before plunging in. Additionally, once your business gets rolling, you should take steps to protect your business' trademark. You can register your business name with the USPTO even before you start using the name in business (it's called an Intent to Use application).

Additionally, if your business has any intellectual property, you'll want to protect it by registering it with the USPTO, whether they're patents, copyrights or trademarks. And after you've registered your property, you need to vigilantly protect it on your own (the USPTO isn't an enforcement agency).

Give Your Small Business the Best Chance at Success: Hire an Attorney

While you may be a brilliant entrepreneur, trying to decipher all the federal business law requirements can be confusing. A skilled lawyer can help you meet all the requirements and save you hours of lost productivity. Contact us today and learn how we can help you execute your business schemes with aplomb.

Areas of practice