In the U.S. Congress, members of both parties are working together to reduce the corporate tax rate and simultaneously limit business tax breaks. The plan to cut business tax rates is getting strong opposition from U.S. businesses. Reducing corporate tax cuts and the corporate tax rate is a complicated issue because millions of U.S. businesses do not pay taxes through the corporate system. These businesses are often referred to as “pass-throughs” because the income they receive is...

A “B” Corporation is an unofficial designation for socially responsible businesses.  It can also be referred to as a B Corp, Benefit Corp, or B Corp Certification. The 501(c)3 nonprofit, B Lab, determines and designates B Corporations. There are over 1,000 Certified B Corps in more than 60 industries.  Companies that have obtained B Corp designation include Etsy, Method, Seventh Generation, Ben & Jerry’s, and Patagonia. There are many benefits associated with B Corporation status. Designation as...

The state of California has joined in a lawsuit against BP, the British energy giant, in a whistleblower action that was originally brought by a former BP employee, Christopher A Schroen, and alleged violations under the False Claims Act.  Since Schroen’s suit, Los Angeles County, the University of California Board of Regents, and the Trustees of California State University have also joined the suit alleging that between 2004 and 2012, BP defrauded the state of California of...

Recently, California State Senator Bob Hertzberg proposed a new tax on professional services. Although the bill, known as Senate Bill 8 or the Upward Mobility Act, would replace Proposition 30, which was passed by California voters in 2012 and is set to expire in 2018.  If passed, Senate Bill 8 will take effect in 2019. While the Upward Mobility Act is currently a work in progress, it is being touted as a means of starting a conversation in...

Varying circumstances may require parties to a contract to modify their original agreement.  For example, contract modification may be necessary if parties want to extend a contract, change its duration, alter the quantity of goods to be sold or delivered, change a delivery time or place, or change a payment amount or type. Parties typically can modify a contract at any time, as long as all the parties agree to the changes.  Minor changes in a...

A sole proprietorship is the most common business form because it is simple to establish and easy to maintain.  For the same reasons that it is easy to start a sole proprietorship, and dissolving a sole proprietorship is relatively simple as well.  If you own your own business and run it as a sole proprietorship, you can close your business in a few simple steps. Because only one person can own a sole proprietorship, dissolving one is...

The procedures for compensating a corporate officer and setting corporate officer compensation will depend on the type of business entity in operation, the industry, the entity’s profitability, and the corporate bylaws and/or operating agreement.  In general, corporate officer compensation is permitted so long as it is “reasonable” for their efforts in carrying on a trade or business.  In such cases, a corporate officer is often considered an employee of a corporation, and is paid as...

If a party was dishonest about a material fact during the drafting process of a contract, the other party may be able to take the contract to court and argue that it should be rescinded, or cancelled, due to misrepresentation.  Moreover, if the honest party performed the contract because he, she, or it justifiably relied on the misrepresentation in a contract of material fact, he, she, or it may be able to collect damages...

A court may find that a contract, or some of its terms, should not be enforced if the contract as a whole or certain contract terms are unconscionable.  Regardless of whether you are drafting a contract or signing one, it is important to understand what types of contract terms may be found unconscionable. Below are a few examples and specific considerations. Courts commonly describe unconscionable  contracts or contract terms as those that  “shock the conscience.”...

Unlike patents and trademarks, trade secrets are protected without any procedural formalities associated with the benefits of registration with a government agency. The benefit to this is that a trade secret can be protected for an unlimited period of time and requires no public disclosure. The downside is that defining and protecting a trade secret can be trickier. There are different definitions of what constitutes a “trade secret.” California law has adopted the Uniform Trade Secrets Act definition,...