What is a Sole Proprietorship?

Establishing a sole proprietorship is the most common and basic way to start a new business.  In most cases, a sole proprietorship is established by an individual by simply starting a business.  At most a sole proprietorship will need a few simple filings to get going.

Sole Proprietorship

Only one owner is involved in a sole proprietorship. There is an exception for spouses, as California law allows a husband and wife venture to be classified as a sole proprietorship. The owner of a sole proprietorship controls every aspect of the business, and receives all profits from it.

There is no separate legal entity with a sole proprietorship. This is very important to note for liability purposes. For example, if a corporation, which is a separate legal entity, is sued, the corporation owners – its shareholders – are generally protected from individual liability, that is, their liability is limited by their investment in the company in the form of the amount they paid for their shares. However, because there is no distinction between the business and the business owner in a sole proprietorship, the owner can and will be held liable for all business liabilities. In other words, the sole proprietor is personally liable for all debts and actions of the company.

A sole proprietorship exists as long as the proprietor (business owner) is alive. The sole proprietorship will cease to exist once its owner dies.

Filing Requirements

A sole proprietorship in California does not need to file any organization documents with the Secretary of State. However, if the sole proprietorship is going to do business using a name different from the sole proprietor’s, a Fictitious Business Name Statement must be filed.

The sole proprietor will also have to report all business income and expenses on his or her taxes. There is a specific form for this that is part of the California personal income tax return. As with personal income, the sole proprietorship’s tax rate will depend on the proprietor’s total taxable income.

Ezer Williamson Law provides a wide range of both transactional and litigation services to individuals and businesses. We have successfully prosecuted and defended various types of business, contract, and property claims. Contact us at (310) 277-7747 to see how we can help you with your business law needs.

Intellectual Property Basics for Businesses

Intellectual Property Basics

It is important to protect the intellectual property and proprietary aspects of any businesses’ goods and/or services.  There are a variety of different ways to go about protecting your intellectual property, and it is important to determine what method will accomplish your goals effectively. It is therefore important to develop an understanding of the different intellectual property protection options. Depending on your company’s needs, you may want to consider either a patent, trademark, trade secret, or copyrights.

What is a Patent?

patent is a property right. Upon successful application, a patent is granted by the federal government to an inventor. The purpose is “to exclude others from making, using, offering for sale, or selling the invention throughout the United States or importing the invention into the United States.” This protection is given to an inventor for a limited time in exchange for the public disclosure of the invention when the patent is granted.

What is a Trademark?

A patent is very different from a trademark.  A trademark is a word, phrase, symbol, or design (or a combination of these), that identifies and distinguishes the source of one’s goods from others.  A “service mark” is like a trademark, but it identifies and distinguishes the source of a service instead of goods.  Like a patent, a trademark is also granted by the government and entitles the holder of the mark to protect their marks from other competitors.

What is a Trade Secret?

When determining whether a patent is feasible for you, you should also take timing into consideration. For example, if your idea is for something that would be part of fast-moving industries, a patent might not be viable. Technology often moves faster than the patent application process, so it might be better to keep your idea a trade secret, i.e., information that companies keep secret to give them an advantage over their competitors.  Protecting trade secrets often involves contractual protections and state unfair competition laws, among others.

What is a Copyright?

A copyright is a form of protection offered to authors of “original works of authorship,” such as music, books, and plays. Copyrights are available for published and unpublished works and are given copyright protection after the copyright is registered through the Federal Government.

Ezer Williamson Law provides a wide range of both transactional and litigation services to individuals and businesses. Contact us at (310) 277-7747 to see how we can help you with your business law needs.

 

What is Respondeat Superior?

Under the doctrine of respondeat superior a principle (employer) is liable for the torts of its agents (employees).  A principle-agent relationship exists where the employee has agreed to work on behalf of the employer and to be subject to the employer’s control or right to control the physical conduct of the employee.

Respondeat superior is Latin for “let the master answer.”  In the employment context, it might be read more accurately as meaning that “the employer must respond and take responsibility.”

The legal doctrine of respondeat superior makes an employer responsible for the actions of an employee, except where the employee’s actions occur outside the course and scope of employment. This makes it important to understand what it means to be “within the course and scope of employment.”

Whether an action is within the course and scope of employment largely depends on the specific facts and circumstances surrounding the action.  For example, if an employee is running an errand for the company in his or her own personal vehicle, and is responsible for an accident, his or her employer is generally liable. At least one point of settled law is that, generally, if the employee is just commuting to or from work, and the same type of accident occurs, the employer is probably not responsible.

As a business owner, it would be in your best interest to make sure your insurance covers such situations. If a situation arises where someone is trying to hold your business liable because of the actions of an employee, consult with an experienced attorney.

Ezer Williamson Law provides a wide range of both transactional and litigation services to individuals and businesses. We have successfully prosecuted and defended various types of business and property claims. Contact us at (310) 277-7747 to see how we can help you with your business law concerns.

The Difference Between a Merger and an Acquisition

What is the difference between a merger and an acquisition?  The terms “merger” and “acquisition” are common business terms, but they are often inappropriately used interchangeably, when in fact the two transactions are rather different. If you are planning to combine or purchase assets from another company it is imperative that  you understand the benefits and drawbacks of each.

Merger

In a merger, usually two or more businesses wind down as separate entities, and then a new entity is formed – that is, two entities merge into one new entity. The assets and liabilities of both the original businesses are often carried over to the new company.

Recently, mergers have been especially prevalent in the healthcare and airline industries. For example, one of the biggest mergers has been American Airlines and U.S. Airways. Final steps of the 2010 merger, such as a single reservation system and consolidating frequent flyer programs, are still not complete because of the size of this operation.

Acquisition

In an acquisition, usually one business purchases all or part of another business. As in a merger, most acquisitions involve lengthy negotiations, due diligence, and portfolio transfers. In addition, sellers are generally required to provide information about its’ or their finances, personnel, business opportunities, marketing practices, insurance, and legal status.

Acquisitions are unique and fact-specific.  For example, a seller may finance part of the sale in one transaction, or complete an acquisition using a transfer of stock or cash or both.

Examples of major acquisitions just this year include AT&T’s $69.8 billion purchase of DirectTV and Comcast’s $45 billion acquisition of Time Warner Cable.

If you are considering an acquisition or merger it is always best to consult with an attorney who can help find the most advantageous transaction in light of all the factors and issues in your particular case.

Ezer Williamson Law provides a wide range of both transactional and litigation services to individuals and businesses. We have successfully prosecuted and defended various types of business and property claims. Contact us at (310) 277-7747 to see how we can help you with your business law concerns.

Protecting Your Business from Defamation

Consumer review based websites like Yelp have grown in popularity and power. Consumer voices are often trusted, and a bad online review can have costly consequences. However, online anonymity has led to abuse, and if someone has posted an online review about your business that is false there may be legal recourse for your injuries.

Defamation is an action brought to defend reputation. It involves intentional publication of false, defamatory, and unprivileged information that has a tendency to injure or cause special damage.

One recent case involving defamation claims, mLogica, Inc., et al., v. Pankaj Karan, CA Super. Ct. No. 30-2010-00342873 (December 30, 2013), shows how defamation for online activity works.  Two companies entered into a contract for the creation of some custom software. The party purchasing the software posted numerous negative reviews about the other company on its blog, and emailed its business partners and customers alleging that the software was delivered late and that the company employees were “swindlers” who “milked many of their clients of money and time.” The emails were very damaging to the company’s reputation in the industry, caused many projects to be cut, and a resulted in a significant loss of income.

While truth is an insurmountable defense in defamation actions,  the software company was able to show at trial that the software was fully functional and delivered on time. Furthermore, at trial, the defendant could not identify one unpaid vendor or defrauded customer.

A jury in Orange County, California awarded $1.23 million  to the software company for the damage to its reputation. The decision and verdict were affirmed on appeal.  In fact, the appellate court believed that the evidence supported damages of  “about $10 million. Maybe more.”

This case shows that there is a balance between preventing people from being critical on the Internet, and limiting false speech that does not promote the “marketplace of ideas.”

Ezer Williamson Law provides a wide range of both transactional and litigation services to individuals and businesses. Contact us at (310) 277-7747 to see how we can help you with any business dispute concerns you may have.