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  1. #1
    Join Date
    Apr 2005
    Chatsworth, CA

    The Legalities of running a business!!

    Well as some of you already know from my first post's yesterday, I am an engineer and an attorney. I have been practicing law since 1997, however, I still do side engineering work. I am an engineer at heart, that's why I am here

    Anyway, on the thread about putting an advertisement on the side of a truck, someone mentioned the fact that if you had an accident, it could cause you problems. Another mentioned that's what insurance is for. I figured I would do a short write up on the legalities of running a business, and then talk about the above hypothetical. This post is not to be construed as legal advice by you, and no attorney/client relationship is hereby being created by me to you with this post. This post is only my personal opinion, and for educational use only, and should therefore not be relied upon without you first consulting your own attorney. (had to get the pesky exculpatory language out) Also, I am only talking about California State and US Federal law. Also, this post is just a brief talk about business entities and does NOT go into great detail.

    There are basically three types of business entities: (1) Sole Proprietor, (2) Partnership, and (3) Corporations.

    (1) Sole Proprietor, a single person doing business. The vast majority of business in America are Sole Proprietor's. You are personally legally liable for the company.

    (2) Partnership, two or more individuals conducting business together. Each partner is jointly and severally liable for the partnership business. (any partner can be held liable entirely or in part) In most States, if this relationship is not reduced to a writing, then something called the UPA, Uniform Partnership Act establishes the law relating to the formation, operation, and dissolution, as well as legal liability. It is very important to do your own written partnership agreement!!

    (3) Corporations, a seperate legal entity that is created by law when you submit articles of incorporation to your Secretary of State pursuant to your own States Laws. You must do all of the things required by statute, to keep the entity a corporation such as transferring assetts to the corporation, maintaining seperate bank accounts, not co-mingling funds between personal and corporate accounts, etc. Above all, you are not personally liable for the acts of a corporation since it is a seperate entity, however, you are personally liable to the extent of your stock ownership of the corporation. You can also issue and sell shares of the corporation subject to certain laws.

    No matter what type of business entity you form, in most States, you are required to do what is called a ficticious business filing and publication before you can legally do business in a name other than your own, and in order to open a bank account in the business's name. This involves submitting the ficticious business name application to your county or State entity, paying the fee, and then having the application served in a publication of general circulation (newspaper) as required by your local State. After said publication has been done for the required time, the newspaper usually then submits a declaration under penalty of perjury that they did in fact publish to your local or State entity. It is at this point that you can legally do business under a name other than your own.

    The second level would be to do a Federal Trademark application if you would like to protect your name nationally, in America.

    The whole purpose of this process, is to protect your name, announce to the world that Joe Blow is doing business as ABC company, and to give the public a way to find ABC company if legal issue arise. The publication is supposed to also give notice to someone else that may be using the same name, to dispute the filing because it's their name. This is just a short writing on the subject.

    With respect to legal liablity of let's say, having an accident while riding in a car, with your business sign on it. Most insurance companies require that you disclose to them your occupation, the miles you drive each year, and whether your car will be used for business. Obvisouly, if you fail to disclose or misrepresent your use of the vehicle, an insurance company may refuse to tender a defense if you have an accident, and may refuse coverage! It is very important to talk to your insurance company up front about what you are doing. It may cost a bit more, but it is worth it just in case.

    Anyway, my fingers are tired!!
    Last edited by iHostKing; 04-30-2005 at 03:37 PM.
    Internet Hosting & Design

  2. #2
    Join Date
    Aug 2003
    Chesapeake, VA
    That's good info, Norm. - Trusted Merchant Account Solutions since 1998
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  3. #3
    Join Date
    Dec 2003
    ./Southest Missouri
    Very good information, thanks for the post.

  4. #4
    Join Date
    May 2004
    Baltimore, MD
    Great information! That's interesting with the insurance, I wouldn't have thought about it like that.
    Automated Tendencies - Brand Management Agency from Baltimore, Maryland.
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