California Business Law

What Is California Business Law?

Laws in the state of California affect businesses in various ways that could increase pricing, decrease surplus stock and the maximum that the company can sell a product for in certain years. These laws are necessary to ensure the best business practices and to provide a positive outcome for clients and customers in the state.

General Understanding of Business Law in California

Business law is more than just how businesses operate or what type of practices are best for the company owner. The laws involved in these interactions also govern over deceptive practices in and between businesses, antitrust, fraud, taxes, insurance and liability issues. Some serious problems can occur with contracts and employment as well. There are statutes that exist and the courts make decisions that can affect companies each and every year. Other items that affect business involve the voting of certain laws and standards such as funding a high-speed rail, increases or decreases in taxation and confinement of livestock or how vegetation can grow.

California and Antitrust

Antitrust laws exist to foster competition, stop companies from holding and keeping a monopoly and providing for new businesses to enter into the markets in the state. These statutes exist to limit the hold a single parent company can have in the state which could drive up prices, control the market movements and keep production to the point that demand is always high. Antitrust is an important matter for customers to ensure that goods that citizens in California want are within a reachable price and there is enough in stock so that the everyday consumer can purchase them.

Deceptive Trade Practices in California

Deceptive practices that businesses can use include a variety of ways to entice the customer to buy more or more expensive items than previously intended. These practices can include the bait and switch where the company advertises one item but does not have that product for sale or has a limited number which leads to purchases of more costly objects. Another deceptive practice includes advertising at the wrong price, with the wrong quantity or with something that is much lower quality than suggested in advertisements or promises from the store. Others can include lies about something sold that prove untrue only after the person buys the product and misrepresentation about the product that is similar to false advertisement.

Businesses can also engage in practices that include the turning back of odometers to sell cars, false details about something that might require an expert to determine the truth and actions that can harm customer because of negligence or knowledge of a defect before selling the item. Companies can use different business practices that are detrimental to customers which could lead to litigation because of physical injury, economic damage and trauma from using the product which could create chaos at home or in public. The deceptive practices are illegal and can lead to either a lawsuit or criminal prosecution from the courts in California.

California Entities in Business Law

Business entities and creating the entity are both crucial aspects of business law in California. The individual can create a partnership, sole proprietorship, a limited liability company, corporation or a small business and interact with customers. Some decide not to register and incorporate and sell online or in smaller sales such as with home-made products or through Cottage Food laws. Depending on the entity, the owner will have more paperwork, processes and a greater need for a lawyer. Most often, the individual will choose an entity that expresses the products or service offered. However, some will decide on the LLC because it limits personal liability with assets if there is a lawsuit.

California LLC

An LLC is a business entity that will limit personal liability with legal concerns through shielding the owner's personal assets and redirect the lawsuit against the assets of the company. Special tax options exist with this entity that can also entice owners seeking to sell products or services through an LLC rather than a sole proprietorship or corporation. Another bonus many seeking to create a company include the benefits of transforming the LLC into a corporation and the fact that the LLC is a perfect starter entity for someone that has never owned a business before.

California C Corporation

One of two primary corporation options is the C Corp. It has taxes that are separate from the owner, and the C Corp also has additional tax. The first tax is on income from the company before divided amongst shareholders. Then, this income undergoes tax again when individual shareholders file tax returns and after dividends disperse. These entities are the general companies created in the state with the most room to grow. The corporation can house more shareholders than any other entity. Additionally, the owners can pay employees, shareholders and clients directly from income gained by the business. There is a greater power over the distribution of profits.

California S Corporation

While an S Corp shares similarities with the C Corp, there are some key differences. This entity can only house up to 100 shareholders. It does not pay federal income tax at any point. Under the laws in California, there is a 1.5 tax percentage on the acquired net income. This entity must also have a separate bank account and records kept for all transactions. The S Corp can exist under another entity, and this will shape the structure with management. The company can also run as an LLC, partnership, and standard corporation. Business loss liability does not fall o the shareholders, and creditors cannot look to them to acquire necessary funds to pay back loans.

California Partnerships

Partnerships can occur in conjunction with another entity such as a corporation or an LLC. However, the owner is a partner that has a certain percentage of power and interest in the company. The two or more partners work to build a company that sells products or services and will have an operations guide that can express how to handle certain situations that can arise in the future. Articles of organization and other documentation are requirements when building this and other entities in the state. Partners often also must follow protocols when selling interest, buying new assets and leaving the company either through retirement or through health concerns.

The Use of the California Secretary of State

Most forms needed for creating an entity in the state of California are available online through the Secretary of State website or in person. Each process has a different form with filing fees starting at $15 and can increase to $25 for statements of information. The Articles of organization requires an LLC-1 form with a $70 filing fee. While this entity does not need a termination fee, some may depend on the choice the partners or owners make. The online access also provides printing options or filing through the website. There are two options to sign forms through electronic or digital. Electronic signatures are the typing of a name and stating that the individual knows what this means. A digital signature requires more and may also walk the person through additional steps.

Common California Business Legal Issues

Whether it is a business owner, an employee or a client, there is a myriad of legal issues that a business can encounter. There are contract problems, tax violations and employment offenses. These items can range based on the business type and what happens within the company. Small business owners and large corporations can also encounter similar issues depending on the situation.

A company must hire and manage employees with both California state and federal employment regulations. There are legal structure complications when building the company from scratch. Some owners must extend or end credit and collections for sales, income and personal taxes and loans. It is vital to acquire and maintain intellectual property protections through a trademark or patent. The business owner must adhere to insurance coverage requirements, buying and maintaining workers' compensation packages and adhering to safety protocols.

California Business Liability Concerns

Within California business laws, there are concerns that arise through liability issues and the end result of litigation. Sometimes, these matters start with an injury to an employee, client or customer. However, some problems can arise through safety non-adherence and whistleblowing concerns with employees that cooperative with the authorities about something illegal occurring the business. Two issues that often happen together are discrimination and harassment. The Equal Employment Opportunity Commission becomes involved with discrimination and Civil Rights Act violations against employees. Liability concerns in business usually require legal support to determine the problem and how to effectively end it without overstraining funds.

California Business Contracts

Contracts are a significant part of any business interaction. The owner can create a contract for clients, customers and employees. These tend to lead to sales exchanges where the client provides services or products for something of value or the reverse where the business provides the product or service. Sometimes, a business will have multiple contracts in effect between numerous clients. This can help if each client offers one material and the company builds a larger product out of them all. Contracts can also lead to breaches where one or both parties violate the terms. The provisions within the document usually explain how to proceed such as compensation for the party violated or legal options to resolve the matter through litigation.

California Business Employment Contracts

Business employment with standard workers is through at-will employment which provides the owner or the supervisor the ability to terminate a person's job for nearly any reason. However, when the employee has a contract for employment at the company, demotion and termination must adhere to the provisions within the contract. Any wrongful action against this individual under contract and the business can face litigation or a contract breach which will pay the employee damages for the breach. Contracts give the individual a timeframe of standard jobs that can proceed through a renewal as well as certain bonuses and benefits that this person can negotiate when creating the contract.

California ADA in the Business

Americans with Disabilities Act is an important part of employment in the country. California is one of the most compliant states with the ADA in providing accommodations for those that have disabilities but want to work. There are more litigations in this state than many others because of the ADA. Any violation of this Act is also an offense of the Civil Rights Act which could cause a minimum penalty of $4000 and lawyer fees for the victim of the violation. Under the ADA, a person that has a disability can work at a company and receive reasonable accommodations that do not place undue strain on the business for giving these accommodations.

Accommodations for the ADA can consist of equipment, tools, processes and new policies. The individual will usually communicate the need for the manager or supervisor. Then, whatever is necessary usually takes some time to procure. However, any wheelchair, crutches, tools or equipment that is for use every day is something that the employee will bring to work on his or her own. Communication in acquiring the accommodation may take multiple meetings, and any violation of the Act can lead to litigation against the business. A lawyer will take on the case if there is sufficient evidence of an offense which can hold the company liable for damages.

California Small Business

The small business in California is usually a company that has fewer than 100 employees. Many have no more than twenty working multiple different job titles. The business itself can have an entity backing it or just a local license or permit to carry on with business interactions. Some are exempt from state and federal requirements for the ADA, certain tax schemes and employment rights based on special circumstances. Others can work exclusively through contracts between the company and clients. The smaller businesses that have fewer than ten employees may not have access to or hire a lawyer unless absolutely necessary.

Small Business Laws in California

In 2019, California has several laws that affect the small business. These include the mandatory selling of non-breeder purchased animals, temporary license plates on newly purchased vehicles and the legal ability to sell homemade foods. One provides overtime for agricultural workers. For the car sales business, any car that is eight or fewer years old is exempt from state smog checks. The statute of limitations for sexual assault victims increased to up to ten years to seek damages in the civil courts. Plastic straws for single use are no longer permitted in full-service restaurants. Nursing mothers must have time to lactate in private areas.

The California Business Lawyer

For most issues with the business, it is vital to have a business lawyer already on retainer. This is crucial for both small and large companies that have any number of issues to consider. For contract breaches, employment complications and client relationships, the business lawyer can help the owner understand how to proceed. The legal professional can also handle discrimination and harassment issues and the EEOC or the Occupational Safety and Health Administration or OSHA for safety matters. The lawyer also negotiates settlements and takes legal problems to the courts.

Hiring a California Business Lawyer

The owner and the individual need a business lawyer when litigation arises and to protect the rights of the client. The lawyer may need to interact with insurance companies, investigate accidents or legal violations and file documentation to help create entities. A California business lawyer is indispensable.

Business CA - Know Your Rights!

  • A California Business Law Guide

    Business law encompasses the formation of new businesses and any issues that arise during the course of the business's life. Businesses can be viewed as separate entities that are subject to their own set of rules designed to give every business in the marketplace a fair opportunity. In this comprehensive guide, learn about all aspects of California business law - from formation, to selling a business, to how a business lawyer can help in any business venture.

  • California Corporate Business Laws

    There are different rules and laws in place for various types of businesses that can impact the company and clients differently based on the location and the specific issue at hand.

  • California Deceptive Business Legal Practices

    There are rules against deceptive business practices in the laws in the state of California that could lead to severe consequences for any company that engages in these activities.

  • Setting Up a New Business in California

    When setting up any new business, it is important to know how to do it in the state of choice or residence, and the owner should first ensure he or she has the best business idea that can earn revenue.

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