San Jose Business Lawyers Blog

Many individuals who are citizens of foreign countries want to take advantage of the economic market in the United States. More specifically, California is a particularly popular state in which to start a business as a foreign national due to the close connections with the tech industry and the large and diverse population, among other reasons. If you are a foreigner considering conducting business in California, there is good news for you—neither residency nor citizenship is required to do so. Instead, you need only go through very similar steps as a U.S. citizen starting their own business with the state.

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The following are some important steps that you must take to start your California business:

  • Choose your business entity – This is an important decision with many implications and your options, including corporation, limited liability company, limited liability partnership, or limited partnership, should be carefully weighed. An experienced business attorney can assist you in choosing the correct entity for your type of business and your goals.

Too often, a contractor, subcontractor, laborer, or material supplier on a construction job does not receive the compensation they deserve for the work they have performed or supplies they provided for the project. Fortunately, California law provides a method by which contractors and others can pursue adequate payment. If the job is a private construction project, a primary tool for receiving payment is the mechanics lien. The following are some brief explanations for frequently asked questions amount mechanics liens in California.


What exactly is a mechanics lien?

A mechanics lien is a tool that creates a security interest in the property on which you worked. After a certain amount of time and if payment is not received from the property owner, you can then sue to foreclose on the lien to satisfy the lien amount.

Start-ups are popping up all around the country. As our society continues its shift towards a strong, tech-driven economy, more and more individuals are looking to find the “next big thing,” especially in the tech industry. Entrepreneurs are more and more motivated by success stories such as those of Uber, Facebook, and Airbnb.


But tech start-ups, while popular, are just one of the types of businesses that are appearing in the commercial landscape. 514,000 people became new business owners in 2012. As the US economy continues to improve, that number continues increasing.  Venture financing is a driving force behind the dynamic growth of small businesses such as start-ups. The National Venture Capital Association estimates that venture capital firms manage nearly $193 billion in total capital.

Vesting Schedules

When a person is considering starting a business, one of the first questions that often arises is which state to incorporate in. Many people simply choose the state in which they live and plan to do business, as it often seems to be the easiest and simply makes sense. In many cases, the decision to incorporate in your state of residence is perfectly fine and has no real long-term impact. It is important to note, however, that the choice of jurisdiction in which a business is incorporated has the potential to have a significant effect on a company’s tax liability and the way in which the business is run on a day-to-day basis. For this reason, anyone who is considering forming a business should discuss his or her options with an experienced Silicon Valley startup attorney familiar with corporate law throughout the United States.

Why does it matter?

Corporations and Limited Liability Companies, two of the most popular business formations that can shield owners from personal liability, are created by state law. As a result, there are 50 different sets of rules that apply to business formation and corporate governance. Furthermore, each state has a separate state taxation scheme that can result in significant differences in tax liability. Some of the issues that will depend on where you choose to incorporate include the following:

Articles of Incorporation are an essential requirement of forming a California startup corporation. This document is filed with the California Secretary of State’s office and establishes the corporation as a legal entity as well as certain key facts about the corporation, including the name of the corporation, its principal place of business, the name and address of its registered agent, the purpose of the corporation, and others. One of the most important decisions that founders are faced with when filing an Articles of Incorporation is how many shares of stock to authorize. There are many considerations that should be addressed when making this decision, so it is important for anyone considering forming a corporation to discuss their circumstances and goals with an experienced Silicon Valley business law attorney.

Determining how many shares to issue can be complicated

Authorizing shares allows a company to divide ownership among many different parties and also makes it possible to raise capital. As such, it is important to authorize enough shares to accommodate growth but not so many as to make individual shares nearly worthless. Importantly, not all the shares that the Articles of Incorporation authorizes have to be issued, so a company can reserve shares for issuance at a later date. Some of the reasons it may be beneficial to authorize more shares than you plan on issuing include the following:

More and more startups are issuing stock and other forms of equity as a form of compensation for work, especially in the early stages of a venture. This arrangement allows a business to recruit talent that they otherwise wouldn’t be able to afford and, if the company is successful, can result in a significant windfall for people who worked to get a company off the ground without a guarantee of compensation.toad-river-brown_3737_990x742

Generally speaking, when you are transferred equity in a company it is necessary to pay taxes on the fair market value of that equity as you would with any other type of income. In many cases, however, a grant of equity is subject to a vesting agreement, which means that the equity is not actually owned by the grantee until a certain period of time passes. As a result, at the time of the grant, nothing is actually owned, so there is no tax liability associated with the initial grant. When the stock vests, however, that income becomes realized, meaning that there may be significant tax liability, particularly if the company has done well.

83(b) elections can minimize tax liability associated with grants of equity

Many companies issue stock options as a form of compensation or as an incentive to various parties. At their most basic, stock options are the right of a party to buy company stock at a predetermined price for a period of time. Generally, the agreed-upon price is similar to the market price at the time at which the option is issued. Two of the most commonly issued types of stock options are Incentive Stock Options (ISOs) and Nonstatutory Stock Options (NSOs). The information below provides some basic information about each type and highlights some of the differences between the two. For specific information regarding these types of stock options and how they may affect your business, call the Structure Law Group today to speak with a qualified business attorney.

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Incentive Stock Options

Incentive stock options can only be issued to employees, which means that members of the board of directors or independent contractors cannot be granted ISOs. These options are not subject to federal income tax when they are granted or exercised, but alternative minimum tax

Any company with employees is aware of the fact that conflicts between people are inevitable. Conflicts can arise due to disagreements about work-related matters or because of issues that are purely personal. Fortunately, these kinds of conflicts are often resolved informally and without the intervention of an employment attorney or even the human resources department. In some cases, however, an employee may file a lawsuit against his or her employer in an attempt to hold it liable for discriminatory policies, discriminatory acts committed by management, or even the failure to address inappropriate conduct between one employee towards another.

There are several steps that California employers can take to minimize their legal liability as a result of discrimination lawsuits, some of which are detailed below.

Have an employee handbook

Federal and state government contracts can be a lucrative source of business for private companies in a variety of industries, including defense contractors, medical researchers, software developers, and other companies that operate in the technology sector. In many cases, government initiatives drive innovation, and many items and inventions that we use on a daily basis were originally developed pursuant to a government contract.


While government contracts can be an excellent source of business for many private companies, it also carries with it inherent risks, including the loss or dilution of a company’s intellectual property rights. There are several statutory provisions that govern the way these rights are allocated, which tend to provide contractors with significant protections. That being said, it is still extremely important for parties contracting with the government to ensure that the contract that they sign preserves their rights in any intellectual property produced.

The specific types of rights that may be at issue depend largely on the type of intellectual property that is produced while fulfilling the contract. For example, certain types of IP may be eligible for copyright protection while other may be protected by registering a patent. Regardless of the specifics, it is extremely important that parties working with the government consult with an experienced attorney to ensure that their IP rights are protected.

Selling a business is a major decision that often has the potential to leave entrepreneurs with significant financial freedom. In fact, in many cases, entrepreneurs start a business with the intention of selling it once they reach a certain valuation point. One only has to look at the recent sales of Instagram to Facebook ($1 billion) or Beats Audio to Apple ($3 billion) to see why selling a business can be an attractive proposition to many entrepreneurs. Of course, these billion-dollar examples represent a fraction of the kinds of mergers & acquisitions that regularly occur in the business marketplace. That being said, a deal worth a fraction of these sums could still put a hefty sum of life-changing money into an entrepreneur’s pocket.

As a result, it is important for people who are considering selling their business to do so with the guidance of legal counsel that understands the legal issues that often arise in selling an existing venture. Below are four tips for entrepreneurs who are thinking of putting their business on the market.

  • Determine your goals – Of course, everyone who puts a business on the market is ultimately looking to make money. Some people, however, have a set amount that they feel that they need to obtain in order to make a sale worth it. For others, it is extremely important to stay involved with their “baby” after a sale has been made.