San Jose business lawyer

Business Entity Formation and Tax Implications

March 17, 2023 | Mark Figueiredo

One of the legal services that corporate attorneys provide is advising startups with strategies to protect their long term interests. Each business entity has specific tax requirements and a San Jose business attorney can help you determine which is best for your venture. In this article, we’ll discuss specific business entities and how they’re taxed.

Sole proprietorship

A sole proprietorship is not a business entity. It’s the default state of an individual who owns a business. Those who run sole proprietorships are taxed as individuals with assets and profits. The biggest pitfall of the sole proprietorship is that you end up paying both the employee and the employer side of social security. These are typically split between employer and employee.

State and Federal Governments Adopt New COVID-19 Emergency Standards Requiring Immediate Action by Employers in California

January 15, 2021 | Structure Law Group, LLP

COVID-19 has created significant issues when it comes to workplace safety, and lawmakers are racing to implement rules based on changing circumstances of the pandemic while attempting to balance the interests of employers and employees. While Congress has engaged in protracted and fierce debate over economic relief packages, state and federal agencies have been much quicker to act on safety rules – and to enact the emergency authority necessary to enforce these rules. Employers in California must be aware of these rules and the immediate actions they require. Here are some of the most basic safety rules that have been enacted to protect California employees from the spread of the coronavirus in the workplace:

What the New Rules Require

Cal/OSHA has adopted emergency rules that require employers to protect their employees from the transmission of COVID-19 in the workplace. These rules require employers to:

When Does a Force Majeure Clause Apply?

June 26, 2020 | Ryan Penhallegon

Force majeure is an important protection for businesses entering into any contract. Especially during the dramatic and unpredictable consequences of the coronavirus pandemic, business owners are wise to use and enforce force majeure clauses whenever possible. An experienced business lawyer can help you draft and use this protection properly. An attorney can also help you deal with a vendor or client who is attempting to improperly use a force majeure clause to get out of fulfilling contractual obligations.

What is a Force Majeure Clause?

Force majeure is a French term that translates to “superior force.” In contracts, it is used to address what will happen in the event of unforeseen circumstances that are not caused by either party. A force majeure clause can address specific events (like wars, strikes, and riots) or general categories (such as “acts of god”). When such a clause is written and enforced properly, it can excuse both parties’ obligations under the contract.

Implied Consumer Warranties

October 7, 2016 | Katya Mezek

The State of California protects consumers of retail goods by limiting warranty disclaimers on products sold in the state. California’s warranty protection extends to manufacturers, distributors, and retailers alike. The warranties apply to both the sale and lease of consumer goods. The seller can disclaim the warranties by following very specific and highly detailed statutory requirements. Failing which, the seller cannot disclaim the warranties implied in every consumer sale. The sale of a service contract at the time of or within 90 days of the sale of the goods adds another aspect to the seller’s ability to protect themselves after the sale. San Jose’s preeminent business attorneys at Structure Law Group, LLP possess a high level of experience and skill drafting warranty disclaimers for businesses.

The implied warranty of merchantability protects consumers in every sale of goods in California. Specifically, the implied warranty of merchantability extends to the retailer, distributor, and manufacturer of goods. The retailer is indemnified by the manufacturer for the full amount of liability. Merchantable goods must either conform to the contract description or be of acceptable quality in the trade or business. In addition, the goods must be fit for their ordinary use, rather than for a specific purpose. The goods must also be identified, labeled and packaged appropriately. Lastly, the goods must conform to the promises made on the label or packaging. Goods are non-conforming if the goods fail to satisfy any one of the necessary requirements set forth above.

A second implied warranty arises in specific circumstances. This warranty is the implied warranty of fitness for a particular purpose. The warranty of fitness for a particular purpose attaches to the sale of goods when the retailer, distributor or manufacturer knows or has reason to know that the consumer is relying on the goods to perform a very specific purpose. Additionally, the buyer is relying on the seller’s expertise and advice that the goods purchased are sufficient to satisfy the particular purpose. Additionally, the seller must know or have reason to know that the buyer is relying on the seller’s expertise and judgment. The goods must conform to the seller’s expectations, i.e. the particular reason the consumer purchased the goods.

How to Comply With The Anti-Trust Law

September 16, 2016 | Structure Law Group, LLP

Public policy in California dictates that businesses should be free to compete against each other in the marketplace. Competition among businesses greatly benefits consumers. At the same time, competition engenders higher quality goods and higher service quality at price points advantageous to the consumer. Toward that end, California’s antitrust law, known as the “Cartwright Act,” prohibits a wide variety of conduct designed to restrain competition in the marketplace.

The San Jose business lawyers at Structure Law Group, LLP dedicate their practice to helping business owners grow their company while insulating them from harm. Unfair competition has a negative effect on consumers and businesses. Business entities should avoid structuring agreements which arguably cause unfair competition. Failure to do so could subject those businesses to lengthy and costly litigation and expose them to potential damages.

According to California business, trusts are unlawful and against public policy. California law defines a trust as a “combination of capital, skills, or acts by two or more persons” to:

Protecting Private Information In California

September 9, 2016 | Structure Law Group, LLP

The exchange of cash for payment for a goods or services is rare these days. We have certainly become a digital society. Business make advances daily to make transactions more efficient and convenient. However, businesses engaging in e-commerce must not compromise security for expediency. Additionally, businesses store infinite amounts of personal data about their customers. These businesses, such as health care providers and health insurance companies, not only must safeguard their electronic transactions but must also secure sensitive information and proactively combat data breaches. Failure to do so can lead to a huge economic loss for the customers and the company. The savvy business attorneys at Structure Law Group, LLP advise businesses on the best practices to prevent data breaches and counsel them on the necessary steps to take if such an unfortunate event occurs.

In California, people have a constitutional right to the safety and integrity of their personal information. California’s information security act defines personal information as any information that could identify or describe a person. Personal information is also an individual’s name, address, social security number, license number, medical information, and the like. A business in possession of such information must take reasonable steps to prevent disclosure of private information. California law obligates businesses to implement security measures reasonably designed to protect the integrity of the private information. Every business entity, from a sole proprietorship to a multi-national corporation is subject to the information security act.

California law broadly defines “data breach.” Data breach includes any “unauthorized acquisition of computerized data that compromises the security, confidentiality, or integrity of personal information maintained by the person or business.” The information may be used in good faith for the benefit of the person whose information is disclosed, provided that such disclosure is authorized.

Reviewing Your Commercial Lease

August 12, 2016 | Structure Law Group, LLP

Everyone knows what they say about real estate: location, location, location. This same axiom is definitely true for many businesses too. While some businesses may operate out of homes and employ their workforce remotely, many operations require a physical location to which workers and customers go on a daily basis. For example, stores, restaurants, and other locally-serving businesses always want to have a prime location with lots of foot traffic and easy access in town. Others, such as manufacturers, need large warehouses with affordable rent and room for all their equipment. While many business owners choose to own their building, many others do not have means to do so, or may not want to commit to one location long-term. For these reasons and more, many business owners lease their commercial spaces.

For any type of lease agreement or contract, you want to be sure that all of the provisions are fair and reasonable. A proper lease will set out your rights as a tenant, and you want to be sure it does so adequately. A commercial lease will also designate your responsibilities as a business tenant, and you should be aware of any terms that require unreasonable or difficult responsibilities from you. Because each of these lease types can be complex documents with confusing legal language, you should always have any potential leases reviewed by a highly experienced business attorney prior to signing.

Of course, you will want to make sure the length of the lease and rent requirements suit your needs. The following are some additional terms your attorney will consider and review:

LLCs – Fiduciary Duties of Members and Managers in California

July 15, 2016 | Katya Mezek

A limited liability company (“LLC”) is one of the most favored forms of business entities because they combine the advantages of a corporation, such as limited liability and protection of their members from investor-level liability, with the advantages of a partnership, such as “pass-through tax treatment.” Additionally, LLCs are characterized by the informality of its organization and internal governance, set forth through an internal contract called the operating agreement. An LLC member can be an individual, a corporation, a partnership, another limited liability company or any other legal entity.

An LLC can be structured as a manager-managed or member-managed LLC. In a manager-managed LLC, the members appoint a manager or managers to run and manage the LLC while the members take on a more passive role. In a member-managed LLC, all the members share in managing the day-today operations of the LLC. The managers or managing members who have been charged with the responsibility of running the LLC are obliged to act in the best interest of the LLC. The duties connected to this obligation are known as fiduciary duties. The key fiduciary duties are the duty of loyalty and the duty of care. These duties are specifically defined by California law, as discussed in more detail below.

Requirements of a Fiduciary Duty

Dissolving Your LLC in California – Important Things to Consider

July 8, 2016 | Katya Mezek

At some point during the life of a limited liability company (LLC), the owners may decide that it is time to close the business. The process of closing a business is just as important as the process it took to create the LLC, because, among other things, the owner(s) need to provide notice to creditors and ensure that the LLC is beyond the reach of creditors. The formal process of closing your LLC is called “dissolution.” While there are many ways to dissolve an LLC, including involuntary dissolution, this article focuses on voluntary dissolution by the LLC’s member(s) and for those LLCs which were active in conducting business during its lifespan.

Dissolving the LLC

In order to voluntarily dissolve an LLC, the member(s) should first look to the company’s formational documents, which are the articles of organization and operating agreement. In the majority of cases, one of these two documents will contain procedures and/or rules for how to dissolve the company. In most cases, the procedure begins with a vote of the LLC members on a resolution to dissolve. It is important that any specific requirements regarding the voting of member(s) are followed, such as providing for when a meeting to vote should take place, whether any advance notice to the LLC’s members is required in preparation for the meeting, and what required percentage of members is needed to pass the vote.

Understand the New Overtime Rules

July 1, 2016 | Jaclyn Ford

If your business employs at least one person, you should be thoroughly familiar with both the California and federal wage and hour laws. These laws regulate many aspects of employment from minimum wage to guaranteed rest and meal breaks. One important part of compensation that is regulated by wage and hour laws is overtime payments for individuals who work more than 40 hours per week.

Overtime laws entitle certain employees to time-and-a-half payments for additional hours worked. However, not everyone is entitled to overtime and the laws that regulate overtime exemptions can be complex. One important rule under the Fair Labor Standards Act (FLSA) is that anyone who earns less than $455 per week for full-time work ($23,660 annually) is automatically entitled to earn overtime. If employees earn more, a closer examination into their job duties must be made. In addition, once an employee earns $100,000 annually, they are considered to be “highly compensated” and no longer have the right to overtime provided his or her job duties meet certain minimum requirements.

The Department of Labor updated the overtime rules with regard to the income threshold and the new rules will take effect on December 1, 2016. The new threshold for automatic entitlement to overtime will be $913 per week for full-time work ($47,476 annually) and the new highly compensated threshold will be increased to $134,004. It is estimated that over four million people will receive a new entitlement to overtime.