frequently asked questions - business law
What is business law?
Business law and corporate law can span a wide variety of legal topics that encompass business, commerce, consumer transactions, and the formation and management of business entities. Some of the more important areas of corporate law include sales, secured transactions, negotiable instruments, and debtor and creditor law. Business law overlaps, but also includes the formation and management of business entities along with the day to day business compliance in government rules and regulations such as DOT, OSHA, Unemployment, Workers' Compensation. An attorney with experience in business and commercial law can help you with all of your questions.
I am an entrepreneur looking to start up my own corporation. What business formation should I be looking into?
In order to know which formation you should be looking into, you first need to determine the type of management, oversight, size, and potential liability your business will have. Once you have identified what your business will be, you can determine what type of formation will best serve your needs. Examples of some of the formations include:
- The Sole Proprietorship It is simple and cheap to form and is usually chosen by one-person businesses. The business is an extension of the owner and the owner is liable for all business liabilities and taxed on all income of the business.
- A General Partnership is similar to the sole proprietorship except that it is formed when two or more persons carry on as co-owners of a business for profit. Each general partner participates in the management, owns the assets, and shares the profits and losses. Each general partner is personally liable for business related obligations and can be liable for his partners actions. General partners are taxed on their individual tax returns.
- A Limited Partnership differs from a general partnership in that there is at least one limited partner who contributes capital, but does not have substantial management control. The limited partner has limited liability to the extent of their capital contribution to the partnership.
-A Limited Liability Company(LLC) LLCs are becoming the most formed business entity in Texas. When you form a LLC you must file articles with the state. In an LLC its assets are used to pay its debts and the owners assets are usually protected. However, an LLC is not a separate taxable entity, and LLC owners report profits and losses in their individual tax returns.
-A Corporation A corporation has the most statutory formalities to set up. Owners of the corporation are protected from the corporation's liabilities. However, the corporation is taxed for its income which can lead to double taxation for the owners.
What is "piercing the corporate veil?"
Sometimes, courts or statutes will allow plaintiffs to receive compensation from corporate officers, directors, human resource directors or shareholders for damages rather than limiting recovery to corporate resources. This procedure avoids the usual corporate immunity for organizational wrongdoing, and may be imposed in a variety of situations. Some examples of when the corporate veil may be pierced include:
- Human Resources (EEOC)
- Privacy
- Benefits
- OSHA
- Environmental
The potential for personal liability encourages businesses to observe legal requirements and to avoid damage to third parties
As a Business Owner, Can I be held criminally liable for business actions?
Yes, several federal and state rules and regulations for businesses have the ability to criminally implicate business owners. It is best to seek advice on compliance issues related to your business in order to avoid fines, penalties, and violations.
If you have a Business Law Question that has not been answered, please click the button below to email your question directly to an attorney. We will review your question and get back to you soon.
Business law and corporate law can span a wide variety of legal topics that encompass business, commerce, consumer transactions, and the formation and management of business entities. Some of the more important areas of corporate law include sales, secured transactions, negotiable instruments, and debtor and creditor law. Business law overlaps, but also includes the formation and management of business entities along with the day to day business compliance in government rules and regulations such as DOT, OSHA, Unemployment, Workers' Compensation. An attorney with experience in business and commercial law can help you with all of your questions.
I am an entrepreneur looking to start up my own corporation. What business formation should I be looking into?
In order to know which formation you should be looking into, you first need to determine the type of management, oversight, size, and potential liability your business will have. Once you have identified what your business will be, you can determine what type of formation will best serve your needs. Examples of some of the formations include:
- The Sole Proprietorship It is simple and cheap to form and is usually chosen by one-person businesses. The business is an extension of the owner and the owner is liable for all business liabilities and taxed on all income of the business.
- A General Partnership is similar to the sole proprietorship except that it is formed when two or more persons carry on as co-owners of a business for profit. Each general partner participates in the management, owns the assets, and shares the profits and losses. Each general partner is personally liable for business related obligations and can be liable for his partners actions. General partners are taxed on their individual tax returns.
- A Limited Partnership differs from a general partnership in that there is at least one limited partner who contributes capital, but does not have substantial management control. The limited partner has limited liability to the extent of their capital contribution to the partnership.
-A Limited Liability Company(LLC) LLCs are becoming the most formed business entity in Texas. When you form a LLC you must file articles with the state. In an LLC its assets are used to pay its debts and the owners assets are usually protected. However, an LLC is not a separate taxable entity, and LLC owners report profits and losses in their individual tax returns.
-A Corporation A corporation has the most statutory formalities to set up. Owners of the corporation are protected from the corporation's liabilities. However, the corporation is taxed for its income which can lead to double taxation for the owners.
What is "piercing the corporate veil?"
Sometimes, courts or statutes will allow plaintiffs to receive compensation from corporate officers, directors, human resource directors or shareholders for damages rather than limiting recovery to corporate resources. This procedure avoids the usual corporate immunity for organizational wrongdoing, and may be imposed in a variety of situations. Some examples of when the corporate veil may be pierced include:
- If a business is indistinguishable from its owners in practical terms, courts will not allow owners to benefit from limited liability.
- If a corporation is formed for fraudulent purposes, courts will allow recourse to the owners.
- If a business fails to follow corporate formalities in areas such as record-keeping and decision-making procedures, a court may impose liability on the individuals controlling the business.
- When the corporation fails to adhere to state or federal rules and regulations, such as in the areas of:
- Human Resources (EEOC)
- Privacy
- Benefits
- OSHA
- Environmental
The potential for personal liability encourages businesses to observe legal requirements and to avoid damage to third parties
As a Business Owner, Can I be held criminally liable for business actions?
Yes, several federal and state rules and regulations for businesses have the ability to criminally implicate business owners. It is best to seek advice on compliance issues related to your business in order to avoid fines, penalties, and violations.
If you have a Business Law Question that has not been answered, please click the button below to email your question directly to an attorney. We will review your question and get back to you soon.
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No Attorney-Client Relationship or Legal Advice
Communication of information by, in, to or through this Web site and your receipt or use of it (1) is not provided in the course of and does not create or constitute an attorney-client relationship, (2) is not intended as a solicitation, (3) is not intended to convey or constitute legal advice, and (4) is not a substitute for obtaining legal advice from a qualified attorney. You should not act upon any such information without first seeking qualified professional counsel on your specific matter. The hiring of an attorney is an important decision that should not be based solely upon Web site communications or advertisements.
You also should not rely upon the transmission of an e-mail message to an attorney through this Web site to create an attorney-client relationship. The transmission or exchange of information will not do so. Without an attorney-client relationship in the matter, we cannot assure you that your communications will be privileged or (unless we otherwise agree in a specific case) that we will treat them as such. Please do not send us any confidential or sensitive information until you speak with one of our attorneys and obtain prior written authorization to send that information to us.
