Business and Law

Archive for the ‘Labor Law’ Category

You might wonder what to do if or when your business gets into the red. Although it isn’t the best idea, you might have to consider liquidating your debts. To do this you will want to get a business bankruptcy attorney. Before you get all excited about getting an attorney, you need to be specifically careful to hire a business bankruptcy attorney instead of a civil bankruptcy attorney. The differences between a regular bankruptcy attorney and a business bankruptcy attorney can be the difference between actually filing for bankruptcy and finding another way to liquidate and save some of your business.

A business bankruptcy attorney does not necessarily go to school longer than a regular attorney, but they do however take more business classes than others. The last two years in law school is a time to choose your specialty, that time can be spent on family law, business law, criminal law, or other sub divisions of law. During this time the lawyers to be are spending a lot of time getting to know people and specified laws in their chosen fields. These type of attorneys would take classes that center around business law, either corporate, sole proprietors and/ or partnerships. They would also take a few classes to differentiate between all the laws that cover these classes of business. Business bankruptcy will be covered in at least a few classes, and in much more depth than it would in a general law class.

A business bankruptcy attorney will have a lot of background in the business and bankruptcy field. Most attorneys start at firms that cover their specialties and they work with top attorneys in their fields. Attorneys do not like to lose, and therefore when you go to one of these firms you will get not only a young out of school attorney but the whole firm that works with this person. You can get all the experience of fresh law school knowledge and experienced, winning attorneys.

Is the Threat of a Lawsuit a Real Fear?

As a small business owner, you may be one of the 48% concerned about frivolous or unfair lawsuits. According to the U.S. Chamber Institute for Legal Reform, actual lawsuits and the fear of lawsuits cost U.S. small businesses $98 million in 2005. That figure may seem large because it includes money spent on damage awards, settlements, legal costs, liability insurance premiums, and costs incurred by insurance companies on behalf of policyholders. Is the fear of lawsuits a real fear? Unfortunately, yes. Anybody can sue anybody over anything at any time. In reality, 46% of small business owners have been threatened with a lawsuit, 34% have been sued in the past 10 years, and 62% have made business decisions to avoid lawsuits. Indeed, small businesses bear 69% of the total cost of the tort system to all U.S. businesses.

What is the Best Course of Action?

What’s a small business owner to do? For starters, realize that the best defense is a great offense. While most small business owners fear the law, it is much wiser to use the law as a protective shield. There are many business and legal components that contribute to creating the strongest shield possible – business entities (the type of structure that governs your business), insurance, and intellectual property (copyright, trademark, patent, and trade secrets) to name a few.

As a former full-time practicing attorney and now a small business owner, I have been on both sides of the fence when it comes to the legal issues a business owner may face. It is imperative that entrepreneurs understand the basics of the legal side of running a business, and how to use the law as a shield to protect yourself and your business.

Creating a Shield Through Business Structure

The first item a small business owner should consider is the structure of the business. There are 4 basic types of business entities: sole proprietorship, partnership, corporation, and limited liability company. A common misconception of small business owners is that the business entity itself always creates a legal shield. In some instances (a corporation, or limited liability company, for example), this is generally true. However, if you are a sole proprietor (and, if so, you are not alone, as 78% of all small businesses in the U.S. are sole proprietorships), then you essentially have no shield. As a sole proprietor, you are personally liable for all business debts and other obligations. Fortunately, the law is not the only means to create a shield to protect your business. If the business entity itself does not provide a shield, then you can create one by acquiring appropriate and adequate insurance coverage. Thus, a sole proprietorship that is adequately protected by insurance may have an effective shield.