Archive for category Business law
Can I do my company meetings by telephone or video conference?
Posted by David Leon in Business law on 17/05/2010
If your company documents allow for the use of electronic meetings, then yes, you can conduct your meetings using conference calls or the internet. You need to ensure that each participant is properly identified and can communicate with all other participants, and a record of votes must be kept.
Also, if all participants agree in writing in advance, a meeting may be held electronically.
Sec. 6.002 Texas Business Organizations Code
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Our company needs to have an annual meeting. Where should we have the meeting?
Posted by David Leon in Business law on 17/05/2010
You can have the company’s meetings at the place that is provided in the entity’s company documents. If there is no place mentioned in the company documents, then the meetings can be held at the registered office of the company. As always, if all agree, then the meeting can be held anywhere.
Sec. 6.001 Texas Business Organizations Code.
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What is a registered agent?
Posted by David Leon in Business law on 17/05/2010
A registered agent is a person or entity whose job it is to receive service of process, notice, or demand required or permitted by law to be served on the entity. The code requires that each filing entity must designate and continuously maintain an agent in the state.
Sec. 5.201 Texas Business Organizations Code
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I have a Texas business. Can I conduct business using another name?
Posted by David Leon in Business law, Intellectual Property on 17/05/2010
Yes. A business entity registered in Texas may use an assumed name to conduct business, provided that it registers the assumed name (Texas Business Organizations Code Sec. 5.051.) Also, the business should double check that the name does not violate the trademark of another.
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A person filed a false document with the secretary of state’s office. Is this a crime?
Posted by David Leon in Business law, Criminal Defense on 17/05/2010
Yes. It is a misdemeanor (class A) to knowingly file a materially false document with the Texas Secretary of State’s office. If it the false filing was done with the intent to harm or commit fraud, then it can be a felony (state jail).
Sec. 4.008 Texas Business Organizations Code.
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I have a Texas entity. What kinds of books and records do I need to keep?
Posted by David Leon in Business law on 16/05/2010
Each filing entity shall keep:
(1) books and records of accounts;
(2) minutes of the proceedings of the owners or members or governing authority of the filing entity and committees of the owners or members or governing authority of the filing entity;*
(3) at its registered office or principal place of business, or at the office of its transfer agent or registrar, a current record of the name and mailing address of each owner or member of the filing entity; and
(4) other books and records as required by the title of this code governing the entity.
* limited liability companies and limited partnerships need not keep these records, if their governing documents do not require them.
Sec. 3.151 of the Texas Business and Organizations Code
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What is a non-profit company?
Posted by David Leon in Business law on 16/05/2010
A non-profit company is typically an entity that is formed for a purpose other than to make money. Under the Texas statute (Sec. 2.002 of the Business Organizations Code), the purpose of the nonprofit should be for “serving charitable, benevolent, religious, eleemosynary, patriotic, civic, missionary, educational, scientific, social, fraternal, athletic, aesthetic, agricultural, and horticultural purposes…” Also included under the statute are certain animal husbandry organizations, some trade/labor unions, and certain types of co-ops.
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I just sold a property that had a lien on it. The lienholder demanded the money from the sale. How long do I have to pay the lienholder?
Posted by David Leon in Business law, Contract law, Real Estate Law on 07/05/2010
As an ideal matter, a lienholder should be paid at closing. Texas penal code sec. 32.33(e) provides: a person is presumed to have intended to appropriate proceeds if the person does not deliver the proceeds to the secured party or account to the secured party for the proceeds before the 11th day after the day that the secured party makes a lawful demand for the proceeds or account.
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What is an organizational meeting?
Posted by David Leon in Business law on 05/07/2009
After forming a new corporation, an organizational meeting is to be held by the directors. At this meeting, the officers and directors of the corporation are elected, the bylaws adopted, and the stock is issued to the shareholders. (Texas Business & Corp. Act, Sec. 3.06)
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What is usury?
Posted by David Leon in Business law, Contract law on 05/07/2009
Usury is the charging of excessive interest rates. The default maximum interest rates are 10% with a written contract, and 6% without a contract, pursuant to Article 16, Sec. 11 of the Texas Constitution. Other Texas statutes govern maximum interest rates for financial institutions, mortgage companies, etc.
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What is a fiduciary duty?
Posted by David Leon in Business law, Estate planning and probate, Insurance Law, Litigation and judgments on 28/06/2009
A fiduciary duty is the highest standard of care one can owe to another. The fiduciary relationship is one of trust and confidence. The person or institution who owes the fiduciary duty must put the person’s interests above his or her own interests. Common examples of fiduciary duty include power of attorney holders, executors in wills, and trustees of trusts.
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What is a pyramid scheme?
Posted by David Leon in Business law, Criminal Defense, Franchise Law on 27/06/2009
A pyramid scheme (a/k/a franchise fraud) is an investment fraud scheme in which someone is offered a distributorship or franchise to market a particular product. This involves a fee to become part of the business. The real profit is earned by the sale of new distributorships and not by the sale of the products. Typically, the scheme is sold by telling new subscribers that they can remake their original investment by selling distributorships to two or more people, and so on. Soon, the lower levels of the pyramid are unable to find more people to buy into the scheme, and the scheme collapses. (Source: FBI )
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I’d like to sue a spammer who used my equipment. Can I do this while still protecting my trade secrets?
Posted by David Leon in Business law, Intellectual Property, Litigation and judgments on 14/06/2009
A party can request that a court provide protection for a trade secret or a vulnerability under Texas Business and Commerce Code Sec. 321.110.
PROTECTION OF SECRECY OR SECURITY. At the request of a party to an action brought under this chapter, the court, in the court’s discretion, may conduct a legal proceeding in a manner that protects:
(1) the secrecy and security of the computer, computer network, computer data, computer program, and computer software involved so as to prevent a possible recurrence of the same or a similar act by another person; or
(2) any trade secret of a party to the action.
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Selling a used watch in Texas
Posted by David Leon in Business law, Contract law, Criminal Defense on 25/05/2009
Yes. Title 2, Chapter 17 Subchapter C of the Texas Business and Commerce Code deals specifically with the selling of secondhand watches in the state. Not only must the watch be clearly labeled “secondhand” (17.21) but accurate records must also be maintained under Sec. 17.20. Failure to comply is a crime under Sec. 17.22.
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DTPA and going out of business
Posted by David Leon in Business law, Criminal Defense on 25/05/2009
No. Texas Business and Commerce Code Sec. 17.11 specifically prohibits this practice. Further, this behavior is a misdemeanor.
DECEPTIVE WHOLESALE AND GOING-OUT-OF-BUSINESS ADVERTISING.
(c) No person may wilfully misrepresent the ownership of a business for the purpose of holding a liquidation sale, auction sale, or other sale which represents that the business is going out of business. A person who advertises a liquidation sale, auction sale, or going-out-of-business sale shall state the correct name and permanent address of the owner of the business in the advertising.
(d) A person who violates a provision of Subsection (b) or (c) of this section is guilty of a misdemeanor and upon conviction is punishable by a fine of not less than $100 nor more than $500.
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DTPA and wholesalers
Posted by David Leon in Business law on 25/05/2009
No. If you are not a wholesaler, you cannot advertise your business as a ‘wholesale’ business. Sec. 17.11 of the Texas Business and Commerce Code specifically prohibits this, as this would be a deceptive trade practice. This type of behavior is a misdemeanor. The statute provides:
DECEPTIVE WHOLESALE AND GOING-OUT-OF-BUSINESS ADVERTISING. (a) In Subsection (b) of this section, unless the context requires a different definition, “wholesaler” means a person who sells for the purpose of resale and not directly to a consuming purchaser.
(b) No person may wilfully misrepresent the nature of his business by using in selling or advertising the word manufacturer, wholesaler, retailer, or other word of similar meaning.
…
(d) A person who violates a provision of Subsection (b) or (c) of this section is guilty of a misdemeanor and upon conviction is punishable by a fine of not less than $100 nor more than $500.
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AUTHORITY TO BLOCK CERTAIN COMMERCIAL ELECTRONIC MAIL MESSAGES; QUALIFIED IMMUNITY
Posted by David Leon in Business law, Intellectual Property on 25/05/2009
Yes, Texas Business and Commerce Code Sec. 321.114 gives internet service providers and email service providers the authority to block emails that the ISP or email provider reasonably believes are in violation of 321.052 (the Texas anti-Spam laws). The provider must have in place a reasonably accessible mechanism to unblock the emails, should the sender believe s/he is in compliance with the law. The statute is listed below.
AUTHORITY TO BLOCK CERTAIN COMMERCIAL ELECTRONIC MAIL MESSAGES; QUALIFIED IMMUNITY. (a) An electronic mail service provider may on its own initiative block the receipt or transmission through its service of any commercial electronic mail message that the service provider reasonably believes is or will be transmitted in violation of this chapter, if the service provider:
(1) provides a process for the prompt, good faith resolution of a dispute related to the blocking with the sender of the commercial electronic mail message; and
(2) makes contact information for the resolution of the dispute accessible to the public on the service provider’s Internet website.
(b) An electronic mail service provider who complies with Subsection (a) may not be held liable for blocking the receipt or transmission through its service of any commercial electronic mail message that the service provider reasonably believes is or will be transmitted in violation of this chapter.
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I contracted with a company to send email ads for me, but I didn't know they violated the law. Can I still be sued?
Posted by David Leon in Business law, Contract law, Intellectual Property, Litigation and judgments on 25/05/2009
Yes, however, you may have a defense. Texas Business and Commerce Code Sec. 321.113 provides a limited immunity from prosecution in the event that a sender acted in good faith in hiring a sender to send compliant unsolicited commercial emails, but the company (without knowledge of the sender) violates the law. However, there may still be liability for violating another state’s laws, if the emails wind up in an out of state user’s mailbox.
QUALIFIED IMMUNITY FROM LIABILITY OF SENDERS. A sender may not be held liable for the transmission of an electronic mail message that violates this chapter if the sender:
(1) contracts in good faith with an electronic mail service provider to transmit electronic mail messages for the sender; and
(2) has no reason to believe the electronic mail service provider will transmit any of the sender’s electronic mail messages in violation of this chapter.
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I run an electronic mail service or internet service provider. Can I be sued if one of my clients sends unsolicited commercial email (spam) without my knowledge?
Posted by David Leon in Business law, Contract law, Litigation and judgments on 25/05/2009
Although you can be sued, you may have a defense under Texas Business and Commerce Code Sec. 321.112. The defense is very specific, and only applies to relay, store and forward servers
IMMUNITY FROM LIABILITY: TELECOMMUNICATIONS UTILITIES AND ELECTRONIC MAIL SERVICE PROVIDERS.
(c) A person injured by a violation of this chapter does not have a cause of action against a telecommunications utility or an electronic mail service provider under this chapter solely because the utility or service provider:
(1) is an intermediary between the sender, or a person acting on behalf of the sender, and the recipient in the transmission of electronic mail that violates this chapter;
(2) provides transmission, routing, relaying, handling, or storing, through an automatic technical process, of an unsolicited commercial electronic mail message through the utility’s or service provider’s computer network or facilities; or
(3) provides telecommunications services, information services, or other services used in the transmission of an electronic mail message that violates this chapter.
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Can I create a class action lawsuit to go after a spammer in Texas?
Posted by David Leon in Business law, Intellectual Property, Litigation and judgments on 25/05/2009
No. Sec. 321.109 of the Texas Business and Commerce Code specifically PROHIBITS a class certification under this chapter.
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My email servers were used by a spammer to send unsolicited emails. Can I go after the spammer?
Posted by David Leon in Business law, Intellectual Property, Litigation and judgments on 25/05/2009
Yes. If your business was injured by a spammer, then you may have a cause of action against the spammer by means of Texas Business and Commerce Code Sec. 321.106 which provides:
ALTERNATIVE RECOVERY FOR ELECTRONIC MAIL SERVICE PROVIDERS. In lieu of actual damages, an electronic mail service provider injured by a violation of this chapter arising from the transmission of an unsolicited or commercial electronic mail message may recover an amount equal to the greater of:
(1) $10 for each unlawful message; or
(2) $25,000 for each day the unlawful message is received.
Note, the injured party may instead bring an action for lost profits, in lieu of the statutory damages listed above. Either way, the injured party MUST comply with Sec. 321.107, and give timely notice to the Texas Attorney General.
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Is there a civil penalty in Texas for sending unsolicited commercial email (UCE or Spam)?
Posted by David Leon in Business law, Intellectual Property on 25/05/2009
Yes. Sec. 321.102 of the Texas Business and Commerce Code covers unsolicited commercial email (spam) that is sent within the state of Texas, in violation of Sec. 321.052. The statute provides:
VIOLATION OF CHAPTER: GENERAL CIVIL PENALTY AND INJUNCTIVE RELIEF.
(a) A person who violates this chapter is liable to this state for a civil penalty in an amount not to exceed the lesser of:
(1) $10 for each unlawful message or unlawful action; or
(2) $25,000 for each day an unlawful message is received or each day an unlawful action is taken.
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Is it a crime to send a sexually explicit unsolicited commercial email?
Posted by David Leon in Business law, Contract law, Criminal Defense, Intellectual Property, Litigation and judgments on 25/05/2009
Yes, however, Texas Business and Commerce Code Sec. 321.052(a) provides a potential “safe harbor” under Texas law. Failure to comply with 321.052(a) may lead to criminal liability under Sec. 321.101. TRANSMISSION OF MESSAGE CONTAINING OBSCENE MATERIAL OR MATERIAL DEPICTING SEXUAL CONDUCT; CRIMINAL PENALTY. (a) A person commits an offense if the person intentionally takes an action to transmit a message that contains obscene material or material depicting sexual conduct in violation of Section 321.052(a)(1).
(b) An offense under this section is a Class B misdemeanor.
Please note this is state specific, and there may be other state’s law or federal law implications as well.
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I want to send an unsolicited commercial email in Texas. How do I comply?
Posted by David Leon in Business law, Contract law, Intellectual Property on 25/05/2009
Texas provides a limited safe harbor for unsolicited commercial email (a/k/a bulk email or SPAM) Please note, that other states may have different laws that would apply to email sent to residents of that state.
See 321.051 of the Texas Business and Commerce Code. Sec. 321.052.
REQUIREMENT FOR TRANSMISSION OF UNSOLICITED COMMERCIAL ELECTRONIC MAIL MESSAGES.
(a) A person may not intentionally take an action to transmit an unsolicited commercial electronic mail message unless:
(1) “ADV:” appears first in the subject line of the message or, if the message contains obscene material or material depicting sexual conduct, “ADV: ADULT ADVERTISEMENT” appears first in the subject line; and
(2) the sender or a person acting on behalf of the sender provides a functioning return electronic mail address to which a recipient of the message may, at no cost to the recipient, send a reply requesting the removal of the recipient’s electronic mail address from the sender’s electronic mail list.
(b) A sender shall remove a person’s electronic mail address from the sender’s electronic mail list not later than the third day after the date the sender receives a request for removal of that address under Subsection (a)(2).
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Is it against the law to falsify (munge) internet headers or use fake subject lines when sending unsolicited emails?
Posted by David Leon in Business law, Intellectual Property, Litigation and judgments on 25/05/2009
Yes. Sec. 321.051(b) of the Texas Business and Commerce Code specifically addresses this:
(b) A person may not intentionally transmit a commercial electronic mail message that:
(1) is an unsolicited commercial electronic mail message and falsifies the electronic mail transmission or routing information;
(2) contains false, deceptive, or misleading information in the subject line; or
(3) uses another person’s Internet domain name without the other person’s consent.
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What is business succession planning?
Posted by David Leon in Business law, Estate planning and probate on 12/03/2009
In some cases, a family business is the most important asset in a family’s financial well being. Business succession planning is a type of estate plan for people with family owned businesses. The specific planning includes who takes care and runs the family business after the passing of the principal owner or operator. The business succession planning typically includes life insurance planning, estate planning and contract law. The cost and complexity of a business succession plan vary with the type of business, and the objective of the plan. Contact Us for more information.
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What happens when you close a business in Texas
Posted by David Leon in Business law, Litigation and judgments on 08/03/2009
A dissolved corporation in Texas shall continue its corporate existence for a period of three years from the date of dissolution, for the following purposes:
(1) prosecuting or defending in its corporate name any action or proceeding by or against the dissolved corporation;
(2) permitting the survival of any existing claim by or against the dissolved corporation;
(3) holding title to and liquidating any properties or assets that remained in the dissolved corporation at the time of, or are collected by the dissolved corporation after, dissolution, and applying or distributing those properties or assets, or the proceeds thereof.
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I formed a business using online forms. What do I do now?
Posted by David Leon in Business law on 08/03/2009
Our office receives this inquiry quite often. In many cases, a person incorporates using online forms. They then receive their charter, thinking they are ready to transact business. This is not necessarily the case. The next step should be for the board of directors to call and hold an initial organizational meeting. During the organizational meeting, the board should adopt bylaws, elect officers, issue stock and transact any other business as necessary. The directors calling the meeting shall give at least three (3) days notice thereof by mail to each director, stating the time and place of the meeting. If you plan to invest time and money into your new business, you should consider ensuring that it is properly set up. Our office has assisted people with the completion of the organizational meeting. Please Contact Us for an appointment to have your new business reviewed, and to have us assist you with the completion of the organizational meeting.
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How long do I have to sue for breach of contract?
Posted by David Leon in Business law, Contract law, Litigation and judgments on 08/03/2009
Under most circumstances, the statute of limitations for a breach of contract in Texas is four years. (See Sec. 2-275 of the Business & Commerce Code)
However, many contracts may have limiting language altering your right to sue, and some contracts have pre-requisites to your right to sue. Because every contract is different, you should have an attorney review your contract to see if there are any exceptions to the general rule. Additionally, there may be other causes of action that may have shorter limitations periods. Contact Us for more information, or to have your contract review.
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When would I need to apply for a late hour mixed beverages permit?
Posted by David Leon in Business law on 08/03/2009
The holder of a mixed beverage late hours permit may sell mixed beverages on Sunday between the hours of 1:00 a. m. and 2 a. m. and on any other day between the hours of 12 midnight and 2 a. m. (TABC Sec. 29.01)
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I’m selling my restaurant or bar. It has a mixed beverage permit. Is the mixed beverage permit transferable?
Posted by David Leon in Business law on 08/03/2009
No. Section 28.04 of the Texas Alcoholic Beverage Code states: A mixed beverage permit held by a corporation may not be renewed if the commission or administrator finds that legal or beneficial ownership of over 50 percent of the stock of the corporation has changed since the time the original permit was issued.
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What is a Certificate of Authority?
Posted by David Leon in Business law on 06/03/2009
A Certificate of Authority is a document executed by the Texas Secretary of State. This document states that a foreign business (which means a business formed outside of Texas) has permission to transact business within the State of Texas. The business with a Certificate of Authority must file annual reports and pay associated Texas taxes to maintain the Certificate. A Certificate is required for any business regularly transacting within the State of Texas. Contact Us for more information.
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What is business insurance planning?
Posted by David Leon in Business law, Estate planning and probate, Insurance Law on 06/03/2009
Business insurance planning includes insurance against the loss of a key person who is vital to the survival of a business. This type of policy can be used to inject cash into a business in order to survive while you replace the lost person. It can also cover buy/sell agreements, allowing the surviving member of the business to buy out the deceased member’s interest. Other types of insurance planning include wholly owned or captive insurance companies, umbrella insurance policy planning and commercial liability. Contact Us for more information.
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Why would I want to incorporate my business or form a limited liability company?
Posted by David Leon in Business law on 01/03/2009
The most common reason for incorporating a business is to separate an individual’s liabilities from those of a business. For example, a company may enter into a contract with a third party. If the business subsequently dissolves, the individual owners of the business might not be liable for the debt in many circumstances. Additionally, a business entity allows a person to easily raise capital, and spread ownership among others. Our office forms business entities and helps to ensure that they are formed properly. Contact Us for more information.
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Can a business entity use a fictitious name?
Posted by David Leon in Business law, Intellectual Property on 27/02/2009
Yes. An entity may use a fictitious in most instances. The company must have permission to file the dba and the dba must be available. The company is still subject to other Texas laws regarding the use of trade names, and comply with trademark laws. Fictitious names allow a company to use a name other than its corporate name. We can help your business with the appropriate filings. Contact Us for more information.
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What is a fictitious name?
Posted by David Leon in Business law on 27/02/2009
A fictitious name (also called a d/b/a or “doing business as”) is the least expensive method for conducting business. Under this scenario, there is no distinction between the individual and the business. From a tax standpoint, there is no difference between the individual’s income and expenses, and those of the business. The business owner is personally liable for the obligations and debts of the business. Taken literally, a d/b/a is just a nickname of the individual that created it. In this case, the name is a business name. For example, Joe wants to create a business to do computer repairs from his home. Joe can file a dba as “Fix It Quick”. Joe can now receive checks made out to Fix It Quick. For individuals, a dba does not have a separate tax identification number in most instances. Contact Us for more information.
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sworn account suit
Posted by David Leon in Business law, Consumer & Credit, Contract law, Litigation and judgments on 20/02/2009
In Texas, a suit on a sworn account typically involves a business suing a customer who purchased goods and services on a revolving credit account. Typically, this process begins when a customer fails to pay invoices. The aggrieved business will send a demand letter to its customer, with a thirty day notice to pay the invoices. If the customer fails to make arrangements, then the business may file suit on a sworn account. In this action, the business will attach an affidavit to the lawsuit verifying the amount due and owing. The defendant customer then has to file a sworn denial on the account, or face losing the suit. Contact Us if you need help with one of these suits.
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Can an officer or director of a company be liable to the shareholders for actions taken on behalf of the company?
Posted by David Leon in Business law, Litigation and judgments on 15/02/2009
There are times the officers and directors may be personally liable for their actions taken on behalf of a company. Additionally, directors and officers owe specific duties of loyalty to the company. Breaches of these duties (some of which may be fiduciary duties) are actionable. Also, problems may arise when minority shareholders are treated unfairly. A common issue is when a director of a company “self deals” at the expense of the company. Contact Us for more information.
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suit on a sworn account
Posted by David Leon in Business law, Litigation and judgments on 15/02/2009
This tends to be one fo the more common types of litigation. Essentially, a business will offer good and services on a revolving account basis to another. When those invoices remain unpaid, litigation may be necessary. The typical first step is to assemble all written documents exchnaged between the parties. Next, a demand letter stating that the other party is in breach of the arrangement would be sent, detailing what the other side needs to do in order to rectify the situation. Should the sides fail to reach a settlement, then the side owed money can file a suit in which a representative the company that issued the invoices swear to the truthfulness of the invoices. This is called a “sworn account suit” This forces the other side to have to file a sworn answer stating that they do not owe the invoices. If you have one of these issues, please Contact Us to discuss your issue.
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I entered into a contract over the Internet. I’m in Texas and the other party is not, whose law applies?
Posted by David Leon in Business law, Contract law, Litigation and judgments on 15/02/2009
As a general rule, if a contract made solely over the Internet between a person located in this state and a person located outside this state who does not maintain an office or agent in this state for transacting business in this state, then Texas law applies unless each Texas party:
(1) is given notice that the law of the state in which another party to the contract is located applies to the contract; and
(2) agrees to the application of that state’s law.
(Texas Bus & Commerce Code Sec. 271 & 274)
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I’m still confused about this independent contractor vs. employee determination. Can I ask the IRS for a determination?
Posted by David Leon in Business law, Contract law, Employment law on 18/01/2009
Yes! The IRS has Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding
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Independent Contractors versus Employees in Texas
Posted by David Leon in Business law, Contract law, Employment law on 18/01/2009
The IRS uses three main criteria when determining whether or not someone is an employee or independent contractor.
From the IRS.gov website:
Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?
Financial: Are the business aspects of the worker’s job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)
Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?
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Independent Contractors versus Employees in Texas
Posted by David Leon in Business law, Contract law, Employment law on 18/01/2009
No, there is no “bright line” test determine whether or not a person is an employee or an independent contractor. The IRS will look at the entire relationship between the parties.
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Independent Contractors versus Employees in Texas
Posted by David Leon in Business law, Contract law, Employment law on 18/01/2009
No. From the perspective of the IRS, the IRS doesn’t care if you label a person an employee, independent contractor or anything else. The IRS will look at the entire relationship between the parties. If you incorrectly label someone an independent contractor when they are in fact an employee, you could face serious liability. The IRS has its own criteria for determining a person’s status as employee vs. independent contractor.
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Independent Contractors versus Employees in Texas
Posted by David Leon in Business law, Contract law, Employment law on 18/01/2009
This is a common question. Many small business owners want help, but don’t want the added hassle (or taxes) of hiring employees. Many business owners believe that they can just simply classify someone as an independent contractor by contract and be done with it. The problem is that the IRS may not agree with your assessment as to whether a person is an employee or independent contractor (even if your agreement specifically states such.) The IRS has its own criteria for determining a person’s status. The contract is only a factor, but it is not determinative. The IRS will look at the entire relationship. Further, if you incorrectly classify someone as an independent contractor, you can face some serious fines from the IRS.
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Annual meetings and Texas companies
Posted by David Leon in Business law, Franchise Law on 21/12/2008
It’s still a great idea to document what has transpired over the past year with your business, even if you are the only owner. This puts you in the habit of observing company formalities, and it makes it easier for you to recall what happened in a given year, should an issue later arise.
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Corporate minutes for the end of the year
Posted by David Leon in Business law, Franchise Law on 21/12/2008
This is a common question. Most companies and partnerships in Texas should complete some end of year meetings. The notes from these meetings, called “minutes” should be placed with the company’s records. The minutes should contain signatures of all owners of the company, and a list of any important business that has been transacted since the past meeting. You can also take this opportunity to have your board of managers / board of director elections for the upcoming year, double check that the registered agent and public information reports (PIR) are up to date. Contact Us for more information.
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I have a simple transaction that I need to complete for my business. Do I need a contract?
Posted by David Leon in Business law, Contract law on 24/11/2007
The purpose of the contract is to ensure that both sides of an agreement are fully aware of their respective obligations. This is referred to as a “meeting of the minds.” In some cases, one or both parties may have had a different expectation of a transaction, even if the transaction was supposed to be simple. Also, sometimes there is a situation that prevents one side or the other from performing as promised. This is where you need to have a well drafted contract. If done properly, contracts can help avoid litigation, and can protect you and your business if an unexpected event occurs. Contact Us for more information.
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I have an out of state business. How can I conduct business in Texas?
Posted by David Leon in Business law on 24/11/2007
If you have more than an insolated transaction occuring in Texas, then you will need to either set up a Texas subsidiary or qualify your foriegn company to transact business within the State of Texas. If you are qualifying an out of state entity, then you need to petition the Texas Secretary of State’s office for a Certificate of Authority to transact business within the state. This also requires obtaining a Certificate of Good Standing in your company’s home state, as well as a company meeting to ratify this process. Contact Us for more information
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Duty of loyalty by an officer or director of a company
Posted by David Leon in Business law, Litigation and judgments on 24/11/2007
Directors of a company have a duty of loyalty to the company. If you believe that one of your corporate directors is self-dealing or not acting in the company’s best interest, you should Contact Us immediately, as this may be a breach of a fiduciary duty.
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Do I need to use an attorney if I am buying or selling a business using a broker?
Posted by David Leon in Business law on 24/11/2007
Our firm has experience in handling the buying and selling of businesses. Even if you are using a broker, you can still have your own attorney to assist with the negotiation and closing of the transaction. Transfering ownership of a business can occur in several different ways, and it takes a trained professional to determine which methods of ownership transfer will best benefit the client while minimizing the risk. Also, many companies, such as restaraunts and retail, have specific legal requirements. These tend to be complex transactions and our firm can assist you with each step of the transaction. Contact Us for more information.
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I want to start a business in Texas. Do I need a lawyer?
Posted by David Leon in Business law on 24/11/2007
Although there are several ways you can form a business yourself without an attorney, there are several different types of entities to choose from when you form a business in Texas. Depending on what your plans are, and what your business model is, there are several choices. An attorney can assist you with selecting the appropriate type of entity to choose. After you have selected the type of entity, our firm can set up the company and assist you with the stock or unit issuance and organizational meetings. Contact Us for more information.
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