An Overview of Business Law
Business law encompasses rules, codes, statutes, and regulations that have been created to govern commercial relationships, in addition to providing a legal outline for business conduct and management. Business law covers various areas including information, organization, contracts, planning, negotiations, mergers, acquisitions and divestitures. Below we examine the ins and outs of what business law entails by answering a few commonly asked questions.
What is a Joint Venture & Partnership?
These two concepts do in fact share some characteristics. A joint venture can be a partnership where two or more parties band together for a short-term purpose. Each party has an equal amount of liability. A partner may represent the organization if needed, and make decisions on behalf of the partnership or joint venture.
What Does it Mean to Be a Non-Profit Organization?
A non-profit corporation is an organization that was created to perform charitable, religious, literary, educational and/or scientific purposes. A nonprofit does not have to pay state or federal income taxes on the profits gained from activities. The public typically can benefit from a non-profit, so state tax and IRS agencies award the organization a tax-exempt status.
What Should I Consider When Choosing a Business Form?
The factors when choosing a business form for your company can include tax treatment, plan to issue stock or publicly trade, intentions for capitalization, the structure of management and business owner liability. You can work with a business law professional who can advise you on choosing the right form that can meet your specific needs.
How Can I Be Protected from Personal Liability for Debts/Obligations?
Personal liability can arise in business and may completely devastate the wealth accumulation of years, or a lifetime of work. Some other personal liability from a business obligation can include damage awards in lawsuits, back wages, benefit payments and tax penalties. If an owner behaves in a way that is unlawful or fails in upholding statutory requirements, he or she can face severe personal liability.
What Does the Phrase “Pierce The Corporate Veil” Mean?
Every so often, a court can allow creditors and plaintiffs to receive an amount of compensation from directors, corporate officers or shareholders for damages instead of limiting recovery of corporate assets. Piercing the corporate veil can include the following:
- The court may choose to not allow an owner to benefit from the company’s limited liability if an underlying business is not distinguishable.
- If the corporation was created for any kind of fraudulent purposes.
- The court may decide to enforce liability on individuals who maintain the business if the company fails to adhere to corporate formalities.
How Often Should a Company Hold Meetings & Update Minutes?
If a corporation goes through a change or transaction, it can be reflected in the updated minutes. Meeting with shareholders and directors can happen once a year if only to elect new directors and officers. By failing to organize regular meetings it can jeopardize a company able to properly shield officers, shareholders, and directors from personal liability.
Consult with an experienced Business lawyer such as the Business lawyer Memphis, TN locals turn to can help you today.
Thanks to authors at WisemanBray for their insight into Business Law.