Business & Corporate FAQs
The following information includes frequently asked business questions. The answers stated are general in nature and are not intended to apply to any particular business situation. Each matter is different and carries its own set of circumstances which must be taken into consideration by competent legal counsel. By contacting Orange County corporate Attorney Matthew A. Sumrow, you can receive a personal consultation regarding your specific legal matter.
What is a corporation and what are the advantages of having a corporation?
A corporation is a separate legal entity with its own identity separate and apart from its shareholders (owners). As a separate legal entity, a corporation is responsible for its own debts. Normally, shareholders, directors and officers are not responsible for corporate debts and liabilities. If the corporation suffers losses, the corporation itself must bear those losses to the extent of its own resources, and not the personal assets of the individual shareholders should not be at risk. Thus, a corporation provides limited liability protection for its owners. Thus, the corporation protects the owner of a business against personal liability. Contact California corporate attorney Matt Sumrow for further information.
What are the advantages of an S corporation?
An S corporation is created by timely filing an S corporation election with the IRS after a corporation is formed. In a properly organized and operated S corporation, the corporation’s income passes through to the shareholders of the corporation without having to pay any income tax at the corporate level (this is know as “pass-through tax treatment”). The primary advantage of an S corporation is the avoidance of double taxation that applies to a C corporation in which income is taxed at the corporate level (at corporate tax rates) and then taxed again at individual tax rates when the remaining income is distributed to the shareholders. An S corporation, however, has limits on the number of shareholders and restrictions on who may be a shareholder. Contact California corporate attorney Matt Sumrow for further information.
What is a limited liability company?
A limited liability company or “LLC” is a separate legal entity from the owners of the LLC. Owners of LLC’s are referred to as members. An LLC is frequently referred to as a hybrid of a corporation and a partnership. The members of a limited liability company are shielded from personal liability (like a corporation) and profits and losses may pass directly to the members without taxation of the LLC itself (like an S corporation or partnership). Contact California business lawyer Matt Sumrow for further information.
What are the benefits of an LLC?
An LLC offers primarily two benefits. First and foremost, an LLC provides the members protection from personal liability. Additionally, an LLC provides for pass through taxation. An LLC is similar to a corporation because it has: (i) limited liability; (ii) free transferability ; and (iii) perpetual existence. The taxation of a limited liability company is comparable to an S corporation or partnership. However, unlike an S corporation an LLC can have an unlimited number of owners, or “members” as they are known in an LLC. Contact California business lawyer Matt Sumrow for further information.
What are the requirements for registering a trademark or service mark with the USPTO?
A trademark or service mark may be registered with the with the United States Patent and Trademark Office (USPTO) by filing an application. The application must be filed under the name of the actual owner of the mark. The owner of the mark is the person who controls the nature and the quality of the goods sold or the services rendered under the mark. The owner can be an individual or any form of business entity (corporation, LLC, partnership, etc.).
The application must be based on an actual use of the mark in interstate or international commerce or on a real intention to use the mark in interstate or international commerce. For the application to be based actual use, the applicant must indicate when the mark was first used in interstate or international commerce. A trademark must be used on products themselves or on labels or packaging for the products. A service mark must be used in connection with the services offered, such as on a web site promoting the services or in an advertisement for the services. Using a mark on a business card rarely satisfies the “use in commerce” requirement.
When you are filing an intent-to-use based application, it is sufficient to make a statement in good faith that you plan to use the mark in commerce. However, you will have to actually use the mark in interstate or international commerce before it can be registered. The USPTO will first issue the Notice of Allowance, which gives you six months to either use the mark in commerce or file for an extension. After a Statement of Use is filed, the USPTO will issue a registration certificate (assuming there are no other grounds for the application to be denied). Contact California corporate attorney Matt Sumrow for further information.
What is Business Litigation?
Business litigation involves individuals and companies in wide array of matters pertaining to such diverse areas as:
- Business Torts – including commercial defamation; copyright, patent or trademark infringement (including Lanham Act suits); interference with contractual or economic relations; breach of fiduciary duty; fraud and misrepresentation; unfair and deceptive trade practices and other conduct or claims that affect the success of a business.
- Contracts – such as disputes among partners regarding a partnership agreement; breach of a service contract with a primary vendor; disagreements concerning an output contract with a key supplier; threatened cancellation of a sales contract with an important customer; or any actual or potential dispute concerning any other kind of written or oral agreement.
- Professional Malpractice – accountants, architects, engineers, doctors and lawyers all face the risk of malpractice claims that can jeopardize business, reputation and finances.
- Securities – claims involving securities and investments, claims arising under federal (for example, Rule 10b-5, the 1933 Act, the 1934 Act) or state securities laws.
- Shareholder and Corporate Governance – including shareholder inspection rights; duties of directors and officers; conflicts of interest; derivative actions; business judgment rule defenses; change of control provisions; voluntary and involuntary dissolutions; minority shareholder rights and claims; appraisal proceedings; and valuations of closely held corporations.
Contact California corporate attorney Matt Sumrow for further information.
Why Should I Worry About Business Litigation?
If you run a business, chances are you either already are confronted with business litigation or will be in the near future. Almost all business people confront litigation or the threat of litigation in the course of their business, whether they are Fortune 500, small or medium size companies, closely-held or family owned businesses, internet start-ups or individual entrepreneurs. Even though you may have protected your personal assets by forming a corporation or LLC, litigation may put your enterprise at risk. Consult with California business attorney Matt Sumrow to advise you and potentially represent you in your specific case.