Bergman Dacey Goldsmith

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Corporation: Learn the pros and cons of this type of business

When forming a business in California, you will face many critical decisions. One of the earliest of these decisions involves choosing the type of business structure that will best benefit your enterprise. While an attorney experienced in business transactional work can guide you in making these decisions, it helps to learn about business structures on your own.

The business transactional work section of this blog has already discussed the process of forming a Limited Liability Company or LLC. This post will tackle the pros and cons of creating a corporation. Learning about some of these issues can help when it comes time to formalize your endeavors. Below you will find two pros and two cons of incorporation that may play a role in your final decision.

Fake slip-and-fall claims costly to companies

Business owners, unfortunately, can find themselves the target of unscrupulous customers and even employees who fake a slip-and-fall in order to make a claim and cash out. It's actually fairly easy for someone to fake a fall and injuries — especially if this is not the first time that they have done it.

Vulnerable businesses should do all they can to mitigate or disprove such fraudulent claims that only drive profits down and increase the costs of doing business in the community. Below are some things of which business owners should be aware.

Learn about California's overtime laws to avoid legal trouble

California's wage and hour laws have become very complex over the years. Employers who do not fully understand them can suffer serious legal trouble if they violate these laws. The fact that the violation was unintentional will not help if an employee decides to file a claim. However, if business owners build a relationship with an attorney experienced in employment defense for employers, it can help them avoid unintentional violations in the first place.

One of the most basic yet frequently misunderstood wage and hour laws is how to pay employees when they work overtime. In California, a normal workweek is 40 hours and a normal workday is eight hours. The section below explains how employers should manage overtime pay under state and/or federal laws.

  • If employees exceed eight hours of work in a day, employers must pay them 1.5 times their regular hourly wage.
  • If employees exceed 40 hours of work in a week, the same rule applies, and the employer must pay 1.5 times the regular hourly wage.
  • If employees exceed 12 hours of work in a day, employers must pay double the hourly rate, as well as double pay for "all hours, worked over eight on the seventh consecutive day of work in a workweek."

What steps are required to create an LLC in California?

It might be hard to believe but developing a limited liability company (LLC) in California is not especially difficult. In truth, most entrepreneurs could perform the required steps alone. However, there is much more to creating a prosperous new business enterprise than executing a few simple steps. To ensure that you set yourself up for maximum success, it is wise to engage an attorney experienced in business transactional work.

To answer the question of what is involved in creating a California LLC, please see the following list of required steps.

  • Choose a business name: The name you select must be unique and unlike other business names. It must also include the term, Limited Liability Company, or one of the term's abbreviations (LLC or L.L.C.).
  • Draft an operating agreement: While the law does not require this step, it is wise to create a legal document describing your business and its management model. A business transactional work lawyer can provide valuable guidance with this step.
  • File necessary documents: Specifically, you must file your Articles of Organization and a Statement of Information with the California Secretary of State. Again, an attorney can help you meet these critical requirements.
  • Attend to tax issues: The state requires that you take care of several tax matters within the first year of starting a new business. You must also be prepared to pay taxes on an annual basis as well.
  • Acquire permits and licenses: Whether your business falls into a city or county jurisdiction, you must acquire the proper licenses and permits. If you fail to get these documents, you can face very expensive fines.

What are some defenses against construction defect claims?

Construction contractors operating in California work hard to build a reputation for quality workmanship at fair rates. When allegations arise that a contractor's work is substandard or defective, it can destroy this hard-won reputation. Even a single successful construction defect claim is enough to cause a dramatic decline in a contractor's clientele, leading to financial hardships and other consequences.

Defending yourself against defect claims is paramount to your continued success. In these cases, it is wise to seek legal assistance from an attorney experienced in construction law and defects claims. Working with legal counsel allows you to understand the defenses at your disposal. Below, you will find examples of effective ways you may be able to prove that you are not liable.

  • The claim did not arise because of your workmanship.
  • Your construction contract does not cover the problem at issue.
  • The property owner caused the defect by their actions.
  • No defect has occurred.
  • The defect occurred because of the structure's design elements

California employers need legal protection more than ever before

Operating a business with employees in the modern world has become quite a complicated endeavor for California employers. Along with ensuring that their business remains successful, employers must also learn to manage any legal complaints leveraged by their workers. Examples of common complaints include the following.

  • Harassment and discrimination in the workplace
  • Wrongful termination
  • California wage and hour violations
  • Lack of religious freedom while working
  • Workplace retaliation

Even if a single worker files a complaint against you, it is critical to seek help building a strong employment defense for employers. The steps you take in the wake of a complaint can make all the difference in how your business succeeds going forward.

How smart businesses protect themselves against harassment claims

Many successful businesses have to worry about the potential for a lawsuit by a current or former employee damaging both their profit margin and their reputation within the community in which they operate.

Harassment and discrimination lawsuits could do a lot of damage to your business, which is why any company that has any number of employees should have proactive policies in place to prevent an instance of discrimination or harassment from occurring at the business. They usually also have plans in place in case someone does experience harassment while at work.

Questions employers may have regarding workers' rights

It is important for employers to be well aware of all of the rights that their employees hold at every stage in their business relationship. This starts during that initial interview and runs all the way until an employee retires, potentially covering decades of the person's life. Employers need to understand their legal obligations and what actions they can and cannot take in their position of authority in this relationship.

Good contracts are vital to successful business transactions

Whether you are just starting your business or have operated for some time, chances are you have entered into agreements with one or more parties. Some business owners adopt a "cookie-cutter" approach to business transactional work involving contracts. For example, they draw up a single contract template for all business agreements.

Let's look at a couple of hypothetical scenarios. In the first one, you adopt the cookie-cutter contract approach and it serves you and your business well. In another scenario, you adopt the same approach to business transactions. However, one of the entities with whom you have contracted fails to honor their portion of the agreement.

Why your professional reputation is important

Your company's reputation is important. It may matter far more than you realize. Any threat to that reputation is a threat to the company itself.

In fact, some experts have gone so far as to call reputation a form of currency. You think long and hard about how you invest your money in employees, products, ad campaigns, research and development, and much more. Make sure you also think about how much time and effort you put into your reputation. Those returns must be just as positive as the others for you to see sustained success.

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