Business law, which is also known as commercial law, is a body of laws which govern entities and commercial transactions. For example, if an individual wanted to open a shoe company, business law would govern how to register and organize that company. Such laws would also cover how to pay the company’s employees and even how to legally ship the company’s merchandise to customers overseas.
Business law applies to many different aspects of every business. Additionally, business laws will vary based upon the type of business being operated, such as private vs. public, not-for-profit vs. for-profit, the business structure, such as a general partnership vs. a corporation, and by the jurisdiction the business is located and operating in.
If businesses are just opening and need to determine how to register and set up those businesses, this will be governed by laws including state statutes regarding business formation and structure, state laws laws, and the Federal Tax Code. if the business registers intellectual property, which may include copyrights or trademarks of the business, both state and federal laws will apply.
The business formation structure which is chosen will also provide rules regarding how the business is required to operate. For example, if the business is a limited partnership, there must be one partner who serves as a general partner to the entire partnership and one limited partner.
When businesses need to determine how to pay their employees, provide their employees with work benefits, or arrange their employee work schedules, these would fall under the subcategory of business law called employment law. Employment law is the body of law which governs employers, employees, and safety conditions in the workplace.
Another major subcategory of business law is commercial and contract law. Commercial and contract laws govern many business aspects, from business deals to employee non-disclosure agreements and even sales transactions. Because of the many aspects of businesses that contract laws regulate, this is one of the most important areas of business law.
Contract laws govern aspects of a business including:
- Merging with another business;
- Forming an agreement with a distributor for the sale of products; and
- Providing a service to customers.
It is important to be aware that each state may have specific business laws which are unique to that state, so it is important to consult with an attorney about the laws in the area. For example, Montana business laws may be vastly different from South Dakota business litigation laws.
Examples of the areas of business law which may apply to an individual and their business may include:
- Business formation and dissolution;
- Commercial law and contracts;
- Investing and securities law;
- Intellectual property law;
- Antitrust and white collar;
- Corporate law;
- Employment law;
- International business; and
- Tax law.
For more information regarding business and commercial law, see the following LegalMatch articles:
- Business Management Structure;
- Starting a Business;
- Buying or Selling a Business; and
- Contract Terms and Negotiations.
What is Involved with Buying and Selling a Business?
There are many reasons why an individual may want to buy or sell a business. Purchasing a business which already exists instead of starting from scratch may be advantageous.
A business which is already established may include:
- A solid customer base;
- A fully hired staff;
- A physical location; and
- An online business presence.
Having these advantages can make it easier for the purchaser to operate what is likely already a successful business. There may also be many reasons to sell a business, including:
- Personal reasons for the seller;
- The business is doing well;
- The economy is strong; or
- The business is part of a sector that is currently in high demand.
For more information on buying and selling a business, see the following LegalMatch articles:
- Buying a Business;
- How Do I Sell or Close a Business?;
- Do I Need a Business Acquisition Agreement?;
- What May Be Included in the Sales Contract?; and
- Business Takeovers.
What are Corporations, LLCs, and Partnerships?
Corporations, LLCs, and partnerships are different ways to form a business. The structure a business selects when forming can affect all aspects of business operations.
When selecting the type of structure to use for a business, there are several things to consider, including:
- The number of owners who are forming the business, for example, a single proprietor or multiple members;
- Whether the businesses wants the ability to issue stocks and raise money from investors;
- The tax incentives each business management structure offers under both federal and state tax laws;
- How much control the owner wants to have over company decisions as well as assets;
- The amount that the owner is willing to spend to register the business; and
- The potential risks and liabilities the owner is willing to incur both personally and professionally;
- For example, if an individual wants to protect their personal assets from creditors they should choose to form an LLC.
For more information regarding corporations, LLCs, and partnerships, see the following LegalMatch articles:
- How Do I Form a Limited Liability Corporation (LLC?);
- Different Types of Partnerships;
- Types of Corporations;
- What are S Corporations?; and
- Types of Business Management Structures.
What are Franchises and Franchising?
A franchise is a certain type of business which is owned and operated by an individual, called a franchisee, but is overseen and branded by a larger, typically national or multinational, company, called a franchisor. When an individual purchases the rights to open this type of business, they are purchasing the rights to use a business model and a system including prices, products, and marketing techniques.
For more information on franchises and franchising, see the following LegalMatch articles:
- Types of Franchises;
- What Should I Expect from a Franchise Contract?;
- Could I Be Convicted of Franchise Fraud?; and
- Liability of Franchises and Their Owners.
What are Non-profits?
A non-profit corporation is one that exists to fulfill a non-monetary purpose instead of a regular corporation which solely exists to make money. In general, a non-profit organization is structured just like a regular corporation. Non-profits, however, have tax-exempt status and may be eligible for private and governmental funding.
For more information regarding non-profits, see the following LegalMatch articles:
- What is a Non-profit Corporation?;
- Non-Profit Corporations;
- Non-Profit Organizations; and
- Does a Non-Profit Have to Pay Taxes?.
What are Public Offerings?
Public offerings are when an issuer offers securities, which can include bonds or equity shares, to investors in the open market. Initial public offerings (IPOs) are the first non-private sales of securities by the issuer or the individual controlling the issuer to members of the public. Direct public offerings (DPOs) are shares of stock in a company, typically a start-up company, which is offered to potential investors to raise funds for the company.
For more information regarding public offerings, see the following LegalMatch articles:
- What Is an Initial Public Offering (IPO)?;
- Explanation of Direct Public Offerings; and
- Tips for Initial Public Offerings.
Do I Need an Attorney for Help With Formation or Dissolution?
It is extremely important to have the assistance of a business lawyer for any of your business needs. As noted above, the laws governing businesses may vary by location.
It is important to have your attorney involved in every step of your business. Investing in properly forming your business will help ensure it has the best chance at success.