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5 Services San Diego Business Attorneys Can Provide to Sole Proprietors

San Diego business attorneys represent companies of all different types, including sole proprietorships. More than 70 percent of all businesses within the United States are operated as sole proprietorships. As the Small Business Administration explains: “a sole proprietorship is basically an unincorporated business owned and run by one individual (no partners are involved), with no distinction between the business and its owner.” San Diego business attorneys

Forming and operating as a sole proprietorship is simple, but there are significant downsides. If you are operating a business and have not incorporated or formed an official business entity that is separate and distinct from your individual identity, you should talk with Gehres Law Group to find out the implications of operating as a sole proprietor and to find out about the services we can provide to help your business grow and prosper, including the following five key types of legal service.

Assistance with liability protection

Sole proprietors face a significant risk of personal liability. When you operate a business without creating a separate legal entity, there is no separation between you and your business organization.

Only around 20 percent of new businesses continue to operate after their first year and just 1/3 are still operational after 10 years, according to USA Today. If your business is not profitable and becomes indebted, you will be personally liable for debts as a sole proprietor. If lawsuits are filed against your company for any reason, ranging from employment discrimination to breach of warranty or injury, a judgement against the business could affect your personal wealth, including any real property you own, your personal bank accounts, investments and other personal assets.

It is vital to understand the risks and to minimize them. One possible option to consider is forming a different type of business entity, such as a corporation or LLC, which provide significant protection against personal liability. Understanding and complying with premises liability laws, employment laws and other applicable laws, and utilizing well-drafted legal documents, will also reduce the risk of a judgement against you and your company. Another vital method for protecting your personal and business assets is to purchase sufficient insurance coverage. These are a few of the more common and effective approaches to reducing the risk of a lawsuit and adverse judgments.

Advice on tax compliance

Sole proprietors declare business profits and losses as income on personal returns. There is no flexibility in terms of how profits are declared as a sole proprietor. In contrast, owners of other types of business entities, such as S-corporations, have more tax flexibility because they can categorize some of their income as distributions rather than wage income, avoiding FICA taxes.

Advice on contract law issues

As a sole proprietor, you may need to lease or buy office space. You may need to enter into agreements with investors or review loan documentation. You may need to enter into contracts with suppliers or customers. Both drafting and signing contractual agreements requires legal knowledge.

For example, it is important to understand how laws like the Uniform Commercial Code (UCC) can impact when a contract is formed and what contractual terms will be when a contract has been created. For example, under standard contract law, a meeting of the minds is required and all parties to a contract must have the same understanding of all contract terms. Under UCC rules related to the battle of the forms, contracts can be created even if two companies use different forms with slightly different terms for the same transaction. Understanding the nuances of contract laws applicable to companies is vital for sole proprietors.

Intellectual property protection

Many sole proprietors have valuable intangible assets, such as a recognizable trademark or a creative invention the company will be producing. It is vital to secure protection for intellectual property through the use of patents, trademarks and copyrights. You may also wish to use non-disclosure agreements to ensure that employees do not share trade secrets, especially as non-competes are unenforceable within California.

Business Succession Planning

Many companies do not survive the death of an owner, according to Forbes. If you want your business to continue to thrive after you are gone, making a business succession plan is vital. A comprehensive plan should address the transfer of ownership and other legal issues raised by the death of a sole proprietor. You can also expand your business succession plan to address disability and retirement, as well as the death of an owner.

San Diego Business Attorneys Can Help

Our San Diego business attorneys can provide invaluable assistance to sole proprietors with business succession planning, risk mitigation and liability protection, contracts and more. To find out about the services Gehres Law Group can provide to sole proprietors, give us a call today.

By | 2017-08-09T08:28:26+00:00 August 3rd, 2017|Business Law|Comments Off on 5 Services San Diego Business Attorneys Can Provide to Sole Proprietors