BUSINESS and THE LAW

Business Law Santa Cruz County

The Law Offices of Shelby Clark helps people living in Santa Cruz County and neighboring counties with business law, including corporate law and litigation. I evaluate businesses to point out and manage hidden risks as well as addressing known problems.

General business law deals with the rules and regulations that govern business relations and includes business negotiations, contracts and other documents used in regular business activity, employment law, and regulatory compliance.

Corporate law provides a legal framework for businesses to conduct and manage their business, and includes business formation and organization, corporate governance, changes in business form, sales, mergers, acquisitions, buy-sell agreements, and tax-related business planning, among other issues.

Business litigation deals with disputes between businesses or with vendors or clients, such as breach of contract or unfair business practices, that result in litigation in court or arbitration.

At the Law Offices of Shelby Clark, I can help you draft documents that fit your business, how it operates, and your overall business goals, while also taking into account your life outside your business. I also help protect you from liability and potential business disputes, as well as initiate or defend against litigation over a business dispute.

Thanks to my work on animal law issues, I also have unusual insight into various animal-related problems businesses may encounter. For example, I offer informed guidance on the federal and state laws regarding service dogs and emotional support animals, which are relevant to most retailers, hospitality businesses, landlords, and employers.

I offer quality and experienced Business Law advice and representation to the people of Santa Cruz county and surrounding counties. In particular, I help clients in the following areas:

General Business Law

General business law deals with the rules and regulations that govern business relations and includes business negotiations, contracts and other documents used in regular business activity, employment law, and regulatory compliance.

Business Formation

Business Formation Legal Services

The Law Offices of Shelby Clark helps individuals and businesses in Santa Cruz County with forming a new business or changing from one business form to another.

Businesses can exist in many forms. They can exist in a minimal form such as a Sole Proprietorship or in a more complex form such as a Corporation, the most common of which are called C Corps or S Corps (after the relevant IRS code subchapter). Another entity form is a Partnership such as a General Partnerships or Limited Partnerships, and in an estate planning context, a family partnership. A popular hybrid of corporations and partnerships is the Limited Liability Company or LLC. Many homeowners’ associations, charities, or activist groups form as Nonprofits. A new type of C Corporation in California is the Benefit Corporation, which comes in two varieties and is partly devoted to causes other than maximizing profit. Each entity has different advantages and disadvantages and the appropriate entity form can vary based on the type of business and how the business is run. Often the tax treatment of the entity’s form is an important consideration in choosing among these.

Sole Proprietorship

A Sole Proprietorship is a form of business in which an individual, who is the sole owner and decision-maker, carries on a business for profit. The Sole Proprietorship is the simplest and least expensive form of business organization to form, and is the default form of business for a single person who doesn’t choose another form.

General Partnership

A General Partnership is an association of two or more persons, as co-owners, carrying on a business for profit. Although not as simple as the Sole Proprietorship, a General Partnership is easier to organize than a Limited Partnership (LP) or a Corporation and can provide a relatively simple arrangement regarding management and control, capital contributions, and sharing profits and losses. This is the default form of business for a group of people who don’t choose another form.

Limited Partnership

A Limited Partnership (LP) is a partnership formed by two or more persons that has one or more general partners and one or more limited partners. A California LP is a hybrid form of business organization having some attributes of a General Partnership and some attributes of a corporation. The LP form may protect its limited members’ personal assets (except for their investment in the partnership) against claims by the partnership’s creditors.

Family Limited Partnership

A Family Limited Partnership or Family Partnership is a type of LP that can be used in estate planning for its transfer tax and asset protection benefits. It is often used in combination with other methods of estate planning such as a will or trust.

Limited Liability Company

A Limited Liability Company (LLC) is a business entity that is essentially a hybrid of corporation and partnership. A California LLC is an entity having one or more members that is organized under the California Limited Liability Company law. In 2014 the California Revised Uniform Limited Liability Company Act (RULLCA) displaced the earlier Beverly-Killea Limited Liability Company Act. A California LLC can have the tax advantages of a partnership while avoiding the double taxation inherent in the use of a general corporation, but without the restrictions imposed on S Corporations, close corporations, and limited partnerships. The formation and operation of an LLC is relatively simple. However, like a corporation or limited partnership, more formality in formation and operation is required than in either a general partnership or sole proprietorship.

Corporations

The corporation is the dominant form of business ownership today. California general business corporations are governed by the General Corporation law. A Corporation is a distinct legal entity, existing apart and recognized separately from its owners or shareholders, and has all the powers of a natural person, including the rights to own property, sue in its corporate name, and make contracts. The rights and obligations of the corporation, its directors, and its shareholders are clearly delineated by law but may be altered, within statutory limits, by agreement. Corporations (and LLCs) can be formed in other jurisdictions while still operating entirely or mostly in California; most typically Delaware is used, although Nevada is gaining popularity.

C Corporation

The standard form of the corporation is called Subchapter C, or often “C Corp,” and it is taxed under Subchapter C of the Internal Revenue Code. Most large U.S. corporations are C Corps.

S Corporation

An S Corporation is a regular business corporation that has made an election to be taxed under Subchapter S of the Internal Revenue Code and, therefore, is treated as a partnership for most tax purposes. This treatment is also called “pass-through taxation” and its availability is a feature of LLCs, S Corps, and most partnerships.

Benefit Corporation

In 2011 California introduced two competing forms of public benefit corporations, sometimes called B Corps. (Unlike C Corps and S Corps, the B Corp is not defined by the statutes of the Internal Revenue Code, but instead by state law.) Some consider these “hybrid corporations” because, while they have the corporate form, they explicitly serve a social purpose in addition to being a for-profit entity. Both the Social Purpose Corporation and the Benefit Corporation require their directors to take specified non-economic factors into consideration when making business decisions, and both require annual reporting on the societal benefit of their activities. Relevant social purposes can address employees, the community, and the environment. Although there are no federal or state tax advantages to these corporate forms, some jurisdictions, e.g. San Francisco, may provide preferential treatment to them in competitive bidding. Many small businesses or low-profit-margin businesses may find these forms unwieldy due to their reporting requirements, but they do have marketing advantages in the right situation.

Nonprofit Corporation

A Nonprofit Corporation is a business form subject to the general restriction that no profits may be distributed to members (and in fact, not all types of nonprofit have members). Businesses that are formed for specified nonprofit purposes may avoid state and federal taxation. In addition, these businesses may qualify as exempt organizations, so that donors may deduct as charitable donations any contributions to the entity. The corporate form also protects directors from personal liability. The best-known form of nonprofit corporation is the 501(c)(3), named for the relevant Internal Revenue Service code section.

I have experience drafting articles of incorporation, bylaws, operating agreements, partnership agreements, and amendments to those agreements, as well as electing Subchapter S status and filing for tax-exempt status. (Most applicants find IRS Form 1023, to obtain 501(c)(3) status, a bit overwhelming at first.) I can help you start a new business entity, change from one business entity to another, or sell or dissolve an existing business.

Small Business Advice

Small Business Advice

The Law Offices of Shelby Clark helps small businesses in Santa Cruz County with legal advice and representation in a vast array of business matters. Because I am consulted on an array of problems, I learn about many risks and complications that a small business owner would not anticipate.

A small business can exist as a Sole Proprietorship, LLC, Corporation, or even a Partnership. Small businesses are often family-run and involve additional concerns beyond profit and loss. These may include Estate Planning issues such as transferring the business to the next generation, maintaining the balance of control in a partnership or small corporation with employee shareholders, or advice specific to the demographics of a close-knit community like Santa Cruz County. Additionally, business franchise owners may have concerns similar to those of small businesses despite having franchisor support for marketing and advertising.

The Law Office of Shelby Clark has experience advising small businesses on choosing or changing a business form, legal liabilities of particular actions, and helping ensure compliance with federal, California state, and Santa Cruz County regulations. I regularly help small businesses with drafting contracts such as sale-of-goods agreements, employment contracts, or other documents for the day-to-day operation of a small business.

Buy-Sell Agreements

Buy-Sell Agreement Legal Services

A buy-sell agreement (also known as a buyout agreement) is a contract in which the shareholders or owners of a business agree to purchase the interests of a withdrawing or deceased shareholder. The agreement describes the conditions (usually death, disability, or termination of employment) and the terms under which shareholders may or must transfer their shares. One other common situation involves the divorce of a partner in the business that results in part of the partner’s interest in the business being assigned to an ex-spouse who does not participate in the business; a well-drafted buy-sell agreement can manage this situation.
 
The Law Offices of Shelby Clark has experience in drafting buy-sell agreements that ensure the continuity of the business entity in the event of the death or withdrawal of a participant, prevent outsiders from becoming transferees of corporate shares upon a shareholder’s death, disability, divorce, or retirement from the corporation, and enable the shareholders to sell their shares for a fair price despite the lack of a public market. I can also draft the buy-sell agreement to give the remaining shareholders an option to dissolve the corporation upon the death of a major shareholder.

Corporate Governance

Corporate Governance Legal Services

The Law Offices of Shelby Clark can help boards of directors manage corporations and LLCs of all sizes in and near Santa Cruz County.

Corporate governance involves the roles and relationships between a corporation’s board of directors, management, shareholders, and other stakeholders. It is a system of law and techniques to direct and control a corporation’s structure and is intended to monitor the actions of the management and directors of the corporation, to mitigate risk from corporate officers’ misdeeds of both commission and omission. Proper governance and adherence to the requirements of the chosen business form is essential to maintain the corporate liability shield and to avoid have a lawsuit “pierce the corporate veil” and threaten the owner’s personal assets due to an inadvertent lapse in corporate governance.

By drafting agreements and creating internal corporate policies, I can set up corporate governance systems that pervade the corporation and facilitate control by management and the board of directors.