Business law is a diverse and complex area of law that covers many aspects of business, including contracts, torts, intellectual property, securities, and employment law. Business law also involves regulation by federal and state agencies, as well as litigation in state and federal courts. It is a multi-faceted area of law, and a business law lawyer can help with these and more, like formation, document review, document drafting, negotiation, and litigation. Building a working relationship with Ritchey Legal, PLLC will benefit and inspire success.
Types of Business Organizations in Birmingham and throughout Alabama
One of the first decisions that a business owner must make is the type of business organization to form. There are advantages and disadvantages to each of these business types. The most common types of business organizations in the United States are discussed briefly below.
Sole Proprietorship
A sole proprietorship is a business owned and operated by one person. This type of business organization is the simplest and easiest to form. The owner is personally liable for all debts and obligations of the business, and the business income is reported on the owner's personal tax return.
Partnership
A partnership is a business owned by two or more people. The partners share the profits and losses of the business, and each partner is personally liable for the debts and obligations of the partnership. There are two types of partnerships: general partnerships and limited partnerships.
In a general partnership, all partners have equal management authority and are personally liable for the debts and obligations of the partnership. In a limited partnership, there is at least one general partner who manages the business and is personally liable for the debts and obligations of the partnership, and one or more limited partners who contribute capital but have no management authority and are not personally liable for the debts and obligations of the partnership.
Limited Liability Company (LLC)
A limited liability company (LLC) is a hybrid business organization that combines the liability protection of a corporation with the tax benefits of a partnership. The owners of an LLC are called members, and they are not personally liable for the debts and obligations of the LLC. The income and losses of the LLC are passed through to the members' personal tax returns.
Corporation
A corporation is a separate legal entity from its owners, known as shareholders. The shareholders elect a board of directors, which manages the business and appoints officers to run the day-to-day operations of the corporation. The shareholders are not personally liable for the debts and obligations of the corporation, and the corporation's income is taxed separately from the shareholders' personal income.
Business Contracts
Contracts are a fundamental aspect of business law. A contract is a legally binding agreement between two or more parties that creates an obligation to do or not do something. Contracts can be written or oral, but it is generally recommended that contracts be in writing to avoid misunderstandings and disputes.
To be enforceable, a contract must contain four elements: offer, acceptance, consideration, and mutual assent. Offer refers to a promise to do or not do something, acceptance refers to the agreement to the terms of the offer, consideration refers to the exchange of something of value, and mutual assent refers to the agreement of both parties to enter into the contract. Contracts can also be a valuable tool for avoiding business disputes.
Business Dispute Prevention in Birmingham and throughout Alabama
There are several ways to help minimize the risk of becoming involved in a business dispute. These include, but are not limited to:
Draft Effective Contracts
One of the best ways to head off any future disputes is to ensure you have effective, legally-binding contracts in place. A business dispute lawyer can draft carefully written, clear, and specific contracts for your business.
Seek Advice Early
If you are unsure about how to approach a complex issue or if you have a gut feeling that something is not right, seek advice from a business attorney straight away. Obtaining legal advice at an early stage on how best to proceed helps you to avoid a business dispute.
Document Everything
It is best practice for a business to keep a written record of important documents or events in case a dispute later arises. This includes retaining copies of all emails, contracts, accounting information, loan documents, file notes, and meeting minutes. A business litigation attorney can assist you with developing a good document retention strategy and system.
Contact a Business Lawyer in Birmingham Today
The success of your business depends on its legal foundation whether that's in the formation of the business or the contracts implemented by the business. Enduring compliance with the laws and ongoing legal counsel should also be a part of any strategic plan. Seek legal advice today to ensure your business is on the right legal footing. Contact us today to schedule a consultation.