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Small Business Law



Many business owners go into business for themselves to be able to use their creativity free from the constraints of a boss and corporate regulations. Yet even the small business owner must navigate through a host of laws and regulations that can sometimes pose a challenge. Understanding the very basics of business organization, contracts, and intellectual property can go a long way toward helping the small business owner.

When a business is formed, the basic structure of the business has implications for both taxes and liability. A sole proprietorship and a partnership both allow the business owners unlimited profit, but also subject the owners to taxes on those profits and, importantly, generally unlimited liability for the business losses. A corporate structure, whether it is a classic “C” corporation, a closely held “S” corporation, or a limited liability corporation “LLC,” allows the owner to share in the profits, but limits the personal liability of the owners. Typically corporate owners are limited to losing their own personal investment in the corporation – but rarely have personal liability beyond that amount.

Contracts are the basic building block of most businesses. Who will do what by when, and for how much? While it seems simple enough, most contracts raise a host of issues. First, what law applies? Is it state law or the Uniform Commercial Code (UCC)? Second, has an actual contract been formed? Has there been an offer and acceptance? Has there been consideration? Has the contract been properly rescinded? Third, what are the terms? Is the language used in the contract clear? Is a term being used in its everyday sense, or in a more particularized business sense? Fourth, have the parties performed? Was payment due upon substantial performance? Is the project complete once the builder is off the site, or not until the premises has passed inspection? Fifth, is a party excused from performing? What about how storms or electrical outages or labor strikes affect the contract? Sixth, has there been a breach? Did one side violate some key portion of the contract? And finally, are there any third party issues – such as a third party beneficiary? Can a non-party to the contract sue a party to the contract?

Intellectual property can be the cornerstone to many small businesses. Whether it is simply your brand, your idea, or your actual invention – many businesses depend on maintaining a portfolio of intellectual property as the core of the business. A copyright, according to the United States Copyright Office is “a form of protection provided … to authors of ‘original works of authorship.’” Artists, advertisers, and authors, among others, can protect their creations from being passed off by another. Copyrights should be registered with the Copyright Office of the Library of Congress. A trademark, according to the United States Patent and Trademark Office (USPTO) is “a word, phrase, symbol or design, or a combination of words, phrases, symbols or designs, that identifies and distinguishes the source of the goods of one party from those of others.” And a service mark is “the same as a trademark, except that it identifies and distinguishes the source of a service rather than a product.” The Nike “swoosh” symbol is an example of a famous trademark; when you see that symbol – you think Nike. If another company used the same or even a fairly similar logo that confused the average consumer, Nike’s business could suffer. A patent, whether a utility patent, design patent, or plant patent, is a grant of a property right from the federal government that allows the owner to exclude others from making, using, selling, or importing the same thing for approximately 20 years.

Beyond business organization, contracts, and intellectual property, business owners may also want to seek the assistance of counsel to understand business litigation, business transactions, chapter 11 bankruptcy for business reorganization, e-commerce, franchise law, insurance law, and small business employment law.

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