Category: Business Consulting

Running a business with a partner can be rewarding, but disputes are often inevitable. When these disagreements arise, they can significantly impact the business’ operations, finances, and future growth.

Understanding the types of disputes, finding ways to resolve them, and knowing the legal rules in San Diego or California can help protect your business.

• Financial Disagreements – Disputes often surface when partners have conflicting perspectives on financial contributions, profit distribution, or expense management. These conflicts can be exacerbated by a lack of transparency in financial records or differing interpretations of the partnership’s financial health and priorities. When one partner feels that their investment or contribution is not being adequately recognized or compensated, this can foster mistrust and create a significant rift within the partnership.
• Decision-Making Conflicts – Strategic decision-making is at the core of any successful business, but partners may differ in their visions for the company’s trajectory. Disagreements might involve expansion plans, marketing strategies, or day-to-day operational management. These conflicts often arise when partners have varying risk appetites, differing levels of experience, or conflicting ideas about the company’s growth and development.
• Breach of Fiduciary Duty – Partners are bound by a fiduciary duty to act in the best interest of the business, prioritizing the collective good over individual gains. Breaches occur when a partner engages in actions such as self-dealing, fraud, or misappropriation of company assets for personal gain. Such breaches not only violate the legal obligations of the partnership but also erode trust, potentially leading to legal action and dissolution of the partnership.
• Management and Role Conflicts – Clear delineation of roles and responsibilities is essential for maintaining harmony. Disputes arise when there’s ambiguity, overlap, or when partners perceive an imbalance in workload, authority, or contribution. Power struggles often emerge when one partner feels marginalized or when there’s a perception that another partner is overstepping their agreed-upon role, undermining the agreed governance structure.
• Leaving the Partnership – When a partner decides to exit, it can be a sensitive and complex process, especially if there’s no predefined agreement on handling such departures. Issues such as valuation of the departing partner’s share, transfer of responsibilities, and non-compete agreements can become contentious points of negotiation, potentially destabilizing the entire partnership if not addressed proactively.

Resolution Strategies

• Negotiation – Discussing the problem openly can sometimes lead to a solution without needing outside help. A clear partnership agreement can guide these conversations.
• Mediation – Involving a neutral third party to facilitate discussions can be an effective way to reach a mutually beneficial agreement.
• Arbitration – In this process, a neutral arbitrator listens to both sides and makes a binding decision. It’s often faster and less costly than going to court.
• Legal Action – When other methods fail, taking the dispute to court might be necessary. In California, partnership disputes fall under the jurisdiction of the California Corporations Code, which governs how conflicts are resolved.

Legal Consequences of Partner Disputes

• Financial Losses – Prolonged disputes can drain business resources, impacting profitability.
• Business Dissolution – In extreme cases, unresolved disputes can lead to the dissolution of the partnership.
• Legal Liability – Breaches of fiduciary duty or contract can result in lawsuits, with partners potentially facing significant financial damages.

California Considerations

In California, partnership disputes are governed by the California Revised Uniform Partnership Act (RUPA). This act outlines the rights and duties of partners and the procedures for resolving disputes. San Diego courts also emphasize alternative dispute resolution (ADR) methods, such as mediation and arbitration, to resolve business disputes efficiently.

Why You Need Legal Support

Disputes can be difficult to manage, it’s important to have a knowledgeable attorney who understands the intricacies of California law. An experienced business attorney can help you manage negotiations, draft clear partnership agreements, and represent your interests in mediation or litigation.

Need Legal Advice?

Partner disputes can be challenging, but with the right approach and support, you can protect your business.

If you’re facing a partnership dispute, consulting with us can provide clarity and assist in resolving any conflicts. Our experienced attorneys are ready to help you every step of the way, ensuring your business stays strong.

Contact us today at (619) 546-7880 for a consultation to discuss your specific situation and learn how we can support you in managing these new requirements.

Disclaimer: The information in this post is considered attorney advertising under applicable California Law. The contents of this post is for informational purposes only and is not legal advice. The information may be incomplete or out of date. No representations, testimonials, or endorsements on this web site constitute a guarantee, warranty, or prediction regarding the outcome of any legal matter.

You want to start a new business, which is exciting. But what type of structure is best? In California, like in other states, you can form an LLC or set up a corporation. Here are some of the differences between the two.

Limited Liability Company (LLC)

Typically, an LLC is run by business owners but can also be structured where a manager is responsible for daily operations rather than the owners. Small businesses, startups, and single-owner businesses are good fits for this type of structure.

The Advantages

An LLC is an entity separate from the business owners (members). This structure provides owners with liability protection to shield their assets from business debts and obligations. The risk of loss is limited to what the owners invested in the business.

Other advantages of forming an LLC include:

• Perpetual existence (the business can remain in existence even if ownership changes)
• Flexible management structure
• Pass-through taxation that avoids double taxation (LLCs, as an entity, are not subject to taxation; tax obligations are passed down to members on their personal income tax returns)

The Disadvantages

An LLC can cost more than a sole proprietorship or general partnership. There’s an initial fee to form the LLC and ongoing expenses at the state level. In California, for example, there’s an $800 annual fee.

Transferring ownership of an LLC can also be more complex than transferring ownership of a corporation, where buying and selling shares of stock determine ownership.

How to File for an LLC Formation in California

Filing is handled through the Secretary of State. You’ll need to file an Operating Agreement – which outlines your company’s operations, management, and ownership structure.

Corporation

In a corporation, you’ll have shareholders, a board of directors, and officers such as CEOs and CFOs.

There are two main types of corporations – a C corporation and an S corporation. A C corporation is responsible for paying taxes on its profits. Shareholders also pay taxes on dividends they receive. An S corporation has pass-through taxation, similar to an LLC. It comes with limitations, though, such as the number and type of allowed shareholders.

The Advantages

A corporation provides personal asset liability protection that protects owners from the company’s debts or legal obligations. 

Other advantages include:

• Access to capital (you can raise funds by selling stock)
• Tax breaks available to corporations
• Business perpetuity

The Disadvantages

Corporations can get bogged down in legal and regulatory requirements that can become time-consuming and costly. Recordkeeping can become a bear.

Double taxation comes into play when you form a corporation. The corporation is taxed and shareholders are also taxed on dividends.

How to File to Become a Corporation

To form a corporation in California, you must file for Articles of Incorporation with the Secretary of State. 

How to Choose the Right Structure

When deciding between an LLC and a Corporation, you’ll want to consult with a knowledgeable business attorney who can help you consider the following factors:

• Liability Protection: Both structures offer liability protection, but the formalities and management styles differ.
• Tax Implications: Evaluate how the business structure’s taxation aligns with your financial goals and the nature of your business.
• Business Goals: Assess your long-term objectives, growth plans, and exit strategy to determine which structure better suits your needs.
• Complexity and Formalities: Consider each structure’s administrative requirements and ongoing compliance obligations.

Making an informed decision now can set the foundation for your company’s success and mitigate potential challenges in the future.

Meet With a Business Attorney

At Hoffman & Forde, we provide business and legal guidance for business formation and more. To meet with one of our experienced business attorneys, contact our office to book an appointment.

As businesses grow, so do the legal complications and the potential pitfalls. For all but the smallest of these businesses, the question is not if your business needs a lawyer but when you should call in their services.

Most small to medium-sized businesses don’t need to hire full-time, in-house counsel.   Still, they should strongly consider forming a relationship with an outside attorney who is familiar with their operations and can provide assistance on an as-needed basis. 

Here are some of the top reasons your business might need a lawyer.

Business Formation

When your business is just starting, or if you are considering changing the way it’s organized, there are many decisions to make that can have significant consequences in the future. From a sole proprietorship to an LLC to incorporation, all of these structures have advantages and disadvantages in terms of taxation, liability, etc. It is a good idea to sit down with a business attorney to discuss your options and get help with the paperwork.

Similarly, if you are considering forming a partnership with other individuals, it is well worth your time to meet with an attorney and work out the details of an agreement. One of the best services a lawyer can provide in this situation is to help you and your business partners plan for potential conflicts and unanticipated events. What happens when one of you wants to sell their share of the business? What happens if one of you dies? How do you proceed if you disagree on important decisions? Understanding this in advance can save you a lot of grief in the future.

Compliance Issues

Spanning a myriad of areas, from taxes to HR to data privacy, compliance issues are the bane of many business owners. They are often viewed disdainfully as bothersome government interference that pulls resources away from the business’s core mission. Whatever your feelings may be on the topic, the consequences of noncompliance can be pretty costly for a business.

An attorney who understands how your business works can, first and foremost, bring compliance issues to your attention that you may not have even been aware of yet. Later, they can help you create policies and procedures that help keep your business on regulators’ good side.

Workplace Disputes

Employment law is a fraught area for businesses. Conflicts with and between employees have a high potential for future legal disputes. 

For example, firing employees is an unfortunate necessity that comes with running a business, and it should always be approached as the precursor to a lawsuit. Everything you do or say may come up later, so it’s essential to go by the book. However, that can be hard if you don’t know what rules to follow. Consulting with an attorney will help you navigate this situation without exposing your company to a lawsuit.

Similarly, dealing with problems between employees can be just as important. For example, if an employee complains that they were harassed in the workplace, it’s crucial to handle this properly and not just wing it. Draft policies in advance with the help of your lawyer, and then have their phone number ready if a situation arises.

Lawsuits

Some consider it a rite of passage or a sign of success when a business is sued for the first time. Indeed, the longer your business is around and the higher its profile, the more likely this will happen. 

If you or your business receives notice that it is being sued, the next thing you should do is contact an attorney. If your business already has a lawyer, you will be in a much better position than if you shop around for one while the clock is ticking.

Southern California Business Attorneys

Your business is too important to leave anything to chance. Having an experienced attorney who can advise you when needed is critical to protecting your business and building a sustainable foundation for future success.

Our highly credentialed attorneys have been proudly serving the Southern California business community for years. With broad-ranging experience in a variety of practice areas—from commercial real estate to civil litigation—Hoffman & Forde can provide the legal expertise your business needs.

In California, as in other states, professionals in a wide variety of fields are required to hold a license in order to practice their trade. Such professions range from medical doctors to accountants to private investigators. Each has a licensing board or other authority that makes and enforces rules on competence, ethical standards, and more.

If a professional falls afoul of their licensing board for one reason or another, the board may file an accusation of misconduct against them. The professional will then be given a chance to defend themselves in an administrative hearing, often before an administrative law judge (ALJ). If they are found to have committed some sort of misconduct, punishment can include the suspension or even revocation of their license.

Is it possible to get your license back after it’s revoked? The answer is yes, and you have a couple of options.

Petitioning for Reinstatement

Your license can either be revoked with stay or revoked without stay. A revocation with stay is a type of probation. It means the board will hold off on actually revoking your license for a period of time, during which you must fulfill certain requirements (taking educational courses, for example). A revocation without stay, on other hand, is a final judgment, but that doesn’t mean you don’t have any options left.

Most boards allow professionals to petition for reinstatement after some time has passed. This period can vary, but is usually one to three years. At this hearing, you can show that you have resolved the issue which led to the revocation, call fellow professionals as witnesses to vouch for you, and generally convince the board that there will be no further problems. If successful, the board can restore your license and you will be able to practice again.

Appealing the Board’s Decision

You can always appeal a board’s decision if you believe it was mistaken or unfair. Depending on the particular board involved, there may be an internal appeals process, which must first be exhausted. If you have tried everything at the board level, you can appeal its decision to a regular state court.

The court can overrule the board if it lacked jurisdiction, denied you a fair hearing, or abused its discretion. California courts have recognized license revocation as depriving someone of the “fundamental right” to practice their profession, and will look to see if the punishment was too severe for the misconduct. If the board’s decision to revoke is overturned, it may still impose some other punishment, such as probation or suspension.

Learn More About Your Options

If you are facing disciplinary action by a licensing board or your license has already been revoked, your livelihood is at stake and it’s critically important to have assistance from an administrative law attorney. An experienced attorney can help ensure you receive a fair hearing, minimize disciplinary action, and even get your license back.

Our team of administrative law experts practice all across Southern California. Contact us today to schedule a consultation.

Whether a worker is designated as an independent contractor or employee has significant consequences both for the employer and the worker. Most of these consequences are financial; employers are not required to pay unemployment insurance, payroll taxes, health benefits, vacation time, and more. In return, ideally, the contractor has more control over their schedule, how they perform the work, and what jobs they take on.

There is little doubt that many businesses have abused this system by miscategorizing employees as independent contractors in order to save money, but efforts at reform have been contentious, especially in California. Industry groups and even some worker groups have fought against legislative changes, arguing that freelancers will lose their independence and jobs will leave the state. 

Here is the current state of freelancer laws in California.

The ABC Test

The test for whether a worker should be categorized as an independent contractor or an employee as established by the California Supreme Court in Dynamex Operations West, Inc., and has since been codified and extended by the legislature in Assembly Bill 5. Under this law’s “ABC test,” a worker is presumed to be an employee unless the employer can demonstrate each of the following:

• The worker is free from the control and direction of the employer in connection with the performance of the work, both under the contract for the performance of the work and in fact.
• The worker performs work that is outside the usual course of the hiring entity’s business.
• The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.

If all of these do not apply, then the worker should be considered an employee, not an independent contractor.

Exceptions to the ABC Test

Not surprisingly, the law also recognizes quite a few exceptions to the rule stated above. First, there are a number of professions that are exempted. These include physicians, dentists, veterinarians, lawyers, architects, accountants, commercial fishermen, and more.

Also, if the worker provides one of a number of specific “professional services,” the ABC test does not apply. However, this is only true if the worker’s situation meets a variety of requirements, such as a separate business address and the ability to control their own schedule, which serve to establish the worker’s actual independence from the employer. 

The law’s exceptions are numerous, and many have their own list of unique requirements that must be individually evaluated.

Prop 22

In November 2020, California voters approved Proposition 22 by ballot initiative, which exempted app-based ridesharing companies from the requirements of AB 5. As a result, drivers for companies such as Uber and Lyft are not considered employees (as they would have been under AB 5), but independent contractors. In exchange, these drivers receive a few additional protections and benefits, though only while “engaged” in work for the companies.

If your business is unsure how to categorize its workers, or if you are a worker and believe you have been wrongly categorized as an independent contractor, contact Hoffman & Forde today for a consultation.

Business legal advisory services are a lot like preventative medicine:  people have a tendency to put them low on their list of priorities, but when a problem does arise everyone wishes they had done more to prevent it. At the heart of what a business advice lawyer does is prepare for worst case scenarios, and hopefully keep them from ever happening. 

Consider a few examples of how a business attorney can play a crucial role at different stages of your company’s lifetime.

Business Formation 

Whether you are starting a sole proprietorship, a corporation, or a nonprofit organization, the decisions you make at the formation and planning stage will have ramifications far into the future. It is critical to work closely with a business attorney throughout the process. 

The issues to be addressed here are numerous and diverse. Are your personal assets protected? How much control will investors have over the company? How can tax exposure be minimized?

Or take for example a partnership with two owners. The business starts out great, but over the years the situation changes. Personal relations become strained, the partners have differing visions for the company, or one of them simply wants out of the partnership. It’s important to have the assistance of a business advisory lawyer who can plan for these contingencies without pointing fingers. 

Contracts and Compliance

Your business is established and growing. Revenues are up, you have more employees, and maybe you’re thinking of expanding operations. You may not need in-house counsel, but you should definitely have your lawyer on speed dial by this point – someone who is already familiar with your business and can help keep things running smoothly.

As businesses grow, contracts tend to become more complicated. Rather than simply signing boilerplate agreements, now you may have more leverage to negotiate. Contract law is a jungle unto itself, however, and custom-tailored contracts require expertise to ensure you are covered in all situations. Contractual disputes can be similarly complex, and your business generally is best served by quickly handing them over to your attorney.

Compliance and liability issues also take on increased importance as the financial stakes go up. Anything from workplace accidents to digital security breaches can send a business reeling. An experienced attorney who is up to date on the latest changes in the law can help you establish best practices in order to prevent problems and keep your company protected when they arise. 

Succession

You’ve built the business from the ground up, but now you are ready to retire, or you want to establish what happens to the company if you die. Succession can be complicated and requires careful legal planning. A thorough valuation of the business is needed, as well as transfer instruments that will pass muster in court if necessary. Consulting with an attorney to create a clear succession plan helps ensure that your wishes are respected and the company can continue to thrive for years to come.

Consult a Business Attorney

Whatever stage your business is at, the attorneys at Hoffman & Forde are ready to provide comprehensive legal advisory services. Schedule a consultation today.

Business owners may not always have hiring an attorney at the forefront of their minds. But legal counsel doesn’t just apply to litigation or when your business is already well-established. In fact, it would prove beneficial to consult with a business attorney even before starting your enterprise. This way, you can avoid legal troubles down the road and especially if you’re a first-time business owner. Here are some things for you to consider when hiring a business attorney.

Experience

Check how long your potential attorney and law firm have been practicing. But in addition to the number of years in their particular practice area, are they also experts in their field?  Look for proven success as you review their track record.

Proven Success

Here are a couple questions for business owners to consider: What kinds of businesses have they helped and in what capacity? What is their track record based on available testimonials? Your business attorney should have a firm understanding of the differences between small business needs and large corporations, and have demonstrated success in serving different types of businesses.

Legal Specialties

Choose an attorney that specializes in business law but consider the firm that the attorney’s a part of. Boutique firms (such as Hoffman & Forde) have access to legal professionals that specialize in other relevant fields that are beneficial to business owners.

Pricing

Find out if your attorney provides clients with a sensible billing structure that ensures there are no unnecessary fees or surprises.

Accessibility

Is the attorney an effective communicator and do you have access to their legal team? Choosing a business attorney that is accessible, compassionate, and communicates well makes a big difference. Accessibility demonstrates dedication to clients. 

How Our Southern California Law Firm Helps Businesses

Whether you’re considering pursuing a startup or already have a business that’s pivoting, our Southern California law firm strategically advises our clients on all stages of a business’ cycle, from formation to succession. Your business may opt to retain us to serve as if we are their in-house general counsel or as consultants during the formation phase.

Entity Formation & Planning

 Hoffman & Forde is engaged in all aspects of our clients’ business formation and development, from conception through liquidity. We provide business and legal guidance to clients through all stages of development, from initial incorporation, to seed and angel investments, venture capital debt and equity financing, strategic investments, and more.

Contracts

Contracts are key to any business. Our business consulting law firm has extensive experience in drafting tailored contracts to meet our clients’ needs, including terms and conditions, distribution agreements, customer contracts and non-disclosure agreements, breach of contracts, and more. If you need assistance with contracts, we can help.

Corporate Governance

Our business attorneys help clients develop and implement corporate governance policies and procedures, including employment policies, to foster best practices and to help meet clients’ obligations under applicable law. With policies changing more frequently because of coronavirus, employers need to be even more aware of their legal rights and responsibilities.

Consulting

We counsel employers on regulatory, legal, and human resources issues to ensure compliance with employment laws. We also help our clients establish policies, procedures, and guidelines essential to their businesses. At Hoffman & Forde, we help business owners keep up with their legal requirements and duties, and provide superior legal advice and planning. Learn more about our business consulting practice or contact our business attorneys for a complimentary consultation today.

With many businesses struggling or outright closing permanently, it may seem counterintuitive to start a new business in the middle of a pandemic or a recession. But did you know that some of the biggest companies today were started during an economic downturn? Today we take a look at why starting a new business in the midst of a pandemic is still a good idea.

Business Insider listed companies that got their start in the middle of a recession. The list includes giants such as Microsoft, General Motors, Hyatt, and Hewlett-Packard. Previous downturns also paved the way for mobile companies such as Square and Slack. NerdWallet was born during the 2008-2009 financial crisis and CEO Tim Chen lists these factors why a recession is the perfect time to start a business:

• Better talent at cheaper costs
• Inexpensive marketing
• Less competition
• Nimbleness of new businesses

Rashmi Menon, entrepreneur in residence at the University of Michigan’s Zell Lurie Institute for Entrepreneurial Studies, echoes some of Tim Chen’s sentiments in a New York Times article. She notes that “there is less competition for resources” during these times and “whatever changes we face, positive or negative, bring up new customer needs. And customer needs are at the core of any business.”

Most economic signs seem to say it’s crazy to invest in a business or to start one during challenging times. However, there are still many out there whose entrepreneurial spirits are undefeated. There are still people applying for small business loans and requesting EINs, albeit at a slower rate than previous years.

“There have been more than 500,000 applications for an employer identification number since mid-March, according to the Census Bureau, although that is down nearly 20 percent from a year ago. Between mid-March and mid-April, the Small Business Administration issued nearly 300 start-up loans worth about $153 million, a 36 percent drop from a year earlier. Stripe, the credit card processing firm, said it had handled more than $1 billion in sales for businesses that started on the platform during that time.”

Source

To do business well, consider legal counsel to make sure all aspects of your endeavor are in accordance with and protected by the law. 

How Our Law Firm Helps Businesses

Whether you’re considering pursuing a startup or already have a business that’s changing directions, our Southern California law firm strategically advises our clients on all phases of a business’ cycle, from formation to succession. Our clients may choose to retain us to serve as if we are their in-house general counsel or serve as consultants during the formation phase.

Entity Formation & Planning 

Hoffman & Forde is engaged in all aspects of our clients’ business formation and development, from conception through liquidity. We provide business and legal guidance to clients through all stages of development, from initial incorporation, to seed and angel investments, venture capital debt and equity financing, strategic investments, and more.

Contracts

Contracts are key to any business. Our business consulting law firm has extensive experience in drafting tailored contracts to meet our clients’ needs, including terms and conditions, distribution agreements, customer contracts and non-disclosure agreements, breach of contracts, and more. 

Corporate Governance

Our business attorneys help clients develop and implement corporate governance policies and procedures, including employment policies, to foster best practices and to help meet clients’ obligations under applicable law. With policies changing more frequently because of coronavirus, employers need to be even more aware of their legal rights and responsibilities.

Consulting

We counsel employers on regulatory, legal, and human resources issues to ensure compliance with employment laws. We also help our clients establish policies, procedures, and guidelines essential to their businesses. At Hoffman & Forde, we help business owners keep up with their legal requirements and duties, and provide superior legal advice and planning. Learn more about our business consulting practice or get in touch with our business attorneys for a consultation today.

Even in the midst of a worldwide pandemic, we are still bound by our legal duties. Employers and workers alike still need to know their rights and responsibilities to ensure that everyone is safe and their business is run sustainably.

As businesses have been opening at various stages throughout California, here are some basic guidelines and resources that employers and workers need to keep in mind. All facilities must check off these items prior to reopening:

1. Perform a detailed risk assessment and implement a site-specific protection plan
2. Train employees on how to limit the spread of COVID-19, including how to screen themselves for symptoms and stay home if they have them
3. Implement individual control measures and screenings
4. Implement disinfecting protocols
5. Implement physical distancing guidelines

Industry-Specific Guidelines in California

These guidelines are available in the state’s COVID-19 website and cover topics such as a workplace specific plan, employee training topics, and cleaning & disinfecting protocols. We have included a few guides here for your reference.

• Guidance for real estate transactions
• Guidance for retail
• Guidance for dine-in restaurants
• Guidance for hair salons and barbershops

For those needing unemployment assistance, the California Employment Development Department (EDD) has resources for filing unemployment claims. Their Pandemic Unemployment Assistance page can be viewed here. If you are an essential worker and your employer has failed to follow these guidelines, they may be subject to damages and/or penalties. You have the right to file a complaint or to refuse to go work if your environment is unsafe.

According to California’s Department of Industrial relations, if you are a non-essential worker who can’t work from home, you “can use any available paid sick leave for time off work under the ‘preventative care’ provision in the law.”Employers also need to be mindful of the following legislation:

• Americans with Disabilities Act (ADA)
• Wage and Hour
• Occupational Safety and Health Act (OSHA)
• Family and Medical Leave Act (FMLA)
• Workers Compensation
• FFCRA Paid Sick Leave

For employers and workers needing legal assistance during this time, schedule your consultation with our employment and wage & hour lawyers. We will help you understand your rights, make sense of laws that apply to your situation, and walk you through the legal process.

Sources:

California COVID-19 Website

California Department of Industrial Relations

California Labor & Workforce Development Agency