Business laws basics
Business law is omnipotent. It governs how businesses operate, what type of business to form, and how one should run the company. All companies face legal issues day-to-day and all businesses can benefit from understanding these issues before they are faced with them.
This article discusses a few of the laws that regulate two of the most prevalent types of businesses: sole proprietorships and corporations, as well as some basic legal terms in this field.
The best way to truly understand these regulations and other business law is by attending a short course or taking an online class through your local community college or university.
Legal term
"In general, a legal term is an abstract or concrete definition that serves as the foundation of a legal doctrine. For example, one can say that "taxation" is the levying of taxes on business transactions. However, later in the tax case, it may be necessary to know precisely what "levy" means. The precise meaning is determined by considering the legal doctrine that governs taxation. Conversely, if in another part of the case it is necessary to explain what "levy" means, reference must be made again to the precise legal definition." [1]
Law terminology
There are many other laws and legal terminology that may be useful for understanding business law.
- "Venture capitalist" or VC: A term describing someone who invests in startups. This term is a direct reference to the old English slang for "agent."
- "Business incubator" or "incubator": This is a building where many startups can thrive through assistance from business experts and software engineers, as well as financial investment.
- "Registered agent": A person appointed in the state of business that is authorized to accept legal service letters for legal entities, usually for tax purposes. Registered agents also act as legal entities themselves as well as being appointed by the State to act on behalf of the entity.
- "Limited liability company" or LLC: A business that has a limited number of owners, partners, and investors. It is not required to pay taxes on profits as do corporations; however, it is required to file tax forms for the IRS.
- "Sole proprietor": An individual who owns a business by himself or herself. This type of business does not need to file its own tax forms, but rather files them under the owner's name on his or her income tax form. Sometimes, the business records are not kept separate from the owner's personal records and can make obtaining information via IRS very difficult if not impossible.
- "Corporation" or "corporation sole": A business that has shareholders and officers. It is a publicly traded company that is required to pay taxes on its profits and to file tax forms with the IRS. Corporations are run by boards of directors as well as compensation systems for their employees and owners.
- "Charter:" Charter is a legal document that is customarily given to new corporations at incorporation by an entity such as a state government or the federal government. This document governs the entity for future periods of time until it is terminated in certain circumstances.
- "Stock:" Stock is a property right in a corporation that is measured by the number of shares of stock owned. Shares are only worth what the market says they are and can be sold at any time.
- "Equity": Equity is money invested in the company, usually for a purpose such as paying for equipment, or to expand operations or develop future products.
- "Employee:" An employee is an individual who works for and participates in business decisions that affect his or her performance on the job; this works similar to other full-time employment relationships. In some situations, this can also refer to an independent contractor who has agreed to perform job duties on behalf of another person.
- "Independent contractor:" An individual who provides a service to another person or entity but has no right to have any control on the type of service he or she provides, nor the manner in which it is performed.
- "Copyright:" A right granted to the author or creator of a work that allows others to use their work, but only if they adhere to certain rules and regulations created by law. These laws can be found at the United States Copyright Office.
- "Patent:" A legal protection that is granted by government for an invention that qualifies for it as well as follows certain regulations set forth by Congress in the Patent Act. One example is a product idea for an electronic calculator.
- "Trademark:" A mark or symbol that identifies one's product or service to the public. It can be a word, phrase, design, or symbol. It is used to protect one's business and product information against copying and infringement by competitors.
- "Trade secret:" Information or items that are used in the business of the company and are protected against use by others who have not been granted permission to use it. These items may include a recipe for a product, an invention for a process, an idea for a machine part, or any other proprietary information used in the business.
- "Cyberlaw:" The area of law that focuses on the use of communication devices, such as computers and the Internet. This encompasses both private and public issues surrounding its use.
- "High-tech commerce:" A phrase used to describe a business that uses electronic means for communication, transfer of data, financial transactions, etc. It also includes high-tech equipment or devices used in these transactions.
- "Law of contract:" The law that governs contracts, such as an agreement between two people.
- "Law of remedy (or recovery)" : The law that governs the procedures for requesting and obtaining monetary damages for wrongs committed.
- "Law of agency:" The law governing one person's obligation to another when said person is being asked to perform an act for another person. This means a duty to obtain consent from the other party before performing his or her duty. An example would be someone asking a friend to change his or her mind about a divorce and instead agree to stay together, whereas this is impossible without the other party's consent.
- "Law of tort:" The law that governs damages and punishment for acts that are deemed offensive to the public or private.
- "Law of trust:" A law that governs the rules and regulations governing trusts. These rules are put in place by Congress and its importance is based on the ways in which the assets of a trust are handled.
- "Commerce:" The act or process of trading, especially by merchants or manufacturers, in such articles as merchandise or commodities. Commerce also refers to importation and exportation, as well as to transportation through waterways or airways when loading cargo onto ships, airplanes, trains, trucks, etc.
Conclusion
As you can see, there are many types of business law. They all depend on the type of business an individual has, as well as other factors that can include the geographical location of a business as well as government regulations and laws. For example, small businesses often have less strict regulations than large companies do. Here are just a few more examples:
- "Deceptive trade practices:" These include frauds and swindles that are designed to take advantage of small businesses when they place their trust in another party.
- "Breach of contract:" This occurs when one party acts in such a way that causes the other party to break its terms or conditions of an agreement or contract.
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Business laws basics