Forming A Limited Liability Company In California

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A limited liability company, or LLC, is a unique business entity that combines the benefits of a corporation and the benefits of a limited partnership. Forming a LLC in California is a multi-step process and an incorporation attorney at Beverly Hills Law Corp., PC can assist you every step of the way.

  • Step 1

Fill out and file the Articles of Organization, Form LLC-1. They are available from the California Secretary of State’s website. Regarding the name of your LLC, California law provides that the name must end in LLC, L.L.C., to signify it is organized as a limited liability company. An LLC cannot have in its name the words bank, trust, trustee, incorporated, inc., corporation, corp., insurer, insurance company, or any other word which would lead a person to believe the LLC is in the insurance business. Additionally, the California LLC cannot have a name that would mislead the public or a name that is the same as the name of an existing California LLC. A business attorney at Beverly Hills Law Corp., PC can help you select a legal name for your LLC.

  • Step 2

Select a registered agent and an address for the registered agent.

  • Step 3

Select how many managers for the LLC there will be and list the organizers of the LLC. An LLC can be a multi-member LLC or a single-member LLC.

The filing fee to form an LLC in California is $70. One should also be aware of the annual minimum franchise tax for a California LLC, which is $800. This tax must be paid by every LLC, regardless of whether this California LLC is doing any business or making any money.

Once the Articles of Organization have been filed, your LLC is formed and you can start doing business under the LLC’s name. However, there are numerous other steps that an LLC should take. These include the following:

  • Opening up bank accounts.
  • Obtaining an Employee Identification Number if it is going to have employees.
  • Filing for a fictions business name, if required.
  • Obtaining any requisite licenses or permits.
  • Determining whether the LLC wishes to be taxed as an S-corporation, and drafting the operating agreement.

To assist you with these tasks, we at Beverly Hills Law Corp., PC offer affordable flat-rate packages. Leave it to us to establish your LLC–and enable you to legally do business under it–while protecting your personal assets.

The California Bulk Sales Law

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Under California law, there is a bulk sales act which protects the business’ creditors by giving them notice of a bulk sale (also known as a bulk transfer). If you are a California business owner considering selling your business, you need to be aware of this law–even more so if you are buying a business in California.

The purpose of the bulk sales law is to help prevent situations where a business is sold and then the seller of the business simply takes the proceeds from the sale and keeps it–instead of paying creditors for those goods. If a bulk sale occurs in California, the law requires that the creditors be given notice of the transaction. In some cases, the bulk sales law requires the purchase price of the business to be put into an escrow account so that the seller’s creditors can submit claims into the escrow and be paid before escrow is closed.

Notice under the bulk sales law must be given to the creditors of the business as follows:

  1. The buyer must get a complete list of business names and addresses used by business for the past three years.
  2. The buyer has to give notice of the sale (bulk sale).

Under California commercial laws, the notice must contain the following:

  • A statement that a sale of the business is pending.
  • The location and date of the sale.
  • All business names and addresses used by the parties to the sale (buyer and seller) for the past 3 years preceding the sale.
  • Whether the sale is a small cash sale (the sale is valued between $10,000 and $2,000,000).
  • The location of the business assets and description of the business assets that are being sold.

According to California law, a bulk sale occurs when:

  • There is any sale outside the ordinary course of the seller’s business of more than half the business’s inventory and equipment as measured by the fair market value on the date of the sale.

However, even if the above requirements are met, the bulk sales law may not apply. It only applies in the following situations:

  1. The seller’s principal business is the sale of inventory from stock, including those who manufacture what they sell, or a restaurant owner.
  2. The seller is located in California.

If the seller of a California business fails to comply with the bulk sales act, the buyer of the business may be held liable for the debts that were owed by the business before the buyer purchased the business. Thus, it is in the best interests of both a buyer and seller to comply with the California bulk sales law.

Generally, a purchaser of assets or a buyer of a business is not liable for a seller’s debts unless the buyer specifically agrees to assume them. If the bulk sales law is not complied with, you as the buyer may be held liable for the debts of the business. There are additional considerations with the bulk sales law in California as well, such as special requirements for certain types of sales and tax considerations.

We at Beverly Hills Law Corp., PC can assist you whether you are buying or selling a business in California. We serve all of California, in addition to Los Angeles and Orange Counties. Contact us for a free consultation.

Filing A Lis Pendens In California

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“Lis Pendens” is a Latin phrase which essentially means a pending suit. Lis Pendens is also known as a pendency of action in California and serves the purpose of letting prospective purchasers, encumbrancers, and other real property interest holders know that any interest they acquire in the property that is subject to the Lis Pendens may be affected by the outcome of a pending legal action concerning the property.

A Lis Pendens can be used in the following types of California real estate cases:

  • Quiet Title actions.
  • Eminent Domain proceedings.
  • Partition actions.
  • Claims to escheated property.
  • Actions to declare a building uninhabitable.

A Lis Pendens may also be used in other types of real estate actions, depending on the facts and circumstances of such actions. Determining this can be difficult and requires the help of an experienced real estate attorney.

The procedures of a Lis Pendens are governed by the California Code of Civil Procedure Section 405. If a Lis Pendens has been wrongfully filed, the property owner can sue for damages and attorney’s fees. Thus, it is imperative to consult with a Los Angeles real estate attorney who knows California law regarding Lis Pendens and can advise you as to whether a Lis Pendens would be proper for your particular type of real estate matter.

In order to remove a Lis Pendens from a property, the property owner must file a motion to expunge the Lis Pendens. As part of this action, California law allows the property owner to recover legal fees as well.

We at Beverly Hills Law Corp., PC are uniquely qualified to help you in such matters. Our attorneys have real estate and Lis Pendens experience. Our lead attorney is also a licensed real estate broker. Contact us now for a free consultation regarding your California real estate matter.

Buying A Business In California

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When purchasing a business in California, it is important for buyers to do their due diligence. Failing to do so can lead to many problems down the road. Here are a few things to consider:

  • Review the governing documents of the entity that currently owns the business. If it is owned by a LLC, review the operating agreement. If it is owned by a corporation, review the corporate bylaws and shareholders agreement. If a partnership owns the business, review the partnership agreement. Doing this will help you spot any possible red flags. A business attorney from Beverly Hills Law Corp., PC can help you review and interpret these often complex documents.
  • Review the business’ current customer lists and vendor lists.
  • Review all of the business’ current liabilities, including any debts owed.
  • Hire a CPA to review the business’ tax filings, profit and loss statements, annual reports, general ledger, accounts payable and receivable reports, and other financial documents.
  • Determine whether the business has the licenses and permits that the law requires.
  • Search the Internet for any references to the business.
  • If the business leases its space, be sure to review the lease. A real estate attorney from Beverly Hills Law Corp., PC can help you with this. Our lead attorney is also a real estate broker.
  • Have a detailed discussion with the current owner as to why the business is on the market.
  • Review all documents related to employees, including HR policies, any employment contracts, etc.
  • Determine whether there are any legal actions pending against the business.
  • If the business has physical assets, be sure to thoroughly inspect them, including inventory, office equipment, manufacturing equipment, and real estate.
  • Examine all insurance policies that the business has in place.

These are just a few of the considerations that one must look into when purchasing an existing business. For a more complete understanding of what to expect–and help with the purchase–contact us at Beverly Hills Law Corp., PC for a free consultation.

Collecting A Judgment In California

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Plaintiffs in California lawsuits commonly believe that once they obtain a default judgment or a money judgment against the defendant at trial, the matter is over and that they have won. However, winning is not necessarily collecting the judgment funds. Unless the defendant (now the debtor) voluntarily pays the amount of the judgment, you, the plaintiff (and now the creditor) will have to collect the judgment from the debtor.

Fortunately, California law allows for various methods of collecting a judgment. These are the most common methods:

  • Real Estate Levy
    • This involves putting a lien on a piece of real property the debtor owns in a particular county in California (such as Los Angeles County). If there is sufficient equity in the property, sale of the property may be forced and the proceeds used to satisfy your judgment.
  • Wage Garnishment
    • You can also collect your California judgment by garnishing the debtor’s wages. However, there are exemptions available to the debtor for this, so it would be wise to consult with a Los Angeles judgment collection attorney before proceeding.
  • Bank Levy
    • If you know where the debtor banks, this can be an efficient method. It involves serving a levy upon the bank and collecting proceeds from the debtor’s bank account to satisfy your judgment.
  • Personal Property Levy
    • To collect a California judgment, one can also put a lien on the debtor’s personal property. However, this is an expensive process. It is not recommended unless you know the debtor’s personal property has sufficient value.
  • Initiating A Debtor’s Examination
    • A debtor’s examination is not a method of collecting a judgment. Rather, it is a useful tool to assess the debtor’s assets. It involves forcing the debtor to come into court and be interrogated under oath about their assets, finances, and related matters.

Each of the above methods and tools for collecting a judgment in California involve filling various documents, which must be precisely filled out. Furthermore, if the debtor is fraudulently transferring their property or is a business, then there can be additional complications involved. We at Beverly Hills Law Corp., PC can assist you in determining whether your judgment is collectible and if so, which method may be best for your particular case. You owe us nothing unless we collect the judgment. We await your call.

How To Respond To A Lawsuit In California

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California is a very litigious state. It may be the most litigious in the nation. If you or your business have been sued, it is imperative that you understand how to respond to a lawsuit. It’s in your interest to hire an attorney to defend against the lawsuit. However, if you do choose to proceed on your own, there are a few fundamentals you must understand.

Time to respond to a California lawsuit:

  • If you were personally served with the lawsuit, then you have 30 calendar days to respond.
  • If you were served via substitute service, meaning somebody was served on your behalf, you have 40 calendar days to respond.

How to respond to a California lawsuit:

  • Answer
    • An answer is the most common way to respond to a lawsuit. The answer is when you can admit or deny the allegations that are against you in the complaint. IMPORTANT: any statements that are not denied will be taken as true for the purposes of this case.
    • The answer should also contain your affirmative defenses. You should contact a qualified litigation lawyer to help you with this.
    • The answer can be on a court form for certain types of answers, but must be on pleading paper for other types of lawsuits.
  • Demurrer
    • A demurrer looks at the legal sufficiency of the complaint as it is plead, not the truth of anything said in the complaint or the plaintiff’s ability to prove what is said in the complaint.
    • In the demurrer, you must state what was left out of the complaint to make it legally insufficient.
    • You can object to all or just parts of the complaint on various ground:
      • The complaint fails to state a cause of action.
      • The complaint is uncertain or unclear.
      • Another case is pending between the parties for the same cause of action.
      • The plaintiff does not have the legal capacity to sue.
    • A demurrer in California can either be sustained or overruled.
      • If it is sustained, it can be sustained with leave or without leave. With leave means the plaintiff will have an opportunity to amend the complaint. Without leave means the complaint is dismissed.

    A demurrer and answer are the most common ways that a defendant in a California lawsuit responds to a complaint. There are other options, such as filing a motion to quash service of the summons, filing a motion to strike, and others. We at Beverly Hills Law Corp., PC are ready and able to assess your options. Call us for a free consultation.

California LLC or Corporation…Which?

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As a business and corporate attorney here in California, one of the most common questions put to me is whether a new business should constitute itself as a California LLC or a California Corporation. Each of these entities has its own set of pros and cons. Which is best for you will depend on the nature of your business, how many owners there are, whether there are outside investors, the tax implications, and other considerations.

A California LLC offers the following advantages:

  • Fewer formalities.
    • Unlike California Corporations, LLCs are not required to have a board of directors, are not required to have bylaws, do not have to have shareholders meetings or board of director meetings, and are not required to keep meeting minutes.
    • LLCs are only required to have an operating agreement which does not need to be filed with the California Secretary of State.
  • No double taxation.
    • A California LLC only has to pay the $800 a year minimum franchise tax; there is no federal tax.
    • LLC income is passed through to the LLC’s members and the members are only taxed on an individual level.

A California LLC has some disadvantages as well:

  • Unable to issue stock.
    • LLCs cannot issue shares of stock. Thus, it may be difficult to attract investors if you are a startup. Venture capital firms often invest in startups in exchange for shares in the company.
    • The inability to issue stock also makes it more difficult for a LLC to raise capital.
  • Professional services providers excluded.
    • Under California law, accountants, lawyers, chiropractors, and other types of professional service businesses cannot operate as a LLC. They must form a corporation of a partnership.

Conversely, California Corporations offer the following advantages:

  • Ability to issue stock.
    • The main advantage is that a corporation in California is easily able to have outside investors issuing shares to these investors. This allows the corporation to raise capital for itself.
  • Can use a fiscal year calendar.
    • Corporations in California are allowed to use either a calendar year or a fiscal year for accounting purposes (a California LLC will generally have to use a calendar year).

Some disadvantages of forming a corporation in California include:

  • Double taxation.
    • Corporations are taxed twice, once at the corporate level and again at the individual level when the profits are distributed to its shareholders.
  • Strict corporate formalities.
    • Unlike LLCs, corporations have strict formality requirements. They must have a board of directors, hold regular meetings of shareholders and directors, keep meeting minutes, file annual reports, and issue their shares properly.
    • Due to the higher level of corporate formalities, it is often easier to pierce the corporate veil and hold a shareholder or owner of a corporation personally liable than it is to pierce the corporate veil of an LLC.

These are just some of the considerations that need to be explored when deciding which corporate structure is best for your purposes here in California. Feel free to consult with us, we have the knowledge and experience to guide you to the business structure that best suits your needs. The initial consultation is free.

California Statues Of Limitations For Civil Matters

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Many people are surprised to find that while they may have a great case, the case cannot be pursued due to the statute of limitations on their case having expired.

What is a statute of limitations? A statute of limitations is the deadline for filing a lawsuit. In California, a lawsuit MUST be filed within a certain period of time. Once the statute of limitations has been exceeded, the legal claim is no longer valid and cannot be pursued. The interval of time during which you can file a California lawsuit varies depending on the type of legal claim. Here are some common California statute of limitations:

  • Fraud and Negligent Misrepresentation: 3 years.
  • Breach of an oral contract: 2 years.
  • Breach of a written contract: 4 years.
  • Suits for libel or slander: 1 year.
  • Personal injury claims based on negligence: 2 years.
  • Property Damages: 3 years.
  • Unknown (latent) problems in real property improvement design, survey, construction which cause damage to real estate or personal property: 10 years

California employment-related lawsuits have a different statue of limitations, requiring the claimant to first file a claim with the California Fair Employment and Housing Authority and then file a suit in court.

Sometimes it is not reasonably possible for a person to discover the cause of an injury–or even to know that an injury has occurred–until considerably after the act which causes the injury. For example, a person might not realize that they have been defrauded in a business transaction until years later. In these instances the statute of limitations does not begin running in California until the injury (fraud, in this example) is discovered. This is known as the “delayed discovery rule” and permits a lawsuit to be filed within a certain period of time after the injury is discovered–or reasonably should have been discovered–by the claimant. Determining whether or not this rule applies can be complicated, so you should consult with a qualified civil attorney to help you determine whether or not it applies in your case.

In other instances, the California statute of limitations is “tolled.” This means that something has stopped the statute from running for a period of time. Common reasons for tolling a statute of limitations include:

  • The victim of the injury was a minor at the time the injury occurred.
  • The victim of the injury was not mentally competent at the time the injury occurred.
  • The “automatic stay” in bankruptcy ordinarily tolls the statute of limitations until such time as the bankruptcy is resolved or the stay is lifted.

As with delayed discover, determining whether the special rule of tolling applies in your case requires the expertise of a qualified attorney.

Finally, while one claim may be barred due to the statue of limitations having expired, an attorney from Beverly Hills Law Corp., PC may be able to help you find another way to make that claim that may still be filed. Contact us for a free case evaluation.

California Overtime Laws

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If you are a California employee or employer, it is likely that the state’s overtime laws will impact you at some point. Under California law, an employee is entitled to overtime pay for all hours over 8 that the employee works in a given day and/or all hours over 40 that the employee works in a given week. If an employee is to be paid overtime, it is to be in accordance with the following:

  • One and one-half times the employee’s regular rate of pay for all hours worked in excess of 8 hours up to and including 12 hours in any workday, and for the first 8 hours worked on the 7th consecutive day of work.
  • Two times the employee’s regular rate of pay for all hours worked in excess of 12 hours in any workday and for all hours worked in excess of 8 on the 7th consecutive day of work.

“Regular rate” is defined as either the employee’s hourly wages (if the employee is an hourly employee), or if the employee is a salaried employee, according to the following calculation:

  • Multiply the monthly remuneration by 12 (months) to get the annual salary.
  • Divide the annual salary by 52 (weeks) to get the weekly salary.
  • Divide the weekly salary by the number of legal maximum regular hours (40) to get the regular hourly rate.

If you are a California employee and believe that you should be getting paid overtime, you have legal remedies. You can either file a claim with the California Labor Commissioner or you can file a lawsuit in court. If a lawsuit is filed, employees are eligible to get their overtime pay–in addition to their attorney’s fees and costs.

It’s not always an easy determination as to whether a California employee is entitled to overtime pay. There can be exemptions, such as the professional exemption or administrative exemption, which allow the employer to legally not pay the employee overtime. The overtime exemptions are very fact-intensive and require analysis by a qualified employment attorney. Moreover, if you are an independent contractor in Los Angeles, you are also not entitled to overtime. However, sometimes, independent contractors are misclassified and are actually employees, thus being eligible for overtime.

One of our labor and employment lawyers can assess your situation and determine whether you are indeed eligible for overtime or whether you are validly exempt from the overtime laws. Contact Beverly Hills Law Corp., PC for a free consultation.

Waiting Time Penalties Available For California Employees

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Under California Labor Code Section 203, employers are assessed a penalty for any willful failure of on-time payment of any part of final wages that are due to the departing employee. Wages earned are due and payable immediately upon discharge for an involuntary termination. Thus, an employee who is fired is immediately entitled to a final paycheck. An employee who quits, however, is entitled to a final paycheck within 72 hours. Presuming the employee gave at least 72 hours’ notice before quitting, that employee is entitled to an immediate final paycheck.

If your employer failed to provide you with your final paycheck after you have been terminated or resigned, you may be entitled to compensation–in addition to the actual wages you are owed. A consultation with an employment attorney from Beverly Hills Law Corp., PC would enable the validity of such a claim to be assessed.

Waiting-time penalties are imposed on employers who fail to pay final wages when they are due. The penalty is one day’s pay for each day the employer is late–up to a maximum of 30 days. Thus, an employer who waited two weeks before providing a fired employee’s final paycheck would be liable for 14 days of wages as a waiting-time penalty. Furthermore, the penalty is based on a usual day’s work. Therefore, if an employee works four hours a day, five days a week, and earns $20 an hour, the employee would be entitled to $80 a day as a waiting-time penalty.

If you have not been paid in a timely fashion after you were terminated or resigned from your place of employment, you may be entitled to up to 30 days of a full day’s wages. Such claims are very fact-intensive and require a thorough analysis by a qualified employment attorney. We at Beverly Hills Law Corp., PC can assist you with assessing and calculating your damages. So, contact us now for a free consultation.