The vibrant city of Los Angeles pulsates with a unique energy, attracting creative individuals and entrepreneurs seeking to make their mark. For those with a passion for hairstyling and a desire to build a thriving business, opening a barbershop or hair salon in LA can be an exciting and rewarding venture. However, navigating the legal landscape of licenses, permits, and regulations can be a daunting task. At KAASS LAW, we understand the intricacies of business law and are dedicated to helping entrepreneurs like you turn their dreams into reality. The following will provide a comprehensive guide to the legal requirements for opening a barbershop or hair salon in Los Angeles, ensuring you have the knowledge and resources to launch your business with confidence and compliance
Steps to undertake for opening a barber shop or hair salon in Los Angeles.
An establishment must provide adequate hand washing facilities, including soap, air hand dryers or paper towels.
According to California Business and Professions Code Section 7351 the establishment must provide at least one public toilet room located on or near the premises. The restroom cannot be used as a storage.
At least one sink with hot and cold running water must be provided in each work area, where hairdressing is performed.
Potable drinking water must be available to employees and customers
The establishments must keep the floors, woodwork, walls, furniture, ceilings, furnishing and fixtures clean and in a good condition.
The Gender Tax Repeal Act of 1995 requires barbers and hair salons to conspicuously and clearly disclose the customers in writing the pricing for each service provided. Barbers and hair salons must follow specific posting requirements.
Moreover, barbers and hair salons must display in a conspicuous place at least one sign which states: “CALIFORNIA LAW PROHIBITS ANY BUSINESS ESTABLISHMENT FROM DISCRIMINATING, WITH RESPECT TO THE PRICE CHARGED FOR SERVICES OF SIMILAR OR LIKE KIND, AGAINST A PERSON BECAUSE OF THE PERSON’S GENDER. A COMPLETE PRICE LIST IS AVAILABLE UPON REQUEST.” After receiving a written notice, the Business establishments must correct a violation of any of the requirements in a 30-day period. Otherwise, it can be a fine of $1,000 for each violation for failing to do so. Additionally, according to California Civil Code Section 52(a), a business may be liable for any amount determined by a jury, or a court sitting without a jury, up to three times the amount of actual damage but no less than $4,000, plus any attorney’s fees. However, an action under this section 52(a) doesn’t prohibit an aggrieved party from seeing any other available procedure or remedy.
Opening a barbershop or hair salon in Los Angeles can be a complex process, with numerous legal requirements to navigate. At KAASS Law, we have extensive experience assisting entrepreneurs in launching and running successful businesses. We can help you:
Ready to take the leap and open your dream barbershop or hair salon in Los Angeles. KAASS LAW is here to support you every step of the way. Contact us today for a consultation. We'll answer your questions, provide expert legal guidance, and help you build a thriving and compliant business.
Do you have any additional questions about starting a business in Los Angeles, California? Our business law attorneys at KAASS LAW would be happy to answer your questions and help you out.
Independent Contractor Agreements are an effective way to clearly detail the scope of a project and services rendered, payment schedules and deadline expectations of both parties in a freelance arrangement. These types of agreements are legally binding and they serve the important purpose of specifying the details of a service so that both sides are shown to be aware of the agreement. This allows for both sides to be held accountable for their actions and their respective responsibilities. Independent Contractor Agreements are also sometimes referred to as Freelancer Contractor Agreements, Contract Labor Forms, or Independent Contractor Contracts, but they all amount to the same thing from a legal perspective.
You’ll want to utilize an Independent Contractor Agreement if:
By far, the most significant and noteworthy distinguishing factor about these types of contracts and agreements is that they are NOT for employees. It is instead specifically for drafting up an agreement between you–or your company–and an independent or freelance worker. An example of this would be paying a handyman to fix some stuff in the office, or hiring a freelance IT person to optimize your website or office space, or even taking on a consultant to get another expert opinion or counsel on a business move that you are considering.
Who is liable if a director, officer, agent, or employee of an unincorporated association harms me during their scope of duty or course of employment? Under California Corporate Code § 18250, "Except as otherwise provided by law, an unincorporated association is liable for its act or omission and for the act or omission of its director, officer, agent, or employee, acting within the scope of the office, agency, or employment, to the same extent as if the association were a natural person." This essentially means that the unincorporated association is responsible for whatever its personnel (director, officer, agent, or employee) does, if it is within the scope of the duties that the personnel is in with the association or during the course of employment. For example, usually unincorporated associations are clubs or teams, such as a recreational soccer team. If a director of a soccer club, registered with the California Secretary of State as a unincorporated association, is involved in a automobile accident while driving a bus full of weekend worrier dad's and mom's to a soccer match, than the association is liable. Thus, if the director is liable for the accident within the scope of duty to the association, than under California Corporate Code § 18250, essentially a codified version of the Doctrine of the association is likely liable for the director's acts. However, the situation is different if the personnel is not within the scope of duty. For example, committing a unrelated and unforeseeable crime while beyond the scope of duty.
A business’s intellectual property has the potential to be its most important asset, granting it a huge competitive edge over competitors across industries. This is because intellectual property is uniquely created by creativity and innovation and it ought to be protected as such.
Intellectual property rights can be broadly grouped into four categories which are trademarks, copyrights, patents, and trade secrets. As an initial gesture of protection, a business should protect its intellectual property rights by registering a trademark or filing for a patent application. These are examples of the first, but by no means last, steps involved in protecting a business’s valuable and intangible assets.
Once registered, a business should remain aware and continue to monitor its intellectual property in order to identify and put a stop to infringement and unfair use. In fact, taking the time to review both proactive and protective measures is essential to securing your intellectual property; it’s best to think of this time spent as a crucial investment to ensure your company’s competitive standing and financial success. A common misconception is that once intellectual property rights and protections are granted, no one will dare to infringe upon your work. The reality couldn’t be any more different. Nobody is going to look for copyright violations or trademark infringement on your behalf: it’s always up to you to actively protect your work. Trademarks, copyrights, and patents merely make it so that in the event of a lawsuit, you will have a far more compelling case on your side since the government acknowledged your intellectual property.
A design patent acts as a form of legal protection given to an ornamental design of a functional item. In practice, what this means is that a design patent prevents others from using, selling, or copying an object with a design that is substantially similar to the design you claimed in the patent. As a result, you have exclusive rights over ownership and distribution of the design. This is a tremendous right to have, particularly since you put in a lot of hard work and effort into creating the design. Some examples of patentable designs include jewelry, furniture, containers, and computer icons.
It goes without saying that there exist different categories, or types, of patents. In the United States, there are three which occur most frequently and which offer the most utility and practicality. The first type is a utility patent, which covers new inventions and creations. The second is a plant patent, which enables an applicant to patent new strains of plants, and finally, the last type of patent is for design. This is the one you will want to apply for if what you created is a style, form factor, or design that has a practical utility to it. Fortunately, due to the vague wording regarding US patent law, there are lots of design creations that can be covered.
You have probably heard of trademarks before, but what you almost certainly haven’t learned about is the process by which you can get something trademarked. The trademark submission process is a federally regulated, highly specialized endeavor that requires lots of detailed information to show how your product, company, good, or service is unique enough to warrant a trademark. The application goes through the United States Patent and Trademark Office, or USPTO for short.
Upon filing a trademark application with the USPTO, you will have to wait through a three to four month period for them to begin the initial assessment and consideration of your application. During this time, there is not much else you can do and, therefore, you ought to ensure that your application is presented as clearly and as succinctly as possible so as to avoid any further delays in the process. At that point, an examining attorney reviews your application and compares it to other, pre-existing trademarks to ensure that there are no conflicts of interest. After this initial overview, the attorney will forward your trademark for publication.
The reason copyright registration exists is to establish a formal, verifiable record of the date of creation and the contents of a work, so that, in case of a lawsuit, infringement, or plagiarism, the copyright owner can point to an official government source. The idea is that having the government officially document and recognize your work will add legal credibility should the issue ever surface in court. However, helping to resolve legal disputes is just one reason why someone may want to copyright their work. There are many motivations one may have for it, but first, it’s a good idea to understand what exactly a copyright entails.
Copyrights protect intellectual works, both published and unpublished, tangible and intangible. Copyrights can be used to protect everything from literary works, to songs, to computer programs, to photographs and films. Because of how broadly copyrights can apply, it would be a nightmare to have to manually copyright every new creation or work. Fortunately, that no longer is the case. In most countries across the world, copyright gets granted automatically at the moment of ‘fixation’, or the moment in which the work is fixed in some tangible medium. This is largely thanks to the international Berne convention, which provides rights at a global level without a need for national registration. Therefore, it is also important to avoid confusing copyright registration with the mere granting of copyright. The granting of copyright happens automatically once a work undergoes ‘fixation’, while copyright registration is a formal process that must be completed by filing a request through your government. The U.S. still does provide certain legal advantages for registering works of U.S. origin through the formal copyright registration process. For instance, having a registered copyright is still a prerequisite to filing an infringement lawsuit. Furthermore, other important remedies rely on prompt registration and verification, such as attorney fees and statutory damages. Therefore, for most people in the U.S. it is still extremely beneficial to have your work undergo the copyright registration. Also noteworthy to consider is that under U.S. copyright law, the protection that is granted to the owner of the work allows them exclusive rights to make and distribute copies of the work, to perform or display the work publicly, to produce derivative or iterative works such as translations, sequels, or adaptations, and to digitally transmit recordings of the copyrighted material.
A stock purchase agreement, or an SPA for short, is an agreement that a company or its shareholders and buyers sign whenever shares of a company or corporation get bought or sold. Stock Purchase Agreements are used most often by smaller corporations when selling their stock publicly to create a certain amount of trust and security between buyer and seller. Both the company itself or its respective shareholders can sell stock to potential buyers. That’s where Stock Purchase Agreements come in very handy as their purpose is to protect you, regardless of whether you’re the buyer or the seller.
It’s important to know that a stock purchase agreement is not the same things as an asset purchase agreement, or an APG. The main difference is that stock purchase agreements only sell shares of a company in order to raise money or to transfer ownership of shares while asset purchase agreements aim to finalize company asset sales. Namely, the stock purchase agreement will outline several key points:
When establishing a company, one of the first and most important decisions you will have to make is whether to form the company as a corporation, an LLC, or any of the other common forms of business organization. Each of them offer various advantages and drawbacks to their ownership and, as such, it is up to you to look into which one will most effectively fit the needs of your business. To help with that crucial decision, we have several articles which go over the different pros and cons of each method of business organization.
Should you choose to go with making a corporation, you will then be faced with having to more rigorously document certain proceedings as a result of how California law interacts with corporations. Some view these more specific details as a nuisance that corporations simply must contend with. We, however, believe that many aspects of the extra bookkeeping that you must track and report are actually very strong indicators of the strength of corporations. By viewing these requirements from that perspective, we can greatly simplify and empower the role that the bookkeeping tasks serve.
There are many reasons why you might want to incorporate your business. Forming a corporation helps to protect your personal assets from liability on account of your business’s debts and transactions. Furthermore, a corporation can protect you as an individual in the event that a business partner or employee is found guilty of a crime. If this is the business organization model you choose, there are several steps you will have to take in order to finish the incorporation process. Firstly, let’s start with naming it.
This part is one of the most important things you can do for your business. A good name is key because it will help with good product promotion and branding. However, the state you file for incorporation must also be okay with your chosen name. This usually means that the name must not already be taken by another corporation that is registered in your state and that the name is distinct enough from other corporations’ names that it would not bring up issues of copyright. Your chosen name can (but does not have to) include the words “Incorporated”, “Corporation”, “Limited” or any abbreviated version of them. Furthermore, your chosen name cannot be misleading to customers, nor can it contain any offensive or controversial words. It is possible to check to see whether your name of choice is already taken by another corporation online by visiting an online entity name checking service, or by sending a name availability inquiry letter to the Secretary of State’s office. Lastly, you can reserve your name by filing a name reservation request form, which just requests that the Secretary of State hold your chosen corporate name for no more than 60 days while you finish the filing process.
Importantly, all of these examples are regarding independent workers and because they are not your employees, the freelancers themselves are responsible for their taxes. However, since they are not your employees, you cannot have as much control over their actions. For instance, you can’t stop them from taking on other clients while they are working with you, nor can you dictate their day-to-day schedules or tell them how to do their job. In other words, they have far more freedom than your employees because they don’t express work for you, rather they work with you on a specific issue or situation.
The first and most obvious reason is that the agreement will help to protect your business and financial interests while you are doing work with a freelancer. The contract will detail exactly what work needs to get done, when it has to be completed by, and how much you are going to pay for that work. Another reason is that protects you from liability issues and helps to shield your personal assets. Also, should you ever go to court, you will have the signed agreement to easily show the judge what your expectations were for the service.
On the other hand, if you are the freelancer, having the agreement can help you get paid properly should you end up in a disagreement with the client over the payment. You also appear far more professional by providing a contract for your clients to review and sign. Lastly, the agreement demonstrates your willingness and commitment to work and get your job done with high quality, which can be very reassuring to the client.
As we alluded to, there are several key advantages to hiring an independent contractor, such as:
Here’s the thing. If the person you have contracted to work for you is entirely self-employed, then you will need to make sure that they complete a W-9 Form and you will need to fill out a 1099-MISC form, both of which can be electronically downloaded from the IRS website. You’ll want the W-9 form to gather your freelancer’s contact information and tax ID number, while the 1099 form is how they will report income their unique tax return. You are required to do this if you pay them more than $600 in a fiscal year. Your deadline is to submit those documents to the IRS and the contract worker by January 31st on the following year from when you hired them.
Bear in mind that the burden of proof is on you since the IRS typically assumes that someone is an employee, unless shown proof otherwise. Therefore, it is wise to keep all of those records and documentation in the event that the IRS asks for further proof that the contracted worker was not an employee of yours. This is for your own benefit as it results in your own protection from any audits or inquires from the IRS.
Freelance workers are becoming increasingly commonplace and the future for most small business is one in which preference will probably be given to simply take on independent contractors and freelancers instead of a full team of employees. More and more small businesses are going along with this model of having only a few core employees and many other freelance workers for their business. This is a lucrative model, especially for smaller businesses, because it is far more cost efficient and flexible. Therefore, it is in your best interest to look and see what kinds of reviews your freelancer worker has prior to signing into an agreement with them; having an idea of what previous companies have said regarding their work ethic is like having references during an interview with an employee–it can definitely help you to make the right decision as to who to hire for the job. Furthermore, by building positive and friendly relations with freelancers, you are setting yourself up for many good working relations for years to come, especially since those workers may also have other freelancer friends that they can refer you to if you ever need some extra work done in a pinch.
At KAASS LAW, our Glendale business lawyers are all about building long-lasting and meaningful relations with our clients and their associates. We believe in the ever-changing and evolving models of the future of business and we are here to make sure our clients have the smoothest experiences going forward with their brands and ideas. Whether you are a business looking to hire some freelancers and independent contractors, or whether you are a freelance worker who is self-employed, we are here to guide you along your financial journey. We have years of experience with connecting the right people for the job, and always stand by our clients. If you are thinking of drafting up an Independent Contractor Agreement, we definitely do not want you to go through that process alone. Contract law is a very complex area of law and we can greatly simplify your business by helping you with your goals. We work with small businesses and freelancers alike to ensure that effective contracts and agreements are written and agreed upon. We invite you to give us a toll free call at (310) 943-1171 to speak to our experienced contract lawyers today and to see just how much we can help your business out. So that way, you can keep doing more of what you love: stress-free.
KAASS LAW is authorized to practice law in California. The above content is intended for California residents only. This content provides only general information which may or may not reflect current legal developments. KAASS LAW expressly disclaims all liability in respect to actions taken or not taken based on any of the contents of this website. The above content DOES NOT create an attorney-client relationship. KAASS LAW does not represent you unless you have expressly retained KAASS LAW in person at the KAASS LAW office.
KAASS LAW helps clients in: Los Angeles, Burbank, Hollywood, Glendale, Van Nuys, North Hollywood, Studio City, Highland Park, Eagle Rock, Sunland, Tujunga, Sylmar, San Bernardino, La Crescenta, La Canada, Beverly Hills, Westwood, Santa Monica, Brentwood. Pacoima, Montebello, Commerce, Alhambra, Downey, Bell, Maywood, Walnut Park, Vernon, Lynwood, Echo Park, Silverlake, Mission Hills, Northridge, Woodland Hills, Encino, Canoga Park, North Hills, Porter Ranch, Chatsworth, Reseda.
While registering your work isn’t a guarantee of protection, it is still the best thing to do first and foremost. To review, the protections and benefits granted by each type of registration are:
You will want to ensure you maintain your protective measures, too. This means taking the time to do some basic upkeep, such as documenting your first use to make it easier to defend in court, should the need arise, and renewing your trademarks on time, using them continuously and filing any paperwork needed to document its use. Bear in mind also that if you choose to begin marketing or otherwise disclose your invention publicly before filing for patent protection, remember that you have to file your patent application within one year of disclosure and you must be the first to file, or you will lose the right to protection. For this reason, you may wish to consider starting with a provisional patent application to protect your rights.
If you intend on marketing your invention, product, or design in other countries, then you may want to look into registering your intellectual property in those countries, as well. This will ensure maximum protection and profit for your company. Fortunately, the U.S. has several treaties and conventions which make it easier for U.S. citizens and businesses to register patents and trademarks in multiple countries with one application. You’ll still have to follow each country’s law, though. For instance:
Many foreign countries also have agreements with the United States to recognize your copyright registration automatically. Check to see if the countries you’re interested in have this type of agreement, and if they do not, look into what the requirements are for you to register.
Oftentimes, the best way of protecting your intellectual property is simply by keeping quiet about it. This is especially the case if your work isn’t patentable or if you plan to protect it by using the trade secrets law. In those cases, you definitely want to limit the amount of people you tell about it. Whenever possible, get your partners and investors to sign off on non-disclosure agreements and make sure to specify in those agreements what exactly must be kept confidential and for how long. As another measure, you might want to still keep quiet about your idea even after filing a patent application since in most cases protection only begins once the United States Patents and Trademark Office actually grants your patent.
All of the laws and registrations we discussed offer you legal avenues for remedies after your work has been infringed or used illegally, but they do not actually prevent your work from being stolen in the first place. This is because some people may not be aware of the law and others just may not care. Sometimes, even a thorough patent or trademark search misses something. As such, it is your job to keep an eye on your industry trends and developments. In particular, you will want to keep a close eye on your industry developments:
When Push Comes to Shove...Pushback! At the worst case scenario, you would locate instances of actual infringement and it is at this point that you must stand up for yourself by taking action. What you ought to do in each case will vary, contingent upon a few circumstances, like:
In these types of strenuous situations, experienced intellectual property lawyers can make all the difference. At KAASS LAW, we have helped many clients manage and defend their patents, trademarks, and copyrights. We believe in the spirit of innovation and originality and we go out of our way to protect our clients’ work and property. We can help you to evaluate and determine which protections are best for your case as well as deciding upon which avenues to take to uphold and defend your rights. We invite you to give us a toll free call at (310) 943-1171 to speak to our experienced Los Angeles intellectual property attorney today.
KAASS LAW, 815 E Colorado St #220, Glendale, CA 91205, (310) 943-1171
Another way that U.S. design patents stand out from others, is that they allow for the applicant’s work to remain hidden or secret. This can be particularly vital if the design is for a new, revolutionary product or software. With more and more emphasis being placed on smart technology, innovation in the field is going to rely more and more on intelligently designed products to captive consumer interest and to garner positive feedback to an ever-increasing amount of press outlets. For the competitive edge alone, having a guarantee that a design patent application will remain secret and not be published until after it is granted can be massive for both large companies and small, independent businesses and startups.
A great example of design patents playing a huge role in modern day product placement and marketing is how it can be a decisive factor in lawsuits. For example, in Apple v. Samsung, the pre-emptive design patents that Apple had applied for turned out to be the huge ace card in the dilemma, winning Apple the lawsuit and millions of dollars from Samsung. A great of relating utility and design patents is by considering Apple’s iPhone: the way it works is the result of many utility patents and the way it looks and displays information is the result of many design patents. As technology changes and adapts, the role of product design will continue to blur function and ergonomics, making novel designs more and more valuable.
Prior to thinking about how to file your design patent application, you’ll want to ensure that your design is, indeed, novel. For this, you’ll have to search through prior art and this step is one of the most grueling as the archive is very expansive and it can feel overwhelming to search through such a huge amount of patents. You’ll want to look closely for the combination of design elements that you wish to protect with your patent to make sure it hasn’t already been claimed. Even down to the font that you use can be subject to a design patent.
This is where you will need to put together all of your findings to present to the USPTO in your application. Here, you’ll want to mention what sets your design apart from others, highlighting its novel features. Further, you should include drawings and diagrams demonstrating this. Putting everything together, you’ll have everything you need to file your design patent application...but why go through all of that headache alone? At KAASS LAW, we are constantly inspired by the beautiful and innovative designs and creations of artists and visionaries. We have years of experience in filing for design patents. We work directly with you to document, record, gather, and showcase all of the novel features of your product design so that the application process is quick and successful. We invite you to give us a call at (310) 943-1171 to speak to our Trademark and Patent lawyers today. KAASS LAW, 815 E Colorado St #220, Glendale, CA 91205, (310) 943-1171
KAASS LAW is authorized to practice law in California. The above content is intended for California residents only. This content provides only general information which may or may not reflect current legal developments. KAASS LAW expressly disclaims all liability in respect to actions taken or not taken based on any of the contents of this website. The above content DOES NOT create an attorney-client relationship. KAASS LAW does not represent you unless you have expressly retained KAASS LAW in person at the KAASS LAW office. KAASS LAW helps clients in: Los Angeles, Burbank, Hollywood, Glendale, Van Nuys, North Hollywood, Studio City, Highland Park, Eagle Rock, Sunland, Tujunga, Sylmar, San Bernardino, La Crescenta, La Canada, Beverly Hills, Westwood, Santa Monica, Brentwood. Pacoima, Montebello, Commerce, Alhambra, Downey, Bell, Maywood, Walnut Park, Vernon, Lynwood, Echo Park, Silverlake, Mission Hills, Northridge, Woodland Hills, Encino, Canoga Park, North Hills, Porter Ranch, Chatsworth, Reseda.
Publication does not actually mean that you are out of the woods just yet. Rather, it refers to a 30-day comment period which every aspiring trademark must undergo. Within that 30-day time frame, anyone from the public can voice their opposition to your trademark request. What that means is that even if the U.S. government has no issue with your trademark application, any person can theoretically state that your trademark may bring damages to their own brand and with that statement they could make their opposition to your trademark. However, once the 30-day window is over, the application gets sent back to the examining attorney for the final review stage. Once the application reaches this state, and provided that you correctly filed the paperwork indicating that your trademark is in use (meaning that your products and services were still being sold at the time the application got filed) then the examining attorney will issue your trademark registration and a certification will get sent out to you through the mail.
The entirety of this registration process for your trademark will take anywhere from 6-8 months time. It is a slow and steady process that involves a lot of down time while you wait for the next stages of the application to undergo final review but once it is all over, you will have successfully trademarked your product, brand, or service through the federal government. So, why would you want to go through that grueling process in the first place?
There are several major reasons why someone would want to obtain a federal trademark. Some of those important reasons include:
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At KAASS LAW, we believe in the spirit of individuality and in the power of originality. Your brand, your ideas, and your products deserve the protection and exclusivity that only a trademark registration can offer them, because it was your hard work and intellect that enabled you to create those ideas and services. Our team of experienced intellectual property and trademark lawyers will ensure the process is as quick and efficient as possible. We invite you to give us a toll free call at (310) 943-1171 to speak to our team today. Let us help you in this critical moment of your enterprise’s expansion.
Copyrights can be bought, sold, or given away to others. A transfer of copyright or an exclusive grant or license to utilize the work is possible only if it is conveyed in writing from the original owner of the copyrighted material. Also, copyrights do not protect the underlying ideas or concepts in the creator’s work. The legal terminology here gets a bit vague but basically ideas, facts, methods, titles, discoveries, works which do not have original authorship, and works with expired copyrights are not protected under U.S. copyright law. Bear in mind also that copyright law is intrinsically territorial and the information which we have talked about only applies to U.S. copyrights, which themselves are granted only to works of U.S. origin. The final aspect of copyrights that we should discuss is their length, or period of effect. The law regarding the length of copyright says the following for:
As previously mentioned, nearly all original works created after 1978 have some form of automatic copyright protection. To recap the important points, bear in mind that any original work automatically gets copyright protection once it is ‘fixed’, however, formally registering your copyright with the U.S. Copyrights Office still offers certain lucrative advantages, such as unlimited and exclusive control and ownership of the work, allowing for increased security and easier time dealing with any potential legal matters in the future, should the need ever arise.
At KAASS LAW, we believe in the spirit of genuine creativity. For that reason, protecting your original works is something we treat very seriously. If you or a loved one have created an original work, we invite you to call us at (310) 943-1171 to speak to one of our intellectual property lawyers today. Our team will ensure your works get registered with the U.S. Copyrights Office in the quickest and most efficient way possible so that you can keep creating beautiful works.
KAASS LAW, 815 E Colorado St #220, Glendale, CA 91205, (310) 943-1171
Our lawyers in Glendale, Los Angeles, California, at KAASS LAW are authorized to practice law in California. The above content is intended for California residents only. This content provides only general information which may or may not reflect current legal developments. KAASS LAW expressly disclaims all liability in respect to actions taken or not taken based on any of the contents of this website. The above content DOES NOT create an attorney-client relationship. KAASS LAW does not represent you unless you have expressly retained KAASS LAW in person at the KAASS LAW office.
Finally, prior to reaching a lasting agreement, a letter of intent, or LOI, must be produced by the seller, explaining the proposed sale at length. It’s up to the buyer to have the presence of mind to make sure that the purchase agreement contains the same terms as the LOI does to avoid any future discrepancies which may arise.
Stock purchase agreements get broken up into several sections that aim to define what certain terminologies mean and to describe how the transaction process works. The contents of a stock purchase agreement will typically resemble the following:
The first part of a stock purchase agreement is called the preamble. In it, the agreement is formalized and the respective parties are identified as well as the date of the contract and purchase. Typically, parties are referred to as either “seller” or “purchaser”. After these key points of information get stated in the preamble, the next section begins and it is normally called the Recital. This part serves as the main meat and bones of the agreement outline.
The definitions section is the first article on most stock purchase agreements as it defines certain key terminologies and phrases which will get used all throughout the agreement. All of the relevant terminology that gets defined will be either boldfaced or capitalized and they will usually be listed in alphabetical order. The attention to detail with the terminology definitions is very crucial, because while it can be very tempting to skip through this section, understanding exactly what these terms mean in the context of the purchase agreement is key since it can drastically impact the meaning of the agreement. Therefore, you really should take the time to read through the whole section so as to familiarize yourself with the wording and its meanings within the agreement. In particular, words such as “liabilities”, “material adverse effect”, and “seller’s knowledge” can all have huge effects on the contract just depending on how they are defined in a particular context.
In this part of the agreement, the exact terms of the sale will be outlined at length. It will contain a part that refers to the seller transferring ownership or selling to the purchaser or the buyer acquiring from the seller some specified amount of shares. Further, the purchase price and any adjustments made to it will be clearly shown here, including:
In this segment, the seller’s warranties are stated expressly and get defined. Untruthful or incorrect representations of warranties can result in the liability of whichever side made the statements. This may include statements concerning past and future facts related to the business, such as:
For the most part, this part of the agreement is identical in function to the previous section, except that it focuses on the warranties and representations from the buyer’s side. Oftentimes, these two sections mirror each other quite closely. Since the buyer usually pays cash for the stock, their warranties may be more limited than the seller’s.
Most deals have a set time frame from when the parties agree to sign off and the actual closing. Because of this limitation, the covenants segment of the agreement outlines things that each party should avoid doing during that time frame. Typically, this translates into a long list of actions that need to happen during that time period in addition to some actions which are outright prohibited until the closing of the arrangement.
This part of the agreement is comprised of terms and conditions that either need to be met or waived prior to the time that the arrangement closes. These conditions often include both sides carrying out their pre-closing covenants and ensuring that all terms are fulfilled.
Article seven aims to clarify indemnification rights by stating the terms whereby the other party gets compensated just in case one party breaches their contract. It will also typically include a section discussing the losses that may arise from specific cases. You can expect this section to talk about:
In the eighth article, you’ll encounter details about each party’s right to terminate the contract. This will typically cover some of the follow reasons for termination:
The final section of an agreement will always end with a section that goes over any miscellaneous provisions. These provisions touch base on several subjects, like:
Stock Purchase Agreements matter because they articulate the terms of a sale and they put it into writing. They can prevent arguments or misunderstandings that would otherwise end up in court. Furthermore, the agreement also gives the buyer more faith in the transaction since the seller has the chance to describe why they are selling. Lastly, it also details other important details, such as warranties, dispute resolution means, and covering costs when unexpected problems cause loss.
Admittedly, there are few situations where having a Stock Purchase Agreement wouldn’t be useful, such as:
Even then, however, an SPA can only help, never hinder you.
There are a few instance as to why a Stock Purchase Agreement is crucial to use, which may include the following situations:
Some common mistakes that people make is thinking they don’t need to make a Stock Purchase Agreement because the person they’re selling to is someone known. That decision affects your whole company, so there’s no room to leave things to chance or faith. Similarly, simply filling out a pre-made stock purchase agreement template from the internet is probably not a great idea either as it likely won’t contain all of the relevant clauses needed for your business. It’s always best to have legal professionals craft your document after meeting with you to assess the individual needs and interests of your business. That’s where we can help you.
We have extensive experience with drafting and filing Stock Purchase Agreements for our clients. We invite you to give us a call at (310) 943-1171 to speak to a California corporate attorney today. Our lawyers in Glendale, Los Angeles County, California, will ensure that your transactions are always in your best interest.
KAASS LAW, 815 E Colorado St #220, Glendale, CA 91205, (310) 943-1171
KAASS LAW is authorized to practice law in California. The above content is intended for California residents only. This content provides only general information which may or may not reflect current legal developments. KAASS LAW expressly disclaims all liability in respect to actions taken or not taken based on any of the contents of this website. The above content DOES NOT create an attorney-client relationship. KAASS LAW does not represent you unless you have expressly retained KAASS LAW in person at the KAASS LAW office. KAASS LAW helps clients in: Los Angeles, Burbank, Hollywood, Glendale, Van Nuys, North Hollywood, Studio City, Highland Park, Eagle Rock, Sunland, Tujunga, Sylmar, San Bernardino, La Crescenta, La Canada, Beverly Hills, Westwood, Santa Monica, Brentwood. Pacoima, Montebello, Commerce, Alhambra, Downey, Bell, Maywood, Walnut Park, Vernon, Lynwood, Echo Park, Silverlake, Mission Hills, Northridge, Woodland Hills, Encino, Canoga Park, North Hills, Porter Ranch, Chatsworth, Reseda. Get Directions on Google Maps
The whole reason that corporations have to deal with a detailed and pesky bookkeeping record is because California law requires it. According to California Corporation Code 1500, every corporation must maintain a detailed and accurate record of accounts and outlines of the time that the executives and owners spend on meetings. In fact, even shareholder, board, and committee meetings and decisions must be documented and housed in the executive headquarters. Further, all shareholder names, addresses, and amounts of shares owned must also be accounted for in the report. For smaller corporations, this is already a nightmare to contend with, but the larger your corporation grows, the more annoying and tedious this law becomes.
The other part of this dilemma to consider is how exactly all of that information is going to be stored. Clearly, the records must account for information that is not only sensitive but also deeply personal and intimate with respect to the company and its shareholders. All of those people are going to be relying on the corporation to ensure the safety of their credentials and information. To that end, there are a few methods of bookkeeping that are worth discussing. The law only goes so far as to specify that the records must be kept either in written form or in some other form that is capable of being converted into a clear, legible, tangible form, or any combination of the aforementioned. Therefore, you actually have some wiggle room here in terms of deciding how to store the necessary information. You can, of course, choose to go the traditional route of simply keeping all the information on hand in paper form. The upside is that you will always have the original paper copy of the records, but the obvious downside is that those records are susceptible to being permanently lost or damaged. The alternative would be to store those records digitally, by uploading them onto your corporation’s secure server from the beginning by means of software. The pro in these situations is that you are unlikely to ever completely lose all of your important bookkeeping records, but the drawback is that now all of that sensitive information is potentially vulnerable to online attack. In these situations, cybersecurity becomes a major concern.
As we have seen there is no one method that manages to avoid all risk, and that’s a large part of the reason why California Corporate Code 1500 can be such a hassle for corporations to deal with. However, we can help. Our firm has extensive experience with helping businesses through the issues that may arise from record keeping as per California Corporate Code 1500. We invite you to us a call at (310) 943-1171 to speak with our California corporate lawyers today. Our lawyers in Glendale, Los Angeles, California, are dedicating to providing our clients with the highest quality services possible. KAASS LAW, 815 E Colorado St #220, Glendale, CA 91205, (310) 943-1171
KAASS LAW is authorized to practice law in California. The above content is intended for California residents only. This content provides only general information which may or may not reflect current legal developments. KAASS LAW expressly disclaims all liability in respect to actions taken or not taken based on any of the contents of this website. The above content DOES NOT create an attorney-client relationship. KAASS LAW does not represent you unless you have expressly retained KAASS LAW in person at the KAASS LAW office. KAASS LAW helps clients in: Los Angeles, Burbank, Hollywood, Glendale, Van Nuys, North Hollywood, Studio City, Highland Park, Eagle Rock, Sunland, Tujunga, Sylmar, San Bernardino, La Crescenta, La Canada, Beverly Hills, Westwood, Santa Monica, Brentwood. Pacoima, Montebello, Commerce, Alhambra, Downey, Bell, Maywood, Walnut Park, Vernon, Lynwood, Echo Park, Silverlake, Mission Hills, Northridge, Woodland Hills, Encino, Canoga Park, North Hills, Porter Ranch, Chatsworth, Reseda. Get Directions on Google Maps
Next, California corporation's have to prepare and file your Articles of Incorporation to the Secretary of State’s office. These documents are what the state will use to establish your corporation as a business entity. The articles must contain the name of the corporation, its purpose, the name and address of a registered agent, the street address of the corporation, the amount of shares that the corporation is authorized to issue, and the signatures of the incorporators. As it pertains to outlining the shares of the corporation, your Articles of Incorporation must account for some specifics. If the corporation will have only one class of shares, then the articles of incorporation must list out the total amount of shares that the corporation is authorized to issue. On the other hand, if the corporation is to have more than one class of shares, then the articles must account for the total amount of authorized shares in each class, the designation of each class, and the rights and restrictions that may apply to each class.
In California, every corporation must have an agent for service of process in the state. This agent has to be a person living in California or corporation that has registered within the Secretary of State’s office as a corporation. The registered agent agrees to receive legal papers on the corporation’s behalf, in the event that legal action is taken. A corporation cannot be its own registered agent. Lastly, note that the registered agent, be it person or corporation, must have a physical address, meaning a PO box is not sufficient. Next up, you’ll want to set up your records book. California Corporations Code 1500: It Pays to Keep Receipts Pursuant to California Corporations Code 1500, your corporation must keep track of important internal information. For this reason, you must set up a corporate record book (physical or virtual), in which you document important corporate paperwork, including minutes of director and shareholder meetings, stock certificates and stubs and shareholder information. Once again, this record must be quite extensive and thus the information it contains is also highly sensitive. It is vital to ensure that the physical and cybersecurity of the record book is of a high standard. It may pay dividends to see our in-depth article about your options for corporate bookkeeping here.
After you’ve taken care of the method of record keeping, you’ll then need to specify the people who are applying to form the corporation. California law allows for one or more persons, corporations, partnerships, or associations to form a corporation. The people who apply to form the corporation are called incorporators and they are responsible for filing the articles of incorporation. The incorporators should also elect directors and officers, and agree upon corporate bylaws. Upon selecting directors, the incorporators have no further responsibilities. The requirements for specifying incorporators are that the corporation must have at least one incorporator and that their name(s) be listed on the articles of incorporation.
Once the incorporators have named the directors, your new directors will have the responsibility of setting and carrying out corporate policy. From then on, those directors have fiduciary duty to the corporation and its respective shareholders, which ensures that they must always act in the corporation’s and the shareholders’ best interests. The requirements for specifying directors for your corporation are only that there must always be at least one director and that the maximum amount of directors is proportional to the maximum amount of shareholders.
After your corporation has specified its directors, California law requires that your corporation state its purpose. While a statement of purpose may not sound particularly complicated, it is actually a very nuanced part of the procedure to forming your corporation. The reason for this is that you would ideally want to leave the purpose statement as vague as possible so as to cover as much breadth and scope as possible. This would enable your corporation to operate within all possible boundaries of the law as it pertains to business. Therefore, it’s imperative to use generic language for your corporation’s purpose statement. For this part, having legal counseling is particularly useful because a seasoned business lawyer will know the best way to word and compose such statements.
Lastly, the final thing you will want to do is to draft up and sign off on corporate bylaws with the incorporators and directors of the corporation. The irony is that this crucial document is not actually required to be submitted to the Secretary of State’s office like the rest of the Articles of Incorporation are, but they are nonetheless vital to have for the smooth upkeep and maintenance of your corporation. This is because incorporation bylaws describe how the company will conduct its operations, how directors and officers are to be appointed, their duties and the manner by which executive meetings take place. It is required that you have your corporate bylaws handy at the corporation’s headquarters. They must also specify whether there is a maximum limit to the amount of directors the corporation can have, or whether that maximum will be determined later by a board or shareholders. It’s also worth noting that there can’t be anything illegal written into the bylaws because state and federal law supersede its authority. Bylaws are also extremely useful for showing that your corporation is legitimate to potential investors and to the IRS.
The process of forming a corporation can be daunting and tedious, but you do not have to face it alone. As alluded to earlier, experienced business lawyers can greatly speed up and smoothen the process of formalizing your corporation as a legal entity. Our team of California business lawyers have many years of experience with the process and can help your company achieve corporation status quickly and effectively. We invite you to give us a call at (310) 943-1171 to see how a Glendale corporate formation lawyer can help. Our lawyers in Glendale, Los Angeles, California, are dedicating to providing the highest quality legal services for all of our clients.