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Business Principles and the Law

Law affects all business relationships

LEGAL CHECKLIST TO START YOUR BUSINESS

January 31, 2011

So you’ve decided to start your own business now where do your begin? The first step is to research the steps needed to start your business, plan, then act.

• CHOOSE A BUSINESS NAME

Choosing a business name involves availability. Most will select something other than their own name so your business will have a FICTITIOUS BUSINESS NAME. You need to do a search at the county to make sure not only that your proposed name is available but also whether any other businesses have a similar name that might be confusing.

You may create a tagline for your business e.g. “More Filling, Taste Great” and develop a logo like the NIKE swoosh. These creations are your Intellectual Property and you will need to become knowledgeable about how to protect these assets.  The Digital Millenium Copyright Act covers copyrights, trademarks, patents. You can protect some of your assets simply like filing for a copyright, others like trademarks may require you to hire or consult an attorney.

• BUSINESS LICENSE

Type of business will determine which rules apply to your business. Many businesses require a license for legal operation. Most cities require a license to operate within its borders. To find out whether you need a business license or not, check with the CITY where you will operate your business. Check with your Secretary of State, some industries have State requirements, e.g. dry cleaners, day-care providers, contractors. Also, if your business involves consumer products some federal regulations may apply for legal operation.

It is challenging enough to start a business, you don’t want to get hit with fines and penalties for not following the rules. Don’t cut corners on compliance, the money you think you may save by not paying for a license or fees will be a fraction of your financial penalties if you are found to be operating without all your paperwork in order.  Plus your business may be shut down until you file all necessary paperwork.

• BUSINESS STRUCTURE

You will need to obtain an employer identification number (EIN) from the Internal Revenue Service.  Sole proprietorship, partnership, LLC, S corporation, C corporation. There are many business entities that you can choose for your business. Primary considerations:
o risk
o sheltering assets
o annual costs
o terminating the business

I would strongly recommend that while you are planning your business, serious thought be given to, if necessary how will the business close down. Sale of assets, who will take what share of profits, debt? Thoughtful planning and drafting of exit provisions will you save thousands in future legal fees.

• BUSINESS LOCATION 

o Internet
Location, location, location. Even if you determine that your business will not have a brick and mortar presence, the Internet has its own set of regulations from privacy laws, identity security.

Does your business need foot traffic, parking? As you research your potential physical location, check with your city planner’s department on the zoning requirements and permit process. Once you have your physical location, you will be required to provide a safe workplace.

• SUPPLIERS

As you work with your suppliers you will need to determine payment terms, e.g.,net 30. Contact your trade association to find out generally accepted business practices if you are new to the industry.

More importantly, if you have a great idea but no practical experience in the industry, consult with an industry expert before you begin your business, have them review your business plan before you begin. If you plan to trade across state lines, many of the regulations that will apply to your business can be located in the Uniform Commercial Code.

Finally, you will need to research if any of the multiple environmental regulations apply to your business at your chosen or planned location.

• RECORD KEEPING

What does record keeping have to do with legal considerations for my business? Your taxes will require good record keeping , your investments will require good record keeping. You will be better prepared if you are audited.

If you decide to sell stock in your company and issue shares, your business will need to comply with Security and Exchange Commission regulations and also the Federal Trade Commission.

• RESEARCH YOUR MARKET – COMPETITORS

So you have researched your market. You know what you need to sell your product to gain a profit and be competitive. You have a great promotional campaign prepared to launch your business, just make sure your advertising is not false or misleading.

The Federal government has established certain enterprise zones to encourage development and urban growth, these locations offer tax credits and benefits for businesses.

• COMPLIANCE ISSUES

When you begin to hire employees, you will have to adhere to employment and labor laws. If you are hiring teenagers or foreign workers, there are specific laws that apply. In your workplace, you will need to display various posters.

As an employer, you will be required to carry certain types of insurance coverage and employee taxes. Some categories of people that work for you are not employees but independent contractors, e.g. gardener.

Has PGE breached its duty of care?

January 29, 2011

UPDATE TO THIS BLOG – 2/20/2011 – San Francisco Chronicle

COST OF SAN BRUNO PIPELINE BLAST JUMPS

“Dealing with September’s pipe explosion in San Bruno will cost PG&E as much as $300 million this year, double the amount it had estimated earlier, the utility said last week.  The higher expenses stem from record verification and possible additional testing and inspections.  Total costs my be as much as $763 million, including $400 million in liability claims, PG&E Chief Financial Officer Kent Harvey said Thursday.  Federal investigators have yet to determine the cause of the rupture, which killed eight people and destroyed 38 homes.”

What is the role of regulation?  In the aftermath of the financial melt-down, the theorists who opined that less regulation would create free market expansion are witnessing the effects of Wall Street’s self-policing.  Similarly, with PG&E specifically and other energy companies generally, a permissive regulatory system has created the environment for the San Bruno explosion.

 PGE is responsible for inspecting 48,580 miles of natural gas pipelines plant .  However, the federal Pipeline and Hazardous Materials Safety Administration and the National Transportation Safety Board (“NTSB”) only inspect PG&E records not the quality of the actual inspections.  PGE and its lobbyists argued against more comprehensive inspections that would have allowed for improved inspections, particularly on older pipelines like the pipeline in San Bruno.

The reality is that not only did PGE advocate for an inadequate inspection procedure but “in the two audits that the CPUC performed, state investigators found that PGE had poor record keeping and problems identifying threats to its pipelines.  Moreover, PGE has inspection records in several locations.

 The real problem is that PGE is still insisting that its inspection procedures are adequate, although it stated that it did lower the pressure in all older pipelines.  Increased pressure in the pipeline may have led to the San Bruno explosion but to date the NTSB has yet to determine a cause.  But we do know this, there are miles of pipelines similar to San Bruno and not only does PGE need to step up its inspection procedures but also commit to repairs to retrofit where necessary to allow for improved inspection procedures.

 

PGE is a running business and as recently as 2001 declared bankruptcy.  Is PGE’s insistence on lesser inspection measures and poor record keeping based on the cost to “do it right” or do they really believe that their business practices are the best for public safety?

San Bruno is not PGE’s first major disaster, Hinkley, California had its groundwater contaminated with hexavalent chromium from a PG&E natural gas compressor plant resulting in a legal case and multi-million dollar settlement that was dramatized in the movie Erin Brockovich.

The public and businesses, no matter the industry, need to place safety foremost in their objectives, however, oftentimes safety costs more than cutting corners.  Making sure that companies in all industries adhere to what is best for the public is the role of regulation.  Advocates for a permissive system will advocate that stricter regulations stifle growth and innovation but after the financial melt-down and San Bruno disaster we all need to challenge those assumptions now that we have lived with the results of looser regulations.

 What is PGE duty to public safety? 

 Does PGE have a duty to impose more stringent inspection and improved reporting as good business or alternatively to be better to avoid another San Bruno?

 What is PGE social responsibility to its ratepayers and the general public?

 So what if PG&E doesn’t have the resources to bring their plant up to a safe level based on SoCal Edison and other energy companies.  It was not that long ago that PG&E was bankrupt.  So who pays for PG&E safety?  We are already crying out that ratepayers are paying for some of the damage from the San Bruno fire but what if collectively as a community we required PG&E to make their plant safe but it can’t do it? What then?

Is Wikileaks the symptom or the problem?

January 20, 2011

Is Wikileaks the symptom or the problem?

By cheryllawgroup@att.net

This blog was originally written January 20, 2011.  This update March 11, 2011.

The United States has focused on the illegality of the Wikileaks disclosures of US State Department cables and the harm they allegedly caused.  One of the primary harms has been to expose the influence and power of the United States on European governments not to prosecute US agents for certain actions.  Additionally, when the US needs on-the-ground information more than ever.  The ambassador to India,  Gene Cretz, was forced to leave the country prior to the protests because cables from the US Embassy in Libya, published by Wikileaks, were critical of Khadafi, showed possible support for rebel forces and retaliation to the ambassador was feared.

 Wikileaks, an internet-based start-up non-profit business, began in 2006.  Despite extensive traffic to their site[1] and being recognized by the media[2]), Wikileaks is not immune to business issues that challenge all start-ups: funding, working capital, organizational and leadership issues.  In addition particular to Wikileaks, i.e., freedom of the press v. treason.

 Business Purpose and Mission.  Wikileaks began as an intermediary between whistle-blowers and the press to shield and encourage the whistle-blower to report.[3]  Supporters of WikiLeaks in the media and academia have commended it for exposing state and corporate secrets, increasing transparency, supporting freedom of the press, and enhancing democratic discourse while challenging powerful institutions.  WikiLeaks states that its “primary interest is in exposing oppressive regimes in Asia, the former Soviet bloc, Sub-Saharan Africa and the Middle East, but we also expect to be of assistance to people of all regions who wish to reveal unethical behaviour in their governments and corporations.”  Wikileaks slogan is “We open governments”.

 Freedom of the Press.  Wikileaks practice to disclose illegal practices would seem to be a benefit.  However, in November 2010, when Wikileaks began leaking US State Department diplomatic cables, the US began to investigate Julian Assange, self described as “the heart and soul of this organisation, its founder, philosopher, spokesperson, original coder, organiser, financier, and all the rest”.  Many media feel that Assange is being unfairly targeted and victimized to cause Wikileaks to shut down.  Despite Wikileaks ability to verify[4] their leaks, many particularly in the US feel that Wikileaks has compromised national security, international diplomacy and want to prosecute Assange.   Although there is difficulty in prosecuting Assange because US law provides that leaking of some documents may be legally protected. [5].  Assange is seeking protection in Switzerland while some countries are contemplating potential criminal prosecution since theft of classified documents from US administration is illegal in most foreign countries.

Friendly Legal environment.   A thorough consideration and understanding of the law is necessary for Wikileaks to operate.  In Sweden, their operation is legally protected and the servers can code to protect the operation and create bulletproof hosting.[6]  Wikileaks had been shut down by Paypal and Amazon and Facebook for a period of tiime.  Facebook page was restored. 

Funding

Beginning in early 2009, Wikileaks had to shut down its website and focus its entire operation on fundraising.  In May 2010, Wikileaks did not receive a grant it had counted on for working capital[7] and had to shut down temporarily.  Through individual funders and legal support by Associated Press[8], Wikileaks has no other revenue stream than donations and grants.

 Operational Issues

Wikileaks is run by 1200 volunteer effort and an advisory board of eight people.  Some report state that as of the end of 2010, Assange and few other executives began to receive a salary.

 Leadership issues

Julian Assange and Daniel Domscheit-Berg who announced in September 2010 that he was leaving Wikileaks over internal conflicts to start his own site, OpenLeaks.com with a different business model.  Jacob Appelbaum did represent Wikileaks at 2010 Hackers on Planet Earth conference due to Assange and US conflict.

 Wikileaks provides an excellent practical example as to the worth and cost of Freedom of the Press?  Without Freedom of the Press how can some government practices be monitored or do threats open the door to reduced freedoms like the Patriot Act?  Do we always support Freedom of the Press or are there circumstances where we limit, what are the risks to either course of action?

Wikileaks receives multiple services like servers for free and has volunteers for most work performed?  How can Wikileaks leverage the number of viewers to its site to gain funding?

 Wikileaks, not unlike Facebook or Apple, experienced leadership issues.  What can start-ups do to prevent the operational success from being so closely linked to one leader?  How can succession planning or organizational depth be achieved?


[1] Claimed a database of more than 1.2 million documents within a year of its launch.[6]

[2] The organisation has won a number of awards, including The Economist‘s New Media Award in 2008[10] and Amnesty International‘s UK Media Award in 2009.[11][12] In 2010, the New York City Daily News listed WikiLeaks first among websites “that could totally change the news”,[13] and Julian Assange was named the Readers’ Choice for TIME’s Person of the Year in 2010.[14] (insert stats

 [4] According to statements by Assange in 2010, submitted documents are vetted by a group of five reviewers, with expertise in different fields such as language or programming, who also investigate the background of the leaker if his or her identity is known.[112] In that group, Assange has the final decision about the assessment of a document

 [6] Goodwin, Dan (21 February 2008). “Wikileaks judge gets Pirate Bay treatment”. The Register. http://www.theregister.co.uk/2008/02/21/wikileaks_bulletproof_hosting/. Retrieved 7 December 2010.

CHINA: Best of times and worst of times

January 20, 2011

By cheryllawgroup@att.net

 China’s president Hu Jintao is visiting Washington.  Mr. Jintao’s visit comes at a critical time as China impacts the world’s economy and the US specifically.  Let’s discuss what is happening the world economy and China’s role.  The regulatory landscape is changing in China to address growth, safety, and energy.  But first…

 The currency game.  The European Union, the euro, has been struggling since early last year bailing their members (Spain, Ireland, Portugal, Italy, and Greece) out of a debt crisis.  Germany is going strong so there EU reluctance to take any action which might stifle Germany’s trade strength. Chinese monetary policy is a gradual appreciation.  The Chinese have slowed the yuan strength for a couple of important reasons.  To keep its own currency low to protect small companies in the world trade where increases would open them up to more competition and force some businesses to close and to keep a reign on inflation. Additionally, while the euro is challenged, an undervalued yuan helps China to keep its exchange strength and to have the euro act as a counterweight against the dollar.

Consumer strength.  China specifically and Asia generally are booming.  The World Bank cites 9.3 percent overall growth for developing Asian economies.  Because of this growth, China has implemented credit-tightening measures to combat inflation and surging property prices.  China’s financial success and growth has led created a new market for luxury goods.  The world can tell who has money by who travels and spends.  Americans remember when its cities were filled by Japanese tourists and a few summers ago tourists from the European Union spending on that strong euro currency rate.  Since the US, Europe and Japan can no longer support the previous spending levels for luxury goods, China is stepping into the gap. 

 The “Peking Pound” has accounted for 2.5 million Chinese tourists visiting Western Europe up from 2 million in 2009.  Chinese visitors’ buying power is bolstered by a rise in the yuan against the euro.  Chinese purchasing power is a target for high end manufacturers. Chinese consumers spent $23.4 billion on high-end handbags, suitcases, shoes, watches, jewelry, clothes, cosmetics, and perfumes.  Just this holiday season, wealthy Chinese tourists were expected to spend $1.57 billion on luxury goods in the U.K.

According to the Chinese Academy of Social Sciences, most luxury goods makers have opened outlets in Chinese metropolises and provincial capital cities.  In the U.K., many West End stores have appointed assistants who speak Mandarin to help cash in on the lucrative new market.

 Energy.  How can China and the US partner on a low carbon future and why would they want that future? Both China and the US rely on fossil fuels.  In 2009, the US was the world’s top oil importer with 9.6 million barrels a day, while China was the second largest with 4.3 million barrels a day. Both countries are heavily dependent on coal which is relatively inexpensive but a major pollutant.  Together, the US and China consume about 60 percent of the world’s coal.

China and the US have met in 2009 and last year to discuss clean energy cooperation.  In 2009, in collaboration with the Worlds Resources Institute, joint research, supported by $150 Million in private and public funding from the US and China, began on development of clean energy technology with a focus on advanced coal research.  In 2010, both US and China participated at the United Nations climate conference in Cancun Mexico and the resultant Cancun agreement, a set of decisions that brings emissions among the world’s major economies under the UN’s framework.  A World Resources Institute analysis shows that the US can get close to its 17 percent emission reduction target for 2020 (v. 2005 levels) if the federal government and states move aggressively in this direction.

Finally, China’s urbanization.  China’s population shift to cities will create a demand for capital investment in urban building, raw materials, and energy production.  As more people relocate from villages or shanty towns.  China is providing affordable housing for up 5.9 million homes in 2010.  The government is providing the low income housing to curb soaring property prices.  China is invested 80.2 billion-yuan or $12.2 billion.  To address the housing migration, the National People’s Congress – China’s top legislature reported that provincial governments failed to meet their 2009 affordable housing construction goals.  The primary challenge to the provincial areas is the rising values for property.  Instead of using the land for affordable housing, the provinces could sell the lucrative land where property prices have continued to soar and increase their revenues.  The central government will guarantee land for the construction of 10 million affordable homes this year. Stricter permitting, inspection and quality control is necessary to address the construction quality and living conditions for the affordable housing.  Some new subsidized apartments were built on toxic land polluted by a chemical plant previously on the site.  In other developments, a subsidized housing project in Beijing was ordered demolished due to substandard concrete. 

 The Law –

 China is keeping the yuan undervalued to protect its small companies in world trade so that Chinese exports continue to be cheap.  China’s monetary policy protects its small businesses from competition which might force some businesses to out of the market.  Also China’s actions protect its trade strength around the world particularly with US and Europe.

 What does US current policy do to help its small businesses, to protect jobs?

 Are there any laws that the US can put in place to help small companies be more competitive in the world market?

 Besides encouraging China to accelerate the appreciation of the yuan, what regulatory actions can US take to increase the dollar’s strength? And reduce trade deficits?

 China is beginning to tax only high income earners for property taxes.  Is Chinese purchasing power an opportunity for the government to tax for increased revenue to support urbanization or would increased taxes take stifle the Peking Pound?

 With the Cancun Agreement, China and the US are linking to a global standard and watchdog in the United Nations regarding carbon emissions.  If China and the US are unwilling to police themselves, will the Cancun Agreement have any teeth?  What regulatory policy would support compliance from China and US?

 China needs to provide stricter guidelines for affordable housing projects.  Should regulations be at the local level regarding permits, construction inspections or at the central level?  Which will more effective?

Welcome to TalkLawblog!

January 3, 2011
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Welcome to TalkLawblog!

  • TALKLAWBLOG supports the course curriculum for JFK University MBA program. 
  • TALKLAWBLOG will analyze how businesses address sustainablity, social responsiblity, professional code of ethics, collaboration, innovation, ethical decisions regarding power and temptation, organizational integrity, and supply and demand.
  • TALKLAWBLOG examines corporations and organizations regarding HOW DO THEY LEAD within their STRUCTURE, human resource management, and CULTURE.
  • TALKLAWBLOG will cover legal issues related to LEADERSHIP, ETHICS, POWER. 
  • TALKLAWBLOG discusses how legal issues relate to marketing, accounting, & economics – national and global. 
  • TALKLAWBLOG blogs about Business and the Law.