By Kelly Bagla, Esq.

The world of business leadership is a high stakes game, and top executives bear the heavy responsibility of protecting their companies and their shareholder interests. Yet, amidst the whirlwind of corporate success, many CEOs and business owners often overlook a critical aspect: safeguarding their personal wealth.

Having been a start-up lawyer and entrepreneur, I have been asked many of the following questions over the years by entrepreneurs when starting their company. Sometimes there isn’t an easy answer, and as lawyers often like to say, “it depends on the circumstances.” But here are my short-hand answers to the frequently asked start-up questions:

1. Should I form my company as C corporation, an S corporation, an LLC, a partnership or a sole proprietorship?

You may have heard of or even use “Social Media Influencers.” This is where businesses sometimes try to reach a broader audience by enlisting “social media influencers,” a term for people who have achieved some level of popularity or recognition online. Social media influencers endorse a product or service offered by a business on platforms like Facebook, Instagram, Twitter, YouTube, or TikTok. In exchange, the business provides them with money, free products or services, or a combination. There are four main tiers of influencers: Nano Influencers: 10,000 or fewer followers Influencers: 10,000 to 100,000 follower Macro Influencers: 100,000 to 1,000,000 followers Maga Influencers: 1,000,000 or more followers Using Social media influencers can be a creative and cost-effective marketing strategy, but it does not come without potential problems and risks. The Federal Trade Commission (FTC) has provided key guidelines in this area. Businesses and sometimes influencers may face legal trouble if they fail to comply with the guidelines. Moreover, poorly created contracts between businesses and influencers can lead to disputes between them. Each side should understand their legal rights and obligations to the public and to each other before entering into a business relationship. FTC GUIDELINES: Section 5(a) of the Federal Trade Commission Act prohibits unfair or deceptive acts or practices that affect commerce. This law empowers the FTC to regulate endorsements. The FTC released guidelines concerning the use of endorsements and testimonials in advertising, which affect the activities of influencers. The guides define “endorsement” broadly as any advertising message that consumers are likely to believe reflects the opinions, beliefs, findings, or experiences of someone other than the sponsoring advertiser. ACTUAL USE: Among other things, the FTC guides provide that an endorsement should reflect the honest opinions, findings, beliefs, or experience of an influencer or other endorser. An endorsement should not convey a representation that would be deceptive if made by the business. It should not be presented out of context or otherwise distort an influencer’s opinion or experience. An influencer should have been a good faith user of the product when the endorsement was given if an advertisement represents that the influencer uses the product. EXPERT: When an advertisement says or implies that an influencer is an expert with respect to the endorsement message, their qualifications should give them the expertise that they are represented as possessing. For example, an endorsement of skin care products by a person described as a “doctor” would be deceptive if the doctor is a brain surgeon. An expert should actually exercise their expertise in evaluating the product’s features or characteristics. DISCLOSURES: An influencer should fully disclose any connection with a business that might materially affect the weight or credibility of an endorsement. This might be a personal or employment relationship, such as when the influencer is a relative of the business owner or is a full-time employee of the business. More often, the relationship is financial, such as when a business provides an influencer with money or free products. The FTC has released specific disclosure tips for social media influencers. CONTRACTS BETWEEN INFLUENCERS AND BUSINESSES: Creating an agreement with an influencer to market a product or service may seem straightforward, but the contract should require the influencer to comply with applicable laws and cooperate with the business in any regulatory action related to the contract. Other terms that should be included relate to messaging, content restrictions, content editing, content removal, and morals and behavior clauses. The contract should designate the influencer as an independent contractor rather than an employee or partner. However, a business still should avoid exercising too much control over the influencer’s work, since this could lead to their classification as an employee even if the agreement says otherwise. Kelly Bagla, Esq. is an award-winning Business Formation and Asset Protection Lawyer in San Diego.

Artificial intelligence (AI) is rapidly changing the world, and the legal profession is no exception. AI-powered tools are now being used to draft contracts, including buy/sell agreements. While AI can be a valuable tool, it is important to be aware of the potential pitfalls of using it to draft legal documents. Many people believe AI technology works in the same way as a human brain, but that’s not the case. Many current AI systems work in manners different from humans. For example, they review data using machine learning, or algorithms, rather than cognitive processes. AI is adept at processing data, but it cannot think abstractly or apply common sense as humans can. One of the biggest risks of using AI to draft legal documents, such as a buy/sell agreement is that the AI may not be able to understand the nuances of the law. This can lead to the agreement being incomplete or inaccurate. Additionally, AI may not be able to take into account all of the specific terms and conditions that are important to the parties involved in the transaction. Another risk of using AI to draft a buy/sell agreement is that the agreement may not be enforceable. This is because AI-generated agreements may not meet the legal requirements for a valid contract. For example, the agreement may not be signed by all of the parties involved in the transaction, or it may not contain all of the necessary terms and conditions. Finally, using AI to draft a buy/sell agreement may create legal liability for the parties involved. This is because the parties may be held responsible for any damages that result from the AI-generated agreements. If you are considering using AI to draft a buy/sell agreement, it is important to be aware of the potential risks. You should also consult with an experienced attorney to ensure that the agreement is complete, accurate, and enforceable. Here are some additional tips to avoid common mistakes when using AI to draft a buy/sell agreement: Use a reputable AI-powered tool that is designed for legal drafting. Make sure that the AI-generated agreement is reviewed by an experienced attorney. Be sure to include all of the necessary terms and conditions in the agreement. Have the agreement signed by all of the parties involved in the transaction. Keep a copy of the agreement for your records Although AI in the legal sector enhances the work of attorneys, it cannot replace them. Kelly Bagla, Esq. is an award-winning Business Formation and Asset Protection Lawyer in San Diego.

Starting a business is a big undertaking, but it can be incredibly rewarding. If you’re thinking about starting your own business, here are five major tips to help you get started: 1. Do your research. Before you do anything else, it’s important to do your research. This includes researching your target market, your competition, and the industry you’re entering. The more you know about the landscape, the better prepared you’ll be to make informed decisions about your business. 2. Create a business plan. A business plan is a roadmap for your business. It should include your business goals, your marketing strategy, and your financial projections. Having a business plan will help you stay on track as you grow your business. 3. Get funding. Unless you’re lucky enough to have the resources to fund your business yourself, you’ll need to find a way to get funding. There are a number of options available, including loans, grants, and investors. Do your research and find the option that’s right for you. 4. Build a team. No one can build a successful business alone. You’ll need to build a team of talented and dedicated people who share your vision. When hiring, look for people who have the skills and experience you need, as well as a positive attitude and a willingness to work hard. 5. Market your business. No one will know about your business unless you market it. There are a number of ways to market your business, including online marketing, print advertising, and public relations. Choose the methods that are right for your business and budget. Starting a business is a lot of work, but it can be incredibly rewarding. By following these five tips, you can increase your chances of success.

Starting an online business is an exciting prospect, but it’s important to be aware of the legal risks involved. Here are a few tips on how to protect your online business legally: 1. Choose the right business structure. The first step is to choose the right business structure for your online business. There are three main types of business structures: sole proprietorship, partnership, and corporation. Each structure has its own advantages and disadvantages, so it’s important to choose the one that’s right for you. 2. Get the right licenses and permits. Depending on the type of business you operate, you may need to obtain certain licenses and permits. For example, if you sell products online, you may need a sales tax permit. Be sure to research the requirements in your state and local jurisdictions. 3. Protect your intellectual property. If you have any intellectual property, such as trademarks, copyrights, or patents, it’s important to take steps to protect it. This can include registering your intellectual property with the appropriate government agency. 4. Have a strong privacy policy. Your website should have a strong privacy policy that explains how you collect and use customer data. This will help protect you from potential legal liability. 5. Use a secure payment system. If you accept payments online, it’s important to use a secure payment system. This will help protect your customers’ financial information. 6. Have a website disclaimer. Your website should have a disclaimer that disclaims liability for certain things, such as the accuracy of the information on your website. This will help protect you from potential legal liability. 7. Get legal advice. If you have any questions about the legal aspects of running an online business, it’s always a good idea to consult with an attorney. An attorney can help you understand the laws that apply to your business and make sure you’re taking the necessary steps to protect yourself. By following these tips, you can help protect your online business from legal risks.

When starting a new business, one of the most important decisions you will make is where to register your corporation. There are many factors to consider when making this decision, such as the state’s corporate tax rate, fees, and regulations. Here are some of the best states to register a corporation in the US: Delaware: Delaware is often considered the best state to register a corporation because of its favorable corporate laws. The state has a low corporate tax rate, no personal income tax, and a business-friendly environment. Nevada: Nevada is another popular state for corporate registration due to its low taxes and lack of corporate reporting requirements. Wyoming: Wyoming is a good choice for businesses that want to avoid double taxation. The state does not have a corporate income tax, and it allows businesses to elect to be taxed as a pass-through entity. Florida: Florida is a good choice for businesses that want to avoid personal income tax. The state does not have a personal income tax, and it has a low corporate income tax rate. South Dakota: South Dakota is a good choice for businesses that want to avoid double taxation. The state does not have a corporate income tax, and it allows businesses to elect to be taxed as a pass-through entity. When choosing a state to register your corporation, it is important to consider all of the factors that are important to you. Some other factors to consider include the state’s business climate, the availability of skilled labor, and the cost of living.

Selling a business can be a complex and intricate process that involves numerous legal considerations. Whether you’re a seasoned entrepreneur or a first-time business owner, enlisting the assistance of a skilled business lawyer can make a significant difference in navigating the complexities of a business sale. This article will explore the invaluable role a business lawyer plays in facilitating the sale of a business and ensuring a smooth and successful transaction. Understanding the Business Sale Process Selling a business involves more than just finding a buyer and transferring ownership. It requires careful planning, meticulous documentation, and a comprehensive understanding of legal requirements. A business lawyer specializing in mergers and acquisitions can guide you through the various stages of the process, ensuring that all legal aspects are handled efficiently and effectively. Structuring the Sale One of the critical roles of a business lawyer is to assist in structuring the sale of a business in a manner that maximizes the seller’s financial interests while mitigating potential risks. They will work closely with you to determine the most advantageous sale structure, whether it be an asset sale or a stock sale, considering factors such as tax implications, liabilities, and potential contingencies. Negotiating and Drafting Contracts Negotiating the terms of a business sale agreement can be a challenging task, requiring astute negotiation skills and legal expertise. A business lawyer acts as your advocate, representing your best interests during negotiations and ensuring that the final agreement aligns with your objectives. They will assist in drafting and reviewing contracts, including purchase agreements, non-disclosure agreements, non-compete agreements, and other necessary legal documents, to safeguard your rights and protect you from potential liabilities. Due Diligence and Compliance A crucial aspect of selling a business is conducting due diligence to assess the company’s financial, legal, and operational health. A business lawyer plays a pivotal role in coordinating due diligence efforts, ensuring that all necessary documentation and information are provided to potential buyers. They will help you address any legal or compliance issues that may arise during the due diligence process, minimizing the risk of future legal disputes and ensuring compliance with regulatory requirements. Mitigating Risks and Liabilities When selling a business, there are inherent risks and liabilities involved. A business lawyer will help identify and mitigate potential risks, protecting you from legal complications that may arise after the sale. They will review contracts, leases, licenses, permits, and other legal documents to ensure all necessary disclosures are made, minimizing the likelihood of post-sale disputes or claims. Navigating Complex Legalities The sale of a business involves compliance with a myriad of legal regulations and statutes. A business lawyer possesses the expertise and knowledge to navigate these complexities, ensuring that the sale proceeds in accordance with the law. They will assist in fulfilling legal obligations, such as obtaining necessary permits, licenses, or approvals, and advise on compliance with local, state, and federal regulations. Finalizing the Transaction When it comes time to finalize the sale, a business lawyer will play a crucial role in overseeing the closing process. They will ensure that all necessary legal documentation is executed correctly, funds are transferred securely, and any post-closing obligations are fulfilled. Their meticulous attention to detail helps to prevent potential issues that may arise during the final stages of the transaction. Selling a business is a significant undertaking that requires careful planning, legal expertise, and attention to detail. By engaging the services of a knowledgeable business lawyer, such as Bagla Law specializing in business formation and asset protection, you can navigate the complexities of a business sale with confidence and peace of mind. From structuring the sale to finalizing the transaction, a business lawyer provides invaluable guidance, protecting your interests and ensuring a smooth and successful sale process.

Acquiring an existing business can be an exciting opportunity for entrepreneurs looking to expand their operations or venture into new markets. However, the process of buying a business can be complex and laden with legal intricacies that demand careful attention. That’s where a skilled business lawyer, such as those at Bagla Law, specializing in business formation and asset protection, can play a pivotal role. In this article, we will explore the various ways in which a business lawyer can assist you throughout the process of acquiring a business, ensuring a smooth and legally sound transaction. Thorough Due Diligence: Before finalizing any business acquisition, conducting due diligence is crucial to understand the company’s financial health, legal standing, and potential risks. A business lawyer can conduct a comprehensive review of contracts, agreements, licenses, permits, intellectual property, financial statements, tax records, and other pertinent documents to uncover any potential liabilities or hidden issues. Their expertise in identifying legal pitfalls ensures that you make an informed decision based on accurate information. Structuring the Deal: A business lawyer can assist in structuring the acquisition deal to suit your unique requirements and objectives. They can help determine whether an asset purchase or a stock purchase is more advantageous and negotiate the terms of the deal accordingly. They will guide you through crucial aspects such as purchase price allocation, warranties, indemnification clauses, and non-compete agreements, ensuring that your interests are protected throughout the transaction. Drafting and Reviewing Contracts: Acquiring a business involves a multitude of contracts and legal documents. From non-disclosure agreements (NDAs) to letters of intent, purchase agreements, and transition services agreements, a business lawyer can draft, review, and negotiate these documents on your behalf. They possess the necessary expertise to identify potential risks, negotiate favorable terms, and ensure that the contracts align with your best interests. Regulatory Compliance: Navigating the regulatory landscape can be challenging when purchasing a business, as various legal and compliance issues may arise. A business lawyer specializing in acquisitions can guide you through the intricacies of regulatory compliance, ensuring that you adhere to all applicable laws, permits, licenses, and regulations governing the specific industry or location. By providing insight into compliance requirements, they mitigate the risk of legal repercussions down the line. Mitigating Risks and Disputes: During the acquisition process, unforeseen risks and disputes can emerge, potentially jeopardizing the transaction. A business lawyer can proactively identify and address potential legal issues, minimizing the likelihood of conflicts. If disputes do arise, they can guide you through negotiation, mediation, or litigation, protecting your rights and interests and working towards a favorable resolution. Post-Acquisition Transition: Even after the purchase is complete, there may be legal matters that require attention during the post-acquisition transition period. A business lawyer can assist with the transfer of contracts, licenses, and permits, ensuring a smooth transition of ownership. They can also advise on employment law matters, intellectual property protection, and other legal considerations that arise during the integration process. Acquiring a business is a significant undertaking, and having the support of a skilled business lawyer from Bagla Law can be invaluable. From conducting due diligence and negotiating contracts to ensuring regulatory compliance and mitigating risks, their expertise ensures a seamless and legally sound acquisition process. By leveraging their experience in business formation and asset protection, you can confidently navigate the complexities of buying a business and position yourself for long-term success.

Starting a business with family members can be an attractive option for many entrepreneurs. It offers the opportunity to work with people you know and trust, and it can also be a way to keep the business within the family. However, there are risks associated with starting a business with family members that should not be overlooked. In this blog, we will explore some of the risks of starting a business with family members. 1. Relationship strain Working with family members can put a strain on relationships. Disagreements over business decisions can spill over into personal relationships, causing tension and conflict. It is important to establish clear roles and responsibilities, and to have open and honest communication to avoid misunderstandings and conflicts. 2. Different work ethics Family members may have different work ethics, which can cause problems in a business. For example, one family member may be more relaxed about deadlines or may take a more casual approach to the business, while another family member may be more driven and focused. These differences can lead to resentment and frustration if they are not addressed. 3. Unequal contributions Starting a business with family members can lead to unequal contributions, both in terms of finances and work. One family member may contribute more financially, while another may contribute more in terms of time and effort. This can lead to resentment and conflicts if the contributions are not acknowledged and appreciated. 4. Lack of professionalism Working with family members can sometimes lead to a lack of professionalism in the business. Family members may be more relaxed about dress codes, punctuality, or language used in the workplace. This can create an unprofessional image for the business, which can harm its reputation and relationships with clients and customers. 5. Legal and financial risks Without proper legal and financial agreements in place, disputes over ownership, profits, and liabilities can arise amongst family members, leading to legal action and financial losses. It is important to consult with a lawyer and a financial advisor to ensure that all legal and financial matters are addressed. Starting a business with family members can be a rewarding and successful experience if done right. However, it is important to recognize the risks associated with this type of business venture and take steps to mitigate them. Establishing clear roles and responsibilities, having open and honest communication, acknowledging and appreciating contributions, maintaining professionalism, and consulting with legal and financial advisors are all important steps to take when starting a business with family members.