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Business Law

Business law is an extremely broad subject.  It is broken down here into subtopics of business entities, licensing, tax laws, securities, and commercial transactions.

At its most basic, there is the law of business entities.  This is the law governing entities such as corporations, partnerships and limited liablity companies.  Under this subtopic, numerous questions arise such as how do you create the entities?  What are the advantages and disadvantages of particular types of entities?  What are the rights and liabilities of owners and persons responsible for running a business?  Which entity is appropriate will depend on a variety of factors and should be discussed with a lawyer to ensure selection of the most appropriate form of doing business.  To prepare for such discussions you may wish to consult the law, forms and other materials provided in the Resources below.  The Secretary of State's Office has a variety of resources including forms for creating business entities within the state.  It also has business resource publications that explain the differences in the business entities and discuss factors to consider in choosing the appropriate entity for a particular business such as limitation of liability, control of the entity and taxation.

Another set of laws applicable to business are licensing laws.  Any business in Washington will have to obtain a business license but it may have to obtain other licenses as well.  For example, a lounge would need to obtain a liquor license and perhaps a gambling license along with a general business license.  And a business will likely have to obtain licenses not just from the state, but also from the county and possibly a municipality as well.  The Department of Revenue provides a very useful tool for determining what licenses a person needs to start any particular business.

Tax laws are also applicable to most businesses.  These include the federal income tax, state taxes such as the business and occupation (B&O) tax and sales and use taxes and also local taxes (possibly county and city taxes).  The federal income tax system is complicated and a business's taxes will depend on the business entity it was created as (whether the income goes to the entity and then is distributed to the owners [shareholders] or whether the income goes directly to the owners).  The Washington Department of Revenue publishes a Business Tax Guide that explains the state's taxation system and procedures for paying taxes.  For local taxes, businesses can consult local governments or chambers of commerce to learn more about those laws.  The Municipal Research and Services Center of Washington also provides information on local governments.

For larger business concerns offering stock, securities laws may also apply.  The securities laws that most people read about in the news are federal laws but states also have securities law.  The federal Securities Exchange Commission (SEC) provides a brief overview of securities laws and information about the Securities Division of the Department of Financial Institutions can be found at its website.

One final area of business laws worth mentioning is the area that is more commonly known as commercial law.  These are laws that commonly apply in business to business transactions.  Such transactions include the sale and distribution of goods and the financing of such transactions.  Although this area is related to contract law (discussed in another section), many business transactions are governed by a part of the Revised Code of Washington called the Uniform Commercial Code (UCC).  The purpose of the "uniformity" in the UCC is to avoid conflicts in the laws between different states when businesses deal with other businesses and persons outside of their home state.  The UCC has provisions to prevent fraud, simplify the processes of sales and distribution and protect parties to transactions by means such as creating warranties.

 

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By: kunsch
Last Updated: December 26, 2011 - 2:30pm

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