Presentation on theme: "Describe legal issues affecting businesses"— Presentation transcript:
1Describe legal issues affecting businesses 3.06 Acquire foundational knowledge of business laws & regulations to understand their nature & scopeDescribe legal issues affecting businesses
2Business LawEverything that relates to our society is governed by laws and business is no exception.Business law or commercial law is simply a body of law that governs every aspect with regards to conducting a business.Before you start your own business, you should always familiarize yourself with the different laws to avoid legal liabilities and to protect yourself from fraudulent attacks.
3Business LawsBusiness law is applicable to both small and big businessesBecause of its broad coverage, several branches of it are categorized to avoid confusionContract lawSales lawProperty lawIntellectual property & computer lawBankruptcy lawTax law
4Contract LawDesigned to provide stability, predictability, as well as certainty, for buyers and sellers in the marketplace.Necessary to ensure compliance with a promise or to entitle the innocent party to some form of relief.
5Contract LawA contract is a legal agreement negotiated between two persons that creates an obligation to perform (or not perform) a particular dutyA “person” may be either a human being or an entity, such as a corporation, created by law.A legally enforceable contract requires:An Offer (I’ll mow your lawn this weekend, if you pay me $35)An Acceptance (You’ve got a deal)Consideration (The value received and given – the money and the lawn mowed)
6Contract Law What law governs contracts? Common Law of Contracts – Service Contracts.Mainly deals with real estate, service, insurance, intangible assets and employment contracts.Uniform Commercial Code (UCC) - Sale and lease contractsMainly concerned with sale of goods and securities.
7Sales LawThe sale of a good, or item of value, is a transaction designed to benefit both buyer and seller.Sales laws relate to the transfer of ownership of property from one person to another for value
8Sales Law What law governs sales? The Uniform Commercial Code (UCC) All 50 states and territories have enacted some version of UCC.Once a state's legislature adopts and enacts UCC, it becomes a state law and is codified in the state's statutes.
9Commercial Property Law Governs the lease, sale and use of land as well as buildings that are mainly used for business purposes.Includes shopping malls, office buildings, warehouses and grocery stores.Looks after people who own and use commercial property.Commercial property laws vary from jurisdiction to jurisdiction.
10Intellectual Property & Computer Law What is intellectual Property?A product resulting from human creativity, an original work fixed in a tangible medium of expression.Intellectual property laws protect the value of the investment in their creation and their economic potential into the future.
12CopyrightsCopyright law protects the expression of an idea but not the underlying idea itself, i.e. composers, artists, photographers.Minimum term of life of author plus 70 years95 years in case of anonymous or pseudonymous worksPublished and unpublished works
13PatentsExclusive federal grant from U.S. Patent and Trademark Office to make, use and sell an invention for 20 years.Cannot be renewed.Protection much stronger than copyright.Holder has exclusive rights to produceMust be an original idea.Patents for Software are now available.
14TrademarksTrademark is a distinctive mark, symbol, or slogan or any combination of these used by a business to identify goods and to distinguish them from products sold by others.Trademarks apply to products.Trade name applies to companies and are protected by federal law as well.Example: IBM, Coca-Cola, NBC.
15Trademarks Register with U.S. Patent Trademark Office Registration allows use of “®” symbol.Continuous use good forever.Renew every 10 years.General trademarks can be lost (Corn flakes and aspirin)
16Trade SecretsIncludes business processes or information that cannot be patented, copyrighted or trademarked.Includes: customer lists, plans, research, formulas, pricing information, marketing techniques.Gives businesses protection from competitors.Protection for trade secrets does not expireGoverned by the Uniform Trade Secrets Act.
17Bankruptcy LawBusiness owners who can't afford to pay back their creditors may file for bankruptcy.Way to settle their debt & avoid costly legal actionCreditors may be prevented from collecting on debts until the bankruptcy process is completed.Generally Two Forms of Bankruptcy ReliefLiquidationReorganizationForms are divided into Chapters:Chapter 7 – Liquidation (Personal or Business)Chapter 11 – Reorganization (Personal or Business)Chapter 12 – Reorganization (Family farmers or fishermen)Chapter 13 - Reorganization (Personal)
18Bankruptcy Law Chapter 7 – Liquidation. Chapter 11 – Reorganization Primarily for individuals but affect businesses operating as sole proprietorshipTrustee will sell assets (business & personal) to satisfy outstanding debtsChapter 11 – ReorganizationApplies to both individuals & small businessesSmall businesses operate under increased scrutiny but may keep operating under a reorganization planChapter 12 – ReorganizationFamily farmers & fishermenChapter 13 – ReorganizationPersonal only.Trustee sets up a 3-5 year repayment plan. Debtor keeps more assets under this plan.
19Tax Law Businesses must consider: N.C. businesses will need to obtain: Federal Tax LawsState Tax LawsSometimes Local Tax LawsN.C. businesses will need to obtain:Federal Employer Identification number (EIN) from the IRSState Employer Identification number from the N.C. Department of Revenue
20Federal Tax Laws Income taxes: Tax on profits of the businessDetermined based on the type of business ownershipPayroll taxes – tax on salaries and wages paid to employeesSocial Security – paid by business & employeeMedicare – paid by business & employeeFederal income tax withholding – paid by employee onlyFederal Unemployment tax – paid by business onlyExcise taxes – broad category of taxes covering certain types of businessesEnvironmental taxes.Communications and air transportation taxes.Fuel taxes.Tax on the first retail sale of heavy trucks, trailers, and tractors.Manufacturers taxes on the sale or use of a variety of different articles
21State Tax Laws Income taxes: Tax on profits of the businessDetermined based on the type of business ownershipPayroll taxes – tax on salaries and wages paid to employeesState income tax withholding – paid by employee onlyState Unemployment tax – paid by business onlyWorker’s Compensation Insurance – paid by business onlySales & Use Taxes – collected from customers & remitted to N.C. Dept. of RevenueProperty taxes – tax on the assets of the businessReal estatePersonal property – trucks, equipment, etc.
22Local Tax LawsMay vary County by County or Municipality to MunicipalityPrivilege License – license to operate a business in localityEnsures a business is located in an area that is properly zonedPermits, Zoning requestsProperty Taxes
23Picture SourcesUniform Commercial Code Picture -U.S. Patent Office Logo -Coco Cola Trademark -Top Secret Folder -Bankruptcy Petition - bankruptcylawnetwork.comTaxes with Hand - business.comFederal Tax Forms - myaccountantaz.comN.C. Dept. Of Revenue Logo - checktaxrefund.comN.C. County Map - geocaching.com