Continuing the last post’s discussion of the fictitious business name (FBN – or, colloquially, the DBA for “doing business as”), this post is prompted by a client’s question as to when his company should apply for its fictitious business name.
California Business & Professions Code Section 17910(a) states that a Fictitious Business Name Statement must be filed within 40 days of the time when the FBN first was used by the registrant to conduct business in the state.
The Statement is files with the County Clerk in the county where the registrant’s principal place of business is located in the state, or in Sacramento County if there is no such place (Business & Professions Code Section 17915). In addition, if the registrant wishes, FBN Statements can be filed in other counties.
After the FBN Statement is filed, it must be published in a newspaper of general circulation once per week for four successive weeks (Business & Professions Code Section 17917; Government Code Section 6064).
The process is not difficult, and there is a statutory incentive to do things right: No lawsuit may be brought based on a contract or transaction entered into under the FBN until the filing and publication procedures have been complied with (Business & Professions Code Section 17918).
* * *
Follow-up: As noted by Staci Riordan on the Fashion Law Blog, when you choose a fictitious business name, you should think about whether to register the name as a trademark or service mark.
This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact an attorney directly.
This post is based on an answer that I provided on Avvo. The user wanted to know, among other things, whether he could assign a fictitious business name (FBN – or, colloquially, a DBA, short for “doing business as”) from his sole-proprietor business to a limited liability company (LLC) that he was about to form.
He probably would assign all of the sole-proprietor assets (and liabilities) to the new LLC. However, there are special considerations with respect to assigning a business’s FBN.
California Business & Professions Code Section 17920(b) provides that if any of the facts (other than certain addresses) set forth in the FBN statement filed with the county clerk change, the FBN expires 40 days later.
Upon assignment of the FBN to the LLC, the facts pertaining to who is using the FBN will change. Accordingly, the LLC should file a new FBN statement promptly following the assignment, and in any event within 40 days. Furthermore, every FBN expires in any event after five years (Business & Professions Code Section 17920(a)), so it is important file a new FBN statement before the end of the five-year period.
Related posts:
This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact an attorney directly.
California is well-known for refusing to enforce non-compete provisions, especially in the post-employment context (see Choice-of-Law and Non-Compete Provisions), so individuals will not be deprived of gainful employment. But provisions limiting competition aren’t always taboo.
Business and Professions Code Section 16601 says, to oversimplify a bit, that anyone who sells his entire ownership interest in a partnership, limited liability company (LLC) or corporation may agree not to compete with the entity in the geographic area where it operates so long as the buyer, or a successor, continues to operate the business. Sections 16602 and 16602.5 provide similarly in the event that a partnership or LLC dissolves, or a partner disassociates from a partnership, or a member withdraws from an LLC.
The rationale: The buyer / new owner of an interest in a business should have an opportunity to make the business a success without being undermined by the seller / former owner.
Practical tip: When you buy a business, it’s OK – even prudent – to put restrictions on the seller’s ability to compete with you…even in California.
Photo credit: stock.xchng
This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact an attorney directly.
Four months ago, I wrote about a Wall Street Journal report that the Internal Revenue Service planned to audit 6,000 randomly-selected U.S. companies to determine the extent to which companies misclassify employees as independent contractors (The “Independent Contractor” Trap Becomes More Dangerous).
Today The New York Times reported that both federal and state officials are cracking down on misclassification (U.S. Cracks Down on ‘Contractors’ as a Tax Dodge). The incentive: To reduce record budget deficits.
By misclassifying personnel, companies avoid paying Social Security, Medicare and unemployment insurance taxes. The article goes on to say that, on average, misclassified personnel do not report 30% of their income. The 2010 federal budget projects that the crackdown will net at least $7 billion over ten years.
Implication for companies of all sizes: If you have been lax in classifying workers, now would be a good time to start doing things correctly. Avoiding the “Independent Contractor” Trap may help you determine how to improve your classification procedures.
This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact an attorney directly.
Two recently-acquired clients had similar situations that brought up the importance of complying with legal requirements.
Each company is a multi-founder startup where one founder became non-productive, and even somewhat detrimental to the business. The other founders wanted to move the problem founder off to the side, where he could cause no more trouble, in a manner that would be fair to everyone involved.
Unfortunately, each company had failed to comply with some of the most basic legal requirements: Holding annual shareholder meetings to elect directors, annual board of director meetings to appoint officers, etc. As a result, in each instance we had to spend time and money taking corporate actions, and recording those actions appropriately in meeting minutes, before the real problem could be solved.
So here is my view of how important legal compliance is:
- Without question, top priorities include making sales, delivering products / services, and taking in revenue.
- When it comes to administrative tasks, however, legal should be closer to the top of the list than the bottom. If legal affairs are not in order, problems can become greatly magnified.
Photo credit: stock.xchng
This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact an attorney directly.
