Businesses involve contracts, ventures, arrangements, and agreements with other business entities. Sometimes, these transactions turn into disputes. Business disputes arise when one or more party fails to honor their end of the deal in an agreement. This causes both parties to argue with each other. This at times leads to legal actions.

If all these disputes lead to court actions, every court all over the United States will be crowded with business dispute cases. Hence, the Alternative Dispute Resolution was born. This aims to encourage out of court settlements instead of litigation processes.

The Alternative Dispute Resolution or ADR is a series of positive and organized procedures for resolving disputes with the mutual consent of the parties involved. ADR encourages the parties to engage in negotiations to settle the dispute.

Business owners have options in dealing with this matter. They have four options to be precise. These are the following:

1. Direct Negotiation

Direct negotiation is a dispute resolution process wherein the two disputing parties work together and come to a resolution on their own. The parties communicate directly with each other without a third party who shall oversee or help with the dialog.

This resolution process is the cheapest way to resolve a conflict. It needs no court fees, attorneys' fees, or other payments. It only requires that the two parties are there, willing to exchange sides regarding the disagreement. This form of resolution calls for effective planning, communication and negotiation skills.

2. Arbitration

This is a resolution wherein the parties in a dispute refers it to a third party, called the "arbitrators." The neutral party listens to the problems and arguments of both sides, examines their evidence, and renders a decision (award) after careful analysis.

Arbitration awards are generally an award of damages against a party. Both parties are bound to agree to the award, this is referred to as the "binding arbitration." The arbitrator's decision is final.

3. Mediation

Mediation is another form of resolution which aims to make disputing parties reach an agreement. The parties meet together with a mediator/s. In this case, the mediator assists them in the negotiation of their differences, but leaves the power to decide between the parties. The parties should be able to come to a mutual decision.

Mediation starts on a joint session and then proceeds to a separate caucus between the mediator and each individual party or their attorney. Mediation is strictly confidential. Thus, everything that is said and discussed in this process will be held in private and cannot be deemed admissible in court or in any other proceedings.

4. Litigation

If the parties cannot settle into an agreement by using an alternative dispute resolution, then their last option is to file a civil case in court. The purpose of business litigation is to determine which side is right or wrong.

Majority of business disputes do not go this far since it entails the most drawbacks. The whole process involves a lot of work, and consumes substantial amount of time and money. However, it is still considered a suitable option.

Nevertheless, most legal actions should not have happened if only companies did abide with the terms of the business agreements they got involved with. Hence, it is very advisable to seek the aid of a business lawyer before engaging in any type of business agreement. This to fully understand the possible advantages or consequences that one may get from such contacts.

By: Jinky Belle Abelardo
For a better understand about the proper manner of entering a business agreement, log on to our professional Los Angeles lawyers website.

An affordable and very effective method to shield your assets from attack is to transfer your rental property to a Limited Liability Company (LLC). Holding title to investment property through an LLC limits the liabilities of the business to only those assets held within the LLC. In the same way as shareholders of a corporation are shielded from liability, a properly formed LLC will guard its owners from lawsuit liability, including liability from acts of its employees and agents.

There are several significant benefits the California LLC can provide to you or your investors. The LLC creates a risk barrier which encourages apartment ownership, yet shields the owner's personal assets from lawsuits and seizure. The double taxation and extensive formalities inherent with traditional corporations are eliminated. When legal action such as an eviction is required against a tenant, it is the LLC, rather than the individual owner, that pursues the claim. In addition, the landlord’s privacy is enhanced because rent checks are made payable to the LLC, lease agreements are between the LLC and the tenant, and correspondence comes from the LLC.

While high limit liability insurance is important, it is still not adequate to protect the property owner(s) from loss of assets. Most insurance policies contain exclusions for mold, lead-based paint and other environmental hazards. Additionally, they rarely cover judgments arising out of discrimination claims. Even with expensive high-limit insurance coverage, a major incident such as a fire or balcony collapse resulting in numerous claims, could create liability far exceeding your policy limit. Even with the best of intentions regarding your tenants, the LLC has become a necessary tool in limiting liability not only for legitimate claims, but also for those in which only a brainwashed jury could see merit. The deductible $800 annual State franchise tax on LLCs is small compared to the huge benefit provided.

In recent years, the State of Nevada LLC has been touted as an asset protection alternative to the California LLC, since the annual tax is relatively small compared to California. However, in most cases there is little or no financial benefit to forming a Nevada LLC for your California rental property, because the ownership of the California property necessarily means business is transacted in California. As such, the Nevada LLC also must be registered with the California Secretary of State and pay the initial California registration fee and $800 annual franchise tax, along with California income tax. (Ca. Rev & Tax Code Sec. 17941, Ca. Corp. Code Sec. 17050). For business ventures other than California real estate, where the principal business is not transacted in California, the Nevada LLC/Corporation may be an attractive option for investors.

Additional benefits of the LLC include the ability of LLCs to utilize 1031 exchanges and exemption from the 3 1/3 withholding on sale of real estate for multi-member LLCs. Furthermore, a separate federal tax return is usually not required for single-member LLCs, including those owned by a husband-wife or living trust, and the property transfer to the LLC is almost always exempt from tax reassessment. And the LLC will work very well in conjunction with a living trust to simultaneously protect and preserve estate assets.

Many apartment owners have executed a living trust in order to provide for the distribution of their assets after they die, as well as to avoid huge probate costs, reduce or eliminate estate taxes when they die, and prevent court control of their assets should they become incapacitated. The living trust, however, will not protect against lawsuits. If an apartment building is held directly by a living trust, then all other assets in the trust will be exposed to lawsuit liabilities generated by the building. A much better approach is to place your apartment in an LLC, creating a liability barrier in order to protect all of the other trust assets. The LLC membership interests may then be safely added to the trust.

As far as multiple investments are concerned, it is better to have a separate LLC for each rental property so that liability arising from one property cannot attach to any other properties. Even single-family homes with tenants should be held by their own LLC. If paying $800 annually each for multiple LLCs is not a viable option, then properties could be grouped together. Owning a total of six investment properties with three in one LLC and three in the other would afford significantly more protection than owning all the properties in one’s personal name. For those investors wishing to transfer multiple properties with annual gross rental receipts totaling more than $500,000 into a single entity, the use of a limited partnership should be considered. Both the limited partnership and the LLC must pay the $800 franchise tax, but the LLC must pay an additional gross receipts tax if the gross annual receipts exceed $250,000.

Because landlords are subject to virtually unlimited lawsuit exposure and financial liability arising out of ownership of their rental property, they must take advantage of every lawful means to protect their assets. Once a competent attorney prepares and files the array of legal documents required for the initial formation of the LLC, personal assets will no longer be reachable to satisfy any debts or judgments against the LLC.

By: Michael Elson
Michael K. Elson is the principal of The Law Offices of Michael K. Elson and specializes in business formation, asset protection and estate planning, including the formation of corporations, LLCs, and living trusts. He may be reached at (818) 763-8831 or (800) 781-7038 or by visiting http://www.LimitLiability.com.

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Most shareholders believe a corporation protects them from personal liability. This is generally true unless alter ego is successfully asserted.

Alter ego is an equitable claim that a corporation should be set aside in a lawsuit and the shareholders held personally liable for a debt. The theory was antiquated and rarely used. In recent years, it has seen a rebirth as many small business corporations are formed using cheap online services. While these services file the entity with the state, there is no real follow up or guidance in regard to how the entity is actually supposed to function. This, of course, leads to alter ego claims and disaster for the shareholders.

To prove alter ego, plaintiffs must paint a picture of misuse of the corporate entity by shareholders. There are many factors that can be looked at, but the following are commonly addressed:

1. Commingling of corporate and personal funds is very strong evidence against shareholders. The same goes for corporate and personal property.

2. Payment of shareholder debts by the corporate entity is another area ripe for examination. The classic situations that arise concern the corporation paying the mortgage or credit card debt of a shareholder. This can also lead to severe tax problems.

3. The failure to maintain corporate books is another problem area. Most cheap online services will send a number of blank forms along with the corporate filing, but most shareholders have no idea what to do with them and thus do nothing at all.

4. The failure to issue stock is another problem area. Stock certificates represent the ownership of the corporate entity. If stock is not issued, the corporation has no legal owners, which is a might bit hard to explain.

5. Failure to properly incorporate is another area that can be problematic. Every state has different rules, but many allow for the use of an incorporator. This is typically an attorney or the online service you might select. The issue that arises is how said incorporator transfers ownership to the shareholders. Some states, such as California, have fairly strong views on this subject. If done incorrectly, the transfer can lead to the odd situation where the shareholders are held not to be the owners of the corporation! It then gets very messy!

There are literally hundreds of other factors that can be looked at when it comes to evaluating whether a corporate entity should be set aside. The exact factors often depend upon the law in your state or whether you are being sued in federal court.

Whatever your situation, it is vital that you gain an understanding on how a corporation must be run and follow said guidelines. You are not “done” when you receive your corporate book in the mail. You are only beginning.

By: Richard Chapo
Incorporate in California with SanDiegoBusinessLawFirm.com.

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The information contained in the above post is not intended as a source of legal advice. You should not act upon or rely on information in this or any other post without the advice of competent legal counsel.

Most sites on the web are at least faintly familiar with the implementation of legal regulations related to their sites. Most, however, have never heard of the California Catch-22.

Most sites tend to view complying with legal regulations as a somewhat amorphous subject. You know you are supposed to do something, but are not particularly sure why or what to do. This leads to the rather humorous situation where many sites have terms and conditions that are completely inapplicable the what they are doing and also look startlingly similar to terms and conditions found on other sites. One might even imagine a bit of “cut and paste” was going on, but who am I to say!

Much of the confusion is understandable. It comes from the lack of clear legal directives by the federal government. In most areas, you get vague “suggestions” put forth by an impotent FTC.

Interestingly, one state has taken over for the federal government – California. Because the right of privacy is actually mentioned in the constitution of the state, unlike in the federal version, the state has passed numerous laws regulating how sites must handle visitors information from a privacy perspective, sales information, security efforts and so on. Frankly, it is a pretty amazing that a group of state politicians managed to pull it off. There are laws ranging from how a privacy policy must be set up to requirements that you disclose identify theft events to the media. This is why you see major companies issuing press releases about security breaches leading to identify theft.

As a site owner located outside of California, you are probably wondering why you should care about the laws of California. Well, you better be in compliance because California has a unique way of defining what sites the laws apply to. Nearly all of the relevant California legislation contains provisions defining jurisdiction by the visitor, not the site.

So, what does this mean in plain English? You must comply with the laws if you have any customers that are residents of California or from which you obtain certain types of information. If you make a sale to a California resident, you must comply. If you collect the name, email address and so on as part of creating a newsletter mailing list, you must comply!

Given the size of the California population, it is the rare site that never makes a sale or collects information from a California resident. In short, you need to comply with everything from the California Online Privacy Protect Act to the various identify theft prevention and notice regulations. Fail to do so, and it can come back to haunt you when things go wrong.

By: Richard Chapo
Richard A. Chapo is an internet attorney with SanDiegoBusinessLawFirm.com.

Featured as a California Law resource, by California Personal Injury Attorneys - Accident Lawyers, a California personal injury attorney / accident lawyer directory, listing hundreds of links to California personal injury attorney / accident lawyer websites and over 1,500 non website courtesy listings.

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The information contained in the above post is not intended as a source of legal advice. You should not act upon or rely on information in this or any other post without the advice of competent legal counsel.

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