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California Business Formation Questions & Answers
1 Answer | Asked in Business Formation and Tax Law for California on
Q: Public purpose vs Charitable Purpose

On the filing of article incorporation of a NPO, two purposes available for ticking : Public purpose and Charitable purpose. What’s the difference? Also If Public purpose is checked can the organization still get 501(c)(3) tax exempt status ?

Matthew Morris
Matthew Morris answered on Apr 28, 2022

A good question. It's not helpful that courts in California have frequently used the terms "public purpose" and "charitable purpose" interchangeably.

Taking your last question first: the IRS will not likely deny a 501(c)(3) determination if you check the box for...
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1 Answer | Asked in Business Law and Business Formation for California on
Q: I want to open a non-profit for my theatre but I'm not sure how to handle the sublease income on a separate floor.

I lease a 2 story building for a live theatre. The theatre occupies the 1st floor. I want to create a theatre non-profit.

The building has a 2nd floor. It's not part of the theatre. Sometimes the second floor is occupied through a sub-lease which is allowed in my lease, sometimes it... Read more »

Matthew Morris
Matthew Morris answered on Apr 21, 2022

This question raises many of the big issues that nonprofit attorneys work on. You definitely should talk to a local nonprofit lawyer because there are LOTS of issues lurking here.

Issue 1: Are you sure you should be a nonprofit? One thing that a lawyer for nonprofits will probably do here...
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1 Answer | Asked in Banking, Business Formation and Consumer Law for California on
Q: The bank won’t give me my money or close my account

A friend of mine Give me a check and asked me to put in my account it cleared the bank refuses to give me the money for the money cleared on the 14th I just found out today the 23rd They told me they wanted my friend to verify himself so I went and got him got all the documents to verify himself... Read more »

Maurice Mandel II
Maurice Mandel II answered on Apr 17, 2022

small claims allows up to $10,000. It may be the fastest way to unfreeze the account, and the bank should not put a freeze on any funds not a part of the check. Consult with a local attorney.

2 Answers | Asked in Business Formation for California on
Q: How do I form an LLC to start a business?
Fritz-Howard Raymond Clapp
Fritz-Howard Raymond Clapp answered on Mar 2, 2022

To form an LLC, a document is filed with the CA Secretary of State which specifies the name of the company, and some basic details such as whether the LLC will have a manager, what will be the nature of its business, and who will act as agent for service of process. Then, you will need what is... Read more »

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1 Answer | Asked in Business Formation for California on
Q: What is the best way to buy a communal house w/multiple people- LLC, cooperative corporation, non-profit?

This house already functions as a co-operative. The current owners are selling and past residents would like to organize to purchase the property. This will need to be done fairly quickly. We have the funds for a down payment and to do some repairs however we'd like to know the best way to... Read more »

Shawn R. Jackson Esq.
Shawn R. Jackson Esq. answered on Feb 21, 2022

Assuming that the "financing" will support it, the initial answer would be the LLC ... which, depending upon how the LLC Operating Agreement is drafted, will allow relatively easy "in & out" of LLC Members and some level of asset protection for the individuals. The best next... Read more »

1 Answer | Asked in Contracts, Business Formation and Business Law for California on
Q: Was offered partnership to create new division of company. After a year he fired me. He kept everything. Is that legal?

I created new division separate from existing company to engage in an area of the industry he wasn't . Only shared name and license numbers. Everything else, I made. Forms, branding, procedures, had my own employees, payroll, books even had to pay him rent for offices. I would become a partner... Read more »

Fritz-Howard Raymond Clapp
Fritz-Howard Raymond Clapp answered on Feb 14, 2022

You have a good claim for breach of contract, where the contract was an agreement that you perform services to set up the business in return for an ownership share. You completed your end of the agreement, but the other party failed to compensate you as agreed. The agreement may have been oral or... Read more »

1 Answer | Asked in Consumer Law, Products Liability, Business Formation and Business Law for California on
Q: Is it illegal to resell abandoned used cloths?
Leon Bayer
Leon Bayer answered on Jan 19, 2022

Selling used clothes is legal.

1 Answer | Asked in Contracts, Real Estate Law and Business Formation for California on
Q: Can a business owner keep my deposit if we needed more time in order to buy the business but she sell it to someone else

We put in a deposit to buy a business but due to unforseen circumstance at my work, I need more time before I can quit my job and start the business. There was no agreement signed stating that the deposit was non refundable but she refused to refund my money and is planning to sell to someone else.... Read more »

Yelena Gurevich
Yelena Gurevich answered on Jan 3, 2022

it's generally not a good idea to give anyone a deposit without a written contract. at this point you will either need to pay a business attorney for a complete consultation and advice or possibly take your chances in small claims court (if the amount is under $10,000).

1 Answer | Asked in Government Contracts, Banking, Business Formation and Business Law for California on
Q: I received an email from " Jerome Powell " saying the federal reserve bank has millions o dollars in my name . There

Supposedly their is a large fund from the imf that belongs to me , it's been going on for 4 yrs now . What are the chances it's real ? I have acct numbers docket numbers but where can I validate them

Julie King
Julie King answered on Dec 27, 2021

It's almost certainly SPAM, but a lawyer would need to look at the actual email to tell one way or the other. Look at the email address from which it came. Does it end with .gov or .com? All government addresses should end with .gov. Also, if they ask you for your social security number or... Read more »

1 Answer | Asked in Business Formation and Business Law for California on
Q: Operating Agreement

Good afternoon.

A legal entity (LLC) has been established. One of the documents required to do business is the Operating Agreement. The problem is that some of the members are non-U.S. residents. Because of the epidemiological situation, we cannot be physically present in the United States.... Read more »

D. Steven Yahnian
D. Steven Yahnian answered on Dec 5, 2021

In California, electronic signatures and photocopied signatures are as legally valid as originals for most legal documents that do not need to be recorded. LLC operating agreement signatures do not need to be notarized unless the document will be recorded. However, I have never seen an LLC... Read more »

1 Answer | Asked in Business Formation, Business Law and Cannabis & Marijuana Law for California on
Q: How to respond to an Entry of Default?
Julie King
Julie King answered on Dec 1, 2021

If you don't know what to do, you should go to the self-help center of your local courthouse or, if there is none, hire a litigation attorney. Getting a litigator to help you is clearly the best route because you are already behind the eight ball, as they say. Do not delay. This is VERY... Read more »

1 Answer | Asked in Business Formation, Business Law and Landlord - Tenant for California on
Q: If I’m renting a workspace biweekly and I sign a contract stating I have to give a 45 day notice, is that binding/legal?

Since I rent biweekly shouldn’t I only have to give a weeks notice?

Julie King
Julie King answered on Nov 17, 2021

People are allowed to enter into contracts providing any terms they want, so long as the terms are legal (i.e., if you had a contract to murder someone, the terms would not be legally enforceable in court.) Since it’s perfectly legal to include any number of days’ notice prior to termination,... Read more »

1 Answer | Asked in Consumer Law, Contracts, Business Formation and Business Law for California on
Q: How do I obtain text messages from Verizon when a client is wanting to sue me? I need proof through texts.

I need to obtain text messages from a year ago from my cell phone account. I’ve been through the steps through Verizon but they are not accessible through my iCloud. I need to find another alternative to pull those messages prior to having to take it to court. Is there a way that can be done?... Read more »

Nadine Sameer Deeb
Nadine Sameer Deeb answered on Nov 11, 2021

You could try subpoenaing them, but your attorney should already know that, unless it's small claims court or you don't have an attorney. You also have no guarantee that you'd get them, since Verizon is under no obligation to keep a copy of your messages for that long.

1 Answer | Asked in Business Formation, Business Law and Patents (Intellectual Property) for California on
Q: I registered a web name LLC name with state and all variations and LLC operating agreement partner didn't sign

He has done many illegal things and I want to keep name and he didn't put in the time nor sweat equity nor capital and while he didn't sign operating agreement it calls for name being returned to me not only that he has restraining orders trying to get permanent for threatening my life,... Read more »

Kevin E. Flynn
Kevin E. Flynn answered on Nov 5, 2021

I do not see any indication that this is a patent law question.

This seems to be a business dispute that will turn on the facts. This is not a good candidate for a web site Q&A. You will need to find an attorney that handles business disputes in the relevant state and lay out the...
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1 Answer | Asked in Criminal Law and Business Formation for California on
Q: too confusing for a civilian. Does this mean i can get my personal possessions back without needing to pay?

My items were burglarized, and i located them at a pawn shop, but i dont have the money to buy them back. They gave the THIEF ( im not calling them a defendant) thousands and the pawn shop is requesting i pay. I obviously want to prosecute, so does this mean i can get my belongings back without... Read more »

Dale S. Gribow
Dale S. Gribow answered on Oct 14, 2021

more info is needed.

did you make a police report? contact the police to let them know you found the items.

they should be able to assist you too.

2 Answers | Asked in Business Formation and Business Law for California on
Q: Once a corporation has been formed can shares of stock not be issued, and if so who owns the corporation?

Once a corporation is duly incorporated, who owns the corporation if no shares of stock have been issued, and can ownership change simply by issuing the majority of shares to and officer (say CEO) of the corporation without that officer having to pay for them?

Doug Bend
Doug Bend answered on Sep 17, 2021

You could change the ownership of the corporation by issuing shares to an officer of the corporation. To do so, I recommend that you have a stock purchase agreement, a Board consent authorizing the issuance of the shares and submit a 25102(f) securities filing for the issuance of the shares.

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1 Answer | Asked in Business Formation and Contracts for California on
Q: How can I create a Partnership Agreement for our start up company.

I am creating a Limited liability Partnership Agreement for a start up business. I need help with jurisdiction and whether or not the sum of 500 dollars a month is in line with federal minimum wage laws.In addition to what the value of cash is insofar as the establishment, development and branding... Read more »

Shawn R. Jackson Esq.
Shawn R. Jackson Esq. answered on Aug 9, 2021

As you probably already know, the basis for any successful business is a clear and cogent "agreement" between the founding members or partners. In an LLC or an LLP, such "agreement" would be embraced within an Operating Agreement ... which outlines management responsibilities... Read more »

1 Answer | Asked in Tax Law, Business Formation and Business Law for California on
Q: Hello, I am planning to found my own consulting firm. Should it be a LLC or sole proprietor?

Hello, I am planning to found my own consulting firm. I am helping startups in the US and EU with public policy, grant strategy, fundraising and business partnerships. Should it be a LLC or sole proprietor? Which one will be better for tax-wise?

Shawn R. Jackson Esq.
Shawn R. Jackson Esq. answered on Aug 6, 2021

The answer depends upon three initial focus points: [1] your exposure to liability ... [2] your desired management structure and [3] how you would like to see ownership and succession. The next step for you would be to schedule at least two free initial calls with attorneys of your choice ... by... Read more »

1 Answer | Asked in Business Formation, Civil Litigation, Contracts and Consumer Law for California on
Q: Can a person who sells her auctioneer services conduct business and hold auctions if the company isn't bonded by the sos

If she cannot legally provide or sell her services to another because she isn't properly bonded, then wouldn't any auctions she's held be illegal to do and void any contracts between her and the buyers of said illegal (fraudulent) auctions?

Leon Bayer
Leon Bayer answered on Jul 30, 2021

This sounds like a matter of government regulation. That would be between her and state licensing agency. She will likely face a fine. It should not affect the validity of the auction sales.

1 Answer | Asked in Business Formation and Business Law for California on
Q: At what point must I have a business license?

I am a website designer normally employed full time but since Covid I have been considering starting my own business. I would offers website design, graphic design, logo design and creation, marketing and social media management as well as ongoing site maintenance and management. Before I fully... Read more »

Julie King
Julie King answered on Jul 12, 2021

Once you market yourself to the world, you are in business and should have a business license. Check the websites of your city and your county to learn the requirements that apply to your jurisdiction. If you are working out of your home, your city and/or county may require a home-based business... Read more »

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