What is Business Law?

Business law is sometimes called mercantile law or commercial law and refers to the laws that govern the dealings between people and commercial matters. There are two distinct areas of business law; regulation of commercial entities through laws of partnership, company, bankruptcy, and agency and the second is regulation of the commercial transactions through the laws of contract. The history of these types of laws dates back several centuries and can be seen in the peace-guilds where members would pledge to stand by each other for protection. A lot of business law involves trying to prevent problems that can hurt the business or cause legal disputes. Business law may include any of the following:

Business formation

Business law starts with setting up a business. In the eyes of the law, each business is their own legal entity. Starting a new business typically starts with filing the paperwork that makes the business formally exist in the government’s eyes.

Many types of business entities are similar throughout the country. However, the exact entities that a new business can choose from vary by state. The process to file the paperwork to establish the business also varies from state to state.

Business lawyers help decision makers weigh the pros and cons of each entity when they’re starting a business. They help educate the business founders in the law in order to help them choose the entity that’s in their best interests. Then, they help them file the paperwork to formally start the business.

Employment Considerations

Once a business is up and running, they might need employees. Businesses need legal advice to help them understand how to hire and fire employees. They need to know how to handle employee disputes and discipline. Businesses need to know what they need to offer employees in terms of pay and benefits. There are also mandatory payroll taxes and deductions. Business lawyers educate their clients on the rules and best practices for managing employees.

Immigration law

Business law and immigration law often intersect. Businesses may want employees from other countries. They may want international employees on a full-time basis, they may need temporary workers, or they may need to bring in a worker just for a short period of time for a special event. Knowing how to navigate federal immigration laws is an important aspect of business law that helps companies get the manpower they need to succeed.

Sales of Consumer Goods

Buying and selling isn’t as easy as it sounds. There are regulations that govern how companies can make products and how they can sell them. From working conditions in a factory to distribution requirements to price controls, there are all kinds of laws and rules that might regulate how a company makes and sells its products.

One of the most influential documents for business operations is the Uniform Commercial Code. It’s a model code that outlines recommendations for commercial transactions. It covers topics such as the statute of frauds, contracts, leases, sales, credit, bulk sales and secured transactions. Business lawyers help their clients identify the laws that a business needs to follow, and they help ensure the company’s compliance with the laws.

Contract Drafting and Negotiations

A lot of business has to do with preparing and negotiating contracts. A contract can be anything from a lease agreement to a purchasing agreement to an agreement with a third-party vendor to sell a product. A lot of contract law comes from common law. Common law isn’t written down anywhere. Instead, it’s principles of law and rules that have developed through the courts over time. Lawyers in business law have to not only understand the elements of contract law from both statutes and common law, but they must also appreciate the nuances that might impact enforcement of a contract. They must work with their clients in order to skillfully negotiate and draft contracts that work to the client’s best interests.


Most businesses want to control a large share of the market. They want to grow and expand. Companies who want to increase their profits and their market share need to make sure that they go about it in legal ways. Companies that employ deceptive or unfair practices in order to cut out competitors or avoid competition might find themselves the subject of allegations of anti-trust violations. Business attorneys help their clients identify conduct that might amount to anti-trust before the behavior has the chance to create problems for the business.

Intellectual Property

When a business invents a new product, they need to make sure they protect their ability to profit from their invention. Making sure a business gets to exclusively keep and use their own products falls under intellectual property and copyright law. Intellectual property is technical and complicated. Lawyers need to have a scientific background in order to formally practice before the U.S. Patent and Trademark Office. Intellectual property work is critical to helping companies profit from their novel work.

Similarly, copyright laws help companies profit from their creative work. Business lawyers help companies register copyrights and enforce them. This process is critical to making sure that a business retains control of its work in order to commercialize it for a profit.


Businesses pay taxes. There are estimated taxes, employee taxes and deductions to be aware of. In addition to helping a business comply with tax requirements, a business lawyer helps their client take legal steps to minimize their tax burden. They may help the business apply for special tax forgiveness or waivers that might be available in a certain location or for certain industries.


Lawyers help businesses in both good times and bad. When businesses go through financial difficulties, they need lawyers to help them determine their options. Filing bankruptcy might be the only option or the best option for a struggling business.

Making the decision to file for bankruptcy is just the beginning. There are many different types of bankruptcy filings available to businesses. They have different requirements, and there might be a reason that a business should choose one type of filing over another. Business lawyers can give their clients advice on the pros and cons of different actions. Once the business makes a plan, lawyers can help the company complete the filing accurately and stay in compliance with the associated requirements.

What is Business Organization Law?

Business organization law is the body of law that relates to creating, managing and dissolving businesses. There are several ways to organize a business. Each type of business structure has its own set of rules to follow. Each type of business structure also comes with its own advantages and drawbacks. A business lawyer helps their client choose the right business structure, complete paperwork filing, manage ongoing organizational issues and even helps dissolve the business when it’s appropriate.

Helping Clients Go Into Business

When a new business begins, they need to determine their business structure and file the appropriate paperwork. The leaders at the business rely on business organization lawyers to help them evaluate the pros and cons of each possible business entity. They also rely on their lawyers to draft the necessary paperwork and file it correctly with the state.

Types of Business Structures

The type of business structure a new organization can choose from depends on the state where the business plans to file. Each state might have slightly different types of business organizations to choose from, but there are some types of business organizations that are common in most states:

Sole Proprietorship

A sole proprietorship is a business owned by one person. Many small businesses are sole proprietorships. A business can usually start operating this way without any formal filings with the government. Even though a sole proprietorship gives the owner complete control, the nature of a sole proprietorship exposes the owner to financial and personal liability if something goes wrong with the business.


A corporation is a business entity that exists completely independently from its owners. A corporation can do most of the things that a person can do like enter into contracts, buy and sell goods and hire employees. There are public companies and closely held companies. In a closely held corporation, there are only a small number of owners. There’s no public market for trading ownership of the company.

On the other hand, a public corporation has a larger number of owners, and owners may buy and sell their interest in the company. To begin a corporation, leaders need to draft articles of incorporation. They might specifically list the functions of their company, or they might simply state that the corporation has all of the powers that are necessary to carry out their affairs.

Limited Liability Corporation or Limited Liability Company

A Limited Liability Corporation or Limited Liability Company has some of the benefits of small business ownership like pass-through taxation and legal protection for debts and liabilities. However, there are limitations like a prohibition on issuing shares of stock to raise operating funds. State laws vary significantly for rules regarding Limited Liability Corporations.

S Corporation

An S Corporation is a type of corporation with unique features. Owners of an S Corporation can report profits and losses on their individual tax returns. Owners enjoy limited liability, and they generally avoid the double taxation that can occur with traditional corporations. There are limits on the number of shareholders, and the Internal Revenue Service tends to scrutinize S Corporations quite carefully.


Partnerships look a lot like sole proprietorships, but there’s more than one person involved. A partner might share in management duties, or they might provide financial investments without sharing in daily operation of the business. A partnership typically begins by filing papers with the state and carefully defining the terms of the partnership.


A group might also need help organizing to operate a charity. A person or group may want to organize a charity to limit legal liability for the work of the organization and avoid the tax liabilities that apply to corporations. There may be requirements at both the state and federal level to properly begin a charity.

Business Organization Law Includes Managing The Business Structure At All Stages

Forming, managing and dissolving businesses are all part of the work of business organization law. Even after a business formally begins, the work of a business lawyer may continue. Leadership may decide to change the business structure. They may decide to change from a sole proprietorship or a family business to becoming a public corporation. In most cases, there are annual filing requirements.

Business leadership may choose to change the structure or the makeup of their leadership. There might be litigation that questions the structure of the business. Leadership may even decide to dissolve the business. Business organization law embodies all of these aspects of business. The organization’s structure matters at all stages of business operations.

Most Business Organization Law Is State Law

State laws primarily govern how businesses can organize. It’s up to each state to determine the types of business entities they allow and what those entities must do to comply with state law. Once a business is in place, there may be federal and local laws to understand and follow. However, at the stage of inception, business organization law falls primarily within the state where the business is located.