California
Business Law
Running a business in California means operating under one of the most comprehensive bodies of commercial law in the country. From the moment a company is formed to the day it changes hands, California law governs its structure, its agreements, its asset protection, and the handling of disputes when they arise. The rules here are specific to this state — shaped by the California Corporations Code, the Business and Professions Code, and a well-developed body of case law from California courts. For business owners, founders, and executives, understanding the legal framework can help prevent costly mistakes and support more confident decision-making at every stage of a company’s growth.
Business Law Firm Practice Areas
Startup Counseling
Our attorneys are well versed in the needs of new and existing businesses and can advise you at any stage in the planning, launch, operation or relocation of your enterprise. Leveraging years of experience, our firm assists clients with fundamental and complex business formation issues.
Advice & Counsel
Our firm will actively participate in contract negotiations to help obtain the best deal possible, while simultaneously (to the greatest extent possible, given the situation) protecting the business from any business, legal, regulatory or other risk.
Outside General Counsel
If you run a business and don’t use an attorney enough to justify keeping them on your in-house payroll, try our Outside General Counsel. This Vaksman Khalfin service is a reasonably priced, completely custom legal option
Business Litigation
We take the time to understand your business, so you can depend on our attorneys to represent you well. Our experience in both transactional and adversarial matters provides your business with excellent perspective on your challenges and opportunities in handling a business litigation case.
Board Advisor & Director
With extensive experience running companies and practicing business law, we at Vaksman Khalfin offer a Board Advisor and Director service to help you manage the ever-shifting legal landscape of running a company.
Company Governance
At Vaksman Khalfin, we understand that without solid Corporate or Company Governance, your chance of failure is high. We also know that to attack that long list of Company Governance responsibilities, you need a well-rounded approach and top-tier, experienced team.
Business Mediation
We prioritize our clients’ needs and strive to resolve disputes efficiently and effectively, always seeking the best possible solutions whilst preserving business relationships and reputations.
Mergers & Acquisitions
Our team of attorneys has worked with many companies undergoing Mergers and Acquisitions. So, we know, first-hand, that even the most seasoned executives need an experienced legal team in their corner.
Business Forms
At Vaksman Khalfin, our seasoned legal team can reduce your time spent drafting Business Forms, freeing you up to manage and grow one of your most important assets: Your company.
Joint Ventures
Successfully executing Joint Ventures can be fairly complex. From commercial, tax, employment and other issues, Vaksman Khalfin can seamlessly manage the legal side of your Joint Venture.
Dental Attorney
Our founding partner is married to a dentist with multiple practices and, as a result, is intricately familiar with the dental industry over the last 15+ years. At the Vaksman Khalfin, PC we will be your trusted advisor going forward.
Family Limited Partnerships
Vaksman Khalfin, PC, in consultation with your other professional advisors, can help you decide whether this solution is appropriate for you and how it can become a part of your overall estate planning and asset protection strategy.
Succession & Exit Planning
Business succession planning helps owners set, sort through, and achieve their exit objectives. It enables owners to leave their companies when they want, to the successors they want, and with the amount of cash they need, while minimizing the risk of loss and taxes.
Marijuana Law
The Marijuana law attorneys at Vaksman Khalfin have significant experience within the industry, including simple dispensary and delivery startups, up to complex international funding transactions involving public entities.
Intellectual Property
Expert legal advice and representation for individuals and businesses in matters concerning patents, copyrights, trademarks, and trade secrets, safeguarding their intellectual property rights and interests.
The California Business Environment
California is home to some of the most active commercial markets in the world, from technology and venture capital in the Bay Area to entertainment and media in Los Angeles, logistics and manufacturing in the Inland Empire, and agriculture across the Central Valley. But operating in California also means adapting to a regulatory and legal environment that sets its own rules — rules that frequently differ from those in other states.
California’s business laws are primarily found in the California Corporations Code, which governs the formation, ownership, and management of entities. The California Business and Professions Code addresses professional licensing, unfair competition, and a range of industry-specific rules. Additional obligations flow through the California Franchise Tax Board (FTB), the California Department of Tax and Fee Administration (CDTFA), and — for businesses in financial services — the California Department of Financial Protection and Innovation (DFPI).
A business incorporated in Delaware or Nevada may still be required to qualify to do business in California if it maintains offices, employees, or significant commercial activity here. Failure to register with the California Secretary of State’s Business Programs division or to maintain good standing can affect a company’s ability to bring or defend lawsuits in California courts — a practical consequence that affects companies at all stages.
What this means for you: Where a company does business matters as much as where it is incorporated. California’s reach into commercial activity is broad, and legal obligations generally follow operations rather than just registration paperwork.
Business Entity Types in California
One of the first and most consequential decisions a founder or business owner makes is how to structure the business. California recognizes several primary entity types, each with different implications for ownership, management, liability protection, and taxation.
Corporations
A corporation is a separate legal entity owned by shareholders. Under the California Corporations Code, corporations must comply with specific rules governing formation, shareholder rights, board composition, and officer duties. California-formed corporations file Articles of Incorporation with the Secretary of State and are subject to ongoing governance requirements — including maintaining a registered agent, holding board and shareholder meetings, keeping corporate records, and filing Statements of Information at required intervals.
One notable feature of California corporate law is its approach to minority shareholder protections. California courts and statutes have developed rules around fiduciary duties that apply not only to directors and officers but, in closely held corporations, sometimes to majority shareholders as well. This distinction matters for family businesses, co-founder structures, and small owner-operated companies where ownership is concentrated among a few individuals.
Limited Liability Companies (LLCs)
The LLC is among the most commonly used business structures in California. It offers flexibility in how it is managed and taxed while providing limited liability protection similar to a corporation. Members can customize their arrangements through a written operating agreement, which governs the relationship among owners and the rules for managing the business.
California imposes an annual minimum franchise tax on LLCs, as well as an additional fee based on gross receipts for higher-earning entities. These obligations apply regardless of whether the LLC is profitable in a given year. Because these thresholds and amounts are subject to change, confirming current figures with the California Franchise Tax Board before filing is advisable.
Partnerships and Other Structures
General partnerships can form in California without filing with the state, though doing so leaves each partner personally exposed to business debts and obligations. Limited partnerships and limited liability partnerships offer more structural options and are often used for professional services firms, real estate ventures, and family business arrangements. Each has different formation requirements and governance rules under California law.
Sole proprietors may operate under a fictitious business name — commonly called a “DBA” — registered with the relevant California county. This provides a recognizable trade name but offers no liability protection to the owner.
Forming and Registering a Business in California
Once a structure is chosen, formal registration sets the business on a legal footing. Most entities operating in California — whether formed here or qualified from another state — will interact with the California Secretary of State’s Business Programs division, which processes Articles of Incorporation, Articles of Organization, and Statements of Information.
California-formed corporations and LLCs must file their formation documents and pay the applicable fees. They must also appoint a registered agent — a person or service designated to receive legal notices and process on behalf of the business. Beyond the initial filing, maintaining good standing requires timely renewal of that registered agent, filing Statements of Information at regular intervals, and keeping the entity’s records current with the state.
For startups and early-stage companies, the formation stage involves more than paperwork. Founders typically need to address equity allocation, vesting schedules, initial governance documentation, and founder agreements before or alongside the registration process. Our startup counseling practice works with early-stage California businesses on these foundational decisions from the outset.
What this means for you: Formation is a legal event with lasting implications. How ownership is structured, documented, and governed at the beginning shapes how the business operates — and how disputes are handled — for years to come.
Corporate Governance and Fiduciary Duties
How a business makes decisions and who has the authority to act on its behalf matters both legally and practically. California law imposes governance requirements that vary by entity type and are most detailed for corporations.
Officers, Directors, and Their Duties
In a California corporation, the board of directors is responsible for managing or overseeing the business. Directors owe fiduciary duties to the corporation and its shareholders — primarily the duties of care and loyalty. The duty of care requires directors to act on an informed basis, with reasonable diligence. The duty of loyalty requires them to put the corporation’s interests ahead of their personal interests when making decisions.
Officers — typically the CEO, CFO, and Secretary — are appointed by the board and oversee day-to-day operations. They are also subject to fiduciary obligations, though the specific contours of those duties may vary depending on the circumstances and the officer’s role.
In closely held corporations, California courts have recognized that majority shareholders may owe duties to minority shareholders in certain situations. This is a meaningful feature of California corporate law for any business with concentrated ownership — it can affect how decisions are made, how distributions are handled, and how disputes among owners unfold.
Board Structure and Decision-Making
California corporations must hold regular meetings, maintain minutes, and follow procedural requirements for formally making decisions. Deviation from these practices can expose officers and directors to personal liability in some cases, particularly in shareholder disputes or insolvency contexts. For businesses that want to establish sound governance processes and documentation from the start, our company governance practice can provide structure and ongoing guidance.
Contracts and Commercial Agreements
Most business activity is governed by contracts with customers, vendors, employees, contractors, and business partners. California contract law draws on the California Civil Code, the Uniform Commercial Code as adopted in California (which governs transactions in goods), and a substantial body of judicial interpretation built over many decades.
What Makes a Contract Enforceable in California
A valid contract in California generally requires an offer, an acceptance, and consideration — something of value exchanged by the parties. While contracts can be oral or written, certain agreements must be in writing to be enforceable under California’s statute of frauds, including contracts for the sale of goods above a specified value and most real estate transactions.
California courts look first to the language of a contract when a dispute arises, then to the circumstances surrounding the agreement if the text is ambiguous. California also recognizes an implied covenant of good faith and fair dealing in all contracts — meaning parties cannot act in ways that deprive the other party of the benefit of the agreement, even if a specific provision doesn’t address the conduct in question.
Non-Compete Agreements in California
California’s approach to non-competition agreements is notably different from most other states. The California Business and Professions Code makes most non-compete clauses in employment contracts unenforceable in California, with narrow statutory exceptions — such as certain agreements connected to the sale of a business. This affects how California employers structure agreements with key employees, departing executives, and co-founders, and means that agreements drafted under the laws of other states may not provide the protections an employer expects when applied in California.
Standard Business Agreements
Most businesses need a working library of commercial agreements — NDAs, service contracts, vendor agreements, operating agreements, and shareholder agreements, among them. These documents generally need to be reviewed for California-specific requirements, particularly when they touch on intellectual property ownership, employment terms, dispute resolution, or limitations on competition.
Intellectual Property for California Businesses
For many California businesses — particularly those in technology, media, and life sciences — intellectual property is among their most valuable assets. Protecting those assets requires attention to both federal and California-specific legal frameworks.
- Trademarks and Brand Protection: A trademark protects a brand name, logo, or identifier that distinguishes a company’s goods or services in the marketplace. Federal registration through the U.S. Patent and Trademark Office provides nationwide protection, while California also maintains a state-level trademark registration system. Trademark rights generally arise from use, meaning the timing of use in commerce — not just registration — can matter in a dispute. Our intellectual property practice assists California businesses with trademark selection, registration, and enforcement.
- Trade Secrets: California’s trade secret protections are grounded in the California Uniform Trade Secrets Act. A trade secret can include formulas, processes, customer lists, pricing data, software code, or any information that provides a competitive advantage and is subject to reasonable measures to maintain its secrecy. When a trade secret is misappropriated — whether by a departing employee or a third party — California law may provide remedies including injunctive relief and damages.
- Copyrights and Patents: Copyright protection arises automatically under federal law when an original work of authorship is created, though registering with the U.S. Copyright Office strengthens enforcement rights. Patents protect inventions and are governed exclusively by federal law, requiring a formal application and examination process before the U.S. Patent and Trademark Office.
Business Disputes and Commercial Litigation in California
Even well-run businesses encounter disputes. Partner disagreements, contract breaches, shareholder conflicts, and claims of fraud or unfair competition can arise in any commercial environment. California provides several avenues for resolving these matters, and the right approach depends on the nature of the issue and the remedies being sought.
Where California Business Cases Are Filed
Most civil business disputes in California are heard in the California Superior Court. Many counties maintain dedicated complex litigation departments for larger or more intricate commercial matters. In Los Angeles, the Complex Civil Litigation Program handles significant cases involving multiple parties, difficult legal issues, or large amounts in controversy. Courts in Santa Clara and San Francisco counties handle a substantial volume of commercial disputes from their technology and financial services sectors.
For disputes involving federal securities claims or parties in different states, federal district courts may have jurisdiction. The U.S. District Courts for the Central, Northern, Southern, and Eastern Districts of California collectively handle a high volume of commercial and business litigation.
California’s Unfair Competition Law
California’s Business and Professions Code Section 17200 — known as the Unfair Competition Law (UCL) — prohibits business acts or practices that are unlawful, unfair, or fraudulent. It is one of the most frequently invoked statutes in California business litigation, used by both private parties and the California Attorney General. Its reach extends to advertising, pricing, data practices, competitive conduct, and a wide range of commercial behavior. Because the UCL can be applied broadly, California businesses should understand how it interacts with their day-to-day operations.
Business torts — including interference with contract, fraud, and breach of fiduciary duty — are also commonly litigated in California courts. Our business litigation team handles commercial disputes across industries and entity types.
Alternative Dispute Resolution
Many California commercial contracts include mandatory arbitration or mediation clauses. Arbitration before a private arbitrator can offer a faster and more confidential resolution than court litigation, though it also involves tradeoffs in terms of discovery rights and appeal options. Mediation — a facilitated negotiation process — is often used as a first step before either arbitration or litigation and can be effective in resolving disputes without the full costs of formal proceedings. Our business mediation practice supports parties seeking efficient, practical resolution of commercial disputes.
What Our Clients Say
"I was buying a company and the transaction was complex with lots of moving parts. Things got heated at times, and there were even threats of litigation. Robert kept me calm and informed at all times. He was ultimately aggressive and negotiated everything with surgical precision. Thank you to the whole team!!"
Regulatory Compliance for California Businesses
Operating in California means navigating compliance obligations that go beyond registration and annual filings. The specific requirements vary by industry, but several apply broadly to businesses in this state.
Franchise Tax and Annual Obligations
Most business entities formed or qualified to do business in California — including corporations, LLCs, and limited partnerships — are subject to the California franchise tax administered by the California Franchise Tax Board (FTB). A minimum annual tax applies to most entities regardless of income, with additional amounts potentially owed at higher income or gross receipts levels. These requirements are recurring compliance items, and maintaining good standing with the FTB is necessary for the entity to remain active and conduct business in California.
Sales Tax and CDTFA Registration
Businesses that sell taxable goods or certain services in California may need to register with the California Department of Tax and Fee Administration (CDTFA) and collect and remit sales tax. California’s sales and use tax rules are detailed and include nexus rules that can apply to out-of-state sellers with California customers — a frequently relevant issue for e-commerce businesses and service providers.
Licensing and the Business and Professions Code
Many industries in California require state or local licenses before a business may legally operate. The California Business and Professions Code governs professional and occupational licensing across a broad range of industries, including contractors and real estate professionals, healthcare providers, and financial advisors. Operating without a required license can expose a business to civil penalties, contract unenforceability claims, and regulatory action.
For businesses in financial services, lending, investment advisory, or insurance, the California Department of Financial Protection and Innovation (DFPI) serves as the primary state regulator, overseeing licensing and enforcement for a wide range of financial products and companies.
Mergers, Acquisitions, and Business Transitions
At some point in the life of many businesses, ownership or structure changes. Whether through a sale, merger, acquisition, or internal succession, these transitions involve legal complexities specific to California in several important ways.
- Buying or Selling a Business in California
- A California business sale may be structured as an asset purchase or a stock (equity) purchase. Each structure carries different implications for how liabilities transfer to the buyer, how existing contracts and licenses carry over, and how the transaction is treated for tax purposes. In asset transactions, California’s bulk sales provisions under the Uniform Commercial Code may also apply — a detail that can affect how the transaction is structured and what notices must be given.
- Due diligence in a California business acquisition typically involves reviewing entity status with the Secretary of State, examining contracts and IP ownership, assessing employment obligations, reviewing any pending litigation, and confirming regulatory standing. Our mergers and acquisitions practice supports both buyers and sellers through these transactions from initial structuring through closing.
- Succession Planning for California Business Owners
- Business owners who want to transfer their company to family members, key employees, or an outside buyer over time often benefit from a structured succession plan. This involves not just the mechanics of an eventual transfer, but also governance planning, key person agreements, and — in many cases — coordination with an estate planning strategy. Our succession and exit planning practice works with California owners navigating longer-term ownership transitions.
Outside General Counsel for California Businesses
Many small- and mid-sized businesses in California need consistent legal support but don’t have enough work to justify a full-time in-house attorney. An outside general counsel arrangement — where an attorney or firm serves as the business’s primary legal resource on an ongoing basis — can provide access to experienced counsel without the fixed overhead.
In this model, the attorney or firm learns the business, its industry, and its risk areas over time. That context enables more practical, efficient guidance across the range of legal questions that arise in normal operations — contract review, employment decisions, compliance issues, vendor disputes, and more. Our outside general counsel services are structured for California businesses that want a consistent, knowledgeable legal presence without building an in-house team.
How We Help California Businesses
California business law covers nearly every aspect of how a company operates — from formation to transition. The legal questions that arise along the way are often interconnected: a governance decision may shape a future transaction; an IP agreement may affect employment relationships; a compliance gap may become a litigation exposure. Addressing these issues in isolation, or only when they become urgent, can lead to outcomes that might have been avoided with earlier attention.
Our California business law practice works with founders, owners, executives, and boards across a range of industries and company sizes. We aim to provide clear, practical guidance that helps clients make informed decisions — not just at critical moments, but as part of how they run their businesses day to day.
Whether you are forming a new entity, working through a commercial dispute, preparing for an acquisition, or seeking ongoing legal support, we welcome the opportunity to understand your business needs and how we can help.
Contact Our California Business Law Team
Business law questions are often best addressed before they become disputes or compliance gaps. If you have questions about forming a business, structuring an agreement, preparing for a transaction, or understanding your legal obligations under California law, we welcome the opportunity to speak with you. Contact our office to schedule a consultation.
Frequently asked questions
California Business Law
California recognizes several primary business structures, including corporations, limited liability companies (LLCs), general partnerships, limited partnerships, and limited liability partnerships. Each has different implications for ownership, management, liability, and taxation. The right structure depends on the nature of the business, its ownership composition, and the goals of its founders or owners. A business attorney familiar with California law can help evaluate which structure fits the specific situation.
Most business entities formed in or qualified to operate in California — including corporations and LLCs — are subject to the California franchise tax administered by the Franchise Tax Board. A minimum annual tax applies to most entities regardless of profitability, with additional amounts potentially owed at higher gross receipts or income levels. Because franchise tax rules and minimums are subject to change, it is worth confirming current requirements directly with the FTB or a qualified advisor.
In most circumstances, no. The California Business and Professions Code makes most non-competition clauses in employment contracts unenforceable, with narrow statutory exceptions — such as those connected to the sale of a business or the dissolution of a partnership. California's position on non-competes is among the most protective of employees in the country. Businesses that have agreements drafted under the laws of other states should confirm whether the non-compete provisions in those agreements would be enforceable in California.
The California Unfair Competition Law (UCL), found in the Business and Professions Code, prohibits business acts or practices that are unlawful, unfair, or fraudulent. It is one of the most broadly applied statutes in California commercial litigation and can be invoked by private parties as well as the California Attorney General. The UCL applies to a wide range of commercial conduct, including advertising, pricing, data handling, and competitive behavior.
An outside general counsel arrangement may be practical for businesses that have ongoing legal needs but don't require a full-time in-house attorney. Common situations include companies in a period of growth, businesses preparing for or navigating a transaction, and owners who want consistent legal guidance on contracts, governance, and compliance. The arrangement works best when the business and its counsel have an ongoing relationship that builds familiarity with the company's operations and risk areas over time.
California business disputes may be resolved through negotiation, mediation, arbitration, or litigation in the California Superior Court, depending on the nature of the matter and any contractual requirements. Many commercial agreements in California include mandatory arbitration or mediation clauses. For matters that proceed to court, complex cases may be assigned to specialized commercial departments, including the complex civil programs in Los Angeles and other major counties.
Common ongoing obligations for California businesses include filing Statements of Information with the Secretary of State at required intervals, maintaining a registered agent, paying applicable franchise taxes to the FTB, renewing required licenses or permits, and satisfying any industry-specific regulatory requirements. For financial services businesses, maintaining active licensing with the DFPI is an additional ongoing obligation. Requirements vary by entity type, industry, and business activity.
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