Transactional

By: Denise C. Werkley

I often get asked by people starting up a new business venture whether they need to file for a fictitious name. In Pennsylvania, a fictitious name is the name you “do business as” or “trade as”. It is the business name you use with the public. If you are not intending to form a legal entity, and instead operate as a sole proprietorship, Pennsylvania requires you to register the name with the Pennsylvania Department of State and to advertise in multiple publications. Registration provides your customers and suppliers with the name of the person who is legally responsible in the event that there is a claim for goods, services, or payment. Registration also legitimizes the business in many vendors eyes and can be beneficial for marketing. Most important though is that Pennsylvania law provides for a fine and the inability to use the courts to enforce a contract if you have not registered your fictitious name. For example, you do business as a sole proprietor and use the name Happy Days Consulting on all your materials. You then enter into a contract for consulting services with a very big fee, and you sign it as Happy Days Consulting. You have not yet filed your fictitious name, and your client doesn’t pay you. You may not be ale to sue on that contract to recover the unpaid fee.

Additionally, people who do have a legal entity (a corporation, LLC, partnership, etc.) often ask to file a fictitious name. An entity can trade under its own name without any registration other than its organizational documents filed with PA – so if you decide to form a legal entity and name it Happy Days Consulting, Inc., you can use the name Happy Days Consulting with your customers/suppliers. However, if you file as Happy Days Consulting, Inc., but want to operate as “Consultants R Us”, you would need to also file a fictitious name for “Consultants R Us”, in addition to the typical organizational documents filed in PA for Happy Days Consulting, Inc.

In addition to filing requirements, choosing a business name should be done with care so as to avoid infringing on existing trademarks, to put you in the best position to protect the name, to make the most of marketing opportunities and for ease of use. For more information on choosing a business name, please contact Denise C. Werkley at 610-692-1371 or dwerkley@utbf.com.

By: Donald C. Turner

To view a recent blog on how to protect your personal interest in a closely-held business entity, click here.

for more information, please contact our office.

Please see our Litigation Blog by Daniel P. Dwyer for more information on Mismanagement and Malfeasance claims against managers and directors.

If you would like more information, please contact our office.

By: Denise C. Werkley

Effective September 4, 2009 Pennsylvania enacted amendments to the Real Estate Licensing and Registration Act which permit real estate agents to be paid under a qualified association, which could be a corporation, limited liability company or other entity. Click here for more information on the amendments to the Act.

For more information please contact Denise Werkley.

February 23, 2009
By: Theodore F. Claypoole

If you are a shareholder of a corporation or a member of a limited liability company, then you may subject yourself to personal liability if you fail to hold yourself out as an officer or member of the entity. Recently, the Centre County Court of Common Pleas of Pennsylvania in Schwenke, Inc. v. J.P. Construction, Inc., and Jeffery Carozza, allowed a plaintiff to proceed with its case against both a corporation and its sole shareholder where: (1) the sole shareholder accepted the bid for services with the plaintiff by signing his name and writing a reference to his corporation; (2) there was no addition of the word “incorporated” or any reference that the sole shareholder signed as an officer and not in his individual capacity; (3) there was no evidence that the sole shareholder corrected or rejected the idea that the plaintiff should deal with him separately from the corporation; and (4) there were no documents in the transaction that listed the sole shareholder as an officer of the corporation, making it unclear under which capacity he entered into the contract.

It is important for a shareholder of a corporation or a member of a limited liability company to refer to himself or herself as an officer, member or manager of the corporation or limited liability company when conducting business in such capacity (e.g., when introducing himself or herself and in business cards) and to sign any contracts or other documentation in his or her capacity as an officer, member or manager of the entity (i.e., XYZ, Inc., by John Smith, President); otherwise, a Court may find that the shareholder or member, and not the corporation or limited liability company, is the liable party. For more information on this case or how you may protect yourself from personal liability when conducting business in your capacity as an officer, member or manager of your corporation or limited liability company, please contact Theodore F. Claypoole.