Legal Question in Business Law in California

Re: LLC and Sole Proprietor

There are two possible answers here, yes and no. The answer is "yes" if you mean is it possible. Sure, it is possible, in the same sense you can write a check for $200 when you only have $100 in your account.

The answer is usually "no" if you mean is it legal and proper, just as overdrawing your checking account is against the rules and sometimes against the law.

So, I'd say it CAN be done, but hasten to add that the person who does so may be violating some right of the sole proprietor.

Let's say you make widgets under the DBA of "Joe's Widget Works" and someone forms an LLC and calls it "Widgets Better Than Joe's, LLC."

Right away, there is the possibility of a trademark infringement, customer confusion, unfair competition and trade libel. Maybe long shots, but there is some possibility for a civil suit on one or another of these.

Then, if the LLC interferes with Joe's contracts with his customers, tries to steal his production secrets by bribing his employees, or engages in false advertising, for example, additional grounds for suit will arise.

However, if someone forms "Jack & Jill Widget Works, LLC" across the street from Joe's, and takes away his customers intentionally but by means of completely fair methods such as better quality and selection, better price, faster delivery, etc., that is perfectly legal and Joe is out of luck.

Re: LLC and Sole Proprietor

You imply that someone formed an LLC to take over your sole proprietorship business. If that is the case the answer is no.

However, you really need to sit down with an attorney and discuss the entirety of the situation to determine what was taken from the sole proprietorship, the costs involved and what it will take to go after that party.

Re: LLC and Sole Proprietor

Huh? No. If someone is 'appropriating' your trade-name and trying to steal customers through an identically named business, you have grounds for legal action, but no one can 'take over' your sole proprietorship without your knowledge. What did they do, come into the store and kick you out? You need to consult with counsel to discuss your actual facts, rights and remedies. Feel free to contact me if serious about doing so. I've been handling civil litigation like this for over 30 years.