Download the complete guide at www.calventurelaw.com
As an entrepreneur and emerging business owner, you realize the necessity of using outside resources, regardless of the size or stage of your venture. Frequently, these outside services come at a significant cost, and have the potential to divert your attention away from more pressing or revenue-generating matters. A perfect example of such necessary outside resources is that of legal services. You, as an entrepreneur, are an expert in your field or industry, and it is unlikely that you could have sacrificed your valuable time to become an expert in the legal field as well. The services of those who are experts in the legal field can be expensive to a fledgling business or beginning entrepreneur.
We offer the “Start-Up Legal Guide: A Legal Guide for the Beginning Entrepreneur and the Emerging Business Owner” in the hopes of educating you on what you need to know immediately about starting and running your business. As a consolidated and user-friendly resource, this legal guide is intended to save you time and money in going forward.
If you want to know the various forms of business entities, how they are taxed, how they are formed, and what are the various costs and benefits of each entity, this guide will endeavor to provide you this information. As an entrepreneur who likely has some valuable form of intellectual property, this guide will help you determine what items you can protect, how you can protect them, and the costs and benefits of the various forms of intellectual property protection. This guide will also touch upon other various issues, such as employment law and business financing, that you will need to know as you start your business.
9. Taxation Ownership Liability Formation Benefits Drawbacks
and Man-
agement
Sole Pro- “Disregarded Sole proprietor Unlimited per- Simply start Complete man- Unlimited per-
prietorship Entity” for in- is the only sonal liability operating the agement auton- sonal liability;
come tax pur- owner and for the owner of business; file omy; easy, fast, limited options
poses; must pay manager. the business all necessary and cheap to for business fi-
self employ- permits and li- form. nancing.
ment tax. censes.
C Corpora- “Double taxa- Shareholders Limited liabil- Essentially: 1) Malleable en- Relatively more
tion tion” at 1) cor- are owners; of- ity for share- Articles of In- tity; developed costly and time
porate and 2) ficers manage holders, subject corporation; 2) law; limited consuming to
shareholder day to day op- to piercing the Bylaws; 3) ap- liability; attrac- form and operate;
level. erations; direc- corporate veil. point directors; tive to inves- double taxation.
tors manage 4) issue stock tors; many fi-
overall policy and appoint of- nancing op-
and direction. ficers tions.
S Corpora- “Flow through” Same as above. Same as above. Same, but also Same, plus no Same, except no
tion taxation: only must make S double taxation. double taxation.
taxed at the Corporation
shareholder election with
level. IRS form 2553.
General “Flow through” All partners Each partner is Enter into part- Shared manage- Personally liable
Partnership taxation: entity own and man- “jointly and nership agree- ment and fi- for all debts/
itself pays no age the busi- severally” li- ment. nancing respon- obligations of
taxes. ness. able. sibility. partnership.
Limited Same as above. All partners General part- 1) Enter into Limited liabil- General partners
Partnership own; only gen- ners same as partnership ity for some are still person-
eral partners above; limited agreement; 2) partners; bene- ally liable.
manage. partners have file necessary ficial entity for
limited liability. certificates with many investors.
SOS.
Limited Li- Same as above. All partners “Several liabil- 1) Enter into Liability for all This entity is usu-
ability Part- own and man- ity” for each partnership partners limited ally limited to
age the busi- partner: only agreement; 2) only to that lawyers, account-
nership
ness. liable for own file necessary partner’s obli- ants, and archi-
obligations, not registration gations. tects, only.
other partners’. with SOS.
Limited Li- Same as above. All partners Limited liabil- 1) Enter into Limited liabil- This entity is
ability Lim- own; only gen- ity for limited partnership ity for some only available in
eral partners partners; sev- agreement; 2) partners and a handful of
ited Partner-
manage. eral liability for file necessary only several states and is very
ship general part- registration liability for new.
ners. with SOS. other partners.
Limited Li- Same as above. All members Limited liabil- 1) File Articles Limited liabil- Securities issues
ability Com- own; only one ity for all mem- of Organization ity for all mem- can be difficult;
to all members bers, even for with SOS; 2) bers; no double not as many fi-
pany
can manage managing enter into an taxation (often nancing options
members. operating compared with as with a corpora-
agreement. an S Corpora- tion.
tion)
10. How to What Nature of Registra- Benefits Draw-
Acquire Can Be the Pro- tion of Regis- backs to
Rights Protected tection tration this IP
Right
Trade- Simply start Anything that Prevent oth- 1) State regis- Federal: 1) Does not pro-
using the identifies ers from us- tration avail- Nation-wide tect inven-
marks mark in com- your goods/ ing a confus- able. notice; and tions, ideas,
merce to services: ingly similar 2) Federal 2) litigation or original
identify your words, sym- mark or a registration benefits works of au-
goods or ser- bols, sounds, mark that di- available: (damages, thorship.
vices. colors, over- lutes your www.uspto.g jurisdiction, Sometimes
all schemes mark’s effec- ov/teas evidence of protects do-
or “trade tiveness. validity). main names.
dress.”
Copy- Simply put Original Exclusive Federal regis- 1) Nation- Only protects
your original works of au- right to repro- tration avail- wide notice the expres-
rights work of au- thorship: duce, distrib- able: and 2) litiga- sion of an
thorship into books, music, ute/perform/ www.copyrig tion benefits idea, not the
a tangible software display, and ht.gov.eco.in (damages, idea itself.
medium of code, movies, create deriva- dex.html evidence of Therefore,
expression etc. Cannot tive works. validity, cannot pro-
protect the third party tect inven-
underlying liability). tions.
ideas.
Patents Must apply or New and use- Have a Only form of Gives you Patent will
“prosecute” a ful processes, “property IP protection the expire, and
patent appli- machines, in- right” in an that must be “strongest” you will lose
cation: http:// ventions, idea: have the applied for: form of IP your property
www.uspto.g some designs, exclusive http:// protection: right; expen-
ov/patents/ and new va- right to use/ www.uspto.g the property sive and time
index.jsp rieties of sell your in- ov/patents/ right over an -consuming
plants. vention. process/ idea. to acquire.
index.jsp
Trade Se- Simply have Anything that Simply the N/A N/A/, but a Weak form of
and use valu- is secret and right to pre- benefit of protection in-
crets able business gives you an vent others this protec- sofar as a
information economic ad- from obtain- tion is that it competitor
that is kept vantage: ing the secret lasts as long can use your
secret and ideas, inven- unlawfully. as the infor- trade secret if
gives you an tions, cus- Competitors mation re- it is ever dis-
economic ad- tomers lists, can reverse mains secret, closed or re-
vantage. etc. engineer your unlike a pat- invented
trade secret. ent which through inde-
will expire. pendent dis-
covery.