© 2004 West Legal Studies in Business A Division of Thomson Learning 1 Chapter 54 Law for Small Businesses Chapter 54 Law for Small Businesses

© 2004 West Legal Studies in Business A Division of Thomson Learning 2 § 1: The Importance of Legal Counsel Those with the desire to start their own business need to be sure to cover the options and legal requirements thoroughly with respect to issues such as:  Finding an Attorney.  Selecting the Appropriate Business Form.  Creating the Business Entity.  Intellectual Property Assets.  Raising Financial Capital.  Buy-Sell Agreements and Key-Person Insurance.  Contract Law.  Credit and Payment Issues.  Employment Issues. Those with the desire to start their own business need to be sure to cover the options and legal requirements thoroughly with respect to issues such as:  Finding an Attorney.  Selecting the Appropriate Business Form.  Creating the Business Entity.  Intellectual Property Assets.  Raising Financial Capital.  Buy-Sell Agreements and Key-Person Insurance.  Contract Law.  Credit and Payment Issues.  Employment Issues.

© 2004 West Legal Studies in Business A Division of Thomson Learning 3 Finding an Attorney The process should be methodical and include:  Interviewing and evaluating attorneys.  Retaining an attorney. The process should be methodical and include:  Interviewing and evaluating attorneys.  Retaining an attorney.

© 2004 West Legal Studies in Business A Division of Thomson Learning 4 § 2: Selecting an Appropriate Business Form Factors to consider:  Limitation on Liability.  Tax Consideration.  Continuity of Life.  Legal Formalities and Expense. Factors to consider:  Limitation on Liability.  Tax Consideration.  Continuity of Life.  Legal Formalities and Expense.

© 2004 West Legal Studies in Business A Division of Thomson Learning 5 § 3: Creating the Business Entity The creation of a business entity must be done with caution, with attention to:  Choosing a Corporate Name.  Creating the articles of incorporation, bylaws, and holding initial meetings.  Creating and maintaining corporate records. The creation of a business entity must be done with caution, with attention to:  Choosing a Corporate Name.  Creating the articles of incorporation, bylaws, and holding initial meetings.  Creating and maintaining corporate records.

© 2004 West Legal Studies in Business A Division of Thomson Learning 6 § 4: Intellectual Property Trademarks, patents, and trade secrets are protected by intellectual property laws to protect the value of the investment in their creation and their economic potential into the future. Register your trademark at the U.S. Patent and Trademark Office. Case 54.1: Royal Appliance Mfg. Co. v. Minuteman International, Inc. (2002). Trademarks, patents, and trade secrets are protected by intellectual property laws to protect the value of the investment in their creation and their economic potential into the future. Register your trademark at the U.S. Patent and Trademark Office. Case 54.1: Royal Appliance Mfg. Co. v. Minuteman International, Inc. (2002).

© 2004 West Legal Studies in Business A Division of Thomson Learning 7 § 5: Raising Financial Capital Capital can be raised through:  Loans.  Venture Capital.  Sale of Securities via public or private offerings. Capital can be raised through:  Loans.  Venture Capital.  Sale of Securities via public or private offerings.

© 2004 West Legal Studies in Business A Division of Thomson Learning 8 § 6: Buy-Sell Agreements and Key-Person Insurance Buy-Sell Agreements allow the owners of a business to have the right of first refusal This is done to protect passive investors from the possibility that managing shareholders may “bail out” of corporation by selling their shares to third parties. Key-Person Insurance protects against the risk that these key persons may become disabled or die. Buy-Sell Agreements allow the owners of a business to have the right of first refusal This is done to protect passive investors from the possibility that managing shareholders may “bail out” of corporation by selling their shares to third parties. Key-Person Insurance protects against the risk that these key persons may become disabled or die.

© 2004 West Legal Studies in Business A Division of Thomson Learning 9 § 7: Contract Law and Small Business Contract law is complex, especially in the area of sales of goods. An attorney should be consulted for creating contract forms for specific purposes and transactions involving a significant investment or dealings in unfamiliar areas. Case 54.2: Instant Print Centers, Inc. v. Crowley (2002). Contract law is complex, especially in the area of sales of goods. An attorney should be consulted for creating contract forms for specific purposes and transactions involving a significant investment or dealings in unfamiliar areas. Case 54.2: Instant Print Centers, Inc. v. Crowley (2002).

© 2004 West Legal Studies in Business A Division of Thomson Learning 10 § 8: Credit and Payment The offering of early payment incentives and the imposition of late payment penalties on one’s buyers may be subject to the terms of the Truth in Lending Act (TILA).

© 2004 West Legal Studies in Business A Division of Thomson Learning 11 § 9: Employment Issues A knowledge of employment law is crucial, to avoid common mistakes in:  Hiring Employees.  Employee Compensation.  Workers’ Compensation. A knowledge of employment law is crucial, to avoid common mistakes in:  Hiring Employees.  Employee Compensation.  Workers’ Compensation.

© 2004 West Legal Studies in Business A Division of Thomson Learning 12 Employment Issues [2]  Unemployment Compensation.  Firing Employees. Case 54.3: Roberts v. Dudley (2000).  Covenants not to Compete.  Using Independent Contractors.  Unemployment Compensation.  Firing Employees. Case 54.3: Roberts v. Dudley (2000).  Covenants not to Compete.  Using Independent Contractors.

© 2004 West Legal Studies in Business A Division of Thomson Learning 13 Law on the Web Lawyers.com. Small Biz at CourtTV.com. Legaldocs.com. Register your domain name at register.com.register.com Small Business Tax info at IRS.gov. Legal Research Exercises on the Web. Lawyers.com. Small Biz at CourtTV.com. Legaldocs.com. Register your domain name at register.com.register.com Small Business Tax info at IRS.gov. Legal Research Exercises on the Web.