Entrepreneurs' Diary- Completion
Rain Ashbell
M17-LegalIssue-OL.pptxSmall Business management
ENTR 442
Legal Issues
Yongseok Jang, Ph.D.
Assistant Professor of Entrepreneurship
Legal Issues
Legal formation
Registering your business
Choosing a Business Form
Legal entity
A being, human or nonhuman, such as a corporation, that is recognized as having rights and duties, such as the right to own property except sole proprietorship.
3
Choosing a Business Form*
Six major factors at play:
Personal liability of the business owner
Taxation of both the entity and its owners
Complexity and organizational costs in setting up
Control of the business
Continuity of the business
Ability of the business to raise capital
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Legal Forms of Start- Ups from the PSED
Figure 18.1
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Sole Proprietorship
One individual owner
No business registration
No formation documents
Personal liability
Taxes are based on individual’s SSN
Terminates at will or upon owner’s death
Partnership
> one person in business together
Simple structure and easy to set up
Joint and several liability
Taxed at partner level
Terminates upon dissolution of the partnership
General or limited partnership
C Corporations
Most basic form of business entity
Owners are shareholders in the company
Shields owners from liability
Taxed at the corporate and at the owner level- double taxation
S Corporations (family businesses)
Closely held corporation
No more than 100 shareholders
Corporate shield for liability
Taxed at individual owner level
S Corporations
Benefits
simple structure
no double taxation- passed through
Rules and caveat
Can’t issue more than one class at stock
Cannot be a publicly held corporation
Limited Liability Corporation
Newer business organization recognized by law
One or more members
Shields members from individual liability
“Check the box taxation", Taxed at the individual level or at corporation
Difficult to issue more than one class of units
Difficult to convert to C Corporation
Limited Liability Partnership
Partnership with limited liability
Used often by professional service providers (PLLC)
Form of Ventures: by Tax
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Form of Ventures
A corporation: a legal entity separate from its owners
Flow-through entities (pass-through entity): passes all losses or gaines through to the owners of the firm.
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Let’s do it right
Next time.. Registering your business
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Legal Issues
Legal formation
Registering your business
Registering as an Employer
Find out information required to register with the EDD
For Commercial Employer-Individual Owners, Co-Ownership, General Partnerships
Name and Social Security number-all responsible parties.
Doing Business As (DBA), if applicable.
Physical business address and mailing address.
Business phone number.
Valid e-mail address (contact person and business).
Choosing a Business Name
Assumed name filing or a fictitious name filing
Filing made with a state(s) in which the business operates disclosing the trade name or assumed name of the business along with the owners of the business.
18-19
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Choosing a good name*
Answer these questions to choose good name
Does the name clearly convey what the business does?
Does it appeal to the kind of customers you want to attract?
Does it get customers to respond to your business on an emotional level?
Is it long, confusing or hard to pronounce?
Is it a pun that no one else understands?
Check the availability of the name
Databases of Names of registered corporation, LLCs, and Partnerships
Registered Trademarks- USPTO
Unregistered Business Names (First Use Prevails)
Fictitious Business Names (DBA)
DBA means “Doing Business As”
Does not offer protection for name
Registration requires a newspaper ad
Filing fee
Duration of name registration: 5 years
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Legal Issues
Legal formation
Taxation, ability to raise capital, liability, ownership
Registering your business
Choosing good name, DBA
