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Business law for consultants
Business law for consultants
Business law for consultants
Business law for consultants
Business law for consultants
Business law for consultants
Business law for consultants
Business law for consultants
Business law for consultants
Business law for consultants
Business law for consultants
Business law for consultants
Business law for consultants
Business law for consultants
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Business law for consultants


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  • 1. Business Law for Consultants Jeffrey C. O’Brien
  • 2. Topics to Be Covered Today
    • Entity Formation
    • Drafting Your Consulting Agreement
    • Enlisting Your Team of Advisors
  • 3. Entity Formation
    • Subchapter S Corporation (“S Corp”)
      • Must make an election with the IRS
      • Restrictions on who can own shares of an S Corp
      • All shareholders have the same rights
      • Possible SE Tax Minimization
  • 4. Entity Formation, Pt. 2
    • Limited Liability Company (LLC)
      • Flexible structure
      • Ability to vary allocation of governance rights and financial rights
      • Single member LLC “disregarded” for federal income tax purposes; sole proprietorship income
      • Drawback: full SE tax (FICA applies to all income whether salary or profits)
  • 5. S Corp vs. LLC
    • FICA Tax Minimization – S Corp
    • Flexibility – LLC
    • BUT: DON’T WORRY: Minnesota’s corporation and LLC statutes provide for a mechanism to convert an LLC to a corporation and a corporation to an LLC
  • 6. Standard Documents S Corporation LLC
    • Articles of Incorporation
    • Bylaws
    • Initial Written Actions of Shareholders/Directors
    • Shareholder Control Agreement (w/ Buy-Sell Provisions)
    • Form SS-4
    • Form 2553 (S Election)
    • Articles of Organization
    • Operating Agreement/Bylaws
    • Initial Written Actions of Members/Governors
    • Member Control Agreement (w/ Buy-Sell Provisions)
    • Form SS-4
  • 7. Top Mistakes Made in Entity Formation that an Attorney Can Help You Avoid
    • Use of state-provided Articles of Incorporation or Articles of Organization (you miss the default provisions!)
    • Incomplete Documents (no Bylaws or Control Agreement with Buy-Sell Provisions)
    • Failure to timely file S Election
  • 8. Basic Consulting Agreement
    • Independent Contractor Agreement; Required IRS language re control of consultant’s work and withholding tax issues
    • Specify what services you are providing and the fees associated with such services
    • Specify how payment for services is to be made (i.e., invoice sent, paid within 30 days, late charges if past due, etc., etc.)
  • 9. Basic Consulting Agreement, Part II
    • Reimbursement of Expenses: Make sure to specify whether your expenses are to be reimbursed and how
    • Term and Termination Provisions - the law doesn’t like open ended/never ending agreements; consider “for cause” termination
  • 10. Basic Consulting Agreement, Part III
    • If you are working with confidential information, be sure to cover in your consulting agreement the parties’ rights with respect to the handling of that information (either yours or theirs)
    • Specify the parties’ intellectual property rights
  • 11. Your Attorney’s Role in Building Your Advisory Team
    • Use your attorney as a resource; we know people!
    • The essential advisors to any business:
      • Business attorney
      • Estate planning attorney (can be the same person as the business attorney)
      • CPA
      • Financial Advisor
      • Banker
      • Insurance Agent
  • 12. INCubation Center FAQ
    • Established in February 2007
    • Comprehensive Program Designed to Provide Essential Legal and Non-Legal Services to New and Emerging Businesses in their Formative Years
    • Combines cost effective basic legal services, referrals to “strategic partners” and periodic education/networking programs
    • Objective is to encourage new business owners to utilize professional advisors, including attorneys
    • We attempt to replicate our existing clients’ successes with new businesses
  • 13. Thoughts to Remember From Today…
    • You are an expert in what you do (i.e., the industry you consult in)
    • Do not try to be in expert in areas where there are other experts to assist you (legal, accounting, insurance, payroll, human resources, etc.)
    • Hiring other experts for these areas will save you money in the long run!!
  • 14. Questions?
    • Jeffrey C. O’Brien
    • Mansfield Tanick & Cohen, P.A.
    • 1700 U.S. Bank Plaza South
    • 220 South Sixth Street
    • Minneapolis, MN 55402
    • 612-341-1263
    • [email_address]