Fundamentals Of Business Legal Issues Grand Valley


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Fundamentals Of Business Legal Issues Grand Valley

  1. 1. Entrepreneurial Series Fundamentals of Business Legal Issues
  2. 2. Objectives <ul><li>Introduce the different types of legal entities </li></ul><ul><li>Identify how to start a business </li></ul><ul><li>Review basic elements of a contract </li></ul><ul><li>Develop a collection plan in the event you are </li></ul><ul><li>not paid </li></ul><ul><li>Introduce basic employment issues </li></ul><ul><li>Review real property and zoning issues related </li></ul><ul><li>to business operations </li></ul><ul><li>Overview of insurance needs </li></ul>
  3. 3. Agenda <ul><li>Introductions </li></ul><ul><li>B usiness entities </li></ul><ul><li>Starting a business </li></ul><ul><li>Business and employment issues </li></ul><ul><li>Leasing and real property issues </li></ul>
  4. 4. Introduction <ul><li>Welcome to the MI-SBTDC ™ </li></ul><ul><li>Fundamentals of Business Legal Issues </li></ul><ul><li>Instructor </li></ul><ul><li>Logistics </li></ul><ul><li>Your business </li></ul><ul><li>Expectations </li></ul>
  5. 5. Legal Considerations when Starting a Business <ul><li>Who will own the business? </li></ul><ul><li>What will be the ownership structure? </li></ul><ul><li>Establishing the structure </li></ul><ul><li>Forming or acquiring the business </li></ul><ul><li>Selecting a name and filing the </li></ul><ul><li>appropriate licenses and registrations </li></ul><ul><li>Location of business and acquiring the location </li></ul><ul><li>Employees versus independent contractors </li></ul>
  6. 6. Legal Identity and Business Entities <ul><li>Sole proprietorship </li></ul><ul><li>General partnership </li></ul><ul><li>Corporation (Subchapter C or Subchapter S) </li></ul><ul><li>Limited liability company </li></ul><ul><li>Limited partnership </li></ul><ul><li>Limited liability partnership </li></ul>
  7. 7. Comparison of Common Forms of Business Ownership <ul><li>Legal form </li></ul><ul><li>Protection against personal liability </li></ul><ul><li>Basic organizational requirements </li></ul><ul><li>Transferability of ownership </li></ul><ul><li>Organizational form </li></ul><ul><li>Tax consequences for owners </li></ul><ul><li>Particular problems. </li></ul>
  8. 8. Tax Treatment of Business Entities <ul><li>C-corp </li></ul><ul><li>S-corp </li></ul><ul><li>LLC </li></ul>
  9. 9. Legal Structure Options Regulation Start-up cost and registration Entity & Life Liability Taxation Sole Proprietor Least Regulated Low County Tied to Individual Unlimited Individual -Schedule “ C ” Partnership Limited Regulation Low County Tied to Partners Partners Liable Shared Schedule “ C ” Limited Liability Company Limited Regulation Relatively Inexpensive State As agreed to by Members Limited to Assets of company May choose to be taxed as partnership Corporation “ C ” corp “ S ” corp (IRS election) Most regulated Most Expensive State Perpetual Legal Entity No Individual Liability Double taxation
  10. 10. Form 1040 Schedule C Profit or Loss from Business
  11. 11. Registering the Business Name <ul><li>Sole proprietorship </li></ul><ul><ul><li>Register with County Clerk </li></ul></ul><ul><li>Corporation and LLC </li></ul><ul><ul><li>Register with Michigan Department of </li></ul></ul><ul><ul><li>Labor and Economic Growth </li></ul></ul><ul><ul><li>(Commercial Services & Corporations) </li></ul></ul><ul><li>Importance of filing Certificate of Assumed Name </li></ul>
  12. 12. How to Enter a Market Business Start Up <ul><li>Difficult to obtain financing </li></ul><ul><li>Need for special skills </li></ul>
  13. 13. How to Enter a Market Purchasing an Existing Business <ul><li>Advantages of purchasing an existing business </li></ul><ul><li>Disadvantages of purchasing an existing business </li></ul><ul><li>Recommended steps in purchasing a business </li></ul><ul><li>Keys: </li></ul><ul><li>- review and analyze financial books & records </li></ul><ul><li>- stock or asset purchase agreement </li></ul><ul><li>- why is owner selling? </li></ul><ul><li>Purchase checklist </li></ul>
  14. 14. How to Enter a Market Purchasing a Franchise <ul><li>Advantages of starting a franchise </li></ul><ul><li>Disadvantages of starting a franchise </li></ul><ul><li>Franchise checklist </li></ul>
  15. 15. Selecting and Using Legal Counsel in your Business <ul><li>Questions to ask yourself before </li></ul><ul><li>interviewing for legal counsel </li></ul><ul><li>Setting up the “interview” </li></ul><ul><li>Suggested interview questions for the </li></ul><ul><li>prospective attorney </li></ul>
  16. 16. Contract Basics - Elements of a Contract <ul><li>Definition </li></ul><ul><li>Written versus verbal contracts </li></ul><ul><li>Offer and acceptance </li></ul><ul><li>Identification of parties </li></ul><ul><li>Effective date </li></ul><ul><li>Warranties and representations </li></ul><ul><li>Format </li></ul>
  17. 17. Specific Types of Agreements <ul><li>Noncompetition </li></ul><ul><li>Confidentiality </li></ul><ul><li>Employment </li></ul>
  18. 18. Leases <ul><li>Basic terms </li></ul><ul><li>- Parties to lease </li></ul><ul><li>- Personal guaranty </li></ul><ul><li>Lease options </li></ul><ul><li>Escalations </li></ul><ul><li>Tenant/Landlord responsibilities </li></ul><ul><li>Basic tip: All leases are negotiable </li></ul><ul><li>(depends on location, market) </li></ul>
  19. 19. Collection Action Plan <ul><li>Proactive steps </li></ul><ul><li>Reactive steps </li></ul><ul><li>Get it in writing! </li></ul><ul><li>- Attorney fees provision </li></ul><ul><li>- Interest rate provision </li></ul><ul><li>  </li></ul>
  20. 20. Construction Liens <ul><li>Residential versus commercial projects </li></ul><ul><li>Michigan Construction Lien Act </li></ul>
  21. 21. Intellectual Property Protection <ul><li>Patents </li></ul><ul><li>Trademarks </li></ul><ul><li>Copyright </li></ul><ul><li>Trade secrets </li></ul>
  22. 22. Employment Issues <ul><li>Finding and hiring employees </li></ul><ul><li>Discharging employees </li></ul>
  23. 23. Independent Contractors versus Employees <ul><li>Independent Contractor / Employer checklist </li></ul><ul><li>Specific differences </li></ul>
  24. 24. Property <ul><li>Environmental issues </li></ul><ul><li>Inspection </li></ul><ul><li>Renovations </li></ul><ul><li>Business entity to hold real property </li></ul><ul><li>Location </li></ul>
  25. 25. Zoning Issues <ul><li>Check current zoning of property </li></ul><ul><li>Is the business a home-based business? </li></ul><ul><li>Difficulties in rezoning property </li></ul>
  26. 26. Insurance <ul><li>Life insurance </li></ul><ul><li>- “Key person” </li></ul><ul><li>- Shareholder/member to fund </li></ul><ul><li> buy and sell agreement </li></ul><ul><li>Health </li></ul><ul><li>Liability </li></ul><ul><li>Malpractice </li></ul>
  27. 27. <ul><li>The MI-SBTDC™ is funded through a cooperative </li></ul><ul><li>agreement with the U.S. Small Business Administration, </li></ul><ul><li>the Michigan Economic Development Corporation SM </li></ul><ul><li>(MEDC) and matching funds from Local Network </li></ul><ul><li>partners in each region. </li></ul><ul><li>MI-SBTDC TM State Headquarters </li></ul><ul><li>Grand Valley State University </li></ul><ul><li>Seidman College of Business </li></ul><ul><li>Phone: 616.331.7480 </li></ul><ul><li> </li></ul>The Michigan SBTDC TM
  28. 28. Michigan SBTDC Services <ul><li>Counseling - One-on-one meetings with experienced business consultants to assist starting or growing small businesses </li></ul><ul><li>Training - Available through the Entrepreneurial Series: </li></ul><ul><li> ▪ Starting a Business ▪ Writing a Business Plan </li></ul><ul><li> ▪ Marketing Your Business ▪ Finance </li></ul><ul><li> ▪ Business Legal Issues </li></ul><ul><li>Research - Provide a full range of information services through the State Headquarters </li></ul>
  29. 29. Small Business Resources Additional Local Resources