A presentation I did discussing the legal issues small businesses and nonprofits should be aware of when incorporating and operating.

1. THE LEGALITIES
The Legal Issues Your Small Business and Non-profit Should Be
Aware Of
Presented by: Erin McClarty Esq.
Wednesday, September 14, 2011

2. WHEN LEGAL ISSUES
CAN ARISE
Formation
General Operation
Advertising/ Transactions
Labor
Trademarks/Intellectual Property
Dissolution/ Winding Down
Wednesday, September 14, 2011

3. CHOOSING A FOR-
PROFIT STRUCTURE
Sole Proprietorship
Not a legal entity; one person doing business
Unlimited liability for all debts
General Partnership
Group of two or more who agree to carry on all business and share in
all profits/losses.
Limited Partnership
General partners make managerial decisions and share liability. Limited
partners liability limited to their share.
Wednesday, September 14, 2011

4. CHOOSING A FOR-PROFIT
STRUCTURE
Corporation
Limited Liability Company
Limited Liability Partnership
Wednesday, September 14, 2011

5. OTHER STRUCTURES
CONSIDERED
• Franchise
• Distributorship- License to sell products
• Business format- Allow for business under a trademark
• Manufacturing- given the formula to make a product
• Joint Venture
• Would enter a joint venture agreement
• Subsidiaries
Wednesday, September 14, 2011

6. CHOOSING A NON-
PROFIT STRUCTURE
Trusts
• Created by a settlor
• Very rigid in structure
Unincorporated Association
• 3 or more people come together for a common non-profit purpose
• Less formality and fewer reporting requirements than a corporation
Wednesday, September 14, 2011

7. CHOOSING A NON-
PROFIT STRUCTURE
Limited Liability Company
Corporations
Wednesday, September 14, 2011

8. ADVERTISING: TELEPHONE
SOLICITATIONS
Telephone Consumer Protection Act
Texas Law Enforcement Telephone Solicitation Act
Must file a registration statement and pay fee.
Wednesday, September 14, 2011

9. ADVERTISING: WEBSITES
Privacy Concerns
• Have a privacy policy in place
Internet Regulations
• Children’s Online Policy Protection (COPPA)
Jurisdictional Issues
• Post “Terms of Use” on your website
E-commerce
Wednesday, September 14, 2011

10. ADVERTISING:
EMAIL
Controlling the Assault of Non-Solicited Pornography
and Marketing Act of 2003 (CAN-SPAM)
Governs “commercial mail”
Wednesday, September 14, 2011

11. ADVERTISING: OTHER TEXAS
LAWS
Criminal and civl offenses for fraud or
misrepresentation
Example: Texas Deceptive Trade Practice Act
Wednesday, September 14, 2011

12. OPERATIONS
Insurance
Worker’s Compensation
General Liability
Licenses and Permits
Does your business require
• a certain license?
Wednesday, September 14, 2011

13. OPERATIONS CONTINUED....
Supply Chain Concerns
Getting agreements in place with manufacturers. Want to est. pricing, delivery,
warranties, indemnities, termination and governing law.
Address products liability. Can affect everyone in the sales chain.
Federal Corrupt Practices Act (FCPA) Concerns
Huge concern when you have intermediaries or representatives abroad.
Respondeat Superior Concerns
Protect Intellectual Property
Wednesday, September 14, 2011

14. COMMERCIAL PROPERTY
Must protect against lawsuits for injury.
Landowners often try to disclaim responsibility for these.
Legal issues can arise with commercial leases
Will want to get assurances that the land is suitable for your purposes, address
maintenance, rent increases, term and foreclosure.
Always be thinking about potential zoning or covenant issues
Wednesday, September 14, 2011

15. LABOR
Managing Employees
Create an employment agreement
Include a confidentiality agreement
Beware with Social Media Policies
Wednesday, September 14, 2011

16. EMPLOYEE V. INDEPENDENT
CONTRACTOR
Classification is a hot-button issue
Avoid employee problems and many taxes using independent contractors.
Several Factors to determine who is an IC
Determination of Worker Status (IRS Form SS-8)
Texas workforce commission also has a test at http://www.twc.state.tx.us/news/
efte/ics_contract_labor.html
IC’s make you more susceptible to IRS audits
Wednesday, September 14, 2011

17. LABOR LAWS
Fair Labor Standards Act (FLSA)
Department of Labor has a handbook for guidance:
www.dol.gov/asp/programs/handbook/main.htm
Family Medical Leave Act (FMLA)
Texas Labor Code
Wednesday, September 14, 2011

18. NON-PROFIT ISSUES
Charitable Solicitation Laws
May require registration in each state you plan to solicit in
Fill out Uniform Statement Kit at www.multistatefiling.org
Losing tax-exemption status
Unrelated Business Income Activities
1. Trade or business; 2. Regularly carried on; 3. Not substantially related to
furthering the exempt purpose.
IRS Publication 557 Tax-Exempt Status for Your Organization gives
guidance
Wednesday, September 14, 2011

19. HOW CAN YOU
PROTECT YOURSELF
Educate yourself on all the applicable laws
Take how-to books with a grain of salt
Get together your “team”
Bring in knowledgeable people. You get what you pay for.
Utilize development centers, groups and associations
Look for “Meet-ups” and Networking Groups
Attend continuing education
Wednesday, September 14, 2011

20. WHY DO I NEED AN
ATTORNEY?
Guidance and Counsel
Sound-board
Can’t know every law
Draft or review contracts
Pre-emptive action, mitigation and judgement calls
Advocate and representative in case of business transactions
mediation, mergers, negotiations
Wednesday, September 14, 2011

21. BUT I CAN’T AFFORD ONE…..
Be Creative
Some attorneys allow you to buy “credits”
Do package deals
Hire counsel on a contract basis
Wednesday, September 14, 2011

22. ATTORNEY RESOURCES
Houston Volunteer Lawyers Program
S.C.O.R.E
Houston Lawyers Referral Service
Texas Accountants and Lawyers for the Arts
Texas C-bar
Wednesday, September 14, 2011

23. CONTACT
Erin McClarty Esq.
erinemcclarty@gmail.com
www.notationsonnonprofit.com
Wednesday, September 14, 2011