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ENTREPRENEUR RESOURCE CENTER
Legal
Business Legal Structure
This is a formal structure of the business. Basically there are five types of business structure:
The state is likely to have a standard form for incorporating a small business. The three typical pieces of information requested are: corporate name, purpose and corporate life span. The corporate name is usually required to be a business name dissimilar from any other firm incorporated within the state. In addition, the name must not be deceptive or misleading. The state charter office can tell you whether the name you want is available. The purpose of the business must be stated. It is a good practice to use a "specific object" clause that spells out the specific purpose for which the corporation is being formed. While most corporations are formed for an indefinite period, it is possible to set up a specific limited life. Often the reason for creating a corporation is because the life span of the business is unlimited.
Incorporation documents will require the names and address of incorporators; location of the registered corporate office in the state; the maximum amount and type capital stock to be issued at the time of incorporation; a provision for preemptive rights; a provision for regulation of internal affairs of the corporation; names and addresses of corporate directors until the first stockholders’ meeting; and the right to amend or repeal provisions within the certificate of incorporation.
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Business Licenses and Permits
The types of licenses you will need to run your business depend on your industry and the state in which you operate. To obtain the necessary licenses and permits you may try the following steps.
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Go to the appropriate government agencies to see which licenses you need. Be aware that there are licensing requirements at all levels of government - federal, state, regional, county, and city |
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Acquire any necessary specialized licenses (especially for selling food and liquor or handling of hazardous materials) |
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Find out if your profession requires a license. Professions such as lawyers, doctors, dentists, engineer, accountants or financial planners may require a professional license. |
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Check if the licenses are transferable. |
The best way to find out is to check the local chamber of commerce, local trade associations or the local government.
For more information, please refer to:
Intellectual Property
Intellectual property refers to a form of property that includes:
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Copyrights: The excusive legal right to reproduce, publish and sell matter and form. Copyright lasts for 50 years. It is a criminal offence to make or deal in articles that infringes a copyright. If anyone infringes the copyright then the holder of the copyright may sue for injunction or damages. |
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Patents: The grant of an exclusive right to exploit an invention. An applicant for a patent (usually from the inventor or the inventor's employer) must show that the invention is new, is not obvious, and is capable of industrial application. A patent remains valid for 20 years from the date of application (the priority date) provided that the person to whom it has been granted (the patentee) continues to pay the appropriate fees. During this time, the patentee may assign the patent or grant licenses to use it. If anyone infringes the monopoly, the patentee may sue for an injunction and damages. |
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Trademarks: A distinctive symbol that legally identifies particular products of a trader to the general public. The symbol may consist of a device, words, or a combination of these. This authorizes the trader to enjoy the exclusive right to the trademark for which it was registered. Any manufacturer, dealer, importer, or retailer may register a trademark. Registration is initially for seven years and is then renewable. The right to remain on the register may be lost if the trademark is not used or is misused. The owner of a trademark may assign it or, subject to the registrar's approval, allow others to use it. If anyone uses a registered trademark without the owner's permission, or uses a mark that is likely to be confused with a registered trademark, the owner can sue for an injunction and damages. |
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Trade Secret: A formula, process or device used in a business that is not published or divulged and that thereby gives an advantage over competitors. |
In the United States, intellectual properties are protected by laws. In addition, international agreements drawn up by the The World Intellectual Property Organization (WIPO, a UN agency) ensure the intellectual property laws of individual countries are consistent with each other and that any attempts at piracy are exposed and stamped out.
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Selecting Legal Counsel
Legal counsel (attorney) will help small business by providing vital legal information and assistance to avoid or resolve situations before expensive complications develop. So you may consider appointing an attorney for legal advice and expertise in order to comply with and swiftly navigate through the complex federal and state regulations.
Some ways that attorney can help your business:
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Attorneys usually provide information and advice on how to set up and operate various business entities and on the application of the tax laws. |
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If the business entity involves more than one person, attorneys can draft agreements that can resolve important questions that might become the subject of later disagreement among partners and shareholders. |
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If an existing business is to be acquired or merged, attorneys can help analyze the various methods of acquiring the business. |
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Attorneys can draft important documents protecting the interests of the buyer and resolve potential disagreements concerning the conclusion of the transaction. |
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In the due diligence phase of a transaction, attorneys can gather data to advise on the value of the business being acquired, and the nature of any existing and contingent liabilities. |
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Attorneys can assist management with understanding and negotiating agreements that come into play during the financing process, including:
- Engagement agreements with investment bankers, brokers, and finders.
- Offering memorandum and business plans.
- Commitment letters, funding proposals, and letters of intent from prospective investors.
- Funding agreements, investor rights agreements, and shareholder agreements.
- Each deal document presents the possibility for management to agree to more than they intend or more than is commercially reasonable.
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For more information, please refer to:
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