How do I know if organizing my small business as a Limited Liability Company is right for me?
The form under which you choose to organize your small business will have implications on your taxes and how vulnerable your personal assets will be for business obligations (e.g. creditor debts, bankruptcy, or lawsuits against your business). To form a Limited Liability Company, Articles of Organization must be filed with the Secretary of State. Operating Agreements should also be created at this time but are used for the planning of the company operations, not filed with the State. LLC’s are considered separate entities related to debts and owners (called members) cannot be held personally liable for the debts of the company (unless a personal guarantee has been signed or personal collateral has been pledged). For taxation, LLC’s are considered “pass-through entities” by the IRS, meaning that business income (profits or losses) passes on to members and is reported as such on member’s tax returns. LLC’s are not required to keep formal minutes of meetings (as corporations are) and members can choose how they wish to manage the company and distribute profits, instead of being forced to divide these evenly. Negative aspects of LLC’s may be that they are considered dissolved on the death of a member, filing of bankruptcy of a member, and/or when a member wishes to leave the LLC unless a “buy-sell” agreement has been created in advance. Also, small businesses that plan to go public at some point may be better served by organizing as a corporation. Some businesses are not eligible to be formed as an LLC, like banks, insurance companies, and not-for-profits. A small business attorney can advise you about the best options for your business.
How do I hire my first employee?
There are legally required tasks related to hiring and suggested practices for successful employer-employee relationships. Hiring employees will require that you fill out IRS form I-9, the employment eligibility verification form, requiring a social security number to prove that employees are legally allowed to work in this country. The employee needs to fill out an IRS W-4 form to address the kind of taxes they wish to have withheld. Both forms are available on the IRS website; see “Where to Read More” for links. Having the employee fill out an employment application can provide you with address and contact information as well as a list of former employers. If you wish to conduct a background check on new employees, you will need a signed legal form stating the employee’s permission for you to do so. If you intend to direct deposit paychecks into an employee’s bank account, you will need the direct deposit form from your bank or payroll company that the employee fills out and signs. If you have a job description, company handbook, or set of specific company policies, you could provide them at hiring and/or request that the employee sign to acknowledge receipt of the materials and policies. If you intend to provide health benefits for your employee, you will need information about the policy and any premiums the employee will be responsible for paying. Once the employee is hired, you will have to pay payroll taxes and provide a W-2 statement to the employee at the end of the year. A small business or labor and employment attorney can advise you about hiring and provide you with appropriate documents for the protection and health of your company.
My friendship with my small business partner has ended. How can we dissolve our partnership?
Partnerships with a “buy-sell” agreement will have a clear set of procedures in place for such a situation but whether a formal agreement exists or not, there may be several options. One partner could offer to buy out the other partner’s share of the business or the partners could create a Limited Liability Company by having a small business attorney submit Articles of Organization to the Secretary of State. A Limited Liability Company Operating Agreement and Buy-Sell plans can clarify how two former friends can continue to own the business together. A small business attorney can advise you about the best options to address your situation and can facilitate the solution legally.
Am I legally required to get my logo registered with the US Patent and Trademark Office?
No, you are not legally required to register your logo (also referred to as a trade mark or service mark), with the U.S. Patent and Trademark Office (USPTO), in order to use it for your business. Registering the mark gives your business rights to take legal action if another business uses the same name or logo and a registered mark can be filed with U.S. Customs to stop imported goods with the same name or mark. The final registration of a mark can take up to 18 months, at which point the mark can legally be shown with a federal registration indication (®). Marks that are not registered or marks in the process of registration can be shown with a trademark indication (shown as ™) with all instances of your logo. This will indicate to competitors that you are serious about your logo and can be legally shown even if you never have the trademark officially registered. Marks that are registered, however, have more legal recourse if another business chooses to use the same business name or logo.
Clients have been slow to pay for my consulting in the past, how can I protect myself in advance?
Discussing fees and payment timing with a client in advance and requiring clients to sign payment agreements can help to ensure there are no surprises on the client’s side. Clients who sign payment agreements may also see your consulting business as more professional and therefore more deserving of prompt payment in their minds. In addition to payment agreements, regular invoicing of the client for your work in staggered amounts (as portions of the work are completed), can help to encourage a client to pay you promptly (or you may not finish the work). A small business attorney can help protect you by crafting a template for payment agreements in addition to other documents appropriate to the nature of your consulting business. If you have a situation that requires collection of funds from a client, a small business attorney can advise you about best options or can communicate directly with the client on your behalf to seek payment from them.
Which form of legal protection is best for my business product or inventions: copyright, patent, or
There are times when a combination of copyright, patent, and trademark protection will best protect your work. There are also times when the best protection is to keep the invention a secret. An intellectual property attorney can advise you to the best solution.
If I've invented something, do I need a non-disclosure agreement before I share the idea with potent
Beware of anyone promising millions of dollars for an invention before they've even seen it. These entities may be trying to steal the idea(s), your money, or both. If it sounds too good to be true, it probably is. You are better off requiring a signed non-disclosure agreement before you speak to anyone about buying or marketing your invention. An intellectual property or small business attorney can help you draw up the necessary protection.
How expensive are trademark fees likely to be?
Trademark fees may include fees for searches of similar or conflicting U.S. trademarks, done before the trademark application, and costing from $300 to $1600, depending on the extent of the search. Trademark searches are worthwhile if they protect you from the later cost having an opposition filed against your trademark application. Trademark registration fees will typically range from $1,200-$2,000, per International Class, for an unopposed trademark registration depending on any areas of concern (formally called "office actions") raised by the USPTO. The cost can go up dramatically if an appeal is necessary or if an opposition is filed against your application. Trademark fees for foreign registration vary by territory.
What should I expect to pay for a patent search?
Patent searches, conducted prior to filing, disclose prior art and typically cost from $1,500 to upwards of tens of thousands of dollars depending on the technology. Fees to obtain a patent can vary from a few thousand dollars to tens of thousands of dollars by technology and the course of prosecution. Foreign patent protection varies by territory. A typical means of foreign protection is called a PCT application, which can cost over $100,000.
How much might copyright protection of my work cost me ?
Copyright Registration does not usually involve searches. Fees to obtain copyright registration for a simple work will typically cost $300-$1,000.
When can I start to market my invented product?
Do not market your invention until you’ve filed for patent protection; do not give money to someone promising to market your invention for you; document your invention process carefully – keep a bound notebook with a date on each entry; and maintain a file of examples or iterations. Disclosing your invention starts a one year clock for you to file your invention in the US; in some foreign countries, no patent can be granted if a disclosure has been made.
