Legal Aspects of a Small Business

Legal Aspects of a Small Business

I. Available options for the organizational form of the operating entity (identify and compare area organizational characteristics and features):

A. Sole proprietorship

B. Corporation

1. Public vs. closed corporation

2. “S” corporation vs. “C” corporation

3. Professional corporation

C. Partnership; general vs. limited partnership

D. Limited Liability Company

II. Factors influencing the choice of organizational form:

A. Financing the organization and growth of the business

1. Financial planning/forecasting/budgeting

2. Debt vs. equity

3. Sale of securities; federal and state regulation

B. Liability of the entity, its owners, managers, directors, officers and employees to third parties

C. Income taxes

D. Ease of management (routine issues; resolving conflicts; fiduciary duties; put/call options)

E. Transferability of interests

F. Qualifying to do business in multiple jurisdictions

G. Compensation arrangements and fringe benefits

III. Additional issues to consider:

A. Extending credit and collecting delinquent accounts

B. Local licenses, permits, fees and taxes

C. Federal, state and local reporting requirements

D. Documenting company actions and decisions

E. Intellectual property

F. Insurance coverage

G. Conflicts of interest of entity owners, managers and employees

H. Franchising

I. Magnuson&emdash;Moss Warranty Act

J. OSHA

K. Federal and State employment laws

IV. Buying and selling the small business:

A. Identifying assets and liabilities

B. Allocating the purchase price

C. Setting the price and terms (put/call options)