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Starting a Business Starting a Business Legal Issues Legal Issues

Stephen R. Cook, Esq.Stephen R. Cook, Esq.

Clinical Professor of LawClinical Professor of Law

University of Akron School of University of Akron School of LawLaw

scook@uakron.edu

330-972-2358330-972-2358

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Why a business?Why a business?

Make a profitMake a profit Participate in management of Participate in management of

businessbusiness Liability protection from business Liability protection from business

obligationsobligations Minimize taxes for business/ownersMinimize taxes for business/owners Recognition as a businessRecognition as a business Orderly exit from businessOrderly exit from business

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““FLIC”FLIC” Formation – entity selectionFormation – entity selection

Liability – personal indemnity/insuranceLiability – personal indemnity/insurance

Intellectual Property – types/protectionIntellectual Property – types/protection

Contracts - creation/issuesContracts - creation/issues

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Entity SelectionEntity Selection

Sole ProprietorSole Proprietor PartnershipPartnership LLCLLC Corporation S/CCorporation S/C

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Entity SelectionEntity Selection LiabilityLiability Ease of formationEase of formation FormalitiesFormalities OrganizationOrganization DissolutionDissolution

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Entity SelectionEntity Selection Secretary of StateSecretary of State Name selectionName selection Proper formProper form Statutory agentStatutory agent Filing feeFiling fee Charter numberCharter number

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LiabilityLiability Insurance – Business Owner’s Insurance – Business Owner’s

Policy (“BOP”)Policy (“BOP”) Premises/product liabilityPremises/product liability Secondary market insuranceSecondary market insurance Aggregate, per-occurrenceAggregate, per-occurrence

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Intellectual PropertyIntellectual Property PatentPatent CopyrightCopyright TrademarkTrademark Service MarkService Mark Also consider: Trade secret, trade Also consider: Trade secret, trade

name, fictitious namename, fictitious name Confidentiality AgreementConfidentiality Agreement

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ContractsContracts Offer, acceptance, Offer, acceptance,

consideration, mutualityconsideration, mutuality Meeting of the mindsMeeting of the minds Lawful purposeLawful purpose ““Reasonable person” standardReasonable person” standard Statute of FraudsStatute of Frauds

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TaxationTaxation

Sole Proprietor – Schedule CSole Proprietor – Schedule C Single member LLC – Schedule CSingle member LLC – Schedule C Multiple-member LLC – Partnership Multiple-member LLC – Partnership

taxationtaxation EIN numberEIN number ““Flow-through” taxationFlow-through” taxation S Corp. v. LLC – distributive shareS Corp. v. LLC – distributive share

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Due DiligenceDue Diligence Primarily related to corporate Primarily related to corporate

acquisition and/or public securities acquisition and/or public securities offering.offering.

Reasonable investigation as basis for Reasonable investigation as basis for reasonable belief.reasonable belief.

Shield parties from liabilityShield parties from liability Evaluate viability of offering or Evaluate viability of offering or

acquisitionacquisition Affirmative duty to ensure compliance Affirmative duty to ensure compliance