What is the best legal structure for my small business?
Differences between business structures vary, yet most business owners select a legal structure that will offer limited personal liability protection from business debts. Next, is the question of taxation and whether taxes can pass-through or stand alone. From there, the legal structure depends on the nature of the business. For example, will the business engage in a high-risk activity, generate large debt, have significant numbers of investors or will business insurance be available or affordable? Generally speaking, for many small businesses, incorporating or organizing as an LLC is necessary to limit personal liability.
What does limited personal liability mean?
Limited personal liability is the maximum amount an owner of a business (or person participating in the business) can lose or be charged in the case of claims against the company or its bankruptcy. Separate personal assets are usually protected by the limited liability structure, but exceptions do exist. An owner, partner or member may be held personally liable in the case of negligence or intentional acts, for example.
What is the basic difference between a corporation and a limited liability company?
A corporation is a specific legal structure separating a business from its owners (also called shareholders) who are generally protected from personal liability while following certain tax rules imposed on corporations. Additionally, corporate formalities must be followed. Every corporation must have bylaws, hold annual board and shareholder meetings, prepare meeting minutes and keep a stock ledger, among other formalities depending on the corporation. A limited liability company (LLC) provides limited personal liability protection and pass-through taxation (business taxes are paid on each owner’s individual income tax return) without corporate formalities.
What is the difference between a C Corporation and an S Corporation?
A C Corporation is a regular corporation that is a separate entity from the owners (shareholders). The C Corporation is similar to an individual and must file and pay income taxes on its own tax return with allowable deductions. The S Corporation does not pay taxes itself. S Corporations enjoy pass-through taxation of profits and losses. Owners (shareholders) of the S Corporation pay taxes on their individual income tax returns. Otherwise an S Corporation is a corporation that generally protects owners from liability for business debts and claims against the corporation.
What is trademark law? Why is it important to business owners?
Trademark law provides for the legal right and exclusive use of a particular word, phrase, symbol or any other design for a business, product or service. If a company chooses a product or business name that is confusingly similar to a competitor’s name, the company may find itself accused of violating the competitor’s trademark. This is known as “infringement” or “unfair competition,” which may subject the company to monetary damages or force the company to change the business name or logo.
Is a trade name the same as a trademark?
No, but a trade name can also be a trademark. A trade name or commercial name is the name used by a company to identify their business. A trade name is also known as a “doing business as” name or a “fictitious business name.” A trade name is distinguished from a trademark in that a trade name is not afforded any protection under the Trademark Act, unless it meets certain criteria.
What does it mean to “register” my trademark?
There are three types of registration for trademarks – federal, state and common law. Securing federal registration provides the most protection for a trademark. An important advantage is that federally-registered trademarks are national in scope, regardless of the actual geographic use made of the mark. The national scope contrasts with the limited geographic range of state and common law trademarks. Federal registration also makes it easier to prove an allegation of trademark infringement by providing prima facie evidence of trademark ownership and use.
Is there a benefit to copyright registration?
There is a benefit to copyright registration, but you do not have to register with the Copyright Office in order to receive copyright protection. Copyright attaches as soon as original works of authorship are fixed in any tangible medium of expression. That means your words have copyright protection as soon as they are posted online, written in a lab book, word document, twitter post or even a Facebook comment. Registration is not withstanding, but it does grant you many protections that make it easier to prevent or stop others from copying and using your work.
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