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GETTING STARTED. Tips for Survival. © Jay E. Simpson 2001. Who am I?. Jay E.Simpson Office: 952-937-8556 Fax: 952-937-8820 [email protected] Business Law Specialist & General Counsel “Providing Solutions for the Life of Your Business”. © Jay E. Simpson 2001. What Is My Story?.

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Getting started

GETTING STARTED

Tips for Survival

© Jay E. Simpson 2001


Who am i

Who am I?

Jay E.Simpson

Office: 952-937-8556

Fax: 952-937-8820

[email protected]

Business Law Specialist & General Counsel

“Providing Solutions for the Life of Your Business”

© Jay E. Simpson 2001


What is my story

What Is My Story?

  • 2000-Present JAY SIMPSON, LLC

  • 1998-2000 Senior Counsel, Jostens, Inc., Bloomington, MN

  • 1997-1998 Contract General Counsel, American Chiropractic Network, Inc., Minnetonka, MN

  • 1994-1997 General Counsel Zeos International, Ltd., Minneapolis, MN

  • 1993-1994 Of Counsel Contract Attorney with O’Connor & Hannon, Minneapolis, MN

  • 1989-1993 Assistant General Counsel and Assistant Secretary, DataServ, Inc., Eden Prairie, MN

  • 1985-1989 Corporate Counsel and Corporate Secretary, Keith-Stevens Incorporated, Eden Prairie, MN

© Jay E. Simpson 2001


Today s presentation

Today’s “Presentation”

  • Five Common Legal Structures

  • Practical “TIPS”

  • Contracts 101

  • Questions

© Jay E. Simpson 2001


Choose your team

CHOOSE YOUR TEAM

  • People in the Business: Experience, Marketplace

  • Academics

  • Lawyers

  • Accountant/Tax

  • Marketing/Sales

© Jay E. Simpson 2001


A guide to starting a business in minnesota

“A Guide to Starting a Business in Minnesota”

Minnesota Department of Trade and Economic Development

651-296-3871 or 1-800-657-3858

Updated each January

IT’S FREE!

© Jay E. Simpson 2001


Five common legal structures

Five Common Legal Structures

  • Sole Proprietorship

  • Partnership

  • Regular Corporation (C-Corporation)

  • S-Corporation

  • Limited Liability Company (LLC)

© Jay E. Simpson 2001


Sole proprietorship

Sole Proprietorship

  • Simplest Form of Legal Structure

  • You and the Business are the Same

  • Business Licenses (if applicable)

  • Register Business Name (if not owners first and last)

  • Federal and State Tax ID Numbers if Employees

    - Unemployment Comp Tax Number

    - Workers Comp Insurance

  • Sales/Use Tax (if applicable)

  • Unlimited Personal Liability

© Jay E. Simpson 2001


Partnerships

Partnerships

  • General Partnership: 2 or More People

  • Share Equally the Right and Responsibility to Manage

  • Each Partner is Responsible for all Debts and Obligations

  • Any Partner Can Legally Bind the Partnership

  • Requires Federal and State Tax ID Numbers

  • Partnership Not Taxed, Must File Annual Federal and State “Informational” Returns with IRS/MDR

  • Unlimited Personal Liability

  • Partnership Agreements: STRONGLY RECOMMENDED

© Jay E. Simpson 2001


Regular corporation c corp

Regular Corporation (C-Corp)

  • Separate Legal Entity Owned by One or More Shareholders

  • Board of Directors Responsible for Management and Control of the Corporation

  • Limited Personal Liability: Corporation is Responsible for Debts and Obligations

  • Corporation Federal and State Tax ID Numbers and Unemployment Comp ID Number

  • Corporate Formalities

    - Issue Stock

    - Corporate Minute Book

    -Shareholder Records

    -Books of Account

    -Initial Meeting of the Board of Directors or Shareholders

  • Must File Corporate Tax Returns for Both Federal and State

  • DOUBLE TAXATION TRAP

© Jay E. Simpson 2001


S corporation

S-Corporation

  • S-Corp is a Separate Legal Entity from the Individuals who Own or Operate it

  • Unanimous Shareholder Election to be an S-Corp (IRS Form)

  • Limited Personal Liability

  • NO DOUBLE TAX: Taxed at Individual Shareholder Rates

  • Statutory Animal

    - Not More than 75 Shareholders

    - No Non-Individual Shareholders

    - No Non-Resident Alien Shareholders

    - Only One Class of Stock

© Jay E. Simpson 2001


Limited liability company llc

Limited Liability Company (LLC)

  • Limited Personal Liability Like a Corporation

  • Business Income and Loss are passed onto the Owners of the Business

  • Articles of Organization vs. Articles of Incorporation

  • Formalities Similar to a Corporation

  • Many S-Corp Restrictions do NOT apply

© Jay E. Simpson 2001


Insuring your business

Insuring Your Business

  • Required for Most Types of Business

  • Get Property and Liability Coverage to Protect Yourself from Common Claims

  • “Errors and Omissions” Policy

  • Keep Costs Down with High Deductible Policies

  • Home Insurance Policies MAY NOT Cover Business Property and Liabilities

© Jay E. Simpson 2001


Elevator story what do you offer

Elevator Story:What Do You Offer?

  • Write Down Offerings

  • One Minute - Practice

  • References: Who are they? What did they say?

© Jay E. Simpson 2001


How can you be reached

How Can You Be Reached?

  • Be Accessible

  • Return Calls

© Jay E. Simpson 2001


Getting clients customers

Getting Clients/Customers

  • Tell Everyone

  • Join Trade Groups - - - - Get Connected

  • On-Line

  • Web Page

© Jay E. Simpson 2001


Pricing do your homework know the range

PRICING: Do Your Homework – Know the Range

  • Identify the Competition

  • Competitor Offerings and Pricing

  • Experience

  • Unique/Special Skills

  • Low, Mid-Range, Upper End Pricing Strategies (know yourself)

  • Be Reasonable

© Jay E. Simpson 2001


Getting started

CONTRACTS 101


Put it in writing

Put “It” in Writing

  • Good idea to put your “deals” into writing (“cocktail napkin”)

  • Read the “contract”

  • Develop your own Mutual Confidentiality/Non-Disclosure Agreement

  • Develop your own “standard” agreement

  • Ask for it (Thanks, Mom!)

© Jay E. Simpson 2001


Warranties i

Warranties I

  • What should you agree to:

    -That the deliverables will “substantially” comply with the specifications

    -That you have the right to perform the services and deliver the goods free from any third party claims

  • Disclaim implied warranties

  • Disclaim warranty of merchantibility

  • Disclaim warranty of fitness for a particular purpose

© Jay E. Simpson 2001


Warranties ii

Warranties II

  • What shouldn’t you agree to:

    -That services, software or deliverables will be “error” or “bug” free

    -That the services, software or deliverables will meet the client’s “needs” or ““objectives”

    -That the services, software or deliverables will be free from defects in materials and workmanship

© Jay E. Simpson 2001


Limitation of liability

Limitation of Liability

  • ABSOLUTELY ESSENTIAL!

    -Disclaim “INCIDENTAL, CONSEQUENTIAL, INDIRECT AND SPECIAL DAMAGES”

    -Limit damages to cost of performing services and/or delivering goods

    -Make sure that Limitation of Liability is separate from warranty obligations

© Jay E. Simpson 2001


Audits

Audits

  • IRS: Are Personal Expenditures being Claimed as Business Expenses?

  • Separate Checking Account and Credit Card for Business

  • NEVER USE BUSINESS ACCOUNTS FOR PERSONAL EXPENSES

  • Maintain Vehicle Log of Business vs. Personal Use

  • Education Expense is deductible if Related to your Current Business, Trade or Occupation

  • Meals 50% Deductible

  • Maintain Accounting Records for at Least 6 Years

  • No Receipts Required for Items Under $75.00 – Reasonable, Ordinary and Necessary

© Jay E. Simpson 2001


Summary

SUMMARY

  • Assemble Your Team

  • Get Set Up

  • Tell the World

  • Written Contracts are Good

  • Do what you Enjoy, and never Work a Day in your Life

© Jay E. Simpson 2001


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