15-1: Discuss how legal considerations can add value to entrepreneurial ventures.
Understanding the legal considerations applicable to the business is as important as understanding user needs. Taking legal considerations into account may add value to the firm. Whether it is a lawyer, free website content, or some form of legal expert, obtaining competent legal advice will certainly help improve the performance of the venture.
15-2: Explain the most common types of legal structures available to startups.
The most common types of legal structures include: Sole Proprietorship, General Partnership, C corporation, S corporation, Limited Liability Company (LLC), Limited Partnership, Limited Liability Partnership (LLP), and Benefit Corporation. In addition, most of these business structures can be run as a not-for-profit provided the company complies with IRS section 501(c).
15-3: Outline the most common legal errors made by startups.
Startups may make some common mistakes that could be expensive. The most common mistakes they make are in choosing the legal structure of the venture, not having a written agreement defining the many parameters of their relationship, not paying close enough attention to forming the right vesting schedules, and issuing shares to people who are not accredited investors.
15-4: Define IP and how it affects entrepreneurs.
IP is intangible personal property created by human intelligence, as a result of creativity such as inventions, trade secrets, slogans, logos, and processes. The four main types of IP are copyright, trademark/service mark, trade secret, and patent. It behooves entrepreneurs to understand IP because startups are by definition innovative and likely to involve the creation of IP.
15-5: Assess the global impact of IP theft.
Millions of people all over the world violate IP laws every day by ignoring copyright. IP theft costs the United States almost $300 billion every year.
15-6: Describe the common IP traps experienced by entrepreneurs.
Entrepreneurs often make mistakes in the following areas:
- Public disclosure of an invention or innovation;
- Failure to protect products, processes, brands, and so on;
- Inability to determine originality;
- Failure to allocate ownership; and
- Failure to protect IP in global markets.
15-7: Explain the legal requirements of hiring employees.
Legal requirements related to hiring employees include registering employees with the state labor department, keeping records of employee tax history, preparing the appropriate legal documentation, and complying with safety regulations.