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GETTING STARTED

GETTING STARTED. Tips for Survival. © Jay E. Simpson 2001. Who am I?. Jay E.Simpson Office: 952-937-8556 Fax: 952-937-8820 jaysimpson@mn.rr.com 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

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  1. GETTING STARTED Tips for Survival © Jay E. Simpson 2001

  2. Who am I? Jay E.Simpson Office: 952-937-8556 Fax: 952-937-8820 jaysimpson@mn.rr.com Business Law Specialist & General Counsel “Providing Solutions for the Life of Your Business” © Jay E. Simpson 2001

  3. 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

  4. Today’s “Presentation” • Five Common Legal Structures • Practical “TIPS” • Contracts 101 • Questions © Jay E. Simpson 2001

  5. CHOOSE YOUR TEAM • People in the Business: Experience, Marketplace • Academics • Lawyers • Accountant/Tax • Marketing/Sales © Jay E. Simpson 2001

  6. “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

  7. Five Common Legal Structures • Sole Proprietorship • Partnership • Regular Corporation (C-Corporation) • S-Corporation • Limited Liability Company (LLC) © Jay E. Simpson 2001

  8. 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

  9. 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

  10. 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

  11. 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

  12. 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

  13. 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

  14. Elevator Story:What Do You Offer? • Write Down Offerings • One Minute - Practice • References: Who are they? What did they say? © Jay E. Simpson 2001

  15. How Can You Be Reached? • Be Accessible • Return Calls © Jay E. Simpson 2001

  16. Getting Clients/Customers • Tell Everyone • Join Trade Groups - - - - Get Connected • On-Line • Web Page © Jay E. Simpson 2001

  17. 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

  18. CONTRACTS 101

  19. 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

  20. 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

  21. 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

  22. 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

  23. 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

  24. 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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