Business Legal
Services for
Entrepreneurs
Legal Services of Eastern Missouri
Community Economic Development Program
Program Overview
 Free business legal assistance to
 Existing businesses AND
 Start-ups
 Range of legal issues
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Entity formation
Commercial leases
Employment
Contracts
Intellectual property
Program Overview
 Benefits to Businesses
 Avoid time-consuming, potentially
devastating problems
 Help business grow
 Services offered
 One-on-one legal representation
 Business legal workshops
 Legal counseling
Choice of Legal Entity
 Operate as sole
proprietor/partnership? OR
 Form separate legal entity, e.g.,
corporation or LLC?
 Factors to consider
Choice of Entity – Considerations
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Liability
Taxation
Formal requirements and fees
Management and control of business
Ability to transfer ownership
Continuation of business
Main types of legal entities
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Sole Proprietorship
Partnership
Corporation
S Corporation
Limited Liability Company
Sole Proprietorship
 Business owned by one person
 Duration limited to life of owner
 Tax treatment
 Report business income and expenses on
individual income tax return
 Unlimited liability
Sole Proprietorship – Pros and Cons
 Benefits
 Pass through taxation
 Easy to form and maintain
 Maximum flexibility for owner
 Drawbacks
 Unlimited liability
 Difficult to get investments
General Partnership
 Business conducted by 2 or more
people
 Not a distinct legal entity
 Each partner files income and
expenses on personal income tax
return
 Unlimited liability
 Limited duration
General Partnership – Pro’s and
Con’s
Benefits
 Pass through taxation
 Easy to create and maintain
Drawbacks
 Easy to form
 Unlimited liability
General Partnership – Practical tips
 Business insurance to protect against
personal liability
 Written partnership agreement is
essential
Corporation
 Independent entity, separate from
owner/s
 Owned by stockholders
 Managed by a board of directors and
officers
 Duration is perpetual
 No personal liability
 Pay corporate taxes on business
income
Corporation – Pro’s and Con’s
 Benefits
 Protection from personal liability
 Easy to transfer ownership interests
 Easier to raise or borrow money
 Drawbacks
 2 levels of tax
 Formalities to create and maintain
 Avoid “piercing the corporate veil”
Contract -- Signature
 Sign with corporation name, not your
name
ABC Nonprofit Corp.
By: _________________
Name: [Tom Jones]
Title: [Chief Executive Officer]
S Corporation
 Similar to C Corporation except:
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Pass through taxation
More limitations with tax allocations
Additional filing to establish
Limitations on who can be stockholders
Limited Liability Corporation
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No personal liability
Pass through taxation
Owned by members
Managed by members or a manager
chosen by members
Limited Liability Company – Pro’s
and Con’s
 Benefits
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Pass through taxation
Liability protection
Flexible management structure
Few ongoing corporate formalities
Ownership allocation flexible
 Drawbacks
 Difficulty transferring full ownership interests
 Tax filings can be complicated
Limited Liability Company –
Practical Tips
 Avoid piercing the corporate veil
 Must have written operating
agreement
 Required by law with 2+ members
 Strongly advisable with one member
Contracts
 May be oral or written
 Advisable to put agreements in
writing
 Clearly describe terms of agreement
 Avoid “piercing the corporate veil”
Contracts (con’t)
 Why Make a Contract?
 Written Agreement: Less room for
misunderstanding
 Helps identify and resolve differences
 Legally enforceable: Protect yourself
from unfair business practices
 Provides mechanism for settling
disputes
Employment
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Anti discrimination laws
Employee vs. independent contractor
Employer obligations
Policies and procedures
terminations
Employee v. Indep.
Contractor
 Pivotal Question: Who has the right
to control when, where and how work
is completed?
 Employer has right to control how the
work is performed
 Independent contractors choose method
of completing work
Employee v. Indep. Contractor
(con’t)
 Major Factors to Determine:
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Who supplies equipment?
Who determines when person works?
Method of payment
Duration of employment
Right to discharge
 See Missouri and IRS 20 factor test
at:
 http://labor.mo.gov/DES/Employers/rep
ortable.asp#notreport
Employment Policies and
Procedures
 Employee handbook
 Discipline
 Regular performance evaluations
Employment - Terminations
 “At will” relationship: can fire anyone
for any reason as long as it is not an
illegal reason
BUT…
Employment - Terminations
 Before termination, consider:
 Prior notice for unacceptable behavior
 Reasonableness of policy and fair
application
 Adequate investigation
 Proof of policy violation
 Progressive discipline
 3rd person present in termination
meeting
Real Estate
 Commercial leases
 Total economic costs
 Other essential terms that could impact
the business
 Do not rely on landlord’s attorney
 Zoning
 Other permits and licenses
Intellectual Property
 Trademarks
 Trade secrets
 Copyright
 Websites
Trademark
 Word, symbol, and/or design used to
distinguish a product service or
business from others
 Must be non-generic
Trademark (cont)
Avoiding Infringement on Other’s Marks
 Do not duplicate existing trademarks
 Search US Patent Office web site
(www.uspto.gov) and the internet to
determine if there are existing
trademarks in that name
 Letters from other businesses claiming
trademark infringement must be taken
seriously
Trade Secrets
 Information that has independent
economic value because it is not
generally known to other people
 Examples: recipes, client lists,
business information
 Non-disclosure agreement
Copyright
 Original artistic expressions (e.g., curriculum,
books, computer programs, databases)
 Gives business/individual exclusive right to control
the use, distribution, adaptation, display and
performance of the work
 Copyright created automatically
Copyright (con’t)
Practical Tips
 Avoid infringing on others’
copyrights:
 Generate your own pictures, images and
marketing materials
 Do not copy software
 If contractor prepares materials, have
him/her assign ownership of
materials to business
Copyright (cont)
 For more information on copyright
see:
 http://www.publiccounsel.org/tools/p
ublications/files/fairuse.pdf
Patents
 Right to exclude others from making,
using or selling an invention
 Two principal types
 Design patent: what the product looks
like
 Use patent: how the product works
Patents cont.
 Limited duration
 Involves filing and maintenance fees
 If you think you have a patentable
design or invention only share it with
legal counsel
Websites
 Have a written contract with web
designer/host
 Use own pictures and other material
 Can put links to other websites on your
site
Work for Hire
 Who owns intellectual property
created for the business?
 Business if created by employee
 Individual if created by independent
contractor
 Can change these default rules by
written agreement
Contact information
Laurie Hauber, Staff Attorney
Legal Services of Eastern Missouri, Inc.
Community Economic Development Program
4232 Forest Park Ave.
St. Louis, MO 63108
314.256.8747
ljhauber@lsem.org