Legal Structures and Basics for Small Business If you are thinking of starting a business but aren't sure how to navigate the dreaded tax laws and legal issues that come with owning a business, then this is for you! This will discuss company ownership structure and how entrepreneurs should weigh their legal and financial options to find the ones that best fit their particular situation.

1. Asian Women In Business
Legal Basics for Small Business
Monday Nov. 10th 2014
Presented by Samiya (Simi) Mir, Katona & Mir LLP
49 W. 37th St, 7th floor New York, NY 10018
P:(212) 944-1529 F:(212) 553-7370
smir@katonamir.com

2. Disclaimer
This material is meant to assist you in
thinking about legal issues that may come
up in starting or running your business.
It is not legal advice and does not
substitute for the advice of a lawyer or
accountant.

3. A. CHOOSING THE RIGHT LEGAL
STRUCTURE
1. SOLE PROPRIETORSHIP
-Not a separate entity
-Personal liability
2. CORPORATION
-Legal entity separate and distinct
-Limited liability
-Entity powers (can sue, be sued,
contract in its own name, be held
criminally liable)
-Corporate formalities in formation

4. A. CHOOSING THE RIGHT LEGAL
STRUCTURE
3. S- CORPORATION
-Corporate formalities
-Pass through taxation
-No more than 100 shareholders
-Different classes of stock not permitted
-Limited liability
4. LIMITED LIABILITY COMPANY(LLC)
-More shareholders permitted
-Filing, publishing requirement
-Limited liability
-Pass through taxation
-Profit distribution flexibility
-Can have different classes of stock

5. B. WHEN CORPORATE ENTITY MAY
NOT BE RECOGNIZED
-Piercing the corporate veil
-Such domination that corporation is
merely agent of shareholders
-Shareholders are carrying business in
personal capacity/for personal needs
rather than corporate needs
-Where corporation is used as cloak for
illegality
-Professional services corporations
-When necessary to prevent fraud

6. C. CORPORATE FORMALITIES
I. COPORATE DOCUMENTS
-Certificate of incorporation
-Bylaws/Operating Agreement
-Initial resolutions: approving bylaws,
election of initial owners, opening
bank account, etc.
-Make sure to update change of address

7. C. CORPORATE FORMALITIES
II. OPERATING AGREEMENTS
- Effective Communication &
Clarity Among Owners
- Please see an attorney to go over
details

8. C. CORPORATE FORMALITIES
Terms include:
-Clarify roles of members
-Ownership interest
- Restrictions on transferability
- Non- compete clause
- What if one owner wants to leave
- Confidentiality
- Contributions
- How to resolve disputes
- Admitting new members/partners
- Dissolutions issues

9. C. CORPORATE FORMALITIES
III. IMPORTANCE OF GOOD RECORD KEEPING
-Risk of loss of insulation from personal liability
-May negate certain actions taken by the entity

10. D. EMPLOYMENT ISSUES FOR
BUSINESSES AND INDIVIDUALS
I. Types of Employment Agreements
-Non-Competes & Confidentiality
-At Will Employment vs. Contract
-Consulting Agreements
II. Employment Practices
Risk Management Practices
-Employment Manual
- Performance Appraisals/Evaluation
process
- Procedures to deal with complaints
III. Common Employment Issues
-1099 vs. Employees
-Intern Issues/Lawsuits
-Wage and Hour/Minimum Wage/Overtime Rules

11. Asian Women In Business
42 Broadway, Suite 1748
New York, New York 10004
Tel: 212.868.1368 - Fax: 877.686.6870
Email: info@awib.org