1. What's your flexibility? Who else is in on it? How much trust is there between people? How much money? What type of contracts am I going to be entering into?
2. Offer: reasonable expectation of intent to enter contract Acceptance: clear indication by person receiving the offer (written, oral, or by actions (i.e. Just doing it)) Consideration: bargained for exchange, in order to bind there has to be an offer and acceptance
3. Overview:
   1. -Entity selection
   2. -Contracts
   3. -Real estate and lease agreements
   4. -Employment law
   5. -Other considerations
4. Entity selection General considerations: -Liability: Personal and business: =Personal assets are exposed, can be taken in court =Business -Tax implications -Formal Requirements and fees -Management and control of business
   1. Basic entities:
      1. Sole proprietorship: often a DBA, register trade name, but won’t form a true entity —landscapers!
         1. Simplest way to start a business, least protective way to start
      2. Partnerships: two or more owners
      3. Corporations: “C” corps—giant; “S” corps—smaller
      4. LLC: excellent option for small businesses
   2. Sole Proprietorship:
      1. Advantages: total control, flexibility, sole owner of profits, quick and simple, taxed at ordinary income rate (gains and losses reported directly on personal tax returns, business losses can offset other gains)
      2. Disadvantages: potential for personal liability, owner is liable for all debts and lawsuits related to the business (this includes acts by agents and/or employees, Vicarious Liability/Respondeat Superior)—Can get insurance, but if it’s exceeded (not enough coverage) your personal assets will be exposed. If someone is a TRUE independent contractor, I won’t be liable—though certain exceptions. If I give them equipment, exercise control over them, etc., considered employee.
      3. Register business name with SoS
      4. Obtain federal employer id name (EIN)
      5. Pay self-employment tax on own income
   3. Partnerships:
      1. Advantages: greater potential for growth, more likely to have profits/success, favorable tax treatment—each individual partner files their income on personal income tax level, losses from partnership operations may offset other gains); spreads risk of varying income
      2. Disadvantages: partnership is liable for: debts and obligations for the business (pass onto individuals in the partnership, personal assets), actions of other partnerships (disagreements between people); difficult to transfer ownership interest (can’t transfer knowledge, for example)
      3. Association of 2+ individuals, co-owners in business for profit.
      4. Register a trade name
      5. Probably should get EIN
      6. Create partnership agreement—document that sets out how the partnership will be run (compensation, powers of each partner, how decisions are made)—if something isn’t dealt with in agreement, NH law will apply. i.e. if compensation isn’t discussed, equal pay for each will apply.
      7. May be formed by parties actions or oral agreement.
      8. Hard to be familiar with all issues, etc.—best to get a lawyer (knows the exposures, can customize the document)
      9. Ends when any partner dies or leaves the business—then partnership reforms.
      10. Many different forms of partnerships, i.e. One person can be liable for entirety of business, etc.
   4. Corporations:
      1. Advantages: limited liability! (Protection form personal liability stemming from business activity), owned by the shareholders (ability to raise capital through adding more stocks), run by the Board of Directors—not partners or owners making the strategic decisions
      2. Disadvantages: expensive to own and run, also form (taxed twice), expensive to terminate
      3. Formation: file Articles of Incorporation with SoS (purpose of company, the names and addresses of owners/stockholders, amount of money being invested, type of stock issued, rights of stockholders…)—treated as legal person (can buy, sell, are taxed, can commit crimes)
      4. Get EIN
      5. Must be US citizen
      6. Tax considerations—when corp makes money, taxed. Then money is passed onto shareholders (dividend or increase in value of stock)—when money is treated as income, also taxed (usually when stock is sold), meaning money is taxed TWICE
      7. Public (stocks can be bought by anyone) and private (only certain people can buy shares)
      8. Other: must act like a corp to maintain limited liability—fees and do annual filings, sign agreements in the corp’s name, maintain separate financial records and books, meet at least once per year, maintain corporate minutes; piercing the Corporate Veil is when your discovered to not be a corporation—results in personal liability.
      9. S corporation best of both worlds (partnership and corp)! —Protection from personal liability, avoids double taxation.
         1. Owners (stockholders) pay personal income tax on the profits when earned—same as a partnership, still need BoD. No more than 75 stockholders, filing requirements and fees same as C Corp.
   5. Limited Liability Company
      1. Advantages: protections form personal liability, maintain authority to run business (owned by the “Members”, usually run by “Manager(s)”), easier than corporation to manage, taxed like a partnership
      2. Disadvantages: critical to have a well-dragged operating agreement, ongoing filing requirements and fees (annual reports due 4/1 each year, $100)
      3. File with the Secretary of State
      4. Get EIN
      5. Must put “LLC” at end of name
      6. Can be a sole owner—called a Single Member LLC
      7. Operating Agreement governs—google examples
      8. Great for smaller business—hybrid of corporation and partnership —limited liability AND taxed once
      9. Owners are the same as members—stocks are issued to owners
      10. MUST get insurance, a liability policy—can be done through an umbrella policy. Meet with an insurance company—if you don’t have it, they’re likely to try to go after personal assets and go around LLC. If don’t have assets, your future ones (for 20 years) will be grabbed.
5. Should you be an entity?
   1. Yes if:
      1. Liability is an issue
      2. Loan
      3. Own real estate, vehicles
      4. Save money (in some circumstances)
      5. More professional
      6. Family reasons
      7. Signing big contracts
   2. No if:
      1. Not making a lot of money
      2. Part time hobby—just starting
      3. Risk is low
      4. You are on unemployment
6. Binding Contract Basics:
   1. Basic elements:
      1. Identity of the parties
      2. Describe of transaction
      3. Terms and conditions (i.e. If there is an issue, how will it be dealt with?)
      4. Responsibilities of the parties
      5. Description of defaults
      6. Remedies and cure periods
      7. Governing law (can decide which state jurisdiction you want to govern the contract! Woahhhhh)
      8. Signed by both parties
   2. Always read it before signing! Held responsible for whatever is written—you’ve “read” it by signing
   3. Understand what you are signing—anything not understood, ASK! example, Evergreen Clauses: automatic renewal clause
   4. Attempt to negotiate fair terms
   5. If a contract contains a clause you do not like, there are 2 alternatives:
      1. 1. Line it out and have both parties initial the deletion
      2. 2. Substitute favorable language in its place through reference and addendum and have both parties initial the deletion
7. Real Estate and Leases:
   1. Zoning considerations: Home-based businesses: if no clients coming to the house, don’t need to get variance (check though!); equipment for business at house might be something Permitted uses—ask planning/zoning Seek variances or special permit if not in compliance with local zoning laws
   2. Lease agreements: think of what amount of time you want to enter into—what if business grows (space wise or employee-wise); be strategic. Know exactly what expenses you’ll be responsible for (utilities, internet, maintenance, repairs, improvements, taxes, insurance, etc.); ask homeowners insurance and business insurance who covers what while at home, every policy is different. Also watch for personal guarantees! If at all possible, do not sign if personally guaranteed (which means they’ll go after you (your assets) if your business fails)
8. Employment Law:
   1. Hiring process—need to know what you want and need from employee before hiring; cater the advertisement to that. Come up with “non-negotiables”—what must the candidate have? What’s the compensation? Are there negotiable terms (i.e. Get paid less but send to school)
   2. Employee vs independent contractor—right to control (does the employer have the right to control and direct the individual’s work?)
   3. Terminations—NH has “employment at will”: allowed to fire someone at any time for any reason (though many exceptions); can quit at any time. Dissatisfied employer needs to talk to employee and put something on file as a record of behavior—documentation of discipline is necessary; also rate of pay and increases.
   4. Employee Handbook—have written policy on employees, like a manual (i.e. # of sick days allowed, anticipated start time each day, when pay raises happen etc.). Written disciplinary process. But make sure you follow it and be consistent! Make sure they sign it.
   5. Non-Disclosure Agreements:
      1. Confidentiality agreements
      2. Used to protect trade secrets: trade secret is information that has independent economic value because it is not generally known to other people—like a secret recipe at a restaurant, customer lists…
      3. Non-compete or non-solicitation agreement: legitimate interest, time, scope (i.e. “Cant go work in a similar business for x amount of time” (NH doesn’t like these types of agreements))—as long as they are reasonable, much more likely to be enforceable. Must be something unique that’s protectable
   6. Other:
      1. Workers compensation insurance: regulated by Dept of Labor; all employees must be covered
      2. Wages: Employees must be paid every week (can ask for exception from DoL); better to hire a payroll company (very time- consuming); exempt and non-exempt salaried workers; starting in December, if salaried workers under ~$43,000, must be paid overtime. Salaried is getting tougher. Look at Fair Labor Standard Act (FLSA)
      3. Quicken or Quickbooks: financial management tools
      4. Consult with an Attorney, Accountant, Insurance Agency: knowledge and experience in small business
         1. **Attorney’s advice will help you to minimize risks and limit exposure (i.e. how to create documents to reduce tax implications!)
         2. **Accountant’s advice will help you to properly manage business assets and avoid excess taxation
         3. **Insurance Agent will protect your business when liability issues arise.
9. Other Considerations:
   1. Fraud: make your own deposits, banking statements sent to your home or online, divide responsibilities. Have 2 accounts: 1 public (if dealing with vendors, etc) and 1 to sweep profits into (because routing number is out there)
   2. Prevent litigation: Try to resolve the issue rather than ignore it, be respectful at all times, put it in writing, if all else fails, hire an attorney (very expensive! Try to avoid by doing all the former)
   3. Mentor/Associations
   4. Do what you love! Ask for help for the rest.