2024-10-22 BIZ Excel Business Planning Copyright.pptx

Basics of starting a new business, including type of entity, risks, taxes, and copyright for business owners.

1. Slide 1 Business Planning– Legal Considerations October 22, 2024 Presenter: Miriam Robeson, Robeson Law, LLC

2. Business Legal Entities Choosing a business entity is a legal protection, business operation, and tax planning decision. Slide 2

3. What are your Goals? BIZ Goals Ease of operation Transferability Tax benefits Liability protection Self-Employment tax Flexibility Profit Personal Goals Life/Stage of Business Risk Management Control of growth Succeed! Slide 7

4. Liability Protection Flexibility Managing Partners Slide 5 Business Legal Entities

5. OUR PREMIUM OFFERINGS Gourmet Bagged Coffee Deluxe Coffee Drinks Delicious Local Food Slide 5

6. Typical Scenario – Preferred Choice Limited Liability Company or S Corporation Flexibility, Tax benefits, taxed at owner rate Liability protection to owner Works for single or multiple owners Easy to change, easy to add owners, easy to wind down or convert to another form

7. When To Choose Other Entity Types C Corporation Need for control at the top Shareholders who would have trouble with pass-through income Special needs shareholders, “stranger” shareholders Limits movements of assets and cash More difficult to get profit in owner’s hands … WATCH – Dividends are double-taxed.

8. Also When To Choose Other Entity Types Partnership Well-suited for short-term project Can be adapted or evolved into LLC Can be terminated at end of project Highest liability issues and joint-partner risk Sole Proprietor Greatest liability risk – both business and personal assets at stake – Easiest and quickest to market (to start) Special Type: Joint Venture

9. Process of Entity Formation Choose a name File paperwork with IN SOS Obtain Tax ID# Open Bank Account Attorney will prepare paperwork for formation and operations Use Entity name and ID# for ALL accounts, contracts, and business (example: don’t use personal credit card for biz purchases)

10. New Requirement – Corporate Transparency Act Federal law now requires that ALL new businesses register with the Financial Crimes Enforcement Network https://www.fincen.gov/boi Must report “Beneficial Owners” > 25% ownership or control Purpose is to “track” financial crimes Ask your professional advisor for more details

11. Entity Structure and Risk Management Entity structure can either “keep in” or “keep out” risk Liability Insurance – adapted for every entity type, but does not make you “risk-proof” You cannot insure against your own bad behavior Does not protect against financial liability (bad debt, bad business decisions, over-extended credit)

12. Insurance Basic liability insurance Basic casualty insurance Vehicle insurance Workers Comp Umbrella/Operations insurance Life insurance (Lenders sometimes require) Specialty Insurance (industry-specific) Usually combined into one policy

13. Business Taxes Overview of “tax touches” Where taxes find you * All tax payments are now done ONLINE for both FED and STATE Slide 2

14. Sales Tax Sales Tax reports – payment and paperwork Sales tax you collect – Must collect sales tax if you sell a product more than 30 days out of the year, or are “in the business” of sales Must submit forms and payment regularly ST-105 – required to have on file to exclude sales tax for customers (update annual for regular customers) NP-1 (nonprofit version of ST-105) Sales tax you pay – Not everything you purchase is subject to sales tax Exempt items – Materials and Equipment - used “in the direct production of” your business ST-105 form – fill out and give to vendor

15. Employment Tax You must withhold and pay employment tax for any “Employees” Employees have - Required hours Specific Duties Supervision Does not matter if “work from home” Independent Contractors have Specific Expertise You are NOT their only client They can determine their work schedule as long as they meet your deadline W2 Tax Form 1099NEC Tax Form

16. Self-Employed Income Tax You must pay quarterly Estimated Tax on profit Due April – June – September – January Pay FED and STATE You have a year (sort of) to figure it out when you start a business. TALK TO A TAX PROFESSIONAL to get started NOTE: Some tax advisors suggest giving yourself a paycheck/W2 income, which might avoid some SE or payroll tax. This is more helpful for higher-profit businesses.

17. Business Tax Myths MYTH: Home-based business does not have to pay sales tax TRUTH – Any sales of product must collect and remit sales tax to State of Indiana MYTH: I can deduct “bad debts” on unpaid accounts TRUTH – Can only deduct if you have declared that amount as income (accrual taxpayers) MYTH: If I have inventory, I must use the Accrual method of accounting TRUTH – Accrual Method is only required for certain sales threshold limits. However, since accrual is more “accurate” in terms of profitability, inventory-based businesses may prefer this method. MYTH: If I have less than $20,000 in sales, I don’t have to collect sales tax TRUTH: This is an exemption that only applies to §501(c)(3) nonprofits registered with the State of Indiana as exempt organizations (and the rule has changed for nonprofits).

18. Talk to a Professional Getting Started Ongoing Services Slide 2

19. Attorney Consultation Legal advice for YOUR situation Discussion of business models best for your BIZ Formation of an Entity LLC/Corp - $100 @ IN SOS Reservation of Name (DBA) $10 @ IN SOS Legal fees ~ $400 - $600 for basic set up and contracts Ongoing services Project based services Subscription based services – Dial-An-Attorney

20. Intellectual Property Trademarks Copyrights Patents Oh, my! Slide 2  

21. Basics of Intellectual Property What is IP (Intellectual Property)? Patents – Invention Invention that is useful, novel, and non-obvious Trademarks - Name Identification of goods and services Copyright - Creative Creative Expressions fixed in form Creative Commons – Deliberately making your work available for use by others. Patents - Trademarks – Copyright – Creative Commons Don’t Forget Trade Secrets!

22. Patents Patent – exclusive rights to an invention in exchange for public disclosure Must be new, inventive, useful, industrially applicable Good for 20 years Inventions and Processes

23. Trademarks Trademarks (also Service Marks) Commercial methods to identify and distinguish goods and services from competitors Lasts forever ~ as long as you renew the Trademark every 10 years Industry Identification

24. Copyright Copyright “Original creative expressions” Form, not content Duration - Life + 70 (Mickey Mouse Life) Work for hire/anonymous/pseudonymous = 95 years from publication or 120 from creation, whichever is shorter Infringement if copy is “substantially similar” Derivative works DMCA (Digital Medium Copyright Act) Default = Creative Works protected by law ©

25. Copyright Published before December 31, 1922, or Expires 70 years after the death of the creator, or Specifically placed in the public domain (freeware, shareware, etc.), or Government works. However, new arrangements or versions of a public domain work are copyrighted to the extent of the arrangement or version Public Domain - Free to use in any form ©

26. Copyright Obtain permission from the owner Use Public Domain works Public Domain by passage of time Public Domain by Government works Public Domain by design Create your own source materials How to “Get Around” Copyright Law ©

27. Copyright Trolls are predators on the internet who try to extort $$ from you by claiming you are violating someone’s copyright DO NOT Assume that they are correct – ask an attorney! Watch for Trolls! ©

28. Summary Business Legal Entities Business Taxes Professional Services Slide 6 Intellectual Property

29. Any Questions? Slide 6

30. THANK YOU! CONTACT ME AT : Slide 15 You can find this presentation at: www.lawlatte.com/workshops