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CHAPTER 7: LAW FOR THE ASPIRING ENTREPRENEUR. CHAPTER 7: LAW FOR THE ASPIRING ENTREPRENEUR. Learning Objectives: Explore the Role of Law within Entrepreneurial and Small Business Environment Explain the Role of the Attorney Discover Areas of Concern When Leaving a Job - PowerPoint PPT Presentation
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CHAPTER 7: LAW FOR THE ASPIRING ENTREPRENEUR
1
CHAPTER 7: LAW FOR THE ASPIRING ENTREPRENEURLearning Objectives:
• Explore the Role of Law within Entrepreneurial and Small Business Environment
• Explain the Role of the Attorney• Discover Areas of Concern When
Leaving a Job• Determine Strengths and Weaknesses
of Legal Forms of Conducting Business2Chapter 7
APPROACH TO THE CHAPTER
• “Business-Stage” Approach• Early-stage formation is a dynamic time for
any business, with complex challenges in both legal and non-legal realms
• Extended exposure to topics elsewhere in the textbook
Chapter 7 3
LAW AND THE ENTREPRENEUR
Knowledge of the Law Serves to:– Minimize Risk– Improve Strategic Planning Process
4Chapter 7
ENGAGING AN ATTORNEYA. Role of the Attorney
1. Reduce risks and amount of exposure for risks2. Provide strategic guidance
B. Finding Capable Legal Counsel1. Importance of Finding an Attorney with a
Background in Small Business/Entrepreneurship
2. Importance of Finding an Attorney with whom the Owner can Create a Solid Working Relationship
5Chapter 7
ENGAGING AN ATTORNEY
C. The Attorney-Client Privilege1. Nature of the Privilege2. Parameters of the Privilege and How
it can be Lost 3. Determining Who is the “Client”
6Chapter 7
LEAVING EMPLOYMENTA. Current Employees
1. Common Law Dutiesa. General Duty of Loyaltyb. Duty to Act Reasonablyc. Duty Not to Solicit Clients and
Customers of Current Employer2. Contractual Duties
a. No-moonlighting Clauseb. Confidentiality Agreement
7Chapter 7
LEAVING EMPLOYMENTB. Former Employees
1. Common Law: Trade Secretsa. Role of Trade Secretsb. Definition of a Trade Secret
i. “Information with Independent Value,” andii. “Subject to Reasonable Efforts to Maintain its
Secrecy”2. Contractual: Agreements Not to Compete
a. Role of the Agreement Not to Competeb. Enforcing an Agreement Not to Compete
i. Majority of State: Test of Reasonablenessii. California: Forbids
8Chapter 7
LEAVING EMPLOYMENT
C. Hiring Restrictions1. Nature2. Risks
9Chapter 7
SELECTING THE APPROPRIATE LEGAL FORM
A. Preliminary Matters1. Types of Legal Forms
a. Sole Proprietorshipb. Limited Liability Companyc. Corporation
2. Factorsa. Limited Liabilityb. Income Tax Treatmentc. Controld. Financing
10Chapter 7
SELECTING THE APPROPRIATE LEGAL FORM
B. Limited Liability Company1. History2. Use3. Characteristics
i. Limited Liability of Owners for Debts of Business
ii. Possibility of “Pass-Through” Income Tax Treatment
iii. Attraction of Angel Investors
11Chapter 7
SELECTING THE APPROPRIATE LEGAL FORM
C. Corporation1. Use2. Characteristics3. Characteristics
i. Limited Liability of Owners for Debts of Business
ii. “Entity” Income Tax TreatmentI. ImportanceII. “Double Taxation” Notion
iii. Attraction of Venture Capital
12Chapter 7
CHAPTER 7: LAW FOR THE ASPIRING ENTREPRENEUR
13Chapter 7
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