Small Business Business Organizations - Free Enterprise

Free Enterprise - The FindLaw Small Business Law Blog

Recently in Business Organizations Category

Married small business owners often overlook a common reason why some businesses fail: divorce. In most states, one spouse's small business can be considered a marital asset or marital property. When a couple divorces, assets need to be divided, and that small business can be a couple's largest asset. That's why it's important to make sure your business is divorce proof from the outset.

Fortunately, there are ways to protect a small business after a divorce has been filed. Nonetheless, it is a good idea to protect the business from division before divorce happens. To understand your situation, you first need to know if your business will be separate or community property.

If you forgot to divorce-proof your business before filing for divorce, your only option may be to give up other assets, such as the house, cars, or retirement accounts in order to maintain control of your business.

It happens all too often that when a small business owner wants to retire they realize that they have no exit strategy. Sometimes the lack of an exit strategy is due to the expectation that a child will take over running the business. Unfortunately, what often gets overlooked is that not having an exit strategy can leave that child in a situation where much of the business is lost.

The sooner a small business owner recognizes the need for an exit plan (aka a succession plan), especially if that plan is simply to transfer the business to their kids rather than sell it off, the better off the business will be. The following checklist, while broad, should help small business owners plan their exit and transfer the business to their kid(s).

Most entrepreneurs start and end their careers as a sole proprietor. However, the more successful ones eventually incorporate, and the most successful ones start, run, and sell, multiple businesses at the same time. For the serial entrepreneur, there is no one right way to go about structuring multiple businesses.

Sometimes a serial entrepreneur will have multiple businesses all focused in one industry. For instance, a surf shop owner may own the surf store, as well as make surf boards, bikinis, offer surf lessons, sponsor a professional surf team, and make surfing videos. Apart from being one of the most motivated surfers to ever ride a wave, this serial entrepreneur would really benefit knowing the different kinds of corporate structures and how to structure multiple businesses.

The most iconic record store in Berkeley, California, Amoeba Records, is in the process of renovating their store to provide an independent medical marijuana dispensary with a storefront shop in what used to be their jazz section. Citing the decline in record sales over the past decade, the store's owners hope that the pot dispensary will provide the necessary capital needed to keep the record store's doors open.

Having just celebrated their 25th anniversary, Amoeba Records has been approved by the City of Berkeley's City Council to be one of the city's half-dozen medical marijuana dispensaries. The San Francisco Amoeba Records store has had a medical marijuana evaluations clinic operating independently in a separate space located within the store since 2014.

Starting a small business can take many forms: consulting out of your living room, building in your garage, or cutting the ribbon on a storefront. And your small business can exist in many corporate structures: a sole proprietorship, partnership, or LLC. In almost all of these iterations, however, there is normally just one owner or a small group of investor-shareholders.

But what if you want to do something different? They say that giving your employees stock options can incentivize them to work harder and smarter for the company, so what happens if you make all of your employees owners? Here's what you need to know about employee-owned businesses:

In today's small biz world, many startups, especially Silicon Valley-based tech companies, are asking early employees to forgo high salaries in favor of shares in the company, essentially betting on their own future success. Such equity arrangements can be great for employees and entrepreneurs alike, but they may come with a snag: how can new employee-shareholders find out how much of the company they're getting and how much their shares are worth?

For publicly traded companies, it's easy -- check the share price. But for privately held startups getting that kind of information is more difficult, if not impossible. But an oft-overlooked Delaware incorporation law may be opening the books to shareholders. Here's what you need to know:

Turning your dream job into an LLC can make you feel like you finally made it. Or it can feel like a needless hassle that will corporatize your mom and pop shop. Most often, what incorporating your small business will mean is legal protection for both you and your company.

So if you're still weighing your options, or if you've just begun the incorporation process, here are seven big questions you'll want the answers to:

Ex-CEO of Tulsa BBB Gets 37 Months Prison for $1.8M Fraud

You can't judge a book by its cover and you can't judge a person by their titles. Former Oklahoma Senator and Tulsa Better Business Bureau CEO, Rick Brinkley, is going to prison for fraud and tax evasion.

Accused of stealing $1.8 million from the BBB, Brinkley must turn himself in on April Fools Day, ironically, to serve a 37-month sentence resulting from his guilty plea last summer. He was sentenced last week and the hearing was revealing, according to Oklahoma's News on 6.

Pros and Cons of BBB Membership

The Better Business Bureau is a non-profit organization that makes hundreds of millions of dollars annually. Many people perceive it as a quasi-governmental agency. Some say it is a total scam.

Earlier this month, CNN Money reported that it reviewed the tax filings of 102 BBBs nationally and concluded that most of the $200 million annual revenue comes from the businesses it oversees. The report suggests that the BBB motto ("Start With Trust") is deceptive, selling accreditation to businesses and giving consumers the impression that it protects them when it does not.

The "B" in B Corp doesn't stand for "business." And it most certainly doesn't stand for "bank." It stands for "benefit," as in public benefit corporation, and it means the company is as committed to social change, charity, or serving the public interest as it is to making money.

Kickstarter could've taken the path chosen by a majority of tech startups and angled for a sale, acquisition, or IPO. Instead, the online fundraiser stuck to its altruistic guns and became a B Corp.