Small Business Business Organizations - Free Enterprise

Free Enterprise - The FindLaw Small Business Law Blog

Recently in Business Organizations Category

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.

It sounds so good on paper: you've got money and resources and your partner has ideas and technical expertise. Or you both share the passion and now you want to share the business. Going into business with a partner can make your small business dream a reality.

It can also turn into a nightmare. So while a 50/50 partnership with a friend, spouse, or colleague may sound fun, you may want to rethink that plan.

What to Know Before Your Business Goes Global

Many business owners dream of international expansion, but there are important issues to consider before going global. Forays into foreign markets have all the usual problems and risks of any new business, plus cultural and linguistic challenges. And an unsuccessful international venture can be much more costly than failing at home.

Of course, nothing ventured, nothing gained, so going global also presents opportunities for profit that are otherwise impossible. To prepare for the bold step of international expansion, consider the following. If you are not daunted by these questions and suggestions, you may indeed be ready for business adventures abroad.

If you're just getting your small business off the ground, you may be trying to figure out how you want to organize. Go big as a corporation or LLC? Go charitable as a non-profit? Or go it alone as a sole proprietorship?

One of the most popular options for small businesses, due to its simplicity and lack of formal filing requirements, is the partnership. Here are five reasons a partnership might work for your small business:

Companies, especially small businesses, can operate in a constant state of flux. As your business grows and shifts, it may require a different corporate structure. Maybe your partnership now needs to be an LLC, or your LLC needs to sell shares as a corporation. (As entrepreneurs and optimists, we don't often think about our businesses moving in the other direction.)

But if you've already incorporated, can you change your incorporation status? And if so, how?