Category Archives: Legal

The Best Type of Corporation

Posted on by
Reply

Which type of corporation is best: LLC, S corp, C corp, etc.

First, an important disclaimer: I am not an accountant. I am not a lawyer.

This is a topic that affects your tax liabilities and your legal status so you need to educate yourself on the basics of this topic as well as discuss this in detail with an accountant regarding the tax implications and an attorney regarding the legal ramifications.

* * * * *

There are three main types of corporate entities that you will consider as an entrepreneur, all of which provide liability isolation but each with different tax consequences:

  • C corporation
  • S corporation
  • LLC and its variants

The best type of corporation for your business depends on many factors. In a very broad sense, if you are planning to seek outside equity (stockholder) investors to fund your business, then a C corporation will probably be best. A C corporation will be a requirement for any institutional investor and most angel investors. If you are planning a small-scale, lifestyle business and just need some liability protection, an LLC can be very inexpensive to create and maintain, while retaining simple, low-cost tax preparation and accounting costs.

» » » Click here to read the rest of this post « « «

Patents

Posted on by
Reply

I have been granted a patent by the United States Patent Office. I am seeking funds to help with the manufacturing in China.

Congratulations on your patent.

By obtaining a patent, you have obtained Intellectual Property (IP) protection for your product. In order for a competitor to directly compete with your device, they must either pay you a licensing fee for the use of your patented design or create an alternative design that accomplishes the same purpose.

In a broad sense, you have erected a barrier to entry for competitors. Barriers to entry can be created by a dominant brand position, capital resources, unique product capabilities, proprietary sales channels, vendor and customer relationships, etc. All of those barriers to entry are market based.

A patent is a legal barrier to entry in a specific market. In your case, you have a U.S. patent, so your design is protected in the U.S. market. A country specific patent protects products in that country. An International Patent protects a design in all countries who are party to the international patent agreement.

The burden of any legal barrier to entry such as a patent or copyright is that it is incumbent on you, the patent holder, to enforce your rights. That means you must police the marketplace to discover infringing products and file (and pay for) legal action to stop the infringing product’s sales.

The upside of a patent is that it provides legal and enforceable IP protection. The downside is that you need the required capital and legal resources to enforce your patent.

» » » Click here to read the rest of this post « « «