Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
Lecture Links
Lecture Link 9.1: Commercial Law for the New Entrepreneur
(LO 9-1)
The authors in the text discussed that one important element to understand and operate
a business is to gain a fundamental understanding of the basics of Commercial Law.
This topic is important to explore because a new small business owner can discover the
various remedies or resolutions should there ever be an unresolved dispute in the
business.
Visit the Cornell University Law School website about Commercial Law at
http://topics.law.cornell.edu/wex/ (Commercial Law: An Overview. Cornell University
Law School)i and review how the specific laws for a variety of businesses can assist the
new small business owner.
Lecture Link 9.2: New Small Business and the IRS
(LO 9-1)
The authors in the text discussed that the establishment of a basic legal foundation
assists the small business person to gain a comprehensive analysis of the legal
formation of a new small business. The Internal Revenue Service (IRS) is a dynamic
resource for the new small business owner to consider when exploring the legal
foundation for the new small business. The IRS provides many resources that permit
the new small business owner to evaluate and analyze the various legal structures for
the new small business. Visit the IRS website at www.irs.gov and review the rules,
regulations, process, and forms available to the new small business owner when
choosing the legal structure for the new small business.
Next, type “Businesses” in the search box and review the data provided to learn about
compliance as it relates to Corporations, International businesses, Partnerships, and
Small Business and Self Employed data (Government, Internal Revenue Service
(Homepage, 2017). It is always a good business practice to consult an attorney or other
professional to obtain legal advice when the new small business owner establishes the
legal formation of the business.ii
Lecture Link 9.3: The United States Patent and Trademark Office (USPTO)
(LO 9-5)
The authors in the text discussed that intellectual property protection is pertinent to a
new small business owner. The United States Patent and Trademark Office (USPTO)
(Government T. U., 2015)iiiprovides data that is beneficial to a new small business
owner. It is a great resource to evaluate information about patents and the process
associated with registering a trademark for the new small business. In addition, it
provides the resources that illustrate the intellectual property laws and policies for the
new small business owner to protect intellectual property.
Visit the United States Patent and Trademark Office (USPTO) at http://www.uspto.gov/
and explore the resources that illustrate how to obtain a patent. Next, review the
procedures that illustrate how to register a trademark. Finally, review the section that
provides data about intellectual law and policy.
1. What did you discover about a patent that might assist you with your new small
business?
2. Discuss how your business might use the trademark section of this site.
3. Summarize how the knowledge related to intellectual law and policy could assist
you. Why is this important to consider this for the new small business? Bonus
Internet Exercises
Bonus Internet Exercise 9.1: State Rules on Partnerships and the New Entrepreneur
(LO 9-1)
The authors in the text discussed that the two popular forms of partnerships are the
general partnership and the limited partnership. Either kind of partnership is formed with
a partnership agreement that stipulates the specific details of the business
arrangement. Typically, an attorney or other professional draws up the partnership
agreement and the parties involved in that partnership are required to endorse the
agreement.
In certain cases, a partnership is formed and there is not a written partnership
agreement. When this situation occurs, the Uniform Partnership Act (UPA), also known
as the Revised Uniform Partnership Act (RUPA), proposed by the National Conference
of Commissioners on Uniform State Laws (NCCUSL), (National Conference of
Commisioners on Uniform State Laws (NCCUSL) Homepage)iv provides support for the
business owner. There are legalities that stipulate the rights of the partners as they
pertain to a partnership dispute or any other unresolved matter between the partners.
The individual state where the partnership was formed governs the legal matters of the
partnership.
Visit your state’s website and search for partnerships. What laws would be relevant to
you if you decide on a partnership as the entity for your business?
Bonus Internet Exercise 9.2: Business /Gov’s “Permit Me Tool”
(LO 9-4)
In this chapter we discussed how the various laws, rules, and regulations benefit a new
small business. You learned that some businesses are regulated by the number of
employees that work at the company. Some businesses are regulated by the particular
state where the business is located. In addition, businesses are required to purchase a
business license from their city or county to operate a legal establishment in the
community. Other businesses are required to obtain specific state or federal licenses
and permits to be considered compliant in various industries.
How does a new small business owner discover the state, federal, or local requirements
for permits and licenses in their industry? They utilize their resources to discover their
requirements and they hire an attorney to assist them with the requirements for the
business. One essential resource for a new business owner to utilize is the
Business.Gov’s “Permit Me Tool (Government U. S.)v” located at the website
http://www.business.gov/register/licenses-and-permits/ . This tool is an efficient measure
that reveals the resources available to assist a business owner.
1. Review the website and summarize how this data will assist you with your new
small business needs.
2. What type of permits and licenses are you required to obtain to operate your
business? Identify your state and industry and list the required permits and
licenses.
3. Summarize the other useful resources that you discovered at this website and
explain how they are expected to assist you with your new small business needs.
Bonus Internet Exercise 9.3: Workers’ Compensation and the New Business
(LO 9-6)
The authors in the text discussed that insurance is important to a new small business
owner. In many states, workers’ compensation insurance is required to compensate
workers who are injured on the job. When a new small business owner establishes the
legal foundation of the new business, the owner must also evaluate this insurance in
order to protect the business.
Visit the United States Department of Labor’s Office of Workers’ Compensation
Programs (OWCP) (Office of Workers' Compensation Programs (OWCP))vi website
located at http://www.dol.gov/owcp/ and summarize how the information listed on this
website is useful to a new small business owner. List at least three resources that are
useful to your business.Critical Thinking Exercises
Critical Thinking Exercise 9.1: Copyright, Trademark, and Patents
(LO 9-5)
New small business owners should plan before they establish a new business entity. As
we know from the text, there are various forms of business protection for the
entrepreneur to evaluate. List the features, benefits, and the advantages of a copyright,
a trademark, and a patent. Discuss when you would consider them in a business plan.
1. Copyright ___________________________________________
2. Trademark ___________________________________________
3. Patent ___________________________________________
Critical Thinking Exercise 9.1: Copyright, Trademark, and Patents - Notes
1. A copyright is the legal means to protect intellectual property. It grants ownership
on creative materials generated, such as books, magazines, advertising copy,
music, artwork, or virtually any other creative product, whether published or
unpublished. Answers will vary.
2. A trademark provides legal protection and it is a claim of intellectual property that
is associated with a specific business. It is usually the name of the firm, a symbol
that represents or identifies the firm, or the names of the products or services the
firm owns.
3. A patent provides legal protection and it is a claim of intellectual property that
covers a specific innovation. Patents are expensive and they last for 20 years.
Entrepreneurs file their patent application with the United States Patent and
Trademark Office. With a patent, an entrepreneur obtains a competitive
advantage in industry because the patent can prevent direct imitation of the
product for a period of time. Competitors can mimic products and patents do not
prevent other businesses from the development of similar products or services.
Follow up questions for students:
1. Discuss some trademarks that you recall for a specific business. Do you believe
a trademark increases the popularity of the business?
2. Why are patents important when a competitor can develop a similar product or
service? Do you believe that patents are beneficial? Explain your reasoning.
Critical Thinking Exercise 9.2: Contracts and the Sole Proprietor
(LO 9-3)
As we learned in this chapter, it is beneficial to a new small business owner who
initiates a sole proprietorship to plan before they initiate the goals for the new small
business start-up. Frequently, individuals hire professional attorneys to ensure they
receive the professional advice that is required when they plan and implement the
specific goals related to their new small businesses.
Individual ownership is typical in the formation of a sole proprietorship. As a result, there
is no partner to carry on the business in the event that the owner dies. Suppose the
owner of the firm dies and there is not anyone associated with the business to manage
the contractual obligations of the firm. What will happen to the business?
Discussion Questions:
1. Summarize the advantages and disadvantages of a sole proprietorship.
2. Discuss the adverse affects to a business if the new business owner dies and
has failed to implement succession planning into a contract.
3. Explain what a small business owner can do to assure that the business has the
appropriate oversight in the event of the owner’s death.
4. Evaluate the possible recourse of a customer that does not have their contract
fulfilled because the business owner passed away and there was nothing noted
in the contract to protect the business. Who is liable?
Critical Thinking Exercise 9.2: Contracts and the Sole Proprietor
(LO 9-1) - Notes
Discussion Questions:
1. Summarize the advantages and disadvantages of a sole proprietorship. A
2. Discuss the adverse effects to a business if the new business owner dies
and has failed to implement succession planning into a contract.
3. Explain what a small business owner can do to assure that the business
has the appropriate oversight in the event of the owner’s death. The
4. Evaluate the possible recourse of a customer that does not have their
contract fulfilled because the business owner passed away and there was
nothing noted in the contract to protect the business. Who is liable? This
Critical Thinking Exercise 9.3: Entrepreneurs Evaluate Lease Specifications
(LO 9-3)
The authors in the text discussed that a lease is important in the legal formation of a
new small business. A lease specifies the contents of the building or space for the new
operation, the length of the lease, the purpose, and the renewable option features of the
lease agreement. With these thoughts in mind, consider the other contents associated
with a new lease.
1. List at least five other key components of the lease agreement. Discuss why they
are important. Be specific.
2. Why does a new small business owner need insurance when the owner has a
lease agreement? What should it cover?
3. Does a new small business owner have the right to cancel a lease? Why or why
not?
4. Summarize the advantages and disadvantages to a small business owner that
does not provide specific details in the lease agreement.
Critical Thinking Exercise 9.3: Entrepreneurs Evaluate Lease Specifications - Notes
In this lesson, students are expected to identify the critical components in a lease
agreement. They should discuss the following components of a lease:
1. Specifies what the business owner is leasing
2. Describes the length of the lease, the purpose, and renewable options in the
lease agreement
3. States the authorized party responsible to make improvements to the building or
space
4. A specific description of who is responsible for maintenance and other facility
responsibilities
5. The responsible party for liability insurance
6. The landlord’s right of entry specifications
7. Procedures that address other issues
Student responses will vary. The purpose is to discuss the variances in a lease
agreement and the disadvantages to the business owner who does not stipulate
details in the lease agreement.
Bonus Cases
Bonus Case 9.1: Workers’ Compensation Claims Increase
(LO 9-6)
The authors in the text reveled that insurance is an expensive cost associated with a
new business start-up. A new small business does not want to go without the various
kinds of insurance required to protect the business. Workers’ compensation claims are
regulated by each state and data indicates that claims have significantly increased in
the past five or six years.
Discussion Questions:
1. What do you believe is the cause of the increase in workers’ compensation
claims over the past few years?
2. Conduct research and determine what the average indemnity claim is for your
state. List the results of your research.
3. Bonus Case 9.2: Board of Directors or Board of Advisors?
(LO 9-7)
The authors in the text discussed that a new small business selects a Board of Directors
or a Board of Advisors to provide the support and direction for a business to achieve
success. Typically, a Board of Directors and the shareholders are the same individuals
who support the ongoing needs of a business. A Board of Advisors consists of those
individuals outside of the organization that serve as advisers to the new small business
owner.
They both provide assistance with new small business start-up requirements and
provide the continuing guidance that supports the operational effectiveness of the
business. Although a board’s knowledge and experience is pertinent to the growth and
development of the business, it does not guarantee that the new small business will
achieve success.
You are a new small business owner and you are in the process of selecting a Board of
Directors or a Board of Advisors. Consider the type of industry in which your new small
business competes, your level of expertise, and the specific needs as they relate to your
business.
Discussion Questions:
1. Will you establish a Board of Directors or a Board of Advisors? Explain your
answer.
2. Discuss the industry in which your new small business competes. List your level
of expertise as it relates to your new business. Be specific.
3. Summarize how the new board will enhance the operational effectiveness of the
business or of the business owner. Be specific.
Bonus Case 9.2: Board of Directors or Board of Advisors - Notes
There can be interesting class discussion around the topic of whether to select a Board
of Directors or a Board of Advisors. In this lesson, students are expected to evaluate
whether or not they require shareholders or directors to advise the business or do they
require a Board of Advisors to advise the business owner?
The students will have a variety of responses to this study. They will evaluate the
business and determine which type of board is expected to enhance the operational
effectiveness of the business.
Bonus Case 9.3: Regulatory Requirements and the New Entrepreneurial Business
Owner
(LO 9-4, 9-6)
One of the major challenges for a new small business owner is to obtain the licenses
and permits required to operate a legal establishment in the related specific industry.
Consider that you are a new small business owner and you have a restaurant that sells
alcohol to your customers. To cut initial operating costs and save money, you do not
plan to purchase a license in your state to sell the alcohol; and you can’t afford to have
the restaurant inspected until after you reach your break-even point in the business. You
don’t know if your safety and fire equipment is operable because you did not have it
inspected.
Discussion Questions
1. What will you do if the regulatory agencies do a surprise inspection and discover
that you do not have the legal licenses to sell alcohol at the restaurant?
2. Discuss whether or not you are saving money by not purchasing the liquor
license and safety equipment for the business. What are the disadvantages?
3. Summarize the various licenses and safety equipment that you require in a
restaurant that serves alcohol. What types of licenses are you required to have
for your new small business?
Endnotes
i Commercial law: An overview. Cornell University Law School. (2009). Commercial
Law|LII/Legal Information Institute. http://topics.law.cornell.edu.wex/Commercial_Law..
Retrieved on October 26, 2009.
iiThe Internal Revenue Service (IRS) Homepage. (2015). http://irs.gov. Retrieved on
February 1, 2015
iiiUnited States Patent and Trademark O7ce (USPTO) Homepage. (2015). The United
States Patent and Trademark O7ce. http://uspto.gov/. Retrieved on February 1, 2014
iv The National Conference of Commissioners on Uniform State Laws (NCCUSL)
Homepage. (2009). Uniform Law Commission. http://nccusl.org/Update/ . Retrieved on
October 26, 2009.
v Business Licenses and Permits. (2009). Business.Gov. http://business.gov/register/licenses-and-permits/.
Retrieved on October 26, 2009.
vi Office of Workers’ Compensation Programs (OWCP). United States Department of Labor.
http://dol.gov/owcp/regs/statutes/stwclaw/stwclaw.htm. Retrieved on October 25, 2009.
