legal forms for starting running a sma ppt

Legal Forms for Starting & Running a Small Businessby Fred Steingold... Read This First The information in this book is as up to date and accurate as we can make it.But it’s important to

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3rd edition

Legal Forms for Starting & Running a Small Business

by Fred Steingold

About Nolo

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For three decades, Nolo's mission has been to help people solvproblems with confidence, a minimum of fuss and expense, and—whenever

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Read This First

The information in this book is as up

to date and accurate as we can make it.But it’s important to realize that the lawchanges frequently, as do fees, forms, andother important legal details If you handleyour own legal matters, it’s up to you to

be sure that all information you use—including the information in this book—isaccurate Here are some suggestions tohelp you do this: First, check the editionnumber on the book’s spine to make sureyou’ve got the most recent edition of thisbook To learn whether a later edition isavailable, go to Nolo’s online Law Store

at www.nolo.com or call Nolo’sCustomer Service Department at 800-728-

3555 Next, because the law can changeovernight, users of even a current editionneed to be sure it’s fully up to date Atwww.nolo.com, we post notices of majorlegal and practical changes that affect abook’s current edition only To check forupdates, go to the Law Store portion ofNolo’s website and find the page devoted

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in its books can help you solve many ofyour legal problems on a cost-effectivebasis, this book is not intended to be asubstitute for personalized advice from aknowledgeable lawyer If you want thehelp of a trained professional, consult anattorney licensed to practice in your state

3rd edition

Legal Forms for Starting & Running a Small Business

by Fred Steingold

Third Edition Illustrations CoverDesign Book Design Editor ProofreadingCD-ROM Preparation Index PrintingJANUARY 2004 MARI STEIN TONIIHARA TERRI HEARSH BETHLAURENCE ROBERT WELLS ANDRÉZIVKOVICH ELLEN DAVENPORTDELTA PRINTING SOLUTIONS, INC

Steingold, Fred Legal forms forstarting & running a small business/by

Fred S Steingold. 3rd ed.

p cm Includes index ISBN 971-3 1 Small business Law andlegislation United States Forms I Title:Legal forms for starting and running asmall business II Title KF1659.A65S74

0-87337-2003 346.73'0652'0269 dc212003050145

Copyright © 1995, 1996, 1998, 1999,

2001, and 2004 by Nolo

All rights reserved Printed in the USA

No part of this publication may bereproduced, stored in a retrieval system,

or transmitted in any form or by anymeans, electronic, mechanical,photocopying, recording, or otherwisewithout the prior written permission of thepublisher and the author Reproductionprohibitions do not apply to the forms

contained in this product when reproducedfor personal use Quantity sales: Forinformation on bulk purchases orcorporate premium sales, please contactthe Special Sales department Foracademic sales or textbook adoptions, askfor Academic Sales, 800-955-4775 Nolo,

Finally, thanks to my colleague, BrookMcCray Smith, for his many wisesuggestions, and to my assistant, JamieDeFlorio, for her help in preparing themanuscript.

About the Author

Fred S Steingold practices law inAnn Arbor, Michigan He represents andadvises many small businesses, andfrequently leads seminars on how to startand run a small business He is the author

of the Legal Guide for Starting & Running a Small Business (Nolo) and

The Employer’s Legal Handbook (Nolo),

a bible for small business owners Hismonthly column, The legal Advisor, iscarried by more than 30 trade publicationsaround the country

Table of Contents

I How to Use This Book

A Four Practical Ways to Use the Forms

in This Book I/3

B Do You Need a Lawyer?

2 Forming Your Business

A Form 2A: Checklist for Starting a

3 Running Your Corporation

A Form 3A: Notice of Shareholders ’

E Form 3E: Minutes of Directors’

Meeting 3/9

F Form 3F: Minutes of Telephone

Conference Directors’ Meeting

D Form 4D: Promissory Note (BalloonPayment) 4/10

E Form 4E: Promissory Note Only Payments) 4/12

(Interest-F Form 4F: Promissory Note (Lump-SumPayment) 4/14

G Form 4G: Security Agreement forBorrowing Money 4/15

Authorizing Sale of Assets

G Form 5G: Security Agreement for

Buying Business Assets

7 Purchasing Real Estate

A Beware of Possible EnvironmentalProblems 7/3

B Form 7B: Contract to PurchaseBuilding

I Form 7I: Extension of Time to Remove

Contingencies 7/23

J Form 7J: Exercise of Option to

Purchase Real Estate

B Tear-Out Forms Index

How to Use This Book

A Four Practical Ways to Use the Forms

I/3

B Do You Need a

Lawyer? I/3

The most important rule when making

any business agreement is: Get it in

writing In some situations—such as a

contract to buy or sell real estate—only a

written agreement is legally enforceable

Similarly, a contract that can’t be carried

out in one year, or a contract to sell goods

exceeding a certain value set by state law

(typically, $500), must be written.

But even in the situations where anoral contract is legal, there are manypractical reasons to prefer writing youragreement down Two years from now,you and the other people involved in anybusiness transaction are likely to havesignificantly different recollections aboutwhat you collectively agreed to Soputting agreements in black and white is

an important memory aid But a drafted contract confers several otherimportant benefits on its signers For one,

well-it serves as a framework wwell-ithin which toresolve disputes And even if this provesimpossible and a court contest ensues, itwill be far easier to prove the terms of awritten contract than an oral one

Still another important benefit of

drafting a written agreement is that the act

of putting your contract together can helpyou and the other party(ies) focus on allkey legal and practical issues, some ofwhich might otherwise be overlooked.And by starting this process with a well-designed form—like those in this book—your chances of creating a thoroughdocument are further enhanced

To help you create sound legalagreements, this book providesconvenient, ready-to-use forms for most ofthe common transactions your smallbusiness is likely to encounter Whetheryou’re borrowing money, buying abusiness, leasing an office or store, hiringemployees, or contracting for goods orservices, you’ll find well-draftedcontracts that are simple to customize to

fit your needs.

Happily, the fill-in-the-blankscontracts in this book are a lot easier touse than most similar legal documents.Not only have we avoided legalese, wehave also adopted a modern and easy-to-use layout But don’t let the lack ofgobbledygook fool you: These formscover all the important legal bases

Because a legal form without goodbackground information and instructions isalmost valueless, each chapter providescomprehensive legal and practicalinformation that you need to create soundagreements Unfortunately, even a book aschunky as this one doesn’t have enoughspace to provide in-depth coverage ofevery practical and legal issue covered byevery contract

That’s where other Nolo productscome in Throughout this book we’ll referyou to other Nolo titles where you canlearn even more about a specific topic,from hiring employees to choosing adomain name If you need it, these bookswill provide you with detailedinformation and practical tips to get yourbusiness up and running—and keep itrunning Some of the other small businesstitles Nolo offers are:

• The Legal Guide for Starting & Running a Small Business, by Fred S.Steingold Everything you need to knowabout starting your business, from whichbusiness structure is best for you to hiringemployees to tips on obtaining businessinsurance

• Tax Savvy for Small Business, by

Frederick W Daily An indispensableguide to tax deductions your smallbusiness shouldn’t miss, as well as in-depth information on the taxation ofdifferent kinds of business entities.

• How to Create a Buy-Sell Agreement & Control the Destiny of Your Small Business, by Anthony Mancuso andBethany K Laurence If you’re starting abusiness with a co-owner, this bookcontains invaluable information oncreating a buy-sell agreement andprovides forms for you to create andcustomize your own agreement

• Incorporate Your Business: A 50-State Legal Guide to Forming a Corporation,Anthony Mancuso (available forCalifornia, Texas, and New York) Ifyou’re forming a corporation, this book

gives you step-by-step instructions onreserving a corporate name, filing yourarticles of incorporation, and lots ofhelpful information on corporate recordkeeping, taxation, and issuing shares.

• Hiring Independent Contractors: The Employer’s Legal Guide

, by Stephen Fishman If you’re thinking ofhiring independent contractors, this book

is an invaluable resource You’ll learn theHOW TO USE THIS BOOK I/3

pros and cons of hiring independentcontractors instead of employees,including the rules government agenciesuse to classify workers and the special taxissues associated with hiring independentcontractors

• The Corporate Minutes Book: A Legal Guide to Taking Care of Corporate

Business , by Anthony Mancuso This book

contains all the minutes and resolutionsyou’ll need to keep your corporate recordkeeping on track

• Form Your Own Limited Liability Company, and LLC Maker 1.0, both byAnthony Mancuso The former is a guide

to forming your limited liability company

in all 50 states and includes informationand forms to help you reserve a name, fileyour articles of organization, and create anoperating agreement The latter is aninteractive Windows software programthat helps you create, stepby-step, forms toreserve a name for your LLC, file yourarticles of organization, and create anoperating agreement

• The Partnership Book

, by Denis Clifford and Ralph Warner If

you want to form a partnership, this book

is an indispensable guide to partnershipsand contains forms to help you create yourown partnership agreement

A Four Practical Ways to Use the

Forms in This Book

This book is a flexible resource thatyou can adapt to fit your needs and workstyle There are at least four ways you canuse the forms provided in this book

• Since all forms are contained on theaccompanying CD-ROM, perhaps themost efficient approach is to open, fill in,and print out a form with your computer’sword processor, customizing it as needed

• Or, if you don’t have a word processor,you can get the job done the old-fashionedway, by photocopying a form right out ofthe book and then filling it in with a

typewriter, or by hand.

• In some instances, especially where aform will be used repeatedly, you maywant to print out

or photocopy a pile of blank forms,filling them in later (by hand ortypewriter) as needed

• If someone else has already prepared aproposed contract and presented it to youfor signature, you can use the appropriateform in this book as a sort of checklist tomake sure that the proposed contract hasall the recommended ingredients If itdoesn’t, you can have the preparer use thebook’s form as a model when makingmodifications or additions

Think twice before using the only copy of a form Although it’s possible totear out and use the forms directly from