Presentation on theme: "Preparing a Proper Legal Foundation: A Start-Up Fable"— Presentation transcript:
1 Preparing a Proper Legal Foundation: A Start-Up Fable Case 7.1Group nu 2Valerie- MA1N0220David- MA1N0219Bảo Bảo- MA1N0230Amos- MA0N0241
2 Introduction to the case (1/3) Jack and Sarah: Start-up a business called iUser Accessories (to be revised by trademark attorney before any advertisement)to sell accessories for Apple iPods and iPhones10 kiosks in malls and high-traffic areasWebsiteValue-added promotions: Series of short videos (helps to make better use of iPods and iPhones)Customers will be provided code to access videos from the web
3 Introduction to the case (2/3) Jack and Sarah: 1st place in university-wide business plan competition7500 USD in cash and 7500 USD in-kind servicesCompleted feasibility analysisConcept statementDistributed to 16 people incl professors, electronic store owners, users, parents of young users positive responseAfter concept statement: market survey
4 Introduction to the case (3/3) Start-up capital (1 and 3 year pro forma financial statement)business is viable66000 USD fundingAccording to projection: cash flow possitive after 4 months, no need for additional fundingProjections:USD salary / year /both3 000 USD personal contribution of eachUSD friends and famillyMeeting with attorneyThey prepared list of issues with their recommendationsed the list to attorney 1 week prior the meeting
5 Q1: complete Jack and Sarah‘s list for them, incl the issues you think they will place on the list along with their recommendationsIssueJack and Sarah‘s recommendationLegal form of the businessBusiness ownership – types – A. Start-up business, B. Self Employed&Independent contractorSmall business AdministrationEIN – Employer Identific.Nu. – process,where to register, requested papersTaxationSelf Employed Tax, Social Security Tax, Medicare TaxStructure in percentage, depreciation, accounting dutyLiabilitiesThe kind of liabilities , garaties and limitationFinancialFinancial report ordersAgreementsType of the legal form of agreements
6 Q1: Which of the issues will stimulate the most discussion with the attorney, and which issues do you think will stimulate the least?In the discussion they must open the questions concernig of the ownership form and taxation differencies to find the most suitable solutionThey must find out what are the most offen problems of start-up comp., which other order and law issue they must expectQuestion about the accounting, liabilities, financial reporting, guarantees and agreementsIPR – intelectual property concerning of the web pages show them the possible combination of the Face to Face selling, E-commerce opportunities and Services as a form of the business
7 asked for the reference of the right and good attorney Q2: Make a list of the things you think Jack and Sarah did right in preparing for their meeting with the attorney.asked for the reference of the right and good attorneyresearch regarding the legal issues that they might discuss to understand it betterasked for an advice of experiences businessman (father of Sarah) regarding the meeting with an attorneycreated the list of issues together with recommendationsthey ed the list of issues 1 week in advance to attorney in order to allow attorney to prepare well and to lead the discussion efficiently
8 Q3: Comment on the product feasibility analysis that Jack & Sarah completed. Do you think the way Jack and Sarah approached this task was appropriate and sufficient?
9 PRODUCT FEASIBILITY ANALYSIS Developed a concept statement and feasibility study then distributed it to a total of 16 peoples.Responses received: PositiveDistribution of videos: EducativeIdea: To use iPod and iPhones betterSurveyed 410 people in a more conventional manner.
10 Median Age of Target Market: 20 years old Process of Distribution: Approaches their target market, then ask them to complete the survey.Survey design: Large Population52% of the target market own an iPod and iPhone.the way Jack and Sarah approached this task was appropriate and sufficientbecause participants are very interested in their feasibility analysis.
11 QUESTION 4 (a)What advantages do Jack and Sarah have starting iUser Accessories together, rather than one of them starting it as a sole entrepreneur?
12 Sole Proprietorship vs Partnership Disadvantages of a Sole ProprietorshipThe business relies on the skills and abilities of a single owner to be successfulRaising capital can be difficult.Business losses can be deducted against the sole proprietor’s other sources of incomeThe business ends at the owner’s death or loss of interest in the business.Advantages of PartnershipSarah and Jack pooled their skills, abilities, and resources to run a businessHaving more than one owner made it easier to raise funds.Business losses can be deducted against the partners’ other sources of income.The business ends with the death or withdrawal of one partner unless otherwise stated in the partnership agreement
13 QUESTION 4 (b)What challenges do you think Sarah and Jack will have keeping their partnership together?Liability on the part of each general partner is unlimited.Because the business relies on the skills and abilities of a fixed number of partners, hiring employees who have additional skills and abilities could be expensive.Raising capital can be difficult.Because decision making among the partners is shared, disagreements can occur.Loss of interest to work with each otherFamily and friends intrusionThe business ends with the death or withdrawal of one partner unless otherwise stated in the partnership agreement.