Intellectual Property 102 – Identifying, Securing, Capitalizing, and Early Stage Enforcement

Legal mistakes can doom even the best startup concepts and founding teams. It is important to know who owns the IP, the proper timing for registration, and how to enforce your legal rights. This presentation gives you a legal road map to successfully safeguard your product or idea.

If you are interested in more detail related to your situation it is best to speak with an attorney.

Yuri Eliezer heads the intellectual property practice group at Founders Legal. As an entrepreneur who saw the importance of early-stage patent protection, Yuri founded SmartUp®. Clients he has served include Microsoft, Cisco, Cox, AT&T, General Electric, the Georgia Institute of Technology, and Coca-Cola.

yuri

 

Source: Smartup Legal

How Is a C-Corporation Different from an S-Corporation?

Both C-Corporations and S-Corporations are, at their core, corporations that are formed at the state level. The formation process, structure, and governance are usually identical for both.  The two big differences are:

  1. The way each entity is taxed at the Federal level;
  2. The restrictions that are placed on the types of equity S-Corporations can issue and the types of shareholders they can have.

Tax law is what sets the differences between C-Corporations and S-Corporations. In fact, the name of each comes from Subchapter ‘C’ and Subchapter ‘S’, respectively, of Chapter 1 of the U.S. Tax Code (26 USC 1).

When a corporation is formed with the state, the C-Corporation is the default. The Corporation can then file an election form with the IRS (Form 2553) to become an S-Corporation. Once accepted, your corporation becomes an S-Corporation.

Click here for more information on the tax benefits of an S-Corporation (over a C-Corporation).

Click here to find out more about restrictions that the IRS places on S-Corporation.

If you are interested in more detail related to your situation it is best to speak with an attorney.

Andrei Tsygankov is the Co-Founder and COO of SmartUp® and a partner at Founders Legal (Bekiares Eliezer LLP). As an attorney, Andrei specializes in corporate, commercial, trademark, and international business matters.

andrei

Source: Smartup Legal

How an S-Corporation Can Provide Tax Savings

As discussed in an earlier article, an S-Corporation can provide significant Federal income tax savings over a C-Corporation. The question that I am often asked is “if the benefits are so obvious, why aren’t all corporations S-Corps?”

Due to the benefits, the IRS places restrictions on S-Corporation ownership, including the types of shares that the corporation can issue and the types of shareholders who can own them. All restrictions must be met and in place at all times, and they are as follows:

1. The corporation must be a domestic corporation (formed in the United States).

2. The corporation may have only ONE class of stock (although voting and non-voting common stock may be acceptable).

3. The corporation may not have any more than 100 shareholders (certain family trusts can be considered ‘one’ shareholder).

4. Shareholders of the corporation may ONLY be individuals, certain trusts, and estates.

5. Partnerships, non-resident aliens, and other corporations may NOT be shareholders of the corporation (one S-Corp may, however, be a wholly-owned subsidiary of another, if a Q-Sub election is made).

6. The corporation CANNOT be an ineligible corporation (certain types of businesses, including financial institutions, insurance companies and IC-DISCS are excluded from seeking S-Corp status).

The restrictions result in many companies becoming ineligible for S-Corporation status for failing to (or simply not wanting to) adhere to one or more of these rules. If you are considering forming a corporation and are looking into filing the ‘S’ election, discussing the ramifications with knowledgeable legal and accounting professionals can save you significant time, money and heartache down the road.

If you are interested in more detail related to your situation it is best to speak with an attorney.

Andrei Tsygankov is the Co-Founder and COO of SmartUp® and a partner at Founders Legal (Bekiares Eliezer LLP). As an attorney, Andrei specializes in corporate, commercial, trademark, and international business matters.

andrei

Source: Smartup Legal

What Is Biometrics? | Yuri Eliezer Talks About the New Trend with NPR

Biometric technology is the use of fingerprints, iris scans, or voice recognition for user identification. Recently, there has been a growing trend in devices utilizing these features for the purpose of heightened security. Yuri Elizer, patent attorney and CEO of SmartUp, discusses the growing number of patents in this field and the normalization of this technology with NPR.

If you are interested in more detail related to your situation it is best to speak with an attorney.

Yuri Eliezer heads the intellectual property practice group at Founders Legal. As an entrepreneur who saw the importance of early-stage patent protection, Yuri founded SmartUp®. Clients he has served include Microsoft, Cisco, Cox, AT&T, General Electric, the Georgia Institute of Technology, and Coca-Cola.

yuri

 

Source: Smartup Legal

How to Avoid Double Taxation | S-Corporation Advantages

Tax law sets the difference between the C-Corporation and an S-Corporation. When a corporation is formed at the state level, the C-Corporation is the default. The C-Corporation can then, voluntarily, file an election form with the IRS (Form 2553) to become an S-Corporation. Once accepted, your corporation becomes an S-Corporation.

Why go through the trouble of making the ‘S’ election? In short, so the corporation would pay no Federal income tax on its profits. Instead, the S-Corporation’s profits are allocated to the shareholders (the ‘owners’) on a pro-rata basis (e.g. if you own 50% of an S-Corporation, 50% of the profits are allocated to you personally).

Each S-Corporation shareholder then includes the appropriate share of the corporation’s profit on his or her personal tax return, and pays income taxes personally on that income. Why is this beneficial? This avoids ‘double taxation’ experienced by C-Corporation shareholders.

For example, a C-Corporation with two equal shareholders has a net profit of $100. At today’s Federal corporate income tax rates, the C-Corporation would pay a maximum rate of 35% on its profit, or $35. If the C-Corporation pays the remaining $65 as dividends to its two shareholders ($32.50 to each), they would each pay a maximum income tax rate on dividends of 20% (today’s top qualified dividend rate for dividends). As a result, each shareholder would pay $6.50 in personal Federal income tax on the dividend received. Altogether, the C-Corporation and the two shareholders paid a grand total of $48 in Federal income tax on the $100 in profit.

If the corporation in the example above was an S-Corporation, it would pay absolutely no Federal income tax. Instead, the entire $100 net profit is allocated to the two equal shareholders ($50 to each). Then, each shareholder would pay a maximum personal income tax of 39.6% (today’s top rate for ordinary income) on the $50 allocated to him or her. As a result, each shareholder would pay $19.80 in personal Federal income tax on the amount allocated. Altogether, the S-Corporation and the two shareholders paid a grand total of $39.6 in Federal income tax on the $100 in profit.

As illustrated by the (very simplistic) examples above, there can be significant tax savings for shareholders of an S-Corporation. Keep in mind, however, that S-Corporation net profits are allocated to its shareholders automatically – even if the shareholders do not receive any distributions (cash) to cover the tax.

If you are interested in more detail related to your situation it is best to speak with an attorney.

Andrei Tsygankov is the Co-Founder and COO of SmartUp® and a partner at Founders Legal (Bekiares Eliezer LLP). As an attorney, Andrei specializes in corporate, commercial, trademark, and international business matters.

andrei

Source: Smartup Legal

Capital Raising for Small Businesses and Free Lancers: Legal and Practical Aspects

When starting your own business, it is important to keep in mind what makes your company investable, where is your financial support is coming from, and the legal and tax implications in raising capital. You can either go the DIY route or hire a professional who can assist you in cutting through the red tape.

You also need to know the difference between seed funding, traditional and alternative lenders, angel investors, and venture capital to ensure you get the most out of your capital campaign. This presentation provides a great overview of all of this as well as how to design a winning campaign for your new business.

Capital Raising For Small Businesses And Free Lancers

 

If you are interested in more detail related to your situation it is best to speak with an attorney.

Jeffrey Bekiares is a securities lawyer with over 8+ years of experience, and is co-founder at both Founders Legal and SparkMarket. He can be reached at [email protected]

jeff

Source: Smartup Legal

How Long Does It Take to Register a Trademark?

The length of the U.S. Federal trademark registration process can vary. Once filed, an application is typically assigned to an Examining Attorney within about 3 months. The Examining Attorney will firstly review the application to make sure that the applied-for mark can be registered at all. The Examining Attorney will then review the selected classes and sub-classes in the application, make sure that the specimens are acceptable, and that ‘use’ of the mark is proper. Finally, the Examining Attorney performs a search to find possible conflicting marks – including those that look or sound substantially similar to the one in the application.

If the applied-for mark can be registered, no issues are found in the application itself, and if no conflicts are found, then the Examining Attorney will issue an ‘allowance’. An allowance simply means that the mark has passed the USPTO’s internal review, which is oftentimes the biggest hurdle for registration. It is not atypical for this process to take 1-4 months after the application is assigned to an Examining Attorney.

Once the mark is allowed, the application is published for opposition – a period of 30 days during which third parties can ‘oppose’ the mark, if they reasonably believe that registration of the mark in the application will harm them. If no third party opposes the application, then a registration is typically issued 1-2.5 months after that.

Therefore, a period of approximately 8 months from filing to registration is not unusual. There is a possibility that a registration may be granted within 6 or 7 months. It is also worth mentioning that a registration can require much more time (possibly years) if the Examining Attorney issues a refusal or if a third party files an opposition to the application.

If you are interested in more detail related to your situation it is best to speak with an attorney.

Andrei Tsygankov is the Co-Founder and COO of SmartUp® and a partner at Founders Legal (Bekiares Eliezer LLP). As an attorney, Andrei specializes in corporate, commercial, trademark, and international business matters.

andrei

Source: Smartup Legal