Business Plan for Start-Up IT Firm
The College
of St Scholastica
Ekta Gupta
20 June 2013
I am planning to open a software consultancy business in Minnesota.
I (Ekta), my spouse (Vivek) and John will be the owners of the firm. John will
participate in investing in business only which will be declared in voting rights section of operating agreement that:
·
John will not be entitled to take any
managerial decision and will be contributing to business with his investments
only
·
However
John can give suggestions which, Ekta
and Vivek , will not be obligated to follow.
·
Ekta and Vivek will be involved in of all kind
of decisions for business.
·
Profits will be distributed as 40 percent to
Ekta, 40 to Vivek and 20 Percent to John. If John brings in some client then
Ekta and Vivek may consider in sharing some profits but they are legally not
obligated to do so. My husband is highly skilled in software development who has
several connection with some software
firms and know some clients who need consultants (Strategy Planning). We
have sufficient funds to start the business and would be taking some personal
debt from our parents. I am planning to register the company as a Limited Liability company (LLC). LLC
will give us a corporate veil i.e. limited liability and protection of personal assets. LLC
is not treated as separate entity hence double taxation won’t be applicable on
it, all loss and profits will pass
through to owners i.e. to us. As I wanted to divide the profits in the manner they seem fit to us, LLC gives us
opportunity doing so and this profit sharing flexibility make LLC a better
choice over S-corp where S-corps has no flexibility in how profits are split up
amongst its owners since S-Corp has to divide the profit in the proportion of
their stock shares.
Today I foresee doing most of
business in Minnesota only, hence state of organization for my business will
be Minnesota only. Crucial Forms for to set up an LLC are: :Articles of Organization” and “Operating Agreements”. Articles of Organization must set forth:
·
Name of LLC
·
Address of LLC initial office
·
Name and address of each organizer
·
Whether LLC is manager managed and if yes then
name and address of each manager.
·
Whether any member is personally liable for the
LLC’s debt and obligations
·
The duration of existence of LLC
·
the name and address of the LLC’s registered
agent
Articles of organization should be filed at secretary state office of Minnesota. (http://www.sos.state.mn.us/).
Second I will choose to file for operating agreement,
which is an agreement among Limited Liability
Company ("LLC") Members governing the LLC's business, and
member's financial and managerial rights and duties. Minnesota doesn’t require an LLC to have an operating agreement though.
As LLCs operating without an Operating Agreement are governed by the State's
default rules contained in the relevant statute and developed through state
court decisions, therefore I prefer to have one of my own operational
agreements where we can contract the conditions as per our own agreements.
Name of
consultancy will be “Integral Software Developers LLC”. I am thinking to
trademark it. A trademark is a brand name which includes any word, name,
symbol, device, or any combination, used or intended to be used to identify and
distinguish the goods/services of one seller or provider from those of others,
and to indicate the source of the goods/services. Trademarks are governed by federal law, state law, and common law, a
thorough search as to the availability of a mark is very important. I will be making sure whether this name is
not already occupied by some other company. I can confirm it with the help of
following links:
Back in October of 2011, Chicago-based Timelines.com, which lets users to create interactive
“timelines” based on historical events,
sued
Facebook for trademark infringement just weeks after Facebook CEO Mark Zuckerberg unveiled the new
Timeline profile page at the company’s f8 conference. Such incidents confirm
though it’s really a tedious yet compulsory task confirming the trademark and
logo are not being used already otherwise it can bring a huge monetary loss
even.
I am also in process
of developing a logo for the company and planning to trademark that as well. Trademark lifetime is forever. Name,
symbol, logos, great ideas, inventions are intellectual properties which are
intangible and need a greater protection than tangible goods. Trademark,
patent, trade secret and copyright provide propriety ownership for the
registered intellectual property. One of our foreseen clients needs a tool which can compare the
differences in XML files and captures them in a word document. If we will be
able to develop it we are planning to patent the tool. Patent would
authorize me with exclusive rights for a limited
period of time, in exchange for the public disclosure of the invention. I
can find patent details on following websites:
Another intellectual property Infringement where Macy's
Kohl’s, Gap, J.C. Penney, Niemen Marcus and Nordstrom
facing patent infringement lawsuit over search-engine technology. Smart Search Concepts LLC, a Southampton, New York–based Company
that owns the rights to a pair of search-engine patents issued in 2007 and 2009
has sued them. The company's lawsuit alleges that Macy’s and Bloomingdale’s
violated its “search-on-the-fly” technology
by setting up websites that let consumers search for merchandise with keywords,
drop-down menus and database queries that allow users to refine their searches
in multiple steps. (http://www.wcpo.com/dpp/money/business_news/macys-m-facing-patent-infringement-lawsuit-over-search-engine-technology#ixzz2Y1L3s52F.)
In this fast growing global
technological world, keeping track of all the technical inventions
(Which are mushrooming in this era) is a
challenging task which can’t be bypassed or ignored because of these
intellectual properties protections which are in compliance to ethical business
practice. Intellectual properties’ allocations and assignments seems intricate
task to me and I really like to get it done through a lawyer.
At
start, I am planning to hire consultants only so that I can be free from
employee tax and employee insurance and lot other formalities I would have to
go through if I go for hiring an employee. Later on as I find myself more
settled down in this business, I will plan to hire some employees. Minnesota have The Work Opportunity Tax Credit (WOTC) is a
federal tax credit available to all private sector businesses as an incentive
to employers to hire workers in certain groups who consistently experience high
rates of unemployment. I will keep it in my mind while planning for
employee recruitment. I will also make sure my foreign workers’ hiring is proper as per immigration laws and the rules
defined at http://www.positivelyminnesota.com/Business/Finding_Workers/Hiring_Foreign_Workers/Foreign_Labor_Certification_Program.aspx.
I am thrilled by the fact that 93 percent of the total population would prefer to spend money with businesses that hire people
who have disabilities, according to a national survey cited by Office of
Disability Employment Policy (ODEP). It sounds going with my objective of returning back to society and giving
equal opportunity to everyone. Businesses come into existence for profit
however I believe following ethics and being human always bring fruits to
anything you do and I would plan for
some charity out of the profits we make each year.
Businesses need to deal
with disputes within and outside
organizations. I will write in my company policies and contract that
whoever will be involved in business with us, is legally bounded to settle the
disputes through either non - binding
arbitration at Conflict Resolution Ctr (2101 Hennepin Ave # 100, Minneapolis, MN
55405) or in state court of Minnesota if
arbitration doesn’t resolves the conflict between the parties. Arbitration
gives Speedier resolution and less costly. I am not in favor of binding arbitration
as it might sound partial to the parties.
It’s important to let
employees/consultants know the contractual
agreement they need to follow while working with us as these agreements attributes right and responsibilities
between parties to a bargain. Following will be the agreement I am planning to
get signed by each consultant:
1)
Employee
non-disclosure agreement
A non-disclosure agreement (NDA),
also known confidential disclosure agreement (CDA), is a legal
contract between at least two parties that outlines confidential
material, knowledge, or information that the parties wish to share with one
another for certain purposes, but wish to restrict access to or by third
parties.
2)
Employee
non –compete agreement
A non-compete clause (often NCC),
under which one party (usually an employee) agrees not to enter into or start a
similar profession or trade in competition against another party (usually the
employer). Employee/consultants won’t be allowed to work under any of my
current client and my future clients I am involved in bargaining.
3)
Employee
Agreement.
There will be certain office
polices that will be defined in employee’s handbook and consultants/employees
are legally bounded to follow them
4)
Employment
at will
Employment-at-will defines Employment
relationship in which either party can immediately terminate the relationship
at any time with or without any advance warning.
While contracting with my
client I will be making sure that I am not violating any anti-trust policy and not involved with them in any price fixing and
price discrimination. Robison-Patman Act protects price discrimination.
Though I can defense price discrimination if I can justify the cost difference
such as consultant with upcoming or challenging technologies are expensive than
those work on well-known technologies.
Microsoft recently been fined for price fixing of its office Home and
Student 2007 http://www.tomshardware.com/news/Microsoft-office-2007-price-fixing,7508.html
Conspiracies to monopolizes trade are illegal against section 2 of
Sherman act by which I cannot bribe or use some unethical ways to get all
business of a client and try to monopolize them in unethical ways. Apple got sued in 2008 for monopolizing the
online music (http://www.informationweek.com/antitrust-lawsuit-charges-apple-with-mon/205207895)
I need to keep in mind certain
other Labor standards law such as
salary should be above the minimum wages
range, overtime (work more than 40 hours) should be paid. Under
occupational safety I will make sure that work
place is free from any dangers and risks such organizing fire-drill frequently.
My friend who owns a saloon fired
an employee (with the authority of Employment at will agreement) due to
suspicion of theft. The fired employees went to Minnesota Department of Employment and Economic Development (DEED) and sued
my friend with the charges of gender and race discrimination. Therefore I will
also be making sure I should be taking precautionary measures while recruiting
consultant and my recruit process and my behavior with them should be free from
any discriminate behavior. Employment
Non-Discrimination Act (ENDA) prohibit discrimination in hiring and
employment on the basis of sexual orientation or gender identity by civilian,
nonreligious employers with at least 15 employees. DEED policies protecting from any violations of Equal opportunity rules
and policies in Minnesota can be found at http://www.positivelyminnesota.com/Equal_Opportunity.aspx.
The United States federal laws
protect against employment discrimination when the grounds for such an
exclusion is not related to the requirements of the position, and protected
characteristics may include age,
disability, ethnicity, gender, gender identity, height, nationality, religion,
sexual orientation, skin color, and weight.
Starbucks has been penalized to pay $75,000 To U.S. Equal Employment
Opportunity Commission (EEOC) Settle Disability Discrimination Suit when
Elsa Sallard, whose stature is small due to dwarfism, was denied an
opportunity to work (http://www.eeoc.gov/eeoc/newsroom/release/8-18-11.cfm
)
After
big financial fraud like Enron and
WorldCom , sarbanes-oxley Act got in place which prompts Public companies to
adopt code of ethics which is to make sure that companies are not falsely
manipulating their statement and doing real good to stockholders. There is so
much to look through in business I never thought of. Executions of business have lot more to take
care of other than loss and Profits. Business ethics need to be in mind while
doing any transaction. Business runs on People i.e. customers. Losing their
trust is the biggest lost any business can suffer.
References
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