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ISBN­10: 1­4133­1381­7 (pbk.) ISBN­13: 978­1­4133­1547­9 (epub e­book) Small business—Law and legislation—United States—Popular works Business enterprises—Law and legislation—United States—Popular works I Title KF1659.S745 2011 346.73'0652—dc22 2010052770 Copyright © 1992, 1995, 1997, 1998, 1999, 2001, 2003, 2005, 2006, 2008, 2009, and 2011 by Fred Steingold All rights reserved The NOLO trademark is registered in the U.S Patent and Trademark Office Printed in the U.S.A No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise without prior written permission Reproduction prohibitions not apply to the forms contained in this product when reproduced for personal use For information on bulk purchases or corporate premium sales, please contact the Special Sales Department Nolo, 950 Parker Street, Berkeley, California 94710 Please note We believe accurate, plain-English legal information should help you solve many of your own legal problems But this text is not a substitute for personalized advice from a knowledgeable lawyer If you want the help of a trained professional—and we’ll always point out situations in which we think that’s a good idea—consult an attorney licensed to practice in your state Acknowledgments Special thanks to Nolo publisher Jake Warner—the cheerful perfectionist whose ideas infuse every page of this book—and to Nolo editor Mary Randolph, who deftly whipped the early manuscripts into final shape Thanks, too, to the rest of the remarkable Nolo family for their invaluable contributions—­ especially Steve Elias, Robin Leonard, Barbara Hodovan, Jackie Mancuso, Tony Mancuso, Barbara Kate Repa, Beth Laurence, Ilona Bray, Catherine Caputo, Betsy Simmons, and JinAh Lee In addition to the folks at Nolo, these other professionals generously shared their expertise to make this book possible: • Attorneys Charles Borgsdorf, Douglas Ellmann, Larry Ferguson, Sandra Hazlett, Peter Long, Michael Malley, Robert Stevenson, Nancy Welber, and Warren Widmayer • Certified public accountants Mark Hartley and Lonnie Loy • Insurance specialists James Libs, Mike Mansel, and Dave Tiedgen Finally, thanks to my small business clients, who are a constant source of knowledge and i ­nspiration Table of Contents Your Legal Companion for Starting and Running a Small Business Best for Your Business? Which Legal Form Is .6 Sole Proprietorships Partnerships Corporations 12 Limited Liability Companies 23 Choosing Between a Corporation and an LLC 26 Special Structures for Special Situations 28 Structuring a Partnership Agreement 35 Why You Need a Written Agreement 36 An Overview of Your Partnership Agreement 37 Changes in Your Partnership 46 Creating a Corporation 49 The Structure of a Corporation 50 Financing Your Corporation 53 Compensating Yourself 54 Do You Need a Lawyer to Incorporate? 55 Overview of Incorporation Procedures 55 Twelve Basic Steps to Incorporate 57 After You Incorporate 65 Safe Business Practices for Your Corporation 65 a Creatingof Limited Liablity Company 71 Number Members Required 72 Management of an LLC 73 Financing an LLC 73 Compensating Members 75 Choosing a Name 76 Paperwork for Setting Up an LLC 77 After You Form Your LLC 81 Safe Business Practices for Your LLC 83 Preparing for Ownership Changes With a Buyout Agreement 87 Major Benefits of Adopting a Buyout Agreement 89 Where to Put Your Buyout Provisions 93 When to Create a Buyout Agreement 94 Your Business and Products Naming Names: An Overview 95 Business 98 Mandatory Name Procedures .100 Trademarks and Service Marks .104 Strong and Weak Trademarks .104 Before the Trademark: Name Searches .105 How to Use and Protect Your Trademark 107 and Permits 109 LicensesRegistrations and Licenses 111 Federal State Requirements .112 Regional Requirements .114 Local Requirements .115 How to Deal With Local Building and Zoning Officials 117 for the Small Business 119 Tax BasicsIdentification Number 120 Employer Becoming an S Corporation 124 Business Taxes in General 125 Business Deductions 131 Tax Audits 137 Your Business 141 Raising Money forBusiness Plan 142 Consider Writing a Two Types of Outside Financing 145 Thirteen Common Sources of Money 151 Document All of the Money You Receive 157 10 Buying aa Business 161 Finding Business to Buy 163 What’s the Structure of the Business You Want to Buy? 164 Gathering Information About a Business .168 index | 439 landlord-tenant disputes, 246–248 mediation, 397–399 negotiating a settlement, 396–397 in partnership agreement, 46 See also Litigation; Small claims court Dividends and double taxation, 55 “Doing business as,” 103 Domain name, 99 Double tax trap, 18, 55 Drug testing job applicants, 276 state laws, 277–283 Duty to remain open, shopping center leases, 245 E Earthquake insurance, 215 Ecommerce See Websites EIN See Employer identification number (EIN) Employee handbooks, 285–286 Employees background checks for job applicants, 276, 284–285 buying a business and, 173 of a corporation, 52 deducting benefits of, 134 deducting pay of, 133–134 hiring guidelines, 267–270 illegal discrimination, 286–288 immigration law rules, 285 interviewing applicants, 272, 275 job advertisements, 271 job applications, 272 job descriptions, 271 personnel practices, 285–286 termination of, 293–295 testing job applicants, 275–276 unemployment compensation, 295–296 wages and hours rules, 288–292 workers’ compensation, 293 Employer identification number (EIN), 120–124 applying for, 121–123 benefits of, 111–112 LLCs and, 124 when to get a new number, 123 Employer’s non-owned automobile liability insurance, 219–220 Entertainment expenses See Meals, entertainment, and travel expenses Entity taxation, Environmental regulations local, 115 regional, 114 state, 113–114 See also Toxic waste Equal Credit Opportunity Act, 344 Equal Pay Act, 289 Equity investments, 149–151 written agreements for, 160 Estimated taxes, 130 Exempt property, bankruptcy, 393 Expert help valuation of a business, 172 See also Lawyers Express warranties, 319–321 F Fair and Accurate Credit Transactions Act, 332 Fair Credit Reporting Act, 344 Fair Debt Collection Practices Act, 344 Fair Labor Standards Act (FLSA), 288–292 Federal payroll taxes See Payroll taxes Federal Polygraph Protection Act, 275 Federal registrations and licenses, 111–112 Federal Trade Commission advertising and, 312–313 cooling-off period, 316 COPPA enforcement, 325 deceptive pricing practices, 315 440 | legal guide for starting & running a small business franchises and, 193–194 franchisor disclosure rules, 199–200 mail order rules, 318–319 written warranty rules, 320–321 Federal Trademark Register, 96 FICA (Social Security and Medicare tax), 128 Fictitious business name corporations and LLCs, 103 defined, 96 sole proprietorships and partnerships, 102–103 Financially troubled business analysis of, 378–380 bankruptcy, 385–393 managing, 375–378 selling or closing the business, 383–385 signs of trouble, 378 workouts, 380–383 Financing your business business plan, 142–145 common sources of money, 151–157 documents and record keeping, 157–160 outside financing, 145–151 FindLaw Lawyer Directory, 421–422 Fixed price, business buyout, 92 Flood insurance, 215 Florida drug and alcohol testing laws, 278 refund laws, 307 Flow-through taxation, FLSA (Fair Labor Standards Act), 288–292 Franchises contract favors franchisor, 196–197 definition, 193–194 dispute resolution, 209 drawbacks of ownership, 194–198 fees, markups, and interest, 195–196 Franchise Agreement, 205–209 Franchise Disclosure Document, 199–205 investigating a franchise, 198–199 Fringe benefits corporations, 19–21, 54 partnerships, 12 sole proprietorships, 7–8 FTC See Federal Trade Commission FUTA (unemployment tax), 128–129 G Garnishments, small claims judgments, 418 General partnerships See Partnerships Georgia, drug and alcohol testing laws, 278 Gifts, financing your business, 154, 157 Goodwill payments allocating in operating agreement, 79 buying a business and, 170–171 Gross leases, 235 Group life insurance, corporate fringe benefit rules, 20–21 H Hawaii, drug and alcohol testing laws, 278 Hazardous waste See Toxic waste Health care tax credit, 134 Hiring employees See Employees Hobby and profit motive, 133 Home-based business deducting expenses for, 260–264 insurance for, 258–259 leases and, 258 private land use restrictions, 257–258 sale of home, tax consequences, 264 zoning laws and, 252–257 Home equity, and financing your business, 152 Honesty tests, job applicants, 275–276 I Idaho, drug and alcohol testing laws, 279 Identity theft and credit card receipts, 332 Illegal contracts, 355 index | 441 Illegal discrimination job applicants and, 267–268 in the workplace, 286–288 Illinois, drug and alcohol testing laws, 279 Immigration law and job applicants, 285 Implied warranties, 321–323 Income splitting, owners of corporations, 17–19 Income taxes corporations, 15–21, 126 LLCs and, 23–24, 126–127 partnerships, 11–12, 125–126 S corporation status and, 15–17, 126 sole proprietorships, 7, 125 tax forms for, 125 See also Tax basics Income tax withholding (federal), 127, 128 Incorporating See Corporations Incorporators, 50–51 Independent contractors, 296–304 classification issues, 298–301, 303 contract sample, 302 misclassification risks, 304 pros and cons of hiring, 297–298 special worker categories, 303–304 state rules, 304 Indiana, drug and alcohol testing laws, 279 Injunctions, 369–370, 403–404 Insurance agents/brokers, working with, 212–214 bonds covering employee theft, 221 business interruption insurance, 222–223 claim procedure, 226 for corporations, 67 crime coverage, 222 earthquake insurance, 215 flood insurance, 215 home-based business, 258–259 leases and, 239–240 liability insurance, 218–221 for LLCs, 83 property coverage, 214–218 saving money on, 223–226 solvency of insurance company, 214 specific industries and, 223 terrorist damage coverage, 215 Intellectual property, buying a business and, 174 Interest and loans, 146–147 Internet domain name, 99 Internet sales See Websites Interviewing job applicants, 272, 275 Inventory stored at home, 263 Investment partnerships, 12 Iowa, drug and alcohol testing laws, 279 IRS Form 1099-MISC, expanded reporting rule, 131 IRS Form 2553 (Election by a Small Business Corporation), 65, 112, 124–125 IRS Form 8300 (Report of Cash Payments Over $10,000), 330 IRS Form 8832 (Entity Classification Election), 82 IRS Form SS-4 (Application for EIN), 111, 122 J JAMS, 400 Janitorial services, leases and, 243 Job applications, 272 Job descriptions, 271 Job security and “at will” employment, 268 Judgment-proof debtors, 417 L Landscaping, leases and, 243 Lawyers checklist for services of, 420 fees and bills, 423–424 finding, 420–423 for incorporation, 55 problems with, 424–425 review of LLC operating agreement by, 81 442 | legal guide for starting & running a small business review of long-term lease by, 248–249 small claims courts and, 409–410 Leases ADA compliance, 238 bankruptcy and, 392–393 buying a business and, 173 canceling, 242, 248 dispute resolution, 242 expansion in the future, 235 home-based business, 258 improvements, 236–238 insurance requirements, 239–240 landlord-tenant disputes, 246–248 long-term lease, 231–243 modifying, 245–246 option to purchase the building, 243 option to renew, 234 overview of, 229–230 privacy issues, 241 rent terms, 235–236 restrictions on use of the space, 238–239 security deposit, 236 shopping center leases, 244–245 short-term leases, 230–231 signing, 231–232 signs, 241 subletting or assigning, 240–241 term of, 233 waiver of subrogation rights, 240 withhold rent, right to, 243–244 Leasing equipment, 153–154 Leasing property, to the corporation, 53–54 Legal research federal and state law, 425 law libraries, 425 online research, 427 overview of where to start, 426–427 primary and secondary sources, 425–426 tips for researching business law, 428 zoning laws, 254–255 Legal structures advantages and drawbacks by type of entity, corporations, 12–23 limited liability companies, 23–25 overview, partnerships, 9–12 sole proprietorships, 6–9 special structures, 28–33 Liability insurance, 218–221 Liability, personal See Personal liability Licenses and permits buying a business and transferability, 174 federal registrations and licenses, 111–112 leases and, 238–239 local requirements, 115–117 overview, 110–111 purposes of, 111 regional rules, 114 state requirements, 112–114 Lie detector tests, job applicants, 275–276 Liens on real estate, 345 Limited liability companies (LLC) annual state LLC reports, 84–85 articles of organization, 78–79 assignment of contracts to LLC, 85 bank account for, 81, 84 bulk sales law compliance, 82 business practices, 83–84 buying a business, 168 buyout provisions, 93 capitalize adequately, 83 compensating members, 75–76 corporate tax treatment, 82 corporation compared to, 26, 28 EIN and, 124 fictitious business name, 103 financing, 73–75 insurance for, 83 management of, 73 name for, 76–77, 84, 102 index | 443 number of members required, 72 operating agreement, 79–81 overview of structure of, 23–25 paperwork for setting up, 77–81 record keeping, 85–86 S corporation compared to, 27 self-employment taxes, 76 sign documents properly, 84 tax issues, 82 termination, preventing after buyout, 94 Limited liability partnerships (LLP), 31–32 Limited partnerships, 28–29 Line of credit, financing your business, 155 Liquidated damages, 369 Litigation buying a business and, 172–173 cost of, 404 federal and state courts, 402 injunctions, 369–370, 403–404 process, 402–403 reasons for, 401 testifying in court, 404–406 See also Dispute resolution; Small claims court LLCs See Limited liability companies LLP (limited liability partnership), 31–32 Loans for business financing, 145–148 to LLC, 74–75 personal guarantees, 373–374 security for, 147–148, 158–159, 374 Local licenses and permits, 115–117 building codes, 116 crowd control, 115–116 health and environmental permits, 115 taxes, 115 zoning ordinances, 116–118 Loss prevention measures, 224–225 Louisiana, drug and alcohol testing laws, 279 M Magnuson-Moss Warranty Act, 320, 321 Mail orders, 318–319 Maine, drug and alcohol testing laws, 279–280 Manager-management of LLC, 73 Manufacturing businesses credit policies, 339–340 tax break for, 127 Mark, defined, 96 Martindale-Hubbell Law Directory, 422 Maryland, drug and alcohol testing laws, 280 Meals, entertainment, and travel expenses, deducting, 134–135 Mediation, 397–399 partnership agreement clause, 46 See also Dispute resolution Medical reimbursement plans, corporate fringe benefit rules, 20 Member-management of LLC, 73 Minimum wage, 289 Minnesota, drug and alcohol testing laws, 280 Mississippi, drug and alcohol testing laws, 280–281 Montana, drug and alcohol testing laws, 281 Month-to-month (short-term) leases, 230–231 Multiple of book value, business buyout, 92 N Name of business See Business name Name searches, 105–107 National Cooperative Business Association, 33 Nebraska, drug and alcohol testing laws, 281 Negligent hiring claims, preventing, 268–269 Negotiating a settlement dispute resolution, 396–397 small claims court and, 412 Negotiations, contract compared to, 353 Net leases, 235 Net-net leases, 235 444 | legal guide for starting & running a small business Net-net-net leases, 235 New York, refund laws, 307 Nolo’s Lawyer Directory, 421 Noncompete agreements, for employees, 270 Noncompetition clause, partnership agreement, 45 Nondisclosure agreements, for employees, 269–270 Nonprofit corporations, 32–33 North Carolina, drug and alcohol testing laws, 281 North Dakota, drug and alcohol testing laws, 281 Notarization, signing of contract and, 365 Notice requirements, short-term leases, 231 Notices clause, business sales agreement, 185 O Occupational Health and Safety Act (OSH Act), 292–293 Offers, contracts and, 353–355 Officers of a corporation, 52 Ohio, drug and alcohol testing laws, 281–282 Oklahoma, drug and alcohol testing laws, 282 Online sales See Websites Operating agreement, for LLC, 79–81 Option to keep offer open, 354 Option to purchase the building, 243 Option to renew a lease, 234 Oregon, drug and alcohol testing laws, 282 OSH Act (Occupational Health and Safety Act), 292–293 Outside financing, 145–151 Overtime pay, FLSA rules, 289–290 Ownership changes See Buyout agreements P Package franchise, defined, 193 Parking lot maintenance, leases and, 243 Partnerships authority of the partners, 40 business expense deductions, 12 business name clause, 45–46 buyout of partner, 43–45 buyout provisions, 93 cash contributions, 38–39 changes in, 46–47 clauses in agreement, 37–46 continuity clause, 45 contribution clauses, 38–39 fictitious business name, 102–103 fringe benefits, 12 income taxes, 11–12, 125–126 investment partnerships, 12 management responsibilities, 41–42 mediation and arbitration clauses, 46 noncompetition clause, 45 outside business activities, 42–43 overview, 9–10 partners’ rights and responsibilities, 10–11 personal liability, 10 profits, losses, draws, and salaries, 39–41 property contribution, 39 service contributions, 39 termination, preventing after buyout, 94 written partnership agreement, 36 Past-due notices, 346–348 Patents, buying a business and, 174 “Payment in Full” checks, 336 PayPal, 331 Payroll taxes failure to pay, 14, 129 federal income tax withholding, 127, 128 federal unemployment tax (FUTA), 128–129 periodic payment of, 129 Social Security and Medicare tax (FICA), 128 PC (professional corporations), 29–30 Performance reviews, 286 Permits See Licenses and permits Personal assets, protecting, 372–375 Personality tests, job applicants, 275 Personal liability corporations and limits on, 13–15 partnerships, 10 index | 445 protecting assets, 372–375 sole proprietorships, 6–7 Personal savings, financing your business, 151–152 Personal service businesses, credit policies, 338–339 Personal service corporations, 30 Personnel practices, 285–286 Planed unit development rules, 257 PLLC (professional limited liability company), 30–31 Polygraph tests, 275–276 Post-departure appraisal, partnership share, 44 Preemployment inquiries, 272, 273–274 Pregnancy discrimination, 287–288 Prepayment penalties, avoiding, 147 Pricing and return practices, 315–319 Principal place of business, business use of home, 261 Privacy rights, job applicants and, 268 Private land use restrictions, home-based business, 257–258 Product franchise, defined, 193 Product liability insurance, 219 Product samples stored at home, 263 Professional and personal service businesses, credit policies, 338–339 Professional corporations, 29–30 Professional limited liability companies, 30–31 Profit motive test (“3-of-5”), 133 Promissory note, 146 samples, 157, 158 Property insurance amount of coverage, 216 ordinance or law coverage, 217 perils covered, 215–216 property covered, 214 replacement cost vs current value, 216–217 tenant’s insurance, 217–218 PUD rules, 257 Q Qualified joint venture, 12 R Recording of contracts, 365 Records book corporate, 64 LLC, 85–86 Refunds policy for, 318 state laws, 307 Regional environmental regulations, 114 Registered/resident agent, in articles of incorporation, 58 Regular and exclusive use, business use of home, 260–261 Rent terms leases, 235–236 shopping center leases, 245 Repayment plans for loans, 146–147 Rescission of contract, 370 Research See Legal research Restrictive covenants, 257 Retirement savings, and financing your business, 153 Return on investment (ROI), 150 Reviewed CPA report, 171 Revised Uniform Partnership Act (RUPA), 36 Revoking an offer, 354 Rhode Island, drug and alcohol testing laws, 282 Risk reduction measures, 224–225 ROI (return on investment), 150 S Sale of goods (over $500), contract rules, 357, 358–359 Sales agreement See Business sales agreement SBA loans, 155–156 446 | legal guide for starting & running a small business S corporation status electing, 65 incomes taxes, 126 LLC compared to, 27 and taxes, 15–17 Section 179 capital-expense election, 132–133 Secured creditor, 344–345 bankruptcy and, 386 Secured loans, 147–148, 158–159 bankruptcy and, 392 protecting your assets, 374 Securities law and equity investments, 150–151 federal and state, 63, 64 LLC membership and, 73–74 and shareholders, 55 Security deposit, leases, 236 Self-employment taxes estimated taxes, 130 for LLC members, 76, 131 payment of, 129–130 Selling a business, 186–189 financially troubled business, 383–385 See also Business sales agreement Service marks See Trademarks and service marks Set-dollar method, partnership share, 44 Settlements See Negotiating a settlement Sexual harassment, 286–287 Sexual orientation discrimination, 288 Shareholders described, 51 securities law and, 55 Shopping center leases, 244–245 Short-term leases, 230–231 Signs, leases and, 241 Skills tests, job applicants, 275 Small Business Administration, loan programs, 155–156 Small claims court appealing decisions, 417 case evaluation, 410, 412–413 collecting on bad checks, 335 collecting the judgment, 417–418 collection changes, 413 court rules, 410 jurisdictional limits, 410, 411 procedures, 414–416 representing yourself, 408–410 representing yourself as the defendant, 416–417 who to sue, 413–414 See also Dispute resolution; Litigation Snow removal, leases and, 243 Social Security and Medicare tax (FICA), 128 See also Self-employment taxes Sole proprietorships business expense deductions, buying a business, 164–165 fictitious business name, 102–103 fringe benefits, 7–8 income taxes, 7, 125 overview, personal liability, 6–7 spouse as employee, South Carolina, drug and alcohol testing laws, 282 Specific performance, 370 Spouses employee of sole proprietorship, personal loan guarantees, 373–374 qualified joint ventures and, 12 State laws bad-check laws, 334 consumer protection laws, 324–325 drug and alcohol testing, 277–283 personal information and credit cards, 331 refunds, 307 small claims court limits, 411 State licenses and permits, 112–114 Stay, bankruptcy filing, 391 Stock, issuing, 63–64 Straight-line depreciation, 132 index | 447 T U Tax basics audits, 137–139 business deductions, 131–137 corporations, 17–21 employer identification number (EIN), 120–124 information resources, 127–128 limited liability companies (LLC), 82 manufacturing businesses, 127 S corporation status, 124–125 See also Income taxes Tax liabilities, buying a business and, 173 Temporary restraining order, 404 Tenant’s insurance, 217–218 Tennessee, drug and alcohol testing laws, 283 Termination of employment, 293–295 Terrorism Risk Insurance Act, 215 Testing job applicants, 275–276 “Till tap,” small claims judgments, 418 Title to assets, buying a business and, 172 Toxic waste cleanup costs and insurance, 218 environmental regulations and, 114 zoning ordinances, 174 Trademarks and service marks business names compared to, 97 buying a business and, 174 defined, 96 overview, 104 searching for prior use of the name, 105–107 strong and weak trademarks, 104–105 using and protecting, 107–108 Trade name, defined, 96 Trade secrets, buying a business and, 173 Trade shows, selling at, 316 Trash removal, leases and, 243 Travel expenses See Meals, entertainment, and travel expenses Triple net leases, 235 TRO (temporary restraining order), 404 Truth in Lending Act, 343 UCC See Uniform Commercial Code Unemployment claims, buying a business and, 173 Unemployment compensation, 295–296 Unemployment tax (FUTA), 128–129 Unfair competition, protecting against, 269–270 Unfair contracts, 355 Uniform Commercial Code contracts for sale of goods (over $500), 357, 358–359 financing statement, 172, 344–345 history of, 359 implied warranties, 321, 322 Uniform Partnership Act (UPA), 36 Unordered merchandise, 319 U.S Arbitration & Mediation, 400 USCIS Form I-9 (Employment Eligibility Verification), 285 Utah, drug and alcohol testing laws, 283 V Valuation buying a business, 170–172 buyout and, 91–93 partnership share, 44–45 selling a business, 186–187 Vehicles deducting expenses, 135–137 insurance for, 219–220 Venture capitalists, financing your business, 156 Vermont, drug and alcohol testing laws, 283 Virginia drug and alcohol testing laws, 283 refund laws, 307 W Wages and hours rules, 288–292 Waiver of subrogation rights, 240 Warranties and guarantees, 319–324 448 | legal guide for starting & running a small business breaches of, 323–324 buying a business and, 173 express warranties, 319–321 implied warranties, 321–323 Websites Internet sales (mail orders), 318–319 policies to post, 326 privacy policy (COPPA), 325 terms and conditions, 326–327 Wholesale and manufacturing businesses, credit policies, 339–340 Window washing, leases and, 243 Witnesses, signing of contract and, 365 Workers’ compensation claims, buying a business and, 173 Workers’ compensation insurance, 220–221, 293 Work hours, calculating, 291 Workouts common elements of, 382 financially troubled business, 380–383 Wrongful termination claims, protecting against, 293–295 Z Zoning ordinances, 116–118 buying a business and, 174 dealing with officials, 255–256 home-based businesses and, 252–257 leases and, 238–239 litigation, 256–257 researching, 254–255 ● Online Legal Forms Nolo offers a large library of legal solutions and forms, created by Nolo’s in-house 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Your Legal Companion for Starting and Running a Small Business S tarting and running a small business can be both profitable and emotionally satisfying Being an entrepreneur offers rewards of many... sues and wins a judgment against the business Only corporate assets are available to pay the damages Andrea is not personally liable caution Liability for your own acts If Andrea herself had dropped... that are usually included in a partnership agreement for a small business form Chapter of Legal Forms for Starting & Running a Small Business, by Fred Steingolf (Nolo), contains a sample partnership