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Determining co-founder equity in startups

Arriving at a fair equity split for co-founders of a startup company in Ohio can be difficult, but considering different factors could help. Perhaps the most important factor is what positions the partners are going to fill in the new company. A CEO has more responsibilities than a consultant or other non-key executives, so that person should have a greater equity interest in the company.

There are other important factors, such as how much a partner has already contributed to the startup company. This may include contributions of financial capital, promoting growth in the startup or mentoring. That person should ideally be rewarded with additional equity. So should the pivotal contributions of the partner who came up with the original idea for the startup. If one partner gave up a high position, large salary and guaranteed pension to work on this startup, this arguably deserves to be recognized with additional equity over a partner who was unemployed.

The purpose of business liability insurance

Entrepreneurs and business owners in Ohio might benefit from understanding more about the liability insurance available for many small businesses. Depending on what assets the business owns, conducting an operation without liability insurance may be quite risky. Sole proprietorships with personal items tied to the enterprise may be at a greater risk since assets like vehicles and homes can be confiscated through civil action. Even though incorporated businesses are less exposed to this risk, their assets may still be targeted in a lawsuit.

The liability insurance that a business is required to possess typically depends on the industry they operate within. An umbrella business owner's policy typically groups liability insurance alongside different types of coverage. General liability insurance is designed to cover negligence claims. These policies may provide coverage for product liability issues, court costs, legal expenses, property damage, medical costs and bodily injury.

How to open a new business in Ohio

Starting a new business can be a unique and exciting challenge. However, there are a few steps that all companies will go through as they get ready to start doing business. First, a company will generally want to create a business plan as this will help guide the decision making process of the company moving forward. It will also serve as a guide that can help investors determine if they want to provide financing for the company.

After a business plan has been written and financing is obtained, a company may have to determine its business structure. For instance, a company could decide to operate as a sole proprietorship because it requires less paperwork, but it could also opt to do business as a corporation, which may offer some tax benefits for owners of the company.

Enforcing an Ohio contract

In its most basic form, a contract is an agreement by two or more parties that is binding on all parties. In some cases, a party may agree to do something that it otherwise would not be obligated to do. In other cases, a party may not do something that it is otherwise entitled to do. Regardless of what the contract states, it is not valid if one or more parties to the contract are ruled incompetent.

While a verbal contract may be binding, it may be difficult to enforce. Contracts involving sales of real estate or other goods over $500 may need to be put in writing. Contracts that take more than 12 months to honor may also need to be put into writing. Those who enter into a contract may create it on their own or do so with the guidance of an attorney.

Planning a new business venture in Ohio

When you are considering opening a business and striking out on your own, it is vitally important that you take the steps necessary to help ensure it is formed correctly and that the business plan is sound. As you are most likely aware, many new businesses fail, and you want to make certain that you have planned carefully enough to avoid that scenario.

Most businesses such as yours will need to obtain funding in order to begin. Banks and other lenders will normally require that you submit a business plan before they will agree to provide the financing that you will require. Your plan must thus be thorough and based on solid research about not only the product or service you will be offering, but also on matters like the intended location, traffic patterns and the available demand. You will need to include projections that are based on sound analysis and research.

How to register a business name in Ohio

The name used by a business may be descriptive of the enterprise or reflective of the individual forming the company. In some cases, an entrepreneur will have a great idea for a business name before issues such as financing and the choice of entity form are finalized. While some business names might not be at risk of being taken, others related to current trends might be vulnerable. Ohio allows for a business name to be reserved in advance of the company being established.

It is required that a business be registered with the Ohio Secretary of State, and filing the required registration forms will secure a business name. However, a name can also be reserved in advance of the business being formed. Name Reservation Form 534B is used to do so, and a $50 fee is required at the time of filing. This provides reservation of the name for 180 days. A renewal is possible as long as it is completed prior to the expiration of the original reservation.

Understanding entrepreneurial law in relation to debt financing

Ohio businesses may find that establishing an unsecured loan may cost more interest rates and may be harder to establish than a secured loan. An unsecured loan might require that the individual is extremely credit-reputable in order to be approved. Many entrepreneurs start their businesses by borrowing funds from family members, but not taking caution in this process could become problematic for both the business and their personal relationships in the future. An investor is essentially a share-holder in a business until they are repaid. If they are unhappy with a business's operations, they may be legally allowed to intervene in order to protect their investment.

Secured loans are implemented by established collateral that assures the loan will be repaid. The collateral can be used to satisfy the debt if there is ever a default on the loan. This can be a variety of assets, including commercial or private real estate, a certificate of deposit, stocks and bonds securities and a guarantor's signature.

How a business planning strategy can benefit Ohio business owners

Ohio business owners may benefit greatly from projecting their strong vision for the future of their company into a centralized business plan. While business plans were originally intended to unify all aspects of a company toward success, their role in business changed with shifting corporate culture. Business planning became the domain of those who wanted to seek funding for a one-time opportunity, such as venture capitalist funding or other types of outside investment.

The nature of business planning has come full circle as more business owners use strategic planning as part of the daily function of their companies. Business plans are still a great asset when seeking funding from an outside source as they demonstrate that a company has a clear direction and the means to reach its goals. However, business plans also give small businesses and startup companies the chance to build a stable foundation and realize improved long-term success.

Office park sold to foreign investor group

A large Ohio office park was sold to a Canadian investor group on Dec. 23. Summit Office Park, located in Independence, was sold to Summit Cleveland LP for $26.5 million. The prior owners, Aegon N.V., had owned the commercial real estate since 2009.

Located on Summit Park Drive and Rockside Road, Summit Office Park includes four buildings and a total of almost 500,000 square feet of office space. A spokesperson for the new owners of the properties said that the purchase was a long-term investment in the Northeast Ohio real estate market. The spokesperson also commented that the group felt Northeast Ohio was on the upswing, and they looked forward to watching the area rise to its potential.

Minority shareholders and disputes

In the course of any business, shareholder disputes may arise between those who hold minority and majority stakes in the company. This often occurs as a result of decisions taken by management or a board of directors. Contrary to the wishes of minority shareholders, the company could be expanding payroll, manufacturing new products and taking on new debt. Expansion of the business into a new market, from Ohio to New England, for example, could also spark controversy.

Contractual disputes among shareholders also pose a hazard to the smooth functioning of a business. If new shares are issued and the board elects not to offer an increased stake to a minority shareholder, the latter may consider it a breach of his pre-emptive contract rights. A shotgun clause that gives a shareholder the right to sell his stake can lead to a dispute over the fair market value of the shares if the original shareholder agreement didn't specify a price.

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