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QUICK RECAP

Here is a review of what we have done:

1. Came up with the name and selected the appropriate State and type of charter.

2. Set up an LLC or Corporation.

3. Filed and Received our EIN.

4. Elected to be treated as an S Corporation -unless we are a foreign person. 

5. Created a cloud-based file structure to file our business documents and protect against disaster.

Now we will begin executing documents the will establish the ground rules of our business and assure that we get the benefit of our company with regard to liability protection, asset protection, IP management, and legacy planning.

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MODULE TASKS

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COURSE CONTENT

In this module, we will discuss the difference in organizational and operational documents.  After covering these broad topics we will go through the specific documents for the Company or the Corporation so that you execute all the documents necessary for your business to be organized to give you flexibility and the protection you require.

Afterward, we will discuss operational documents.  The section covers agreements like Non-disclosures, asset assignments and simple organizing checklists to keep you on track with your business.

This section may look overwhelming at first, that is because it is filled with dozens of swipe files and templates for different parts of your business.  Here is a plan of attack for how to attack this module.

If you are a Sole Member of your LLC

  1. If your state requires an operating agreement then use the template to execute the document.  Otherwise, you can come back to do that later don’t ignore it.
  2. Execute the banking resolution so you can go ahead and get your accounts set up in module seven.
  3. Come back later and use the documents to get your IP portfolio cleaned up and other agreements papered with your suppliers.

If you are a Husband-Wife partnership of your LLC or going to have partners in your LLC.

  1. Complete the Operating agreement first.  for married couples, it is pretty straightforward but if you are in a partnership with another author then you need to hammer out all the details before you move forward.
  2. Execute the banking resolution so you can go ahead and get your accounts set up in module seven.
  3. Come back later and use the documents to get your IP portfolio cleaned up and other agreements papered with your suppliers.

ORGANIZATIONAL

These agreements typically are completed and then left to sit in a file.  Don’t take that description leave you with the impression that they are not important.  These documents outline how to proceed with big events like the sale or dissolution of the business or how to deal with the issue of a partner’s death.  If done correctly you will lay the foundation for a well-organized business that has strategies for life’s eventualities.

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Select the tab below to see the directions and templates for organizing documents for the type of charter you registered.

The Operating Agreement is the defining document for the company.  So as a single member LLC why do you need this document?

The company serves several functions;

  • Liability Protection
  • Asset Protection & Management
  • IP Management

WIthout completing an Operating Agreement you will not have clear rules for how the LLC is to operate when you are dead or incapacitated missing out on the power of the perpetual entity to fulfill your wishes and manage your risk and assets.

Therefore we will set up a simple operating agreement from the template below.

Single Member Operating Agreement Template

The good thing about a single member LLC is you don’t have to worry about negotiating the operating agreement.  What we look to utilize this agreement for is asset protection, Intellectual Property Management, and Estate Planning.  With the addition of a successor member, your business can continue on after your passing.

The Operating Agreement is the defining document for the company.  So all members need to be comfortable with the document.

The company serves several functions;

  • Liability Protection
  • Asset Protection & Management
  • IP Management
  • In the case of a multiple member LLC how you and your partners will play together.

WIthout completing an Operating Agreement you will not have clear rules for how the LLC is to operate when you are dead or incapacitated missing out on the power of the perpetual entity to fulfill your wishes and manage your risk and assets.

During the genesis of a business opportunity, partners tend to agree on everything because they are influenced by the potential.  They don’t think about what happens if they or the other partner loses interest, or has life circumstances that get in the way of the business.

Take the time to walk through all of the situations and how money and work are to be divided and build that into the agreement.  THink about what happens if one or both of you die and how you want the business to go forward after such an event.

This can all be built into the template below and should be done you sin the deal.  I suggest sitting down with your partner and hammering out all the details in plain old English and then you can have a lawyer review your terms and conditions to be amended into the template.

For husband and wives, there shouldn’t need to be much amendment.

Therefore you will need to set up an operating agreement from the template below.

Multiple Member LLC Operating Agreement Template

For Multiple Member Organizations, you should also issue simple Certificates of Membership for clarity as to who the members are and the percentage interest they have in the Company.

Certificate Evidencing Membership

Print these out and have all the members sign when you execute the operating agreement.

If you incorporated or already have an S Corp set up here are the documents you need to have in place.  Corporate Governance is slightly different.  A “Board of Directors and Corporate Officers” operate the business.  Now in your case, that may be a board of one.  You still need the proper documents in place to show the Board met and resolved to act on an issue.

Bylaws Template:  This is the Corporate version of the operating agreement you will need to execute this document filling in the details according to your Articles of Incorporation and how you want the business to be managed.  Single and multiple members use the same document.

Corporate Meeting Minutes: you need to record minutes of the annual meeting and any major resolutions the board makes.  Use this template to list out the resolutions print sign it and then save to your drive.  Most States require you keep Corporate Minutes to remain in Good Standing.

Resolutions Template:  From time to time you will be required to issue resolutions authorizing action to be taken on behalf of the company.  The first act will be the creation of the corporate bank accounts.

OPERATIONAL

These are documents that are used in day to day operations. Either to make sure you establish clear expectations with vendors, protect your interests and get the things done day to day that needs to get done.

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Bank Account Resolution Letter

From time to time, you will need to provide others with evidence of your authority to act on behalf of the company.  You do this by providing resolutions to others for their record.  The first will likely be your banking resolution.

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When setting up a business bank account you will need to provide;

  1. information about the corporation and its existence. -Articles of Incorporation / Organization
  2. A Banking Resolution authority to create an account on behalf of the company and who are the authorized signatories.
  3. Proof that you are who you say you are if you are a signatory.

Single & Multiple Member LLC Resolution

 

Corporate Resolution

At this point, your company shell has nothing inside it.  We will move your copyrights into the LLC through an assignment.  The boilerplate Copyright Assignment gives your LLC the rights to further assign and use your copyright.

You will execute an assignment document for each copyright that you have in your portfolio.  You could go the extra step of registering the assignments with your county clerk so that they are a matter of public record but this really isn’t necessary and can be expensive if you have a large portfolio.

Copyright

Why should I register my work if copyright protection is automatic?

Registration is recommended for a number of reasons. Many choose to register their works because they wish to have the facts of their copyright on the public record and have a certificate of registration. Registered works may be eligible for statutory damages and attorney’s fees in successful litigation. Finally, if registration occurs within five years of publication, it is considered prima facie evidence in a court of law. See Circular 1, Copyright Basics, section “Copyright Registration” and Circular 38bHighlights of Copyright Amendments Contained in the Uruguay Round Agreements Act (URAA), on non-U.S. works.

Taken from the FAQ page at copyright.gov

Your work is copyrighted the minute you publish.  You can use the copyright symbol and notices in your works.  You should REGISTER your copyright with the Copyright Office within 90 days of publishing a work.  This will provide you additional rights if you do go to court.  If you do not register a copyright you can not file a court case.

More importantly, we want to get into the habit of having clarity around our assets.  The registration gives you a specific registration number to use in asset assignments and licensing agreements.

To register a copyright you need to go to the link below and create an account.  Then register each of your works.  The cost is $35 per book.  Anthologies and co-written books have additional requirements.

Have a clean PDF of the work to upload to copyright.gov. Get rid of the marketing of the marketing links and excerpts to upcoming books.  The purpose of this copy is to act as the record of this copyrighted work.  You do not need to register for every way that you print the book.  Just one copyright for ebook and print.

Register your copyrights

When registering you can set up your new company as the office of record for handling your copyright.  Interested Parties go to the copyright office first and get the public record for the manager or the copyright.

Asset Assignment

To have the Company hold your Intellectual Property.  You will assign the rights of your copyright to the Company.  With these rights, The Company has the authority to contract and manage the assets.

If you were extremely conservative you would set up multiple LLCs one to hold your IP another that held your bank accounts, with a holding LLC owning both to create firewalls between your IP and your cash.  This is extreme and expensive and only mentioned because you may have heard people discuss firewalling assets.

We are more interested in getting your IP into a company shell for legacy and licensing purposes.  By having your IP Assets in a perpetual corporation if something were to happen to you and you had named a successor member then the assets smoothly transfer upon your death.

Having a clean well-documented IP portfolio is not about stopping pirates.  It is about being prepared to license your Intelectual Property to others an provide them with clean assignments. By using this assignment to move the asset into your company with the template provided you give the company total control of that asset.  If you need to extract the asset later you would need to have the company paper an agreement to rescind the assignment.

Assignment Template

Check Lists

It helps to have a checklist to make sure you’re getting all the things done each day, week, month and year.

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Here is the checklist template.  Open in excel and save to your computer.

Company Checklist

Non-Disclosure Agreement

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It is best practice to get all of your key contractors and vendors that will have access to your confidential data to sign a non-disclosure agreement.  This document provides you some recourse at the end of your relationship to get content back and furthermore if there is some breach you have a written agreement that has been violated rather than hearsay and a word of mouth agreement.

Nondisclosure Agreement

If you have a strategy you are implementing and concerns over it being shared by a vendor be explicit have the conversation then document by email or in this agreement that the items discussed on a particular date are considered confidential.  Also, put confidential in the email header when corresponding with someone where confidential information is being shared or discussed.

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