Representing the Small Business Client

In this fast-paced, entertaining presentation, small business attorney and best-selling author Cliff Ennico will focus on the particular challenges lawyers face when representing a small business or an entrepreneurial startup company (there’s a big difference between the two).

Topics to be covered include:

The difference between small businesses and entrepreneurial startups
Areas of the law you need to be familiar with when representing the small business/startup client
The seven steps to forming a legal entity for the small business/startup client
LLCs, corporations, and S corporations: which is the best vehicle for a small business client?
Complying with the federal Corporate Transparency Act
Preparing Shareholders’ Agreements, Operating Agreements, and “Buy-Sell” (restriction on share transfer) Agreement for LLC and corporate clients
How small businesses and entrepreneurial clients are financed, and how attorneys can help with that process
The mechanics of financing by company founders and “friends and family” financings for small businesses
“Angel” and “venture capital” rounds of financing for entrepreneurial startups; and
The basics of crowdfunded offerings under SEC regulations.

Topics covered include:

Business Law Law Practice

Agenda:

Introductory Overview
- Brief introduction of the presenter
- What is a “small business,” and how does it differ from an “entrepreneurial startup”?
- Areas of the law which practitioners may encounter when representing a small business client
Organizing the Small Business Client

Your “intake form” for the small business client
The seven steps to forming a legal entity for a small business
Using a limited liability company (LLC) for an entrepreneurial startup?

Small Business Governance and Founders’ Agreements
- Small business management structures for corporations and LLCs
- Shareholders’ agreements (corporations) and operating agreements (LLCs)
- “Buy-sell” agreements and restrictions on share transfer
Financing the Small Business or Startup
- “Friends and family” offerings
- Angel and venture capital offerings (for entrepreneurial startups)
- Crowdfunding: the pros and cons
- When you need to involve a securities law specialist
Questions & Answers (as time permits)

Duration of this webinar: 60 minutes

Originally broadcast: April 23, 2025 11:00 AM PT

Webinar Highlights

This webinar is divided into section summaries, which you can scan for key points and then dive into the sections that interest you the most.

00:00 Introduction and Speaker Background

Speaker Cliff Ennico is noted for his expertise in legal and tax issues for entrepreneurs and his extensive career in representing small businesses. Cliff begins his presentation by discussing the importance of understanding the differences between representing small businesses and startups. He highlights the advantages of practicing in this area, including the ability to be a legal generalist and make a positive impact.

07:54 Small Business vs. Startup Dynamics

Cliff explains the differences between small businesses and startups, emphasizing their distinct operational models and growth potential. Small businesses are typically personal and involve the owner in daily operations, while startups are designed to be scalable and attract significant investment. Startups often have a broader market reach and a more complex structure with multiple stakeholders. Understanding these differences is crucial for effective legal and business navigation. Cliff discusses the challenges and rewards of working with entrepreneurs, noting the importance of a nuanced approach. He stresses the need for a database of specialist lawyers to assist with complex legal issues beyond one's expertise.

12:45 Legal Entity Formation

Cliff outlines the steps for setting up a small business, including choosing a name, determining necessary licenses, and selecting a legal entity. He explains the differences between corporations and LLCs, emphasizing the importance of understanding state-specific requirements. He highlights the importance of trademarking a business name and securing the appropriate URL for online presence. Cliff advises on the necessity of business licenses, particularly for services that could cause harm if misused. He provides resources for checking state licensing requirements and emphasizes the importance of consulting local lawyers.

28:03 Tax and Regulatory Considerations

Cliff discusses the process of setting up a legal entity, including filing necessary documents and preparing agreements. He explains the importance of registering for federal and state taxes and obtaining an EIN for businesses. Cliff advises on the complexities of payroll tax withholding and the benefits of using a payroll service. He discusses the concept of nexus for tax purposes and the implications for businesses operating in multiple states.

36:08 Ownership and Funding Strategies for Businesses

Cliff explains the different layers of management in corporations and the importance of making decisions at the correct level. He discusses the structure of LLCs and the necessity of drafting a founder's agreement or operating agreement. Cliff highlights the importance of provisions in agreements to restrict share transfers and manage minority shareholder power. He outlines the stages of funding for businesses, including founders' rounds, friends and family rounds, and angel rounds. Cliff advises on the importance of proper documentation for friends and family investments to prevent misunderstandings. He discusses the advantages of incorporating in Delaware for tech startups due to favorable legal tendencies.

52:48 Crowdfunding and Securities Law

Cliff warns against giving too many rights to early-stage investors, which can hinder future fundraising efforts. He advises on the importance of understanding investors' hidden agendas, especially with celebrity investors. Cliff discusses the role of securities law in fundraising and the need for malpractice coverage. He introduces crowdfunding as a method for raising capital, explaining the SEC's Regulation Crowdfunding. Cliff discusses using registered crowdfunding portals and adhering to strict guidelines. He notes that crowdfunding is best suited for businesses unlikely to attract traditional venture capital financing.

01:00:00 Common Pitfalls in Operating Agreements

Cliff emphasizes the need for a securities lawyer when offering securities to unknown investors. He highlights common pitfalls in operating agreements, such as using generic forms. Cliff advises on the importance of tailoring operating agreements to the specific needs of the client. He concludes by offering resources for further learning and encourages reaching out for assistance.

Please note this AI-generated summary provides a general overview of the webinar but may not capture all details, nuances, or the exact words of the speaker. For complete accuracy, please refer to the original webinar recording.

Continuing Legal Education (CLE) Credits

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California CLE

Status: Approved

Credits: 1.00 General

Earn Credit Until: June 30, 2026

South Carolina CLE

Status: Approved

Credits: 1.00 General

Difficulty: All Levels

Earn Credit Until: December 31, 2025

North Carolina CLE

Status: Approved

Credits: 1.00 General

Earn Credit Until: February 28, 2026

Texas CLE

Status: Approved

Credits: 1.00 General

Earn Credit Until: March 31, 2026

This presentation is approved for one hour of General CLE credit in California, South Carolina (all levels), and North Carolina. This course has been approved for Minimum Continuing Legal Education credit by the State Bar of Texas Committee on MCLE in the amount of 1.00 credit hours.

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Speaker

Cliff Ennico Attorney
Law Office of Clifford R. Ennico

CLIFFORD R. ENNICO (www.cliffennico.com) is widely considered to be one of America's leading experts on the legal and tax problems facing entrepreneurs and privately-owned businesses. Read More ›