Preparing for Market
Legal Protection
It is a smart idea for inventors to legally and financially protect themselves from possible lawsuits or financial troubles arising from the selling of their products. No one ever thinks that something they do will hurt anyone or that they will not pay back a loan taken from a bank or an investor. But the fact is, unexpected problems happen. There are always abnormal cases in which someone gets hurt using a product and they win millions of dollars for their injury. An old woman once burnt herself with a McDonald's coffee and she won millions of dollars because, "The coffee was too hot!"
This same thing could happen to an inventor. If someone files a million dollar case against an inventor, he/she could go out of business. Not only would all the inventors business assets taken, but also any debts not paid would be taken from the inventor's personal assets, including houses, cars, land, and investments.
It is easy to protect small businesses in the US. The states protect small business because it is such a strong force in our booming economy. There are several ways to register a business with the state and each comes with its own fees and protections. The least costly, small business approach is to register the business as a limited liability company (LLC). Am LLC is completely protected from losing personal assets while conducting business. For example, say someone sues for $1 million, but the inventor only has $200,000 in business assets. If the inventor is registered as an LLC, they can only lose the $200,000. All personal holdings are safe from any problems caused with the business.
Another approach is to become incorporated in the inventor's state. This approach is much more expensive and the inventor would have to pay double the amount of taxes on his/her profits. The state levies a high tax on corporations because they are offered such high protection while doing business.
To become an LLC or get incorporated, inventors should contact their local Secretary of State's office. By legally protecting personal assets, an inventor can worry about making the most out of business and not as much about things going wrong.
Paper outline
- Protecting inventions
- Manufacturing the product
- Getting resources and financing
- Testing the market
- Preparing products for market
- Closing thoughts
- Download the entire paper
Check out the Silent Timer Web site to see the product Erik took to market. Contact him with any questions.
