Widgets and Gadgets - Essay Example

BUSINESS FORMATION AND SECURITY LAWS FOR START-UP BUSINESS OF WIDGETS AND GADGETS Starting up a business of Widgets and Gadgets comes under the broader umbrella of information technology sector. In United States, courts obligate the information technology industry to operate in a domain of some necessary laws. It is very important to be aware of these laws before starting a new I.T business (US Information Technology Law, 2011). Violation of these laws can end up in paying fines and other punishments.

As a result, it is considered appropriate to take the advice of I.T solicitor in forming up an IT based company as well as in managing the business operations of the company. Licensing and registration, shareholder agreement, privacy policies, and confidentiality agreement are the specific areas of high importance when incorporating an IT based company.The business of widgets and gadgets in the form of company requires certain general legislations as well as industry specific rules and regulations.

In the beginning, the major legal points related to incorporation of a business of widgets and gadgets are discussed and then followed by industry specific legislations.In United States, the formation and incorporation of a company is held under the law of local state. Mostly companies get themselves incorporated under the law of Delaware (Division of Corporations, 2011). The core reasons behind the selection of Delaware state law are very well nationally recognized statute available for corporations, well developed and organized case laws facilities and the presence of more than 50% of US corporations in the state of Delaware.

There are two types of corporate entities under United States law (Limited Liability Company, Concept, Similarities and Advantages 2011). These are:1. Corporations2. Limited Liability Company (LLC)Both types of legal structures have their specific features. Some of them are stated below:a) The LLC is established by filing Articles of Organization of the business with the state secretary of State.b) An LLC does not issue shares, thus not creating shareholders but members.c) The LLC can be incorporated with single member.d) Members are not personally liable for the loans and liabilities of the entity.e) No tax liability on the LLC, until the members clearly elect to be taxed in the same manner as the corporation (company limited by shares).

Acquiring a registered agent is a requirement under the law of Delaware as this agent is supposed to act on behalf of the organization and to represent the company in various legal encounters (How to form a Business Entity, 2011).The next step is the formation of a name of the company. By paying around $75.00, name of the company can be reserved for at least a period of 120 days in the record of Delaware Division of Corporations. Legal papers such as Certificate of Incorporation/Formation and Certificate of Status/Good Standing are required to be obtained under Delaware Division of Corporations.

Fees related to incorporation, filing of names and legal papers must be submitted. All companies formed in the State of Delaware are required to submit an Annual Report along with $50. The franchise tax has different tax rates with different amounts of profits the company earns in a given financial year. The payment period also varies in the similar manner. Electronic filing of Annual Reports for domestic corporations is mandatory under state of Delaware. In order to establish a business to produce widgets and gadgets, licenses and permits are need to be obtained from IT division of State Department (US Information Technology Law, 2011).

Widgets and gadgets are related to IT industry which is covered in the following areas of United States IT related laws and legislations: Cyber crime and network securityDomain namesE-signatures and encryption (cryptography)Privacy and data protectionTaxation and e-commerce/telecommunications servicesAfter incorporation of business and commencement of commercial activities, the compliance of above legislations needs to be strictly maintained. Many widgets and gadgets share user’s personal data and information, like pictures or videos, therefore laws and privacy policies should be strictly followed in order to avoid any unpleasant incident pertaining to customers.

ReferencesDivision of Corporation, (n.d.). Retrieved September 26, 2011, from http://corp.delaware.gov/How to form a Business Entity, (n.d.). Retrieved September 26, 2011, from http://corp.delaware.gov/howtoform.shtmlInformation Technology Law, (n.d.). Retrieved September 26, 2011, from http://www.law.stanford.edu/program/centers/ttlf/law/us/it/Limited Liability Company, Concept, Similarities and Advantages (n.d.). Retrieved September 26, 2011, from http://www.us-llc-for-non-residents-of-the-usa-incorporate-llc-in-us.

offshore-companies.co.uk/