Startup

The Ruby Chocolate Trade Secret

Bimal Saraiya · September 15, 2017 ·

Mmmm… chocolate!

There’s now another type of chocolate! A Swiss chocolate maker has produced a new type of chocolate from the Ruby cocoa bean. The new ruby chocolate, developed by Barry Callebaut (whose chocolate is excellent for making desserts), joins dark, milk, and white as chocolate varieties.

Callebaut has not disclosed how it is produced. It is, therefore, a trade secret.

Intellectual Property Law

Intellectual Property Law is not just patents. It encompasses 4 distinct areas: a) Patents, b) Trademarks, c) Copyrights, and d) Trade Secrets. Trade secrets can be an important tool in maintaining the value of your business.

Trade Secrets

There are some famous trade secrets out there. Probably the most famous is the recipe for Coke. Another trade secret you’ve probably consumed is the Colonel’s Secret Recipe at KFC. Yet another is the recipe for Mrs. Field’s Cookies (despite the email you may have received to the contrary.)

But not all trade secrets involve food. The formula for WD-40 is a trade secret. While you can eat the end product, the mechanism of making Krispy Kreme’s warm donuts that jump into my mouth is a trade secret. And arguably the most valuable trade secret today is Google’s Search Algorithm.

Trade Secret Law

Trade Secret Law is governed by state law. There are specific things you need to do to maintain the ability to enforce your trade secret rights against others. Contact us to learn all about trade secrets and how they can be an invaluable part of your business model.

For more detailed history and stories behind some of the most iconic U.S. chocolate makers (including Hershey’s milk chocolate trade secret), I highly recommend the book “The Emperors of Chocolate” by Joël Glenn Brenner.

College Football

It’s Friday, which means we have a great weekend of College Football ahead of us. This weekend Purdue takes on my dad’s alma mater, University of Missouri. Boiler Up!

Do what you love

Bimal Saraiya · September 14, 2017 ·

Is it time to start your own business?

I read with interest a thought-provoking piece about Elon Musk, written by someone who knows him well. He asserts that neither money nor intelligence are necessary to be successful. At first glance, this seems obvious. After all, there are thousands and thousands of people successful in the arts, in the community, in politics, in their families, and generally in their lives without being in Mensa or being a multi-millionaire. But for success in business, this might be a heretical proposition.

The common consensus is that being highly intelligent and going to, or dropping out from, a top school is necessary to be successful in business. Most entrepreneurs trumpet their academic achievements and showcase past accomplishments that show their intelligence. I’m certainly guilty of that. I am proud of my schooling, my credentials, and my accomplishments. But would I be the same person regardless? Would I have the same drive and the same passions? Mr. Cantrell, it seems, would argue yes.

Love what you do and do what you love – Ray Bradbury

Ray Bradbury may not have been a scion of business, but there’s no doubt he was a success. As Mr. Cantrell explains, a necessary foundation for success is doing something you are passionate about and you are good at. Ray Bradbury certainly epitomized these traits. More than anyone else, he popularized modern science fiction.

Don’t aim for success if you want it; just do what you love and believe in, and it will come naturally – Sir David Frost

If you already have a passion for something, why not turn it into a business? After all, most people didn’t think Elon Musk would succeed with SpaceX. Yet, he was passionate about it, he stuck with it, and he proved everyone wrong. Don’t think that you can’t approach something with the same level of determination he did. Everyone who thinks about running their own business has the three essential skills Mr. Cantrell speaks of: 1) intelligence, 2) skill, and 3) value creation.

Great things in business are never done by one person. They’re done by a team of people. – Steve Jobs

Here at OfficeFlex and Saraiya Pllc we are passionate about what we do. We help business founders follow their dreams and make their business a success. With the right team behind you, inherent skills and dedication can push you along the path of success.

If you have been considering starting a business but have been putting it off, I leave you with a quote from Jeff Bezos, founder of Amazon.com: “The common question that gets asked in business is, ‘why?’ That’s a good question, but an equally valid question is, ‘why not?'”

Contact Us to learn more about turning your passion into your business.

Common Business Types

Bimal Saraiya · March 25, 2016 ·

Before starting your new business, there are a number of important decisions you need to make. One of these is choosing a business entity.

A business entity is the structure under which your company operates. Different types of business entities have different characteristics, such as tax treatment, liability protection, operating requirements, and statutory requirements. Some of the common entity types are summarized below (please note that this post is primarily focused on Texas business entities. For information on other states, please contact us).

Sole-Proprietorship

The simplest type of business is the Sole-Proprietorship. As the name implies, a sole proprietorship is a business which is owned by only one person. A Sole Proprietorship generally operates under the name of the owner, and federal income taxes are paid under the name of the individual owner. The Sole-Proprietorship is the easiest business to form because it requires no state or federal filings. The entity is formed as soon as an individual begins his or her business venture. One disadvantage to the Sole-Proprietorship is it subjects the owner to full liability for the debts of the business.

This is an important factor to keep in mind, as other business entities can be deemed a Sole-Proprietorship under certain circumstances. This will be a topic in a future post.

General Partnership

The next entity type is a General Partnership. This is very similar to the Sole-Proprietorship, except it has more than one owner. There is no state filing required to form a Partnership; simply having 2 or more persons associate to carry on a business for profit forms the partnership. Most partnerships will want to have a written partnership agreement that spells out how the partnership will be operated, but there is no requirement that such an agreement exist. Like a Sole-Proprietorship, partners of a General Partnership have unlimited liability for the debts of the business.

Corporation

A corporation is an entity in which the business acts as its own distinct “person” apart from its owners. Ownership is represented by shares of stock. That is, each individual, business, or other entity that owns those shares of the company’s stock (the shareholders) are owners of the company.

Management of the company is usually vested in the Directors of the company. The Directors are elected by the shareholders, and Directors need not, but can be, shareholders. One advantage of a corporation is that its shareholders are not liable for the debts of the company; their potential loss is restricted to the value of the shares themselves. Other advantages of a corporation include its ease of ownership transferability and its management structure.

To form a corporation, a filing with the Texas Secretary of State is required. Further, the corporation itself must file its own tax return and pays taxes on its income. Shareholders can receive dividends from the company that represents extra capital the company has generated from its operations.

S-Corporation

An S-Corporation is a corporation that has made a specific federal tax filing with the IRS. This filing is strictly a federal tax filing and has no impact on the operation of the business, which is governed by state law. As explained above, further discussion of taxes and an S Corporation election is beyond the scope of this post.

Limited Liability Company

A Limited Liability Company (LLC) is a creature of state law only. Compared to the sole-proprietorship, general partnership, and corporation business entities, it is a relatively new business entity. Each state has its own law or statute that authorizes the formation of an LLC and its operation.

Ownership consists of one or more persons, individuals, or entities and each such owner is called a “Member”. The hallmark of an LLC is that each Member has limited liability. A member can only lose the amount they invested in the company. However, under certain circumstances, the limited liability may be stripped from a member under certain circumstances which will be discussed in a later post.

An LLC can be managed by either its members or by its managers. However, the form of management under either of these management structures can vary widely and is usually spelled out in the LLC’s Operating Agreement.

To form an LLC, a filing, called a Certificate of Formation in Texas, must be filed with the Texas Secretary of State. This filing must include certain minimum statutory information, including the management structure of the LLC. An LLC is usually treated by the IRS as a partnership and members thus enjoy pass-through tax treatment like a partner in a partnership.

Other business entities not described above include the Limited Partnership, the Limited Liability Partnership, the Professional Limited Liability Company, the Professional Corporation, and the Professional Association.

If you are planning on starting a business, please contact one of our attorneys today to learn more about how we can help you form your new business.