Month: October 2023

What is Service Agreement? Service Agreement Meaning : A service agreement is a written contract that unites a client and a service provider. It outlines the tasks to be carried out and the obligations of both parties in order to complete the work and get payment. A service agreement, which is also known as a professional services agreement, service contract, or client services agreement or contract, specifies the dates on which the work will start and end as well as any additional deadlines that might be necessary. Who Requires a Service Contract? One strategy to control expectations while the job is being done is to have a documented service agreement. Additionally, it guarantees that both parties will receive the services and compensation they agreed upon within the anticipated time range. Businesses that offer or receive services should have a thorough service agreement in place to ensure that all parties are aware of their obligations and rights under the contract as well as what to do in the event of a dispute. Key terms in service agreements that clients should take into account Small businesses should take a number of legal factors into account when signing service agreements in order to safeguard their interests. The following constitute essential legal factors for service agreements in small companies. Scope of services: It should outline the scope and type of the services, as well as the deadlines, products, and any unique requirements. This section should be detailed and precise. Pricing and terms of payments: specify the terms of payment, the frequency, and the mode of payment. Include any additional costs, such as taxes or expenses, and, if necessary, mention late payment penalties or interest fees. Compensation: Specifies the total or ongoing payment schedule that the client and service provider have agreed upon in exchange for the services. Confidentiality and non-disclosure: Use non-disclosure and confidentiality provisions to guarantee that secret proprietary information is not shared with other parties. Termination: Specify the circumstances under which the agreement may be terminated or services suspended by either party. Include any necessary fines or repercussions along with notice periods. Intellectual Property Rights: This clause specifies who are the owner of any intellectual property (IP) is resulting from the service. It is essential to discuss ownership and usage rights if the service agreement pertains to the development or use of intellectual property.  Non-compete Clause: Specifies whether or not the service provider may collaborate with a rival of the client. Dispute resolution: Include a clause describing the process to be used to settle disagreements, such as mediation, arbitration, or litigation It is preferable to have written service agreements by this you have the chance to describe requirements for both parties to the agreement by drafting a Service contract. Contracts specify the details of the work to be done, the cost of the project, the timing of payments, and the procedures for handling disagreements misunderstandings that could occur if the agreement is not in writing. Conclusion : The service agreement represents a mutual commitment between [Service Provider’s Name] and [Client’s Name] to uphold the terms and conditions outlined herein. Both parties acknowledge their responsibilities, rights, and expectations as detailed in this agreement.  Also Check : Joint Venture Agreement   Ritu

How to incorporate a company in US from India? These days there is wave of Indian Startups inclined towards incorporating businesses in USA. As you guessed, establishing your business in the USA comes with far too many advantages. If you wish to become a renowned global brand, you should incorporate your business in USA. A lot of global brands which are known worldwide started from USA like Google, Airbnb, Apple, Facebook etc. This article gives you a startup guide on why and how you should apply for incorporation in the US. Why are the Starts-ups more inclined towards US Registration? USA provides one of the most start-up friendly environments. If you want to access the greatest startups ecosystem in the world, USA is the right destination. Starting a business in USA is completely hassle free. If you have finalized your business plan and you are all set to go, it will hardly take 3-5 business days for incorporating a business in USA. It provides ease of doing business in true letter and spirit. Advantages of incorporating a Company in US: Entrepreneur-friendly laws, rules and regulations; Security to your assets; Lesser corporate income tax; Better privacy for the shareholders and directors as they do not need to disclose their names; Better preference among investors; Better market value; Flexible structuring for companies with lesser restrictions; Special courts for corporate matters; Trade accessibility of Dollar; New market opportunities; How to get a US Registration STEP 1: Determine the type of company: The two most common types of companies to get incorporated in US are corporation (both C Corp and S Corp) and LLC. You can also register it as sole proprietorship or non-profit corporations. “C” Corporation A C corporation (or C-Corp) is a legal structure in which the owners and shareholders are taxed separately from the corporation; C-corporations are subject to Corporate Income Tax; Double taxing of profits (both at corporate level and personal level); Can have as many shareholders as they want. It is easier to raise money; They have mandatory annual shareholders’ meetings, and Annual Director’s meetings; Their board of directors is chosen by shareholder’s voting; More class of stocks and very easy to attract investors. “S” Corporation S corps are pass through taxation entities with no corporate tax, but their taxes are paid through shareholder profits; Single taxation; Taxed same as Partnerships; This is particularly true of firms established prior to the advent of the modern limited liability company; It should have 100 or less allowable shareholders. (May not be partnerships, corporations or non-resident alien shareholders); Have only one class of stock, which might be a disadvantage if you want to go public; It should be a domestic corporation, not an ineligible corporation (i.e. certain financial institutions, insurance companies, and domestic international sales corporations); LLC This structure prevails in US, but not in India just like the C corp and S corp; LLC is a hybrid structure combining the elements of both the elements of corporation and partnership. Anyone can be a member including other individuals, corporations and foreign entities and other LLCs. Banks and insurance companies cannot be made members. The liability of the members extends only to the amount of money they have invested; The profits and losses pass through its members who can file their individual tax returns. Therefore, it avoids double taxation. Articles of Organization must be filed with the state for incorporation. Sole Proprietorship Sole Proprietorship/Sole trader is basically a one man show and you have the complete power in decision making;  It has one owner who pays personal income tax on the profits he earned from the business; Your business income and personal income are the same;  They don’t necessarily need a trade name/ brand name as they are small scale businesses with specialized services that are famous among the locals. Therefore, you also don’t have a business identity; All small-scale business starts as sole proprietorship with unlimited liability on the owner, which means you are fully responsible for the profits and risks of the business. For example, beauty parlor on the street corner or a flower shop next to your house or a sweet shop on your way to school, which are all run by a single owner. Non-Profit corporation Non-profit corporations are corporate entities set up for public good; They are exempt from both state and federal taxes; They can receive donations; They can apply for grants and funds; There are two types of non-profits-one is charitable, and another is service/membership organizations. Non-profit organizations are inherently charitable organizations which have separate legal entity and exempt people from personal liability. They are also tax exempt if the organization obtains 501(c)(3), i.e. you don’t have to worry about corporate income tax. A nonprofit organization stands forever even after you are no longer able to carry on your mission. It can also have national and cross border collaborations. They can also avail government fundings. STEP 2: Choose a Unique name for your company: This goes without saying! In order to grow a brand image, it is important for you to have a unique name for your company. This is also important to register your own trademark and not to infringe someone else’s. STEP 3: Appoint a registered agent who has physical address in the state where the company is being formed: A registered agent, also known as resident or statutory agent is a necessary requirement to incorporate a company. They can be a person or a business whose address will be the address of service to the state documents which include annual reports, annual tax notices and any other legal documents necessary for the registration and running of the company. A registered agent in the state of incorporation is completely essential for the standing of the company. STEP 4: File Articles of organization (in case of LLC) Articles of Organization are sometimes referred to Certificate of Organization or certificate of formation. It is a formal document that is necessary to set up an LLC..

LICENSING AGREEMENT A licensing agreement is an agreement between two parties, i.e., the Licensor and the Licensee, in which the Licensor grants or allows the Licensee the right to use its brand name, trademark, intellectual property, patented technology, etc. In simple terms, this agreement grants the Licensee to use the intellectual property that is already being owned by the Licensor. In return of the license granted by the Licensor to use its intellectual property, the Licensee pay a fee/royalty to the Licensor to use its intellectual property. The Party that is providing license is called the Licensor and the Party that is acquiring the license is called the Licensee. One such example of a Licensing Agreement is, Nestle and Starbucks. They entered into a licensing deal. Nestle was the Licensee and agreed to pay $7.15 billion dollars in cash to Starbucks, who was the Licensor. It acquired exclusive rights to sell Starbucks products around the world and Starbucks would receive royalties. ADVANTAGES OF LICENSING  The Licensor can use the Licensee’s distribution network to quickly and easily expand their business into new areas. Setting a licensing agreement saves a lot of time. If a person uses a trademark of another person, that person can sue the one using his trademark without a licensing agreement and it can lead to legal battles. It also gives the Licensor access to other markets. DISADVANTAGES OF LICENSING  One disadvantage is of making a contract with a wrong party. In an urgency to get into new markets, the Licensor may not do its research and may be stuck into a contract with a company whose objectives do not align with the Licensor. Both parties are at a risk of loosing their brand power and/or their reputation. When the Licensor and the Licensee enter into an agreement, it creates competition for the Licensor. Even though the Licensee represents the Licensor, they still compete with each other. Licensing agreements ensure that one has legal permission to use another person’s or business’s property. Mostly licensing agreements are for intellectual property such as, trademarks, patents, copyrighted materials, etc. There are specific types of licensing agreements: Trade secret licenses Trademark licenses Patent licenses  Copyright licenses A licensing agreement covers the following: Payment  Exclusivity  Subsidiary licensing  Quality assurance Sub- agreements Having a well written licensing agreement is essential for both the Licensor and the Licensee. It is important to have a licensing agreement in order to use intellectual property of another person. Also Check : Commercial Lease Agreement Ritu