By: Madeleine Kuhns-Baione
Startups that do not utilize Non-Disclosure Agreements (“NDA”) are at higher risk for financial instability or failure. Even if an entrepreneur feels that they can trust others, utilizing NDAs is one of the easiest yet most effective ways to protect a business.
What aRE ndaS?
Non-Disclosure Agreements, commonly called confidentiality agreements, are binding agreements where parties are legally required to keep specific information confidential. Parties to the NDA cannot share the information with third parties or use it for their benefit. NDAs are useful for all aspects of business, including sales meetings, negotiations, discussions with financiers, product suppliers, etc. Most commonly though, NDAs are used with employees and business partners.
What are THE BENEFITS OF ndAS?
1. Protect Intellectual Property
NDAs protect confidential information including, but not limited to – trade secrets, client information, marketing strategies, proprietary processes, coding techniques, and other sensitive information. NDAs give business owners the power to decide what information is confidential and protected. With this power, business owners can establish employee expectations regarding what information is protected and the consequences of violations.
2. May Minimize Competition
If a startup utilizes an NDA, the parties to the NDA are legally bound to keep confidential information from competitors. In addition, they may not legally use this confidential information to start their own competing business while utilizing the same processes, trade secrets, clients, etc. However, NDAs are not the “end all, be all” to minimize competition. NDAs only assure that a business’s confidential information is legally protected.
3. Provide the Ability to Pursue Legal Recourse
The utilization and enforcement of NDAs are particularly helpful for setting employee expectations and legally binding employees and third parties to abide by the agreement. However, an NDA’s effectiveness within a business is never guaranteed, as employees and third parties may choose to violate the NDA. Luckily, NDAs provide fairly easy legal recourse when a breach occurs.
If confidential information is shared in violation of an NDA, a business may file one of the following claims: breach of contract, breach of fiduciary duty, misappropriation of trade secrets, copyright infringement, or other intellectual property law violations. It is important to note that NDAs offer broad protection. Within an NDA, a business may include proprietary and non-public information that does not meet the standard of a “trade secret,” that other claims require. For example, a misappropriation claim would require that the confidential information meets elemental requirements for a trade secret, while an NDA may not.
If a business does not use an NDA and confidential information is shared, proving that the information is a trade secret may be more difficult. With an NDA violation, a business may file a breach of contract claim, seek an injunction to prevent the employee or third party from further violating the NDA, or the business may file a lawsuit for financial damages for the losses they suffered resulting from the breach.
HOW Can You Ensure That the NDA Is Enforceable?
An NDA is an enforceable contract. For contracts to be enforceable, there must be consideration. In plain language, contracts require a bargain between the employer and the employee or third party. In the case of an NDA for employment, the employer is receiving the protection of confidential information. To enforce the NDA, the employee must receive something in exchange. Some courts have held that at-will employment is sufficient for the NDA to be enforceable. Regardless of the circumstances, NDAs should always be thoroughly reviewed with an attorney, if necessary, to ensure that the NDA will be enforceable.
Even if an NDA appears enforceable, a court may find it is not. This finding may occur when the NDA includes broad language, information that is not confidential, or something illegal. To mitigate these issues, language and word choice should be extremely precise and specify what information is considered confidential under the agreement. Further, if the information stated within the agreement has been widely disclosed or is public knowledge, it is extremely unlikely that a court will uphold the NDA. Lastly, NDAs cannot force employees to engage in illegal conduct, such as legally forcing them to withhold reports of something they are required to report by law.
Although NDAs are easy to draft and utilize, businesses should give them significant time and effort to ensure they will be enforceable. If an entrepreneur utilizes an enforceable NDA, they are taking a big step toward protecting their business and preventing the disclosure of sensitive and confidential information.
This post has been reproduced and updated with the author’s permission. It was originally authored on February 1, 2023 and can be found here.
Madeleine is a 3L at Penn State Dickinson Law pursuing a joint JD/MBA degree. Madeleine studied International Business and Management at Dickinson College for her undergraduate education. Before attending law school, Madeleine worked as a Claim Manager at a 9/11 Victim Compensation law firm in NYC. Madeleine is interested in pursuing a career in business and/or healthcare law.
I want to pay more taxes . . . said no entrepreneur ever! Paying taxes is an unavoidable part of entrepreneurship. After all, the Internal Revenue Service (”IRS”) is essentially a partner in your business. Unlike your actual partners, you would like to pay the IRS as little as possible. Fortunately, an easy 
Let’s focus on homes for a bit. Generally, a taxpayer must use part of their home (which includes separate structures) exclusively and regularly as their principal place of their trade or business. Alternatively, a taxpayer must use part of their home exclusively and regularly as a place to meet and deal with clients in the normal course of their trade or business. Meeting either of these requirements can convert a part of your home to business use.
First, you must identify whether the property is a capital asset. Remember, capital assets are property for which the useful life is longer than one year. Second, you must use your capital property in your trade or business. This step should be easy because if you are following this blog, you have already begun exclusively using your property for your business. Finally, your property must wear and tear. Broadly speaking, anything you physically use as an entrepreneur wears and tears, including buildings.
Entrepreneurs that take advantage of property conversion and depreciation deductions should keep careful records. First, you should document the FMV of the property at the time you converted it. Furthermore, you should always record the time when you abandoned the personal use of your property. Along this same vein, entrepreneurs should never use their converted property for personal use. If you are audited, your failure to comply with depreciation requirements or maintain records could result in the IRS demanding back tax payments, interest, and penalties on the income you deducted.
How many Intellectual Property (“IP”) markers can you spot around yourself?
A trademark is a word, logo, or package design that identifies the source of the goods or services, such as the examples above. Companies invest significantly on advertising to create a unique and recognizable brand identity, and trademark is a tool to reinforce and protect that.
Copyright protects artistic and literary works like books, movies, and music. In the business context, it also protects original and creative works like software, video games, documents, and marketing materials. A copyright owner has the exclusive rights to reproduce, distribute, display, and derive from their copyrighted work. Such exclusive rights allow you to issue a license to others to use your work. Depending on your business, a licensing fee can be a lucrative source of income. A common example is software license.
Patent protects inventions, designs, and asexually reproduced plants. Some famous patented inventions include the electric lightbulb, Apple’s first personal computer, GPS technology, CRISPR gene editing, and the shaving razor.
Trade Secret, as the name suggests, protects secret business information. It protects almost any information that is valuable because it is not known and is sufficiently secret, such as formula, process, software, recipe, customer list, budget plan, marketing data. The two most famous trade secrets are Google’s search algorithm and Coca-Cola’s recipe.
To properly address hazards and risks in the workplace, they must first be correctly identified. The goal of risk identification is to identify what, where, when, why, and how a situation can hinder a company’s ability to function. For example, a business located near the Gulf of Mexico would list “the potential for hurricanes” as an occurrence that could interfere with normal business operations. This will enable you to minimize harmful risks before they arise.
For example, risks may:
Jaiden Moore, at the time of this post, is a second-year law student at Penn State Dickinson Law. He has a B.A. in Liberal Studies from North Carolina A&T State University, and is interested in civil litigation. Jaiden is Treasurer of the International law society and is a member of the Black Law Students Association as well as the Business Law Society at Dickinson Law.
Small business and start-up companies incur a variety of costs to operate their businesses. However, no matter the size of a business, energy consumption ranks among the top five business expenses. The primary use of energy includes operating vehicles, heating and cooling, and operating equipment. The ability to cut down on fixed costs such as utilities may significantly improve cash flow. According to the U.S. Energy Information Administration (EIA), the average monthly utility bill for commercial buildings is $650 per month with the northeast region averaging a higher cost of $727 per month. The cost of electricity and natural gas is only expected to rise in the coming years and remain volatile. Whether your company has been in operation for years or is beginning to get off the ground, managing and saving on energy costs is not only beneficial for the business but also for the environment. With the recent enactment of the Inflation Reduction Act (IRA), small businesses are incentivized to deploy clean energy technology to reap significant cost-saving benefits.
Under the IRA, the ITC enables business owners to receive a one-time 30% tax credit for PV system installation. In contrast, the solar PTC can be claimed every year over the 10-year credit period at the current rate of 2.6 cents/kWh for commercial projects (adjusted for inflation). The size of the system must be under 1 megawatt (MW) to claim an ITC or PTC, and project owners cannot claim both credits for the same property. Projects may qualify for additional bonus credits of 10% if located in a low-income area.
Investing in affordable housing is a necessary step in community development and advancement. The Federal Housing Administration’s (“FHA”) Multifamily Mortgage Insurance program is one of many programs facilitated by the Department of Housing and Urban Development (“HUD”) to secure the advancement of affordable rental housing in the United States. Under the FHA loan program, HUD provides mortgage insurance for loans issued by FHA-approved lenders for the construction, rehabilitation, acquisition, and refinancing of affordable and market-rate multifamily housing. A property must contain five or more rental units to be eligible for the FHA Multifamily Mortgage Insurance Program. FHA Insured properties are not subject to income limits unless the property is operating under an additional state or federal affordable housing program, such as receiving Section 8 subsidies or Low -Income Housing Tax Credits (“LIHTC”).
Under the FHA Multifamily guidelines, the mortgagor (also referred to as the borrower) of any FHA-insured project must be a single asset entity (also referred to as a single purpose entity or “SPE”), meaning that the subject property must be the sole asset of the mortgagor entity. HUD has established entity types that are acceptable forms of SPEs for participation in the FHA Multifamily Mortgage Insurance program, some of which are more popular than others. An investor must weigh the benefits and drawbacks of each entity type to determine which will be best for their real estate investment.
Another popular option for investors is the Limited Liability Company. The LLC is composed of managers and members. Managers have management rights in the LLC, and members are like investors. In a typical HUD transaction, an LLC will have either a manager who is not a member and owns 0% interest in the entity or a “managing member” who is both an interest-holding member and a manager of the LLC. Additionally, LLCs provide liability protections for managers and members. LLCs are popular options for new real estate investors because they can be owned and managed by a single “managing member” individual and provide that individual with liability protection. LLCs are easy to form, with most states requiring only a few documents for formation and registration. Like general partnerships and limited partnerships, the LLC is subject to pass-through taxation. Some states do require annual reporting and fees to maintain active status.
Choosing (and forming) a mortgagor entity for your multifamily investment property is one of the many steps required to participate in the FHA Multifamily program. Consulting with an attorney to make an informed decision as to which entity type is suitable for your investment is imperative, as the mortgagor’s entity structure and organizational documents will be subject to lengthy due diligence review in the approval process.
Let’s talk about naming your business. As you would expect, branding can make or break a project. 82% of investors say name recognition is an important factor guiding them in their investment decisions, and brands with poor company branding pay 10% higher salaries. A name is a long-term commitment, and can be a daunting task – it took Warby Parker six months and over 2,000 options to find their brand’s perfect name.
Once you get a short list of names together, you will want to determine whether or not any of the names are taken. You don’t have to trademark your business name to run business activity under it, but you do need to register a business if you start any sort of commercial activity, like promoting goods or services. If that’s the case, your business needs to be registered and you’ll need to receive a Tax ID before you can legally operate business activity.
The U.S. Patent and Trademark Office (USPTO)’s Trademark Electronic Search System is the best way to search for all applied-for and registered trademarks. If the name is available, filing a trademark for a business name with the USPTO costs between $50 and $600, depending on if you’re registering the trademark in one state, multiple states, and the type of trademark being registered. Note that if you’re a foreign-domiciled applicant, you are required to hire a U.S.-licensed attorney to represent you at the USPTO.
Now that you know some of the basic rules around naming your brand, it’s time to get brainstorming! The links below are some great examples of online tools that can help you to come up with the perfect brand name, domain name, and URL. Just remember – your brand name should be memorable, accessible, and evolvable.
A great place to start looking for a lawyer is the American Bar Association (“ABA”). The 
Business organizations. Depending on the stage of your business, you may need a lawyer to advise you on what type of business entity to form (e.g., corporation vs. limited liability company (LLC)). This lawyer should be able to discuss the advantages and disadvantages of each entity and to prepare any paperwork associated with formation.
How do you educate your clients? A lawyer should be willing to tell you what the law says and explain how it affects your business. A lawyer should be a teacher and take the time to educate you and your staff about legal matters directly impacting business operations. The right lawyer might also distribute newsletters or legal reports that describe recent. developments in the law that impact your business.
Does this person communicate with me? The right lawyer will not simply tell you what you cannot do but will tell you how to do what it is that you want to do. She will discuss all available options. The right lawyer will tell you what other businesses in your situation normally do.