03. Legal and structural guidelines

When a company worker initiates a business venture, the business venture must be organized and operate as a legal entity separate from our company. The legal form of this entity could be a corporation (either for-profit or nonprofit), limited liability company, partnership, or joint venture1. Other legal forms may exist in the country, but these are the most common types of entities. 

Our company workers should follow this checklist when getting involved in a business:

1. Submit an initial proposal to our company regarding the business, and draft a Memo of Understanding to articulate our company’s relationship to the business venture. 

2.
Obtain legal and tax counsel on local laws for the type of business you intend to start.
3. Open a separate bank account for business funds, and maintain separate books and records for the business venture. Comply with all reporting requirements. 
  • The U.S. now requires anyone with signature authority over foreign bank accounts to report these accounts to the U.S. Department of Treasury annually. 
  • In addition, the U.S. collects information from foreign banks about transactions to and from the U.S. It is vital to maintain good records and to file proper documents related to bank transactions in order to avoid potentially serious penalties and personal taxes.
4. Differentiate between the business team and the mission team as much as possible, even though these teams may overlap and will likely depend on each other to some extent. Some people may serve as leaders on both teams, but if possible, the leadership structure of these teams should not be identical.

5. The business may not use our company
’s logo, name, or other tangible and intangible assets. If you intend for the business to use our company's assets or other resources, write a contract for use of the assets, including proper remuneration.

6. 
Do not communicate in a way that implies our company as owners of the business, and do not allow other members of our company and its staff to do so. In addition, take care to communicate accurately about the way your company assignment and work in the business connect. For more guidance, see 04.02: Appendix: Communication Guidelines.


    Footnote
    1. A sole-proprietorship is also a legal form; however, because it gives the worker no personal liability protection and creates no distinction between the worker and the business entity, it is not recommended for a Business for Transformation project. 



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