Subject Entrepreneurship

Segment Financial Elements

Topic Legal and Tax Issues

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Table of Contents
1. Overview
2. Legal and Tax Issues in a Country
3. Legal and Tax Assistance in a Country
4. Summary

1. Overview

"In this world nothing is certain but death and taxes".

- (Benjamin Franklin, 1789)
Obtaining legal advice is critical when starting a new venture, for resolving both tax-
and financing-related issues. A start-up entrepreneur has to face several legal and
tax issues, for example, the founding team must choose a legal form of organisation.
In addition, entrepreneurs must be aware of the laws that govern raising money.
Even small amounts of money raised are subject to regulation. Finally, and hopefully
as a never to be used consideration, there are the bankruptcy laws that govern how
a business in financial trouble shall meet its obligations or be terminated.
Every country has its own legal options. Although many countries have used the U.S.
as a model in constructing these options, country-specific exceptions exist
everywhere.
In this topic, you are required to read and reflect on the important aspects of new
venture-related legal and tax issues in a selected country. This topic will serve as a
framework for your research and study.
Objectives: Legal and Tax Issues
Upon completion of this topic, you should be able to:
 describe the tax laws and guidelines that affect a new business enterprise in
a country
 describe the regulations governing financing activity in a country

2. Legal and Tax Issues in a Country

In this reading activity, read about the important aspects of the legal and tax
implications in your selected country.
Reading: Legal and Tax Issues in Your Country
Every country may have different laws and guidelines regarding the financing and
taxation of a new business. In this reading activity, find relevant information about
the laws and guidelines and important decision-related aspects of the legal and tax
regimes in your country.
Here are some questions you may ask yourself during your reading,

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Subject Entrepreneurship
Segment Financial Elements
Topic Legal and Tax Issues

 What are the legal forms of organisation in this country?

 Which regulatory agency oversees the issuance and redemption of securities
in this country?
 How are the bankruptcy laws in this country structured?

3. Legal and Tax Assistance in a Country

Reflection: Legal and Tax Assistance
You have learned about different legal and tax rules in a selected country of the
world. In this reflection activity, you are required to create a set of decisions based
on the type of business you are proposing. Find relevant information about the legal
and tax regimes in the country of your proposed business project.
Some of the issues to be addressed in your reflection are:
 Which legal form of organisation would you select for your business?
 What is the tax status of your business?
 Which regulations governing financing are applicable to your business?
 In case of bankruptcy, what impact would the laws of bankruptcy have on
your business?

4. Summary
This topic covered the following points:
 Every entrepreneur must choose a legal form of organisation for the new
venture.
 Every entrepreneur must be aware of the tax laws that affect the enterprise
and work within the law to minimise the firm's tax burden
 The regulations governing financing activity vary from country to country.
 The bankruptcy laws and options available to failing businesses will depend on
the jurisdiction that governs the business
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