Why do so few inventions make money? Not for a lack of good ideas -- brilliant inventors like Charles Goodyear and George Ferris all went broke. What they lacked was solid business knowledge.

Any inventor who wants to succeed in today's competitive innovation environment has to understand legal, tax and business issues. What Every Inventor Needs to Know About Business & Taxes helps you:

• determine who owns an invention
• protect and enforce invention rights
• choose the proper structure for your business
• deduct invention expenses
• transfer invention rights

The book provides the straightforward, reader-friendly information you need to:

• properly organize and run your inventing activities like a business
• get the government to help your efforts by taking advantage of the tax laws
• understand the laws that protect inventions and enable creators to make money

What Every Inventor Needs to Know About Business & Taxes provides all the answers every inventor needs, including the latest tax laws, sample forms and references to helpful resources and websites.

• Form SS-4
• Disclosure Doc Req. (SB0095)
• Employment Agreement
• Independent Contractor Agreement
• W-9 Form
• Letter Confirming Employee's Ownership of Copyright
• Joint Ownership Agreement
• Assignment of Rights: Patent Issued
• Assignment of Rights: Patent Application
• Assignment of Intellectual Property Rights: No Patent Issued or Application Filed
• PTO FORM 1595 (Recordation)
• Inventor Nondisclosure Agreement
• Contract Worksheet

1. Why Inventors Need to Know About Law, Business and Taxes

• A. Business, Tax, or Law?
• B. What's Not in This Book

2. Choosing the Legal Form for Your Inventing Business

• A. Your Business Entity Choices
• B. Expense and Complexity
• C. Tax Treatment
• D. Liability Concerns
• E. Recommended Business Forms

3. Setting Up Shop

• A. Choosing a Name for Your Business
• B. Working at Home
• C. Leasing a Workplace
• D. Business Licenses and Permits
• E. Federal Employer Identification Number
• F. Insurance

4. Bookkeeping and Accounting

• A. Simple Bookkeeping for Inventors
• B. Length of Time for Keeping Records and Logs
• C. Accounting Methods and Tax Years
• D. Creating Financial Statements
• E. Other Inventing Business Records

5. Tax Basics

• A. Inventors Who Earn Profits
• B. Inventors Who Incur Losses
• C. Inventors Who Hire Employees
• D. How To Handle Your Taxes
• E. IRS Audits

6. How to Prove to the IRS You're in Business

• A. Qualifying as a Business
• B. Passing the 3-of-5 Profit Test
• C. Passing the Behavior Test

7. Inventor Tax Deductions

• A. Tax Deductions: The Basics
• B. Tax Deduction Road Map
• C. Inventing Expenses You May Currently Deduct
• D. Inventing Expenses You Must Deduct Over Time
• E. Special Deduction Rules

8. Taxation of Inventing Income

• A. Capital Gains vs. Ordinary Income
• B. Capital Gains Treatment for Patents Under IRC § 1235
• C. Paying Self-Employment Taxes
• D. Paying Estimated Taxes

9. Your Inventor's Notebook

• A. Why Keep an Inventor's Notebook?
• B. How to Keep Your Notebook
• C. Witnessing Your Notebook
• D. Alternatives to the Inventor's Notebook

10. Hiring Employees and Independent Contractors

Part I: Determining Workers' Legal Status

• A. ICs Are Business Owners, Employees Are Not
• B. Pros and Cons of Hiring Employees or ICs

Part II. Hiring Employees

• C. Drafting an Employment Agreement
• D. Tax Concerns When Hiring Employees

Part III. Hiring Independent Contractors

• E. Drafting an Independent Contractor Agreement
• F. Tax Reporting for Independent Contractors

11. Who Owns Your Invention?

• A. Patent Ownership
• B. Are You an Inventor?
• C. Are You a Solo Inventor?
• D. Are You a Joint Inventor?
• E. Are You an Employee/Contractor Inventor?
• F. Have You Transferred Your Ownership?
• G. Trade Secret Ownership

12. Introduction to Intellectual Property

• A. What Is Intellectual Property and Why Is It Important to Inventors?
• B. Doing the Work of Obtaining IP Protection

13. Ten Things Inventors Should Know About Trade Secrets

• 1. All Inventions Begin As Trade Secrets
• 2. Any Valuable Information Can Be a Trade Secret
• 3. Trade Secrets Are the Do-It-Yourself Intellectual Property
• 4. You Can Make Money From Trade Secrets
• 5. Trade Secret Protection Is Weak
• 6. Trade Secret Laws Don't Protect Against Independent Discovery or Reverse Engineering
• 7. Trade Secret Protection Has No Definite Term
• 8. You Must Choose Between Trade Secret and Patent Protection
• 9. You Must Keep Your Trade Secrets Secret
• 10. When In Doubt, Use a Nondisclosure Agreement

14. Fifteen Things Inventors Should Know About Patents

• 1. Patents Are the Most Powerful IP Protection
• 2. A Patent-By Itself-Won't Make You Rich
• 3. You Can Profit From Your Invention Without a Patent
• 4. Patents Don't Work Well for Inventions With Short Commercial Lives
• 5. Patents Are Expensive and Difficult to Obtain
• 6. Most Inventions Are Not Patentable
• 7. Do a Patent Search Before Anything Else
• 8. You Must Document Your Inventing Activities
• 9. You'll Lose Your Right to Patent If You Violate the One-Year Rule
• 10. Filing a Provisional Patent Application Can Save You Money
• 11. Patents Last 17-18 Years
• 12. Enforcing a Patent Can Be Difficult and Expensive
• 13. U.S. Patents Only Work in the United States
• 14. Filing for Patents Helps Show You're in Business
• 15. Design Patents Can Protect the Way Your Invention Looks

15. Ten Things Inventors Should Know About Trademarks

• 1. Trademarks Can Earn Billions
• 2. Trademarks Identify Products and Services
• 3. You Must Have Trade to Have a Trademark
• 4. You Don't Need a Trademark to License Your Invention (But It Can Help)
• 5. Trademarks Are Not All Created Equal
• 6. Registering a Trademark Is Not Mandatory, But Provides Important Benefits
• 7. Intent to Use Registration Can Protect Your Mark Before You Use It in Trade
• 8. Do a Trademark Search Before Selecting Your Mark
• 9. Trademark Rights Are Limited
• 10. Only Federally Registered Marks Can Use the ® Symbol

16. Ten Things Inventors Should Know About Copyright

• 1. Copyright Protects Works of Authorship, Not Inventions
• 2. Copyright Can Protect Invention Design
• 3. You Can Make Money From Copyrights
• 4. Copyright Protection Is Limited
• 5. You Get A Copyright Whether or Not You Want It
• 6. Copyright Protection Lasts a Long Time
• 7. Register Valuable Copyrights
• 8. Use a Copyright Notice When You Publish Valuable Works
• 9. Copyright Isn't the Only Law That Protects Designs
• 10. Watch Out If You Hire an Independent Contractor to Create a Copyrighted Work

17. Ten Things Every Inventor Should Know About Licensing

• 1. No License Is Better Than a Bad License
• 2. You're Licensing Your Rights, Not Your Invention
• 3. Sublicensing and Assignments Allow Strangers to Sell Your Invention
• 4. You Can License Away the World and Get It Back
• 5. A Short Term Is Usually Better Than a Longer Term
• 6. Royalties Come in All Shapes and Sizes
• 7. Sometimes a Lump Sum Payment Is Better Than a Royalty
• 8. GMARs Guarantee Annual Payments
• 9. Deductions Can Make Your Royalties Disappear
• 10. Audit Provisions Permit You to Check the Books

18. Help Beyond the Book

• A. Patent Websites
• B. Finding and Using a Lawyer
• C. Help From Other Experts
• D. Doing Your Own Legal Research
• E. Online Small Business Resources
• F. State Offices Providing Small Business Help

Appendix: How to Use the CD-ROM

• A. Installing the Form Files Onto Your Computer
• B. Using the Word Processing Files to Create Documents
• C. Using PDF Forms
• D. Files Included on the Forms CD

Index

Here are summaries of important legal or procedural changes that affect the latest edition of this product.

Whats New in the 2nd Edition of Inventor's Guide to Law, Business & Taxes

Overview of What''s New

Tax rules have been completely updated and patent and trademark law sections have been revised. 

Who Needs the New Edition?

You Need the New Edition If:

you are using the book to determine tax deductions and payments.

Chapters Most Affected

Chapter 6. How to Prove to the IRS You're in Business
Chapter 7. Inventor Tax Deductions
Chapter 8. Taxation of Inventing Income
Chapter 10. Hiring Employees and Independent Contractors

Forms That Have Changed

PTO Form 1595 (Recordation)
IRS Form W-9
IRS Form SS-4
IRS Schedule C (Form 1040), Profit or Loss From Business