Post-Judgment Planning for Entrepreneurs with Judgments

Tomorrow morning, we have another meeting with a prospect regarding an asset protection for a business owner that has a lot of prior judgments from a failed business venture. In today's economy, many experienced business owners have experienced significant failure resulting in lawsuits, judgments, and liability risks. Part of the conversation tomorrow is how to structure future business enterprises to deal with the judgments and liability risks that exist in the past. First, we must be careful because under Illinois law, an attorney must not assist an entreprenuer or small business owner commit a fraud. Generally, future planning that involves future assets is different than planning with current assets such as real estate, investments, checking accounts, etc. When a business owner has a spouse, it makes it easier to plan around past judgments and liens. The obvious question that must be answered and asked is whether bankruptcy or Chapter 7 bankruptcy is an appropriate decision. In many circumstances, Chapter 7 bankruptcy is a bad alternative because the creditors such as banks, financial institutions, and other creditors will undergo an adversarial court proceeding in the Chapter 7 bankruptcy. The purpose of an adversarial court proceeding is to challenge the small business owner's bankruptcy proceeding and save their client money. Thus, even if Chapter 7 is a good alternative in many cases, a Chapter 7 is a bad alternative because the business is an expenditure of money that many entrepreneurs and small business owners cannot afford at this point in time. Another goal of the asset protection attorney is to identify an appropriate business entity to operate in for future purposes. This is important because certain business entities may face a charging order by a court. A charging order is simply a court order which gives control of the company to the creditor. Thus, the creditor will controll all distributions and voting rights. In contrasts, a properly formerly Family Limited Liability Corporation prevents a charging order and limits the rights of creditors. For an experienced business owner this is important because it enables them to regain their economic strength and pay off their debts when they have the financial strength. In many cases, this will involve paying less than what is owed on these creditor debits. In conclusion, Sean Robertson is an asset protection and wealth preservation attorney based in North Aurora and Downtown Chicago, Illinois. Robertson Law Group, LLC is a wealth management and asset protection law firm specializing in distressed business planning and litigation, commercial litigation, and asset protection. Sean Robertson may be reached either at 630-800-2033 or 312-854-7102. The firm's website is www.RobertsonLawGroup.com. Keywords: Family LLC Attorney Chicago, Family LLC Downtown Chicago, Family LLC Lawyer Western Suburbs, Family LLC Naperville Attorney, Family Limited Liability Corporation Law Firm Aurora, Illinois, charging order Family Limited Liability Corporation, Physician Asset Protection, Entrepreneurial Asset Protection Chicago, Entrepreneurial Asset Protection Attorney, Asset Preservation Attorney Naperville Illinois, Asset Protection Law Firm Aurora, Wealth Management Law Firm North Aurora, Wealth Management Law Firm Chicago

Are Non-Compete Agreements Enforceable for Physicians in Illinois?

PHYSICIANS AND ENFORCEABILITY OF NON-COMPETE AGREEMENTS Physicians should think twice before signing a non-compete agreement Just recently in December of 2011, the Illinois Supreme Court broadened the enforceability of non-compete agreements. Prior to the ruling, courts have struggled with the enforceability of non-compete agreements which left both employers and employees weary in these tough economic times. Back in 2009, the 4th District Court of Appeals steered away from a long line of cases requiring that non-compete agreements must protect a legitimate business interest. The Appellate court held that for a non-compete agreement to be enforceable, all that employers had to show was that the non-compete agreement be reasonable in its duration and geographic restrictions. After the 4th District Court of Appeals ruling, it seemed that employers had the upper hand but the legal uncertainty as to whether a non-compete agreement must protect a legitimate business interest left judges struggling to reconcile long established precedent with the new decision. The struggle came to an end when the Illinois Supreme Court came down with its decision holding that there must be a protectable business interest in order for a non-compete agreement to be enforceable, but did it really clarify what types of non-compete agreements are or not enforceable? The Illinois Supreme Court went on further to state that whether a non-compete agreement protected a legitimate business interest should be decided on a totality of the circumstances test. So what does this mean? It means that until future cases establish what types of business interests are protectable, employers, employees and judges will continue to struggle with whether a certain non-compete agreement will be enforceable. Will a business’ reputation or goodwill be a protectable interest? Until such decisions are made by the courts, employees should be especially weary on signing such agreements, especially professionals such as physicians. In the context of non-compete agreements, in some cases physicians are treated the same as any other employee on the issue of enforceability. Although the appellate courts have been split on the enforceability of non-compete agreements against physicians, the Illinois Supreme Court has held that they are in fact enforceable against medical professionals. In Mohanty v. St. John Heart Clinic, S.C., the plaintiff-physicians sought a declaratory judgment that the non-compete agreement at issue, which restricted the “practice of medicine”, was void based on public policy grounds. The Supreme Court rejected other appellate court rulings which held that such non-compete agreements against physicians violated public policy. The plaintiffs’ also argued that the activity restriction, the “practice of medicine”, was broader than necessary to protect the defendants’ interests, which was cardiology. The court upheld the non-compete agreement holding that the activity restriction was not broader than necessary since the geographic restriction was within a narrowly circumscribed area of a large metropolitan area. Physicians contemplating on whether to sign a non-compete agreement should be cautious before entering into such an agreement not only because of the uncertainty of enforceability but also because of the costs of litigating such an issue. Physicians who are uncertain as to whether signing a non-compete agreement is in their best interest should have an attorney review the agreement to protect themselves from the possibility of costly litigation in the future. Andrew McCann is an Associate for the Robertson Law Group, LLC in the North Aurora, Illinois location in the Western Suburbs of Chicago, Illinois. Andrew McCann concentrates in family law, asset protection, and business law for Physicians, Dentists, and Healthcare Providers. Andrew McCann may be reached at 630-800-2033 or Andy@RobertsonLawGroup.com. Robertson Law Group, LLC has offices in North Aurora and Downtown Chicago, Illinois. The downtown Chicago Office may be reached at 312-85-7102. Our website is www.RobertsonLawGroup.com.

New Citations to Discover Law Effects Small Business

On July 25, 2012, Governor Pat Quinn signed a new law dealing with Citations to Discover Asset's Proceedings, which effect debtors or Defendants. A Citation to Discover Asset's Proceeding is a post-judgment proceeding after a Debtor or Defendant has obtained a judgment. There are a couple of major provisions, which apply to this new law. Our law firm will write a more thorough review of this new law within the next 7 days. The old law allowed a Judge to find a Debtor or Defendant in contempt of court after they failed to show up for court for a "Rule to Show Cause". A Rule to Show Cause is a court proceeding in Illinois where a Debtor or Defendant must show up to court and submit the appropriate documents and/or appear personally at the court proceeding. Generally, the old law would hold a Defendant in contempt of court if they failed to appear in court for the "Rule to Show Cause" court proceeding. The court also would find the Debtor or Defendant in Contempt of Court and set the bond amount according to the Defendant's judgment amount with the creditor. This made sure the creditor got paid because a Defendant could not get out of jail and contempt of court until their judgment was paid off. The new law restricts the bond amount for violation of contempt of court to be limited to $1,000. Furthermore, this bond payment does not necessarily go to the creditor to satisfy their judgment. The new law also requires a creditor to personally serve a creditor through personal service. Personal service means that a creditor must hire a sheriff or process server to serve the Defendant or Debtor. Thus, we recently had a case where the service of process was through an email account. Under the new law, this service of process would no longer be sufficient. Robertson Law Group, LLC is a business boutique law firm concentrating in asset protection, Citations to Discover Assets, and civil and business litigation in the counties of Cook, Dupage, Will, Kane, and Kendall County. We are comprised of five (5) different attorneys with various areas of expertise. Robertson Law Group, LLC may be reached at 312-854-7102 or 630-800-2033 (Western Suburbs-North Aurora and Naperville). Our website is www.RobertsonLawGroup.com. Keywords: Public Act 97-0848; Governor Pat Quinn Citation to Discover, "Income and Asset Form" Citation to Discover Assets, Cook County new law Citation to Discover Assets, Dupage County new law Citation to Discover Assets, Rule to Show Cause Citation to Discover Assets, Cook County Rule to Show Cause, Dupage County Rule to Show Cause, Will County Rule to Show Cause, Kane County Rule to Show Cause, Kane County Citation to Discover, Robertson Law Group, LLC Asset Protection, Citation to Discover Assets Lawyers, Citation to Discover Assets Law Firm, Citation to Discover Assets Attorney, Citation to Discover Assets Daley Center

Why a Husband and Wife Should Never Own the Same Company?

http://www.robertsonlawgroup.com The purpose of this blog today is "Why A Husband and Wife Should Never Own the Same Company? There is a simple reason a two (2) spouses should not own the same business. The first reason is a simple asset protection reason. If the business such as an LLC or S corporation gets into trouble, generally, the owners of that business will be sued in their personal capacity plus in their business capacity. For example, Sue and Bob are wife and husband and they own a web site business together called "ABC, LLC", which is owned 50 percent by the wife and 50 percent by the husband. In my experience, a Plaintiff's attorney will sue the business, the wife, and the husband individually as well as "ABC, LLC". In this example, the wife and husband have a problem because they both are brought into this legal proceeding. Generally, in Illinois, a husband and/or wife generally are not liable for each other's debts. This is not the case in community property states such as Wisconsin or California. In my experience in Cook County, Dupage County, Kane County, Kendall County, or Will County, a creditor or Plaintiff's attorney will name the individual shareholders as co-Defendants in the proceeding. Why? The reason is because the creditor or Plaintiff's attorney understands that the business, LLC or S corporation often times does not have the assets. Individuals have assets such as certificate of deposits, checking accounts, saving accounts, and other assets. What happened to no personal liability for a business debt? Yes, this is the general rule but real life court is about obtaining a judgment for your Plaintiff client and filing a lawsuit against the business only often times will result in a loss of money and payment of attorney's fees. Thus, it is a good idea for a business to never have both a husband and wife jointly own that business. If a husband or wife go through a divorce, it is generally viewed as both husband and wife own fifty (50) percent of each other's assets. By Illinois law, a husband or wife for divorce purposes, what be a joint owner of the business (not creditor or debtor law). Thus, if one spouse is avoided the pain and agony of this court proceeding, it gives the husband and wife the ability to protect their bank accounts from judgment proceedings. Furthermore, one spouse generally wants to maintain the good credit while the other spouse may have bad credit. It is a good idea to maintain at least one spouse's good credit especially for business and practical purposes. In many cases, a business will be sued for consumer and business fraud or in a partnership or business dispute, a Plaintiff's attorney will argue that an individual is liable for their actions. Thus, it is not a good idea for a husband and wife to jointly own a business. It is bad for asset protection purposes and more importantly, it will help you and your spouse avoid the pain of experiencing the "American Nightmare". The "American Nightmare" is happening to many small to medium sized business owners right now in Cook County, Dupage County, Will County, Kane County, and Kendall County, which is the target of this blog. The American nightmare is when a small business failure occurs and you have lawsuits and/or creditor proceedings such as a Citation to Discover Asset's Proceeding. In simple terms, the American nightmare is a situation where you and your family are having a difficult time keeping your head above water and feeding your family or providing basic necessities. Sean Robertson is an asset protection and commercial litigation attorney. Sean Robertson is Managing Partner of Robertson Law Group, LLC, which is based in downtown Chicago, North Aurora, and Naperville, Illinois. Robertson Law Group, LLC concentrates in helping small to medium sized entrepreneurs and business owners facing economic and financial distress. Robertson Law Group, LLC counsels and advises business owners and family-owned businesses on how to properly structure their business and personal assets in a manner that reduces or eliminates the liability risks associated with entrepreneurship or small business ownership. Robertson Law Group, LLC may be reached at either 312-854-7102 (Downtown Chicago) or 630-800-2033 (Western Suburbs). Our website is www.RobertsonLawGroup.com. 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Physician Employment and Independent Contractor Agreements

http://www.robertsonlawgroup.com/ Today's topic is Physician Independent Contractor Agreements. An independent contractor agreement is a legal agreement between a Physician or otherwise known as a "Doctor" with a medical practice or hospital. When we represent Physicians or a Medical Group, there are key terms that we want to keep in the independent contractor agreement or watch out for to protect our client. Generally, an independent contractor agreement is an written agreement where a medical practice does not want to assume the payroll taxes of a physician. Thus, control is the ultimate issue that the Internal Revenue Service evaluates to determine whether the agreement is truly an independent relationship or an employer or medical provider's way of avoiding the responsibility of paying payroll, fica, and social security taxes. Robertson Law Group, LLC generally handles physician independent contractor agreements or employment agreements in downtown Chicago, North Aurora, and Naperville, Illinois. When we review these legal agreements, these agreements should highlight who is responsible for payment of payroll, fica, and social security taxes. Ultimately, an independent contractor is legally responsible for making annual or quarterly payroll taxes. In our experience, it is easy for an independent contractor to develop problem with IRS, payroll, or income taxes. We have a bi-lingual and tax attorney that concentrates in assisting physicians and doctors with state and federal payroll, employment, and income tax related problems. Generally, an employment agreement will require the employer or the medical practice to be responsible for payment of the employment-related payroll taxes. It is a great idea for a hospital, small medical practice, or a solo medical practioner should strongly consider using a payroll tax service such as ADP, paychex or paycore. In my experience, this is an excellent idea if you live in the Western Suburbs of Chicago or in the downtown Chicago region. An independent contractor contract should highlight whether a non-compete agreement exists and limit the time and geographic scope. In my experience limiting a physician or healthcare specialists geographic restriction greater than twenty (20) miles is too broad for most independent contractor agreements. As a rule, an appropriate time restriction is one (1) or two (2) years with my preference being one (1) year. I prefer a one year covenant not to compete for physicians and dentists in downtown Chicago, North Aurora, or Naperville because most courts will be less concerned that it is too burdensome to a physican, dentists, or doctor. One mistake most independent contractor agreements or physician employment agreements make are making them too broad. Another consideration for employment or independent contractor agreement is the jurisdiction in case of a dispute. Often times, a physician independent contractor agreement or an employment agreement will state the jurisdiction is where the principal place of business exists for a small medical practice, a healthcare institution, or hospital. For example, let us assume that you are a doctor or physician in Aurora, Illinois, in the County of Dupage. Your healthcare provider or physician office will likely have the Circuit Court of Dupage County be the jurisdiction for disputes. Often times, either the loser of the dispute or the independent contractor or employee will be responsible for payment of their employer's legal fees and costs in case of a dispute. In my experience, another consideration that most physician want to consider is whether outside employment or consulting is allowed. Most employers or physician practice groups will allow it, but it will require pre-approval before the employer will grant you, the doctor or physician, the approval to make outside consulting agreements or participate in healthcare fairs or act as a physician in a pro-bono capacity. Another consideration is whether your malpractice insurance for the patients you saw during your stay at the hospital or medical practice group will expire upon your termination of employment or independent contractor agreement. You may want to get notice of any termination of coverage in case of a malpractice or professional lawsuit especially if you are a surgeon, emergency room physician, or a ob-gyn physician. Often times, in my experience, I notice that surgeons, emergency room physicians, and ob-gyn face a greater liklihood of malpractice exposure. Physicians also should consider incorporating as an S corporation or Medical Corporation. This is important because a physician or doctor wants to limit their personal liability exposure in case of a breach of contract dispute. This rule also applies to doctors and chiropractors. In my experience, most physicians or doctors around the western suburbs of Chicago or Dupage County area or Cook County (Chicago) do not incorporate. Instead, most physicians or doctors practice as a physician in their personal name. This means that employees and your employer may sue you in your personal name. Incorporating could limit the suits against you as a physician or doctor. In conclusion, Robertson Law Group, LLC specializes in physician asset protection, wealth preservation law for physicians and medical practice groups, surgeons, ob-gyn doctors, and emergency room physicians. Robertson Law Group, LLC services the counties of Cook County, Dupage County, Will County, Kane County, & Kendall County for physicians, doctors, medical practice groups, and hospitals. Unlike most law firms, our attorneys and team have a significant amount of experience representing physicians and doctors with respect to independent contractor agreements, employment agreements, consulting agreements, non-compete agreements, non-disclosure agreements, and many other physician or dentist related medical or legal agreements. Sean Robertson is Managing Partner of Robertson Law Group, LLC. Sean Robertson resides in Naperville, Illinois and has significant expertise and experience in negotiating, drafting, and revising independent contractor agreements, employment agreements, and the purchase and sale of a business especially a medical practice group, dermatologist group, or other solo medical practioner practice. Sean Robertson may be reached at 312-854-7102 or 630-637-1053. Our website is www.RobertsonLawGroup.com. Keywords: physician employment agreements Chicago, Cook County physician employment agreements, Chicago doctor independent contractor agreement, Chicago physician employment agreement, medical practice group asset protection, Chicago asset protection physicians, physician wheaton asset protection, asset protection Naperville, Asset Protection Attorney Plainfield, Illinois, Asset Protection Lawyer Bolingbrook, Illinois, Medical Practice Planning Attorney Naperville, Medical Practice Planning Attorney Chicago, Non-Compete Agreements Physicians Cook County, Non-Compete Agreements Chicago Physicians, Physician Non-Disclosure Agreements Naperville, Physician Non-Compete Agreement Oak Brook, Illinois, Doctor Ob-gyn asset protection attorney Chicago, OB-GYN asset protection attorney Naperville.

Wealth Planning for Healthcare Professionals

http://www.robertsonlawgroup.com/ Wealth Preservation for Healthcare Professionals By: Mildred I. Herrera, Esq., LLM (Tax) A comprehensive wealth plan preserves your assets and provides a smooth transition upon your death, incapacity, and/or beyond your life. A wealth preservation plan combines Trusts, Family Limited Partnerships, Limited Liability Companies, and Real Estate Preservation Trust, to name a few, to enhance your estate and asset protection and decrease your tax liabilities. Preserving your assets against malpractice suits, divorce, business interests, or risky investments requires the same type of individualization that a healthcare professional considers in prescribing a health regime. Divorce, business partnership disputes, failed business ventures, and breach of contract litigation are the most likely liability risks that threaten personal assets. Oftentimes, a Corporation or LLC does not protect against partnership, divorce, or business conflicts. These liability risks surprise physicians and threaten their and their family’s financial security. Generally, a general liability or malpractice policy does not cover these types of risks and these risks are generally ignored by most attorneys and healthcare professionals. Additionally, asset protection must plan for your beneficiary’s divorce and creditor concerns because most families and individuals hate their in-laws walking away with their hard earned assets. For high-risk professionals like healthcare providers, attorneys, business owners, and anybody with businesses or investments, putting all your eggs in one basket is too risky. The creative use of asset protection tools like Trusts, Family Limited Partnerships and Limited Liability Companies, to name a few, can be used to create a comprehensive asset and wealth preservation plan. Done properly, the loss of a risky investment should protect your other hard-earned assets and income. Healthcare professionals must act now to take advantage of economic uncertainty and possible claims. A solid asset protection plan must be implemented prior to a possible lawsuit or any attempts to shield your assets could be considered a fraudulent transfer. Also, consider how looming tax changes will affect your wealth and estate plan. A conservative yet creative estate plan must provide flexibility and protection. We rely on healthcare professionals to preserve our health, let a competent attorney assist in preserving your assets and legacy. You have worked too hard to allow a liability risk jeopardizes your retirement and one lawsuit could threaten your life’s dream and family’s security. Mildred I. Herrera is an Illinois licensed attorney with a Masters in Taxation (LLM (Tax)) with the Robertson Law Group, a boutique businesses and family law firm. The emphasis of her practice combines business, estate and tax planning. She can be reached at (312) 854-7102. Our website is www.RobertsonLawGroup.com. The information contained in this article should not be construed as personalized legal or tax advice. Key words: Physician Asset Protection, Illinois Asset Protection, Estate Planning Attorney for Physicians, Physician Estate Planning Chicago lawyer, Physician Asset Protection Attorney Chicago, Chicago Medical Doctor Estate Planning Lawyer, Asset Protection Lawyer Illinois, Doctor Estate Planning Attorney

S corporation vs. LLC in Practical Terms

S Corporation vs. Limited Liability Corporation (LLC)

There are two (2) major entity structures that small businesses typically use. In this article, we will compare and contrast the differences between an S corporation and a LLC. There are three (3) factors to consider when determining whether an S corporation or an LLC is best for you.

COSTS TO SET-UP
The first and often times most important factor is the costs to set-up and maintain the corporate or LLC structure. Generally, a most business owners will elect to be considered as an S Corporation because it avoids double taxation of a Corporation. A regular corporation must pay taxation on employee wages and any distributions to shareholders resulting in “double taxation”. In contrasts, a business owner can elect to operate as an S corporation and eliminate “double taxation” and be taxed like they do not have an individual without a corporation. There are certain requirements to be treated like an S corporation, but that is beyond the scope of this article.

In Illinois, a Corporation costs $175 to incorporate and generally, this process takes two to three weeks. There is a way to speed up the incorporation process called “Expedite Service”. Expedite service means that the Secretary of State can expedite your incorporation and turn it around within 24 hours for an extra $100 filing fee. Thus, a Corporation costs $275 to incorporate within Illinois if you want to use their expedited service. In contrasts, an LLC is more expensive to create and an LLC costs $500 for the regular service and $600 for the expedited service. With a Corporation and LLC, there are annual report fees that the business owner(s) must consider. For a Corporation, the costs of an annual report are generally $100. Whereas, the costs for an LLC are generally is $250 for the filing of the annual report. In my experience, the costs to set-up and operate is an important factor and most business owners do not need the complexity of a Corporation.

FLEXIBILITY

Flexibility is an important factor in determining whether to pick an S corporation or an LLC. In terms of flexibility, an LLC is a much better business entity than the S corporation. An LLC is similar to a partnership or sole proprietorship structure because business owners can set up their LLC as though there are no formal requirements. On the contrary, an S corporation has certain requirements such as there can only be one form of stock. For the majority of business owners, the one form of stock limitation is not a big deal because they would not use the flexibility features of an LLC. Thus, an S corporation has a formal structure requirement that does not offer business owners the option of great flexibility. An S corporation is like a template website where you must insert the words and structure of your website in a restricted manner. An LLC is similar to a customized website because you can set-up the website in any manner that serves your business purpose. For a select group of entrepreneurs, this flexibility feature of an LLC is vital because it enables them to have a corporate structure that fosters growth. My general rule is if your desire is to be a business that has limited shareholders and growth desire than the S corporation is the best business entity for you. In contrasts, if your desire is to grow a business with several employees and have multiple business owners, the LLC is the best entity choice for you. When comparing an LLC to an S corporation, an LLC is like a smart phone because it offers a lot of great features for those that will use them. However, there are a group of people that will purchase a smart phone and will not use the features of the smart phone. For instance, an LLC offers the ability to have multiple classes of ownership unlike an S corporation. This is important if your business is considering angel investors or any type of investors. With an LLC, there is a class of non-voting membership interests where the investor can have priority in getting paid back their investment in case of dissolution or liquidation. An S corporation does not offer this feature. Non-voting membership interest is also important because most business entrepreneurs want a non-active investor that does not attempt to manage the day to day business affairs. Non-voting membership interest achieves this goal because a non-voting membership interests is prohibited from making important day to day decisions. A non-voting membership interest holder may have a vote in vital corporate decisions such as whether to merge, consolidate, or dissolve the corporate entity. Another use of the flexibility of an LLC is creating incentives for employees to make corporate decisions in the best interests of the business. For instance, non-voting membership interests can be given to a key employee where they get a percentage of the profits of the LLC without the liability risks.
In conclusion, flexibility is a major benefit of an LLC and those entrepreneurs that desire to achieve high growth enterprises should strongly consider the LLC. However, most entrepreneurs do not fall into this category and the S corporation is sufficient for your business purposes.

TAXATION

An S corporation and LLC are both disregarded entities, which mean that the corporation or LLC is ignored for tax purposes. Simply put, this means that the S corporation or LLC assumes that you are either a sole proprietor or partnership without the benefit of a corporation or LLC. The LLC does have advantages that the S corporation lacks such as the flexibility of taking profits and losses without regards to your pro rata share of ownership. This simply means that if you are a fifty (50) percent shareholder, you do not have to take fifty (50) percent of the profits and losses as long as it is for a legitimate business purpose. This gives start- up companies and entrepreneurial companies the ability to structure incentives for an angel investor the ability to invest in a business. For example, the angel investor may want to offset a short-term capital loss with a short-term capital gain or offset a long-term capital gain with a long-term capital loss. Generally, a new business will generate losses at least on paper for the first three to five years. In monetary terms, the capital gains is currently a twenty (20) percent tax, which means that a $100,000 investment in a start-up business may be more similar to a $80,000 investment when you consider tax savings. Another example is a business owner that has been in business for seven years and wants to add a business partner. For the first five (5) years, this business owner may want a higher percentage of profits to reward him or her for their hard-earned work without losing the value of the limited partner or business partner. Thus, the flexibility from a tax standpoint of the LLC is advantageous.
Generally, an S corporation is more favorable from a payroll tax standpoint than an LLC because one must pay payroll taxes on profits of an LLC. This is solved by the LLC be treated as an S corporation for tax purposes versus a partnership or the S corporation owning the LLC. Personally, I love the asset protection benefits of an S corporation owning a LLC. In a business lawsuit, the owner of the business and the corporate entity (LLC or S Corporation) will be sued. If the S corporation owns the LLC, there is a small likelihood of the owner of the S corporation being sued individually. In contrasts, if an individual owned the LLC, there is a strong likelihood that the individual member would be personally sued in his or her individual capacity. Going back to the payroll taxes, an S corporation allows you to pay payroll taxes on a reasonably salary. A reasonably salary is most likely less than your profitability in many cases because your revenue is often times re-invested in your business venture.

In conclusion, your corporate structures for asset protection and growth purposes are critical decisions. LLCs generally are the best corporate structure for high growth entrepreneurial companies. Whereas, small businesses that aim to have few shareholders often times are better served with an S corporation structure. You should consult with your accountant and legal advisor regarding your entity structure for growth and tax purposes.
Sean Robertson is a tax planning and asset protection attorney concentrating in corporate counseling, asset protection, and estate planning for closely-held businesses and individuals. Sean Robertson is Managing Partner of Robertson Law Group, LLC, which is based in downtown Chicago at 35 East Wacker Drive, Suite 935, Chicago, Illinois 60601. Robertson Law Group, LLC may be reached at (312)-854-7102. Our website is www.RobertsonLawGroup.com.


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