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.
Keywords: S corporation vs. LLC, benefits of an LLC, benefits of S corporation, corporation benefits, LLC benefits, Articles of Incorporation Illinois, Chicago business attorney, closely-held business lawyer Chicago, taxation of S corporations, taxation of LLCs, payroll taxes S corporation, payroll taxes LLCs
Thursday, December 29, 2011
Sunday, August 14, 2011
Purchase and Sale of a Business
Today's post is on the legal considerations when purchasing or selling a business. There are several primary legal concerns that must be considered. The first legal consideration is liability concerns. There are two (2) types of Sales of a Business: (a) Asset Purchase Agreement and (b) Stock Purchase Agreement.
An Asset Purchase Agreement is a legal agreement to purchase the assets of an existing business. A purchaser does not have to purchase all the assets of a business. For example, a purchaser may want to purchase the name of the business, the goodwill, the accounts receivable, and the commercial lease of a business. These assets will be given a seperate value for tax purposes such as goodwill may be worth $2,000, the accounts receivable may be worth $15,000, etc.
The second legal consideration is how will the business be paid for. Such questions include whethe the Seller will provide seller financing of the business or whether a Bank loan will be used to purchase the existing business. The Asset Purchase Agreement shall typically give a buyer the ability to cancel the sale of the business if they cannot pursue proper financing through the Bank at reasonble terms. Quite frankly, a Seller that is providing seller financing will most often ask for a personal guarantee for the prospective buyers. The purpose of the personal guarantee is to sue a buyer to recover the Seller's lost revenue including attorney's fees and reasonable expenses.
In conclusion, it is critical to have an attorney if you are purchasing or selling a company. Often times, the attorney's job is to negotiate key terms that must be negotiated or to make sure a seller or buyer's legal rights are protected in case things go wrong. An attorney's job is to provide his or her client with protection in case the worst case scenario occurs.
Sean Robertson is a business and tax attorney based in downtown Chicago, Illinois. Sean Robertson has over seven (7) years of experience advising business owners on their legal considerations when purchasing or selling a business. Sean Robertson may be reached at (312) 498-6080. Our website is www.RobertsonLawGroup.com.
An Asset Purchase Agreement is a legal agreement to purchase the assets of an existing business. A purchaser does not have to purchase all the assets of a business. For example, a purchaser may want to purchase the name of the business, the goodwill, the accounts receivable, and the commercial lease of a business. These assets will be given a seperate value for tax purposes such as goodwill may be worth $2,000, the accounts receivable may be worth $15,000, etc.
The second legal consideration is how will the business be paid for. Such questions include whethe the Seller will provide seller financing of the business or whether a Bank loan will be used to purchase the existing business. The Asset Purchase Agreement shall typically give a buyer the ability to cancel the sale of the business if they cannot pursue proper financing through the Bank at reasonble terms. Quite frankly, a Seller that is providing seller financing will most often ask for a personal guarantee for the prospective buyers. The purpose of the personal guarantee is to sue a buyer to recover the Seller's lost revenue including attorney's fees and reasonable expenses.
In conclusion, it is critical to have an attorney if you are purchasing or selling a company. Often times, the attorney's job is to negotiate key terms that must be negotiated or to make sure a seller or buyer's legal rights are protected in case things go wrong. An attorney's job is to provide his or her client with protection in case the worst case scenario occurs.
Sean Robertson is a business and tax attorney based in downtown Chicago, Illinois. Sean Robertson has over seven (7) years of experience advising business owners on their legal considerations when purchasing or selling a business. Sean Robertson may be reached at (312) 498-6080. Our website is www.RobertsonLawGroup.com.
Friday, August 5, 2011
Purchase and Sale of a Business: Important Lesson
This morning, I am meeting with a business owner that is purchasing a Day Care Center. We are preparing the letter of intent, which is designed to make a serious offer at purchasing the existing business.
A common question is what role does an attorney play in the purchase or sale of a business. Several months ago, I represented a buyer in another purchase of a business (i.e. restaurant). In that case, the seller was represented by an attorney after we had a binding contract. The seller never got a personal guarantee from any of the two (2) buyers. Furthermore, there were several negotiating terms that were favorable to us. The main point of emphasis is he failed to hire an attorney to represent him. The seller's attorney eventually argued and negotiated many good points for his clients and I did mine. The point is another attorney will take advantage of you without proper legal representation.
A common mistake with purchasing a business is failure to report the transaction in a timely manner to the Illinois Department of Revenue. If you fail this requirement, you can become for any unpaid tax liabilities by the Seller. Generally, most business owners do not want to purchase the liabilities of the Seller. The Seller honestly does not care because he or she wants to get paid and move on. A lot of times liabilities may be hidden or come back years later to haunt the new business owner.
If you draft an properly executed Asset Purchase Agreement, you will have a new business that is not liable for the old seller's liabilities and lawsuits. Often times, the attorneys negotiate and execute promissory notes and security interest agreements and even commercial leases. We also may do a commercial real estate closing because a lot of business owners own their property and the new business owners want the property along with the assets of the business.
Simply put, an Asset Purchasement is the purchase of select items such as appliances, furniture, goodwill, intellectual property rights, customer lists, and any other valuable asset. Each asset is given a price, so the Seller and Buyer take certain tax attributes. With me, I am a tax lawyer so this is a huge advantage to my clients. Most business lawyers do not understand tax at all.
In conclusion, an important lesson is have an experienced business attorney to assist you with your business purchase or sale. Sean Robertson may be reached at 312-498-6080. Our address is 35 East Wacker Drive, Suite 935, Chicago, Illinois 60601.
A common question is what role does an attorney play in the purchase or sale of a business. Several months ago, I represented a buyer in another purchase of a business (i.e. restaurant). In that case, the seller was represented by an attorney after we had a binding contract. The seller never got a personal guarantee from any of the two (2) buyers. Furthermore, there were several negotiating terms that were favorable to us. The main point of emphasis is he failed to hire an attorney to represent him. The seller's attorney eventually argued and negotiated many good points for his clients and I did mine. The point is another attorney will take advantage of you without proper legal representation.
A common mistake with purchasing a business is failure to report the transaction in a timely manner to the Illinois Department of Revenue. If you fail this requirement, you can become for any unpaid tax liabilities by the Seller. Generally, most business owners do not want to purchase the liabilities of the Seller. The Seller honestly does not care because he or she wants to get paid and move on. A lot of times liabilities may be hidden or come back years later to haunt the new business owner.
If you draft an properly executed Asset Purchase Agreement, you will have a new business that is not liable for the old seller's liabilities and lawsuits. Often times, the attorneys negotiate and execute promissory notes and security interest agreements and even commercial leases. We also may do a commercial real estate closing because a lot of business owners own their property and the new business owners want the property along with the assets of the business.
Simply put, an Asset Purchasement is the purchase of select items such as appliances, furniture, goodwill, intellectual property rights, customer lists, and any other valuable asset. Each asset is given a price, so the Seller and Buyer take certain tax attributes. With me, I am a tax lawyer so this is a huge advantage to my clients. Most business lawyers do not understand tax at all.
In conclusion, an important lesson is have an experienced business attorney to assist you with your business purchase or sale. Sean Robertson may be reached at 312-498-6080. Our address is 35 East Wacker Drive, Suite 935, Chicago, Illinois 60601.
Saturday, March 12, 2011
Purchase and Sale of a Business: Important Lesson
This blog today will be brief, but I wanted to comment on the purchase and sale of a business. Often times, I hear small business owners that regret not having an attorney to review their purchase and sale agreements. The purpose of a business attorney is to safeguard a small business owner from making a major mistake. The common mistake that I see and key lesson is either a purchaser purchases the stock of a Corporation or purchases the membership interest of an LLC. This is problematic because the purchaser assumes the liabilities of the previous business owner. I have talked with many small business owners and they have found that small business owners owe tax liabilities and get sued. For example, I have a current client that sold his business interest to another person. The person, the purchaser, bought the shares of the Corporation. Now, the corporation and the former business partner are in litigation because of an unpaid credit line. Now, if the purchaser would have done an "Asset Purchase Agreement", which is essentially purchasing the sales of the Corporation and/or LLC, the new purchaser would not be liable for the old debts. Instead, a Stock Purchase Agreement assumes all the liabilities of the previous business partner/seller.
Sean Robertson is an asset protection and business planning attorney concentrating in small to medium sized business law, corporate structure planning, and purchase and sales of businesses. Sean Robertson may be reached at (312) 498-6080. Check out our website at www.RobertsonLawGroup.com.
Keywords: Asset Purchase Agreement Chicago, Asset Purchase Agreement Attorney, Buying Selling Business Chicago, Cook County Business Attorney, Attorney Purchasers of Business Chicago, Small Business Attorney Chicago, Small Business Lawyer Chicago, Asset Protection Lawyer Chicago, Asset Protection Attorney Chicago, Corporate Structure Legal Advice Chicago
Sean Robertson is an asset protection and business planning attorney concentrating in small to medium sized business law, corporate structure planning, and purchase and sales of businesses. Sean Robertson may be reached at (312) 498-6080. Check out our website at www.RobertsonLawGroup.com.
Keywords: Asset Purchase Agreement Chicago, Asset Purchase Agreement Attorney, Buying Selling Business Chicago, Cook County Business Attorney, Attorney Purchasers of Business Chicago, Small Business Attorney Chicago, Small Business Lawyer Chicago, Asset Protection Lawyer Chicago, Asset Protection Attorney Chicago, Corporate Structure Legal Advice Chicago
Friday, March 11, 2011
Biggest Mistakes Entrepreneurs Make
This morning, I am passionate about talking about what I see as the biggest mistakes that entrepreneurs and small business owners mistake. The first mistake is putting off incorporation legal services. When I first starting practicing law, I did the same thing with the rational that I will incorporate later when I am making more money. This rational is faulty for two reasons. The first reason is incorporation legal services save your butt because you are not stuck paying for decisions that you made during the first years of your business experience. Slowly, business losses seem to mount and sometimes, you must dissolve a business and start over. There is no sham in this because it is reality. The second reason is you likely will have more money when you first began a small business adventure than later on during your initial years. I was speaking with my mom yesterday and we were talkinga about how I kept borrowing money. Every time, I felt that the loan was for a critical need and sometime, indeed it kept my business alive. In retrospect, the only thing more loan money would do is get me more in debt and cover up critical problems with my business enterprise. Losing money can be a healthy thing because you either quickly find answers to solve the problem or you file bankruptcy or worse yet, are stuck with this decision for a long time.
The second biggest mistake is failing to understand the necessity for personal and business asset protection. An experienced business owner will get sued multiple times and these lawsuits threaten the viability of your business and more importantly, threaten the viability of your family finances. Most small business owners do not realize that your business and you personally will be sued. Most small business owners believe that simple incorporation is enough and that is faulty logic. It is really important that you protect your personal assets and especially your home. Yesterday, I was speaking with a small business owner that got a judgment who is 65 years old now. You could see the worry in his eyes because he is seeking to borrow a loan from his friends. Truthfully, it is a bad loan because he may not be able to pay it back. But, I have learned that small business owners will do a lot to prevent a lien against their home. In some cases, if you have a lot of equity, the creditor may foreclose your home. The small business owner I met with is scared to death about his house being foreclosed. Quit frankly, it is a very real prospect if we cannot settle. Right now, the creditor as all the leverage because they are experienced and know if they file a foreclosure lawsuit the Defendant will likely find the money to settle at a much higher price. Realistically, we will offer a low ball settlement and if the Plaintiff's attorney is any good they will know they have all the negotiating position. These are the type of mistakes small business owners make and life is brutal. Financial security for many small business owners will never ever be realized again. The American dream of being a small business owner becomes the American nightmare. If you do not believe me, talk with twenty (20) business owners and ask them their experience with lawsuits. If they are being honest, you will be surprised how many small business owners have been sued. Surprise, insurance seldom covers your losses because they are lawsuits such as breach of contract lawsuits or business disputes that are outside of liability insurance.
Sean Robertson is an small business and asset protection attorney that concentrates in small to medium sized business law and lawsuit liability planning for business owners and their business ventures. Sean Robertson may be reached at 312-498-6080.
Key words: small business lawsuits Chicago, Cook County business attorney, Small business attorney Chicago, Small business lawyer Chicago, Citation to Discover Asset small business Chicago, Cook County Citation to Discover Assets, Entrepreneur Mistakes Chicago, High Growth Business and Corporate Structure, Asset Protection Small Business Owners Chicago
The second biggest mistake is failing to understand the necessity for personal and business asset protection. An experienced business owner will get sued multiple times and these lawsuits threaten the viability of your business and more importantly, threaten the viability of your family finances. Most small business owners do not realize that your business and you personally will be sued. Most small business owners believe that simple incorporation is enough and that is faulty logic. It is really important that you protect your personal assets and especially your home. Yesterday, I was speaking with a small business owner that got a judgment who is 65 years old now. You could see the worry in his eyes because he is seeking to borrow a loan from his friends. Truthfully, it is a bad loan because he may not be able to pay it back. But, I have learned that small business owners will do a lot to prevent a lien against their home. In some cases, if you have a lot of equity, the creditor may foreclose your home. The small business owner I met with is scared to death about his house being foreclosed. Quit frankly, it is a very real prospect if we cannot settle. Right now, the creditor as all the leverage because they are experienced and know if they file a foreclosure lawsuit the Defendant will likely find the money to settle at a much higher price. Realistically, we will offer a low ball settlement and if the Plaintiff's attorney is any good they will know they have all the negotiating position. These are the type of mistakes small business owners make and life is brutal. Financial security for many small business owners will never ever be realized again. The American dream of being a small business owner becomes the American nightmare. If you do not believe me, talk with twenty (20) business owners and ask them their experience with lawsuits. If they are being honest, you will be surprised how many small business owners have been sued. Surprise, insurance seldom covers your losses because they are lawsuits such as breach of contract lawsuits or business disputes that are outside of liability insurance.
Sean Robertson is an small business and asset protection attorney that concentrates in small to medium sized business law and lawsuit liability planning for business owners and their business ventures. Sean Robertson may be reached at 312-498-6080.
Key words: small business lawsuits Chicago, Cook County business attorney, Small business attorney Chicago, Small business lawyer Chicago, Citation to Discover Asset small business Chicago, Cook County Citation to Discover Assets, Entrepreneur Mistakes Chicago, High Growth Business and Corporate Structure, Asset Protection Small Business Owners Chicago
Wednesday, March 9, 2011
LLC vs. S Corporation for Small Business
Today, I met with two small business owners that wanted to know whether they should incorporate as an S corporation or an LLC. I explained the differences in the two business entities.
First, the first major difference with an LLC and S corporation is flexibility. An LLC is a great business entityf or the right small business owners. Most small business owners do not use the benefits of an LLC. Flexibility is the major benefit of an LLC. For example, with an LLC, a small business owner can set it up like a partnership. This means that a small business owner can be creative and utilize the flexibility of an LLC to their advance. For instance, small business owners often have investors and/or key employees. One of the distinct differences with an LLC and S corporation is the ability to have two types of business ownership. Simply put, an LLC can have voting and non-voting ownership structures. This is a big deal because many small business owners do not want a business partner. Thus, a key employee or an investor can have limited rights with an LLC. This is not possible with ann S corporation because an S corporation only allows one type of stock. YOu cannot have voting and non-voting ownership interets. Again, most small business owners are either uninformed about the benefits of an LLC or will not take advantage of this attribute. Therefore, the S corporation is not a bad alternative.
The second trait is taxation. With an S corporation, a small business pays payroll taxes based upon the payment of a reasonable salary for their industry and considering their circumstances. In contrasts, an LLC pays payroll taxes based upon level of profitability. For example, a small business owner may have $100,000 in profits but re-invest most of these profits. Thus, with an S corporation, a small business owner can limit the payment of payroll taxes by only paying $30,000 of reasonable salary (example not literally). On 8 percent, this could be a significant savings for a small underfinanced business owner.
The third trait are costs. An S corporation has less costs in Illinois than an LLC. In Illinois, the filing fees are $175 for an Corporation. The filing fees for an LLC is $500. Add an additional $100 if you want your business to be recognized by the Illinois Secretary of State within twenty-four hours. The annual maintance fees are comparable to the initial incorporation fees. Thus, an S corporation is significantly less than the LLC. For this reason, the S corporation makes more sense for many small business owners. Again, you should seek a qualified business attorney to counsel you on the basic differences. In your situation, the LLc may be more valuable. Again, choice of business entity is based upon your individual and business circumstances.
Sean Robertson is a business and asset protection attorney. Sean Robertson can be reached at (312) 498-6080 or Sean@RobertsonLawGroup.com. Sean Robertson is a graduate of DePaul University College of Law and University of Illinois at Urbana-Champaign.
First, the first major difference with an LLC and S corporation is flexibility. An LLC is a great business entityf or the right small business owners. Most small business owners do not use the benefits of an LLC. Flexibility is the major benefit of an LLC. For example, with an LLC, a small business owner can set it up like a partnership. This means that a small business owner can be creative and utilize the flexibility of an LLC to their advance. For instance, small business owners often have investors and/or key employees. One of the distinct differences with an LLC and S corporation is the ability to have two types of business ownership. Simply put, an LLC can have voting and non-voting ownership structures. This is a big deal because many small business owners do not want a business partner. Thus, a key employee or an investor can have limited rights with an LLC. This is not possible with ann S corporation because an S corporation only allows one type of stock. YOu cannot have voting and non-voting ownership interets. Again, most small business owners are either uninformed about the benefits of an LLC or will not take advantage of this attribute. Therefore, the S corporation is not a bad alternative.
The second trait is taxation. With an S corporation, a small business pays payroll taxes based upon the payment of a reasonable salary for their industry and considering their circumstances. In contrasts, an LLC pays payroll taxes based upon level of profitability. For example, a small business owner may have $100,000 in profits but re-invest most of these profits. Thus, with an S corporation, a small business owner can limit the payment of payroll taxes by only paying $30,000 of reasonable salary (example not literally). On 8 percent, this could be a significant savings for a small underfinanced business owner.
The third trait are costs. An S corporation has less costs in Illinois than an LLC. In Illinois, the filing fees are $175 for an Corporation. The filing fees for an LLC is $500. Add an additional $100 if you want your business to be recognized by the Illinois Secretary of State within twenty-four hours. The annual maintance fees are comparable to the initial incorporation fees. Thus, an S corporation is significantly less than the LLC. For this reason, the S corporation makes more sense for many small business owners. Again, you should seek a qualified business attorney to counsel you on the basic differences. In your situation, the LLc may be more valuable. Again, choice of business entity is based upon your individual and business circumstances.
Sean Robertson is a business and asset protection attorney. Sean Robertson can be reached at (312) 498-6080 or Sean@RobertsonLawGroup.com. Sean Robertson is a graduate of DePaul University College of Law and University of Illinois at Urbana-Champaign.
Most Common Mistake Post-Judgment for Defendants at the Daley Center
The most common mistake I keep on hearing about are Defendants getting their bank accounts frozen and their money taking after a judgment takes place. A judgment is essentially a ruling by the Circuit Court of Cook County at the Richard J. Daley Center that a Plaintiff is entitled to a certain amount of money as a measurement of damages.
I got two phone calls today with a similar story. This story is Plaintiffs catching a Defendant by surprise within 30 to 60 days after a judgment. After a judgment is recorded, a Plaintiff files paperwork called a Citation to Discover Assets. A Citation to Discover Assets are a deposition under oath with the purpose of finding your money and assets to collect on money that is owed to you. A common tactic is fear because Defendants are likely to pay a Plaintiff if they fear something such as a lien against their home or losing their home. The problem is most Defendant's attorneys do not properly explain the Post-Judgment proceedings because most Defendant attorneys do not practice a lot in the Post-Judgment proceedings. Defendants must expect that a Plaintiff will issue a Wage Garnishment Order to their bank and freeze their accounts. This will cause NSF fees, bounced checks, and Plaintiff to get money that Defendant is legally entitled to. Most Defendants fail to anticipate this and know how to properly prepare for this. In Illinois, a Defendant has certain exemptions under the law. The most common exemption is $4,000 personal property wildcard exemption. This wildcard exemption is to allow a Defendant to protect their bank account or cars (i.e. personal property) from a Plaintiff. However, most Defendants do not know how to properly file the paperwork claiming their wildcard exemption. This means Defendants lose their money and are caught off guard during already difficult and trying financial circumstances. An experienced attorney that anticipates a Plaintiff's attorneys' responses prior to them, can inform and educate a Client on what to expect. A prepared and educated a Defendant is a Defendant that is more financially secure.
Sean Robertson is an attorney that assists Defendants in Cook County at the Circuit Court of Cook County with post-judgment and post-trial litigation. Sean Robertson can be reached at (312) 498-6080 or Sean@RobertsonLawGroup.com.
I got two phone calls today with a similar story. This story is Plaintiffs catching a Defendant by surprise within 30 to 60 days after a judgment. After a judgment is recorded, a Plaintiff files paperwork called a Citation to Discover Assets. A Citation to Discover Assets are a deposition under oath with the purpose of finding your money and assets to collect on money that is owed to you. A common tactic is fear because Defendants are likely to pay a Plaintiff if they fear something such as a lien against their home or losing their home. The problem is most Defendant's attorneys do not properly explain the Post-Judgment proceedings because most Defendant attorneys do not practice a lot in the Post-Judgment proceedings. Defendants must expect that a Plaintiff will issue a Wage Garnishment Order to their bank and freeze their accounts. This will cause NSF fees, bounced checks, and Plaintiff to get money that Defendant is legally entitled to. Most Defendants fail to anticipate this and know how to properly prepare for this. In Illinois, a Defendant has certain exemptions under the law. The most common exemption is $4,000 personal property wildcard exemption. This wildcard exemption is to allow a Defendant to protect their bank account or cars (i.e. personal property) from a Plaintiff. However, most Defendants do not know how to properly file the paperwork claiming their wildcard exemption. This means Defendants lose their money and are caught off guard during already difficult and trying financial circumstances. An experienced attorney that anticipates a Plaintiff's attorneys' responses prior to them, can inform and educate a Client on what to expect. A prepared and educated a Defendant is a Defendant that is more financially secure.
Sean Robertson is an attorney that assists Defendants in Cook County at the Circuit Court of Cook County with post-judgment and post-trial litigation. Sean Robertson can be reached at (312) 498-6080 or Sean@RobertsonLawGroup.com.
Tuesday, March 8, 2011
What Can Keep Your Small Business From Being a Nightmare?
I just spoke with a real estate tax attorney that called me regarding a client of his that has an IRS issue because his client filed a joint tax return with his wife who was a small business owner. Now, this client is personally liable for a tax debt that really was his wife's debt from her small business.
In today's economy, the above example is frequent and asset protection legal advice is essentially for small business owners and their families. Many small business owners began their business ventures with great dreams and after a few years, their initial dream becomes a nightmare. The above example in paragraph 1 is just an example of many examples of problems that afflict small business owners.
There are several things that can be done to minimize liability risks for small to medium sized business owners. The first thing is to incorporate your business. The second thing is never own your own business in your personal name. This is important because in the case of a lawsuit, your creditor will name your business and you personally. If your ownership interests was an S corporation, your S corporation would be named. Thus, the difference is in the first instance, your personal assets are exposed.
In other second scenario, your personal assets are protected and your business assets are only at exposed.
The second thing is place your house or real estate into a Private Land Trust. This prevent liens and judgments from being placed on your property. This strategy is not without weaknesses and therefore, it is important in many cases to combine this strategy with others.
Sean Robertson is an small business and asset protection attorney in downtown Chicago, Illinois. Sean Robertson can be reached at (312) 498-6080.
In today's economy, the above example is frequent and asset protection legal advice is essentially for small business owners and their families. Many small business owners began their business ventures with great dreams and after a few years, their initial dream becomes a nightmare. The above example in paragraph 1 is just an example of many examples of problems that afflict small business owners.
There are several things that can be done to minimize liability risks for small to medium sized business owners. The first thing is to incorporate your business. The second thing is never own your own business in your personal name. This is important because in the case of a lawsuit, your creditor will name your business and you personally. If your ownership interests was an S corporation, your S corporation would be named. Thus, the difference is in the first instance, your personal assets are exposed.
In other second scenario, your personal assets are protected and your business assets are only at exposed.
The second thing is place your house or real estate into a Private Land Trust. This prevent liens and judgments from being placed on your property. This strategy is not without weaknesses and therefore, it is important in many cases to combine this strategy with others.
Sean Robertson is an small business and asset protection attorney in downtown Chicago, Illinois. Sean Robertson can be reached at (312) 498-6080.
Fraudulent Transfer and Small Business Law
This blog today is timely because many business owners will or have faced economic difficulties with their businesses. A fraudulent transfer is a transfer, which is made designed to hinder, delay, or defraud a creditor. Typically, an alleged fraudulent transfer occurs prior to a filing of bankruptcy or when one's business is failing. In today's example, the lesson is important because asset protection prior to a lawsuit or financial distress is the best time to approach asset protection. If one approaches asset protection prior to a lawsuit, one may face a fraud and fraudulent transfer claim. This is a bigger lawsuit because a fraud claim involves punitive damages and reasonable attorney's fees. Thus, a claim becomes much bigger than originally planned.
In today's economy, I speak with many business owners who simply failed to understand or appreciate why corporate structure and asset protection are important. Asset protection is crucial because it provides you and your family a safety net from bankruptcy and financial problems. This last statement does not convey the true meaning of asset protection because it literally is the difference between a miserable life and a better life. If your family is looking for bright outlook out of your economic mess, asset protection by you time and protect you and your family from severe difficult economic times. One believes that things are tough until you are faced with a judgment or lawsuit, which threatens your bank accounts, your home, and your livlihood for the next twenty or more years. Bankruptcy is not always the answer especially if you are over the age of fifty years old.
Sean Robertson helps entrepreneurs and business owners understand the consequences of lawsuits and how to be prepared for the unexpected. If you are a small to medium sized business owner, a lawsuit or multiple lawsuits will come. The question will you and your family be prepared for the consequences of such a lawsuit(s). Lawsuits seem to come according to Murphy's law at the worst possible time.
Sean Robertson is an asset protection and corporate attorney that counsels small to medium sized business owners on the perils of lack of corporate structure and provides assest protection for business owners. Sean Robertson may be reached at (312) 498-6080.
In today's economy, I speak with many business owners who simply failed to understand or appreciate why corporate structure and asset protection are important. Asset protection is crucial because it provides you and your family a safety net from bankruptcy and financial problems. This last statement does not convey the true meaning of asset protection because it literally is the difference between a miserable life and a better life. If your family is looking for bright outlook out of your economic mess, asset protection by you time and protect you and your family from severe difficult economic times. One believes that things are tough until you are faced with a judgment or lawsuit, which threatens your bank accounts, your home, and your livlihood for the next twenty or more years. Bankruptcy is not always the answer especially if you are over the age of fifty years old.
Sean Robertson helps entrepreneurs and business owners understand the consequences of lawsuits and how to be prepared for the unexpected. If you are a small to medium sized business owner, a lawsuit or multiple lawsuits will come. The question will you and your family be prepared for the consequences of such a lawsuit(s). Lawsuits seem to come according to Murphy's law at the worst possible time.
Sean Robertson is an asset protection and corporate attorney that counsels small to medium sized business owners on the perils of lack of corporate structure and provides assest protection for business owners. Sean Robertson may be reached at (312) 498-6080.
Friday, March 4, 2011
Successful business owners Beware! Why? Lawsuits
I met with a business owner yesterday and I noticed a common problem that I see among entrepreneurs and business owners. This business owner owned multiple businesses and was doing well. Unfortunately, at some point, I predict this business owner without my counseling advice would fail and may file bankruptcy. A lawsuit is inevitable and asset protection is underestimated by business owners. One secret of the wealthy and smart business owners are a disciplined approach to legal advice such as corporate structuring, estate planning, and asset preservation planning.
I hear Donald Trump has filed bankruptcy or undergone several setbacks in his career. I suspect that Donald Trust is exceptionally smart about utilizing cutting edge legal strategies such as Trusts, LLCs, and Corporations. As an entrepreneur, you understand your business well and perhaps, a lawsuit has not come your way or you avoided a nightmare.
I love reading Dave Ramsey because I agree with him that credit and debt produce a lot of problems including litigation risks. I often see business owners that are age 60 and beyond that have signed personal guarantees and they unexpectedly have the Bank call in their business loans. Obviously, this is a problem for a lot of them because they do not have huge sums of cash to alleviate their bank and credit problems. Often times, with time, these entrepreneurs and real estate owners would be okay. However, when you need a bank or loan, it is too late.
The purpose of asset protection is for your protection. One foreclosure should not result in your entire wealth being lost. That is exactly what is happening with a lot of business owners and real estaet owners today. I strongly recommend that you pre-plan this issues because it is the difference between bankruptcy and keeping your assets.
Sean Robertson is an business and asset protection attorney in Cook County, Chicago, Illinois. Sean Robertson may be reached at 312-487-6080 or Sean@RobertsonLawGroup.com.
Key words: corporate LLc structure, asset preservation attorney, asset protection lawwyer, asset protection attorney Chicago, Cook County liability attorney, bankruptcy options business owner, wealth asset protection, wealth lawsuits asset protection
I hear Donald Trump has filed bankruptcy or undergone several setbacks in his career. I suspect that Donald Trust is exceptionally smart about utilizing cutting edge legal strategies such as Trusts, LLCs, and Corporations. As an entrepreneur, you understand your business well and perhaps, a lawsuit has not come your way or you avoided a nightmare.
I love reading Dave Ramsey because I agree with him that credit and debt produce a lot of problems including litigation risks. I often see business owners that are age 60 and beyond that have signed personal guarantees and they unexpectedly have the Bank call in their business loans. Obviously, this is a problem for a lot of them because they do not have huge sums of cash to alleviate their bank and credit problems. Often times, with time, these entrepreneurs and real estate owners would be okay. However, when you need a bank or loan, it is too late.
The purpose of asset protection is for your protection. One foreclosure should not result in your entire wealth being lost. That is exactly what is happening with a lot of business owners and real estaet owners today. I strongly recommend that you pre-plan this issues because it is the difference between bankruptcy and keeping your assets.
Sean Robertson is an business and asset protection attorney in Cook County, Chicago, Illinois. Sean Robertson may be reached at 312-487-6080 or Sean@RobertsonLawGroup.com.
Key words: corporate LLc structure, asset preservation attorney, asset protection lawwyer, asset protection attorney Chicago, Cook County liability attorney, bankruptcy options business owner, wealth asset protection, wealth lawsuits asset protection
Thursday, March 3, 2011
What should every interest that invest in a business do?
This blog will be quick because I have a new client to meet this evening. I am meeting two investors that are investing in different business ventures. A common mistake is solely investing in the membership or shares of a company or an LLC. This is a mistake because the shares or membership interests of an LLC are worthless when the business becomes a distressed business.
At a minimum, a security interest should be signed and secured. It is best to have a business owner's house as collateral. Second, each business owner should sign a personal guarantee in case the business goes wrong. Third, the investors should get paid back first in case the investment goes south.
Sean Robertson is an corporate and asset protection attorney in downtown Chicago, Illinois. Sean Robertson has extensive experience representing business owners and venture capitalists that want to invests in an entrepreneurial or start up business. Sean Robertson can be reached at 312-498-6080 or Sean@RobertsonLawGroup.com.
At a minimum, a security interest should be signed and secured. It is best to have a business owner's house as collateral. Second, each business owner should sign a personal guarantee in case the business goes wrong. Third, the investors should get paid back first in case the investment goes south.
Sean Robertson is an corporate and asset protection attorney in downtown Chicago, Illinois. Sean Robertson has extensive experience representing business owners and venture capitalists that want to invests in an entrepreneurial or start up business. Sean Robertson can be reached at 312-498-6080 or Sean@RobertsonLawGroup.com.
Tuesday, March 1, 2011
Should Your Start Up Be An LLC?
This is a common question among new or experienced business owners. First, an Limited Liability Corporation (LLC) is a mixture between a partnership and a corporation. In other words, an LLC is a hybrid business entity, which is common within the last twenty (20) years.
The basic characteristics of an LLC are the following:
1. Flexibility
The greatest asset for an LLC is its' flexibility. Personally, start up companies should strongly consider the flexibility that an LLC offers. This flexibility is important because a start up company can have different forms of ownership classification. This is important because a venture capitalist or an angel investor or family friend wants to know that their investment is secured to the best of their ability. With an LLC, an investor may own non-voting stock or membership interests and be first in line in case of the dissolution of the business. As a rule, non-voting shareholders/owners get a preference in getting paid back first with an LLC. This is not possible with an S corporation because an S corporation only allows one type of stock. Second, many start up companies want the investment but they do not want the investor interfering with their ability to run and manage the day to day affairs of the company. The LLC gives start up companies and their owners the flexibility of negotiating any type of arrangement that one can envision.
The second trait is taxation. An LLC is similar to a partnership because of its' flexibility and its' tax treatment. With an LLC, each business owner may own 50 percent of the LLC but share profits and losses in a different proportion. Possibly, the first three (3) years, the start up company will agree to give the investor a disproprotionate profit due encourage the investor to invest in their new business venture. An LLC is a disregarded entity because the LLC and its' owners do not pay tax for the LLC. Instead, the owners will file their LLC membership interest on their personal tax returns based upon their income, losses, and deductions.
The third trait is costs. An LLC in Illinois is considerably more expensive than starting a Corporation. In Illinois, the LLC costs a minimum of $500. In contrasts, a Corporation starts at $175. The annual maintenance costs are similar as well. For most start ups, capital is a big issue especially during the first three to five years of the business.
The fourth trait is your individual business and personal goals. An LLC is great if you have a desire to build a profitable entrepreneurial company that has multiple employees and/or owners. If your goal is to build a profitable business with minimal employees and owners, possibly the S corporation will better serve your interests. The reason is due to ccosts.
Sean Robertson is a business and corporate attorney based in downtown Chicago, Illinois. Sean Robertson may be reached at (312) 498-6080 or Sean@RobertsonLawGroup.com.
The basic characteristics of an LLC are the following:
1. Flexibility
The greatest asset for an LLC is its' flexibility. Personally, start up companies should strongly consider the flexibility that an LLC offers. This flexibility is important because a start up company can have different forms of ownership classification. This is important because a venture capitalist or an angel investor or family friend wants to know that their investment is secured to the best of their ability. With an LLC, an investor may own non-voting stock or membership interests and be first in line in case of the dissolution of the business. As a rule, non-voting shareholders/owners get a preference in getting paid back first with an LLC. This is not possible with an S corporation because an S corporation only allows one type of stock. Second, many start up companies want the investment but they do not want the investor interfering with their ability to run and manage the day to day affairs of the company. The LLC gives start up companies and their owners the flexibility of negotiating any type of arrangement that one can envision.
The second trait is taxation. An LLC is similar to a partnership because of its' flexibility and its' tax treatment. With an LLC, each business owner may own 50 percent of the LLC but share profits and losses in a different proportion. Possibly, the first three (3) years, the start up company will agree to give the investor a disproprotionate profit due encourage the investor to invest in their new business venture. An LLC is a disregarded entity because the LLC and its' owners do not pay tax for the LLC. Instead, the owners will file their LLC membership interest on their personal tax returns based upon their income, losses, and deductions.
The third trait is costs. An LLC in Illinois is considerably more expensive than starting a Corporation. In Illinois, the LLC costs a minimum of $500. In contrasts, a Corporation starts at $175. The annual maintenance costs are similar as well. For most start ups, capital is a big issue especially during the first three to five years of the business.
The fourth trait is your individual business and personal goals. An LLC is great if you have a desire to build a profitable entrepreneurial company that has multiple employees and/or owners. If your goal is to build a profitable business with minimal employees and owners, possibly the S corporation will better serve your interests. The reason is due to ccosts.
Sean Robertson is a business and corporate attorney based in downtown Chicago, Illinois. Sean Robertson may be reached at (312) 498-6080 or Sean@RobertsonLawGroup.com.
Importance of Business Legal Structure
Most entrepreneurs fail to understand the importance of proper business structure. Business structure is whether you choose to decide to be an LLC or an S corporation or sole properietor. Often times, entrepreneurs believe that they can focus on their corporate structure at a later date.
I explain to business owners that protecting your personal assets from legal exposure must be a priority. When I first started out, I failed to realize the importance of corporate and LLC structure. Ask an experienced business owner the importance of corporate structure that has gotten sued and now faced with the prospect of losing all of their assets or filing bankruptcy.
Literally, appropriate corporate structure is the difference between filing bankruptcy and surviving and starting a new business entity with minimal set backs. In my practice, I often see a business owner and their business being sued as a corporate and individually. For example, one of the biggest types of disputes is a partnership dispute. A key mistake in corporate and LLC structure is the failure of business partners failing to incorporate their own business interests inside their corporation or LLC.
Sean Robertson is a corporate and LLC structure planning attorney with considerable expertise representing business owners and entrepreneurs. Sean Robertson can be reached at 312-498-6080 or Sean@RobertsonLawGroup.com.
I explain to business owners that protecting your personal assets from legal exposure must be a priority. When I first started out, I failed to realize the importance of corporate and LLC structure. Ask an experienced business owner the importance of corporate structure that has gotten sued and now faced with the prospect of losing all of their assets or filing bankruptcy.
Literally, appropriate corporate structure is the difference between filing bankruptcy and surviving and starting a new business entity with minimal set backs. In my practice, I often see a business owner and their business being sued as a corporate and individually. For example, one of the biggest types of disputes is a partnership dispute. A key mistake in corporate and LLC structure is the failure of business partners failing to incorporate their own business interests inside their corporation or LLC.
Sean Robertson is a corporate and LLC structure planning attorney with considerable expertise representing business owners and entrepreneurs. Sean Robertson can be reached at 312-498-6080 or Sean@RobertsonLawGroup.com.
Purpose of a Non-Disclosure Agreement
The purpose of a non-disclosure agreement is to protect valuable and confidential information (i.e. intellectual property). Generally, a non-disclosure agreement or otherwise known as a "NDA" is designed to prevent critical non-public information that is valuable from becoming public knowledge. Often times, key employees, partners, and prospective investors or customers will be asked to sign a NDA by another business owner.
Sean Robertson is a corporate and asset protection attorney with expertise in representing small to medium sized business owners. Sean Robertson can be reached at 312-498-6080.
Sean Robertson is a corporate and asset protection attorney with expertise in representing small to medium sized business owners. Sean Robertson can be reached at 312-498-6080.
Corporate Legal Structure and Investments
Today I received a phone call from a prospective client and his question was how do we structure an investment into another business?
Generally, there are two major corporate structures for small to medium sized business owners. The first major corporate structure is an S corporation. An S corporation is a corporation designed for small business owners and is limited to U.S. citizens and less than 100 shareholders. An S corporation only has one type of stock, which is voting stock and the business owners and any investors have the same type of stock.
In contrasts, the second type of major corporate structure is an Limited Liability Corporation ("LLC), which is a combination between a corporation and partnership. An LLC is similar to a partnership because it has the flexibility of a partnership and the liability protection of a corporation. Both an S corporation and LLC are flow through entities, which mean that the shareholders or owners pass taxes as though the corporate entity does not exists. Thus, shareholders and owners pay taxes on their personal income tax form as though the corporation or LLC is disregarded.
Sean Robertson is a corporate and asset protection attorney that concentrates in corporate and LLC structure planning, business law, and general legal counsel for small to medium sized businesses. Sean Robertson can be reached at 312-498-6080.
Generally, there are two major corporate structures for small to medium sized business owners. The first major corporate structure is an S corporation. An S corporation is a corporation designed for small business owners and is limited to U.S. citizens and less than 100 shareholders. An S corporation only has one type of stock, which is voting stock and the business owners and any investors have the same type of stock.
In contrasts, the second type of major corporate structure is an Limited Liability Corporation ("LLC), which is a combination between a corporation and partnership. An LLC is similar to a partnership because it has the flexibility of a partnership and the liability protection of a corporation. Both an S corporation and LLC are flow through entities, which mean that the shareholders or owners pass taxes as though the corporate entity does not exists. Thus, shareholders and owners pay taxes on their personal income tax form as though the corporation or LLC is disregarded.
Sean Robertson is a corporate and asset protection attorney that concentrates in corporate and LLC structure planning, business law, and general legal counsel for small to medium sized businesses. Sean Robertson can be reached at 312-498-6080.
Monday, January 31, 2011
Partnership Agreements and LLCs
A partnership agreement or otherwise known as a shareholder agreement, an LLC Operating Agreement, or any other written contract between business partners are critical. The most likely business dispute is a business partnership dispute. Often times, each partner's personal assets are exposed in a partnership or business dispute to the surprise of each partner.
A well-written partnership agreement should answer the following questions:
--What happens if one partner wants to be bought out?
--What happens if one partner becomes divorced or disabled?
--What is each business partner's duties?
--If a disability or death occurs, how is the other side bought out?
--What is the purchase price upon a buy out?
--What is the procedure for making key business decisions?
The above questions are critical questions that a well-written partnership agreement should address. Sean Robertson is a business and asset protection attorney based in downtown Chicago and Naperville, Illinois. Sean Robertson is Managing Partner of Robertson Law Group, LLC. Sean Robertson can be reached at either (312) 498-6080 or (630) 364-2318.
A well-written partnership agreement should answer the following questions:
--What happens if one partner wants to be bought out?
--What happens if one partner becomes divorced or disabled?
--What is each business partner's duties?
--If a disability or death occurs, how is the other side bought out?
--What is the purchase price upon a buy out?
--What is the procedure for making key business decisions?
The above questions are critical questions that a well-written partnership agreement should address. Sean Robertson is a business and asset protection attorney based in downtown Chicago and Naperville, Illinois. Sean Robertson is Managing Partner of Robertson Law Group, LLC. Sean Robertson can be reached at either (312) 498-6080 or (630) 364-2318.
Non-disclosure agreement
What is a non-disclosure agreement? A non-disclosure agreement or otherwise known as a "NDA" is a legal agreement that protects an employer's important asset such as priviliged information. Privileged information could be an asset such as methods of getting business, processes, certain business or trade secrets to name a few items.
The purpose of a Non-Disclosure Agreement is to protect the employer's assets and discourage the employee(s) from competing against the employer by using the employer's information against the employer. For example, assume that John Smith owns a furniture store and John hires Jack Johnson as a salesperson and manager of his furniture store. John Smith has Jack Johnson sign a non-disclosure agreement stating that Jack will not use the confidential information inquired during his employer to compete against John Smith in the furniture business.
The key to a non-disclosure agreement is keeping it limited in scope and maintaining the threat of potential litigation if the employee breaches the non-disclosure agreement.
Sean Robertson is a business and asset protection attorney based in downtown Chicago and Naperville, Illinois. Sean Robertson can be reached at (312) 498-6080 or (630) 364-2318.
The purpose of a Non-Disclosure Agreement is to protect the employer's assets and discourage the employee(s) from competing against the employer by using the employer's information against the employer. For example, assume that John Smith owns a furniture store and John hires Jack Johnson as a salesperson and manager of his furniture store. John Smith has Jack Johnson sign a non-disclosure agreement stating that Jack will not use the confidential information inquired during his employer to compete against John Smith in the furniture business.
The key to a non-disclosure agreement is keeping it limited in scope and maintaining the threat of potential litigation if the employee breaches the non-disclosure agreement.
Sean Robertson is a business and asset protection attorney based in downtown Chicago and Naperville, Illinois. Sean Robertson can be reached at (312) 498-6080 or (630) 364-2318.
Thursday, January 27, 2011
Why Entrepreneurship is Fun?
Entrepeneurship and self-employment is fun, but it is filled with liability risks unlike employment with somebody. Many entrepreneurs dream about owning their own business and building this profitable company. Often times, entrepreneurs fail to understand the capital requirements and liability risks associated with business ownership.
One of the first decisions an entreprenuer must decide is what business entity to incorporate as. Being a sole properietor or partnership in your personal name is unwise and presents a bad business image to a budding entrepreneur or start up company. It is important to consult a business attorney to discuss your business structure and what liability risks that are inherit with being an entrepreneur.
Many business attorneys and general attorneys do not understand asset protection because they have little experience. Sean Robertson has a lot of experience in asset protection because he faces lawsuits for his clients on a daily basis. Unfortunately, asset and business structure takes on a new importance when you are the Defendant or potential Defendant in a litigation matter that threatens your solvency or financial stability.
Sean Robertson is a business and asset protection attorney in downtown Chicago and Naperville, Illinois. Sean Robertson can be reached at (312) 498-6080 or (630) 364-2318.
One of the first decisions an entreprenuer must decide is what business entity to incorporate as. Being a sole properietor or partnership in your personal name is unwise and presents a bad business image to a budding entrepreneur or start up company. It is important to consult a business attorney to discuss your business structure and what liability risks that are inherit with being an entrepreneur.
Many business attorneys and general attorneys do not understand asset protection because they have little experience. Sean Robertson has a lot of experience in asset protection because he faces lawsuits for his clients on a daily basis. Unfortunately, asset and business structure takes on a new importance when you are the Defendant or potential Defendant in a litigation matter that threatens your solvency or financial stability.
Sean Robertson is a business and asset protection attorney in downtown Chicago and Naperville, Illinois. Sean Robertson can be reached at (312) 498-6080 or (630) 364-2318.
Monday, January 24, 2011
LLCs and Corporations for Small Business
Many small business owners wonder what are the differences between LLCs and Corporations for small business owners. In this blog, we will discuss three main differences between LLCs and Corporations.
The first main difference is the LLC offers a lot more flexibility than a S corporation. A LLC is a limited liability corporation and is a hybrid between a partnership and a corporation. A LLC is a disregarded entity for tax purposes because partners or individuals pay taxes based upon their own tax situation. Thus, the corporation does not pay taxes but rather individuals file a 1040 return based upon their income, deductions, and losses if any. In contrasts, an S corporation is also a pass through entity, but one distinct difference is treatment of payroll taxes. With an S corporation, a business pays payroll taxes on reasonable salary and not on profitability. With an LLC, business owners pay taxes on the profits of the corporation whether they took a distribution or not.,
The second difference is flexibility. An LLC is flexible and has different types of ownership interest. An S corporation only has one type of ownership interest. Thus, an S corporation does not have the ability to give an investor preferential rights upon liquidation of the business like an LLC. For example, a LLC can offer non-voting and voting shares to shareholders/partners. Often times, accounting and law firms will have different classifications of partners or members. Basically, this different classification is equity and non-equity partners.
The third difference is costs. An LLC is generally more expensive to operate in terms of initial and annual operating costs. In Illinois, an LLC costs $500 to incorporate where as a corporation costs $175. An LLC also has $250 to $400 in annual reports costs compared to $125 to $200 for a Corporation. In my opinion, most small business owners benefit from the S corporation unless they are entreprenerial and expect to offer partnership and ownership opportunities to key employees. Then, the LLC generally is a much more beneficial business entity because of its' flexibility.
Sean Robertson is a business and asset protection attorney that concentrates in small to medium sized business law. Sean can be reached at (312) 498-6080 or Sean@RobertsonLawGroup.com. Sean is a entrepreneur and loves representing fellow small business owners and entrepreneurs.
The first main difference is the LLC offers a lot more flexibility than a S corporation. A LLC is a limited liability corporation and is a hybrid between a partnership and a corporation. A LLC is a disregarded entity for tax purposes because partners or individuals pay taxes based upon their own tax situation. Thus, the corporation does not pay taxes but rather individuals file a 1040 return based upon their income, deductions, and losses if any. In contrasts, an S corporation is also a pass through entity, but one distinct difference is treatment of payroll taxes. With an S corporation, a business pays payroll taxes on reasonable salary and not on profitability. With an LLC, business owners pay taxes on the profits of the corporation whether they took a distribution or not.,
The second difference is flexibility. An LLC is flexible and has different types of ownership interest. An S corporation only has one type of ownership interest. Thus, an S corporation does not have the ability to give an investor preferential rights upon liquidation of the business like an LLC. For example, a LLC can offer non-voting and voting shares to shareholders/partners. Often times, accounting and law firms will have different classifications of partners or members. Basically, this different classification is equity and non-equity partners.
The third difference is costs. An LLC is generally more expensive to operate in terms of initial and annual operating costs. In Illinois, an LLC costs $500 to incorporate where as a corporation costs $175. An LLC also has $250 to $400 in annual reports costs compared to $125 to $200 for a Corporation. In my opinion, most small business owners benefit from the S corporation unless they are entreprenerial and expect to offer partnership and ownership opportunities to key employees. Then, the LLC generally is a much more beneficial business entity because of its' flexibility.
Sean Robertson is a business and asset protection attorney that concentrates in small to medium sized business law. Sean can be reached at (312) 498-6080 or Sean@RobertsonLawGroup.com. Sean is a entrepreneur and loves representing fellow small business owners and entrepreneurs.
Sunday, January 23, 2011
Corporate Structure for Start Up Companies
Corporate structure is critical for successful growth. Ofen times, start up companies ignore or under appreciate the importance of proper growth structure and how the choice of an LLC or Corporation are critical for their growth purposes.
Start up companies that intend for key employees to be their shareholders/partners in the future should be careful. An improper decision can lead to litigation risks and hurt the growth of your company. One bad decision can ruin your company. The costs of litigation are difficult to estimate and often times, litigation will quickly kill your cash flow.
There are real differences between and LLC and Corporation. I will speak about the differences between an LLC and a Corporation at a later date.
Sean Robertson is an corporate and asset protection attorney based in downtown Chicago. He can be reached at (312) 498-6080 or Sean@RobertsonLawGroup.com.
Start up companies that intend for key employees to be their shareholders/partners in the future should be careful. An improper decision can lead to litigation risks and hurt the growth of your company. One bad decision can ruin your company. The costs of litigation are difficult to estimate and often times, litigation will quickly kill your cash flow.
There are real differences between and LLC and Corporation. I will speak about the differences between an LLC and a Corporation at a later date.
Sean Robertson is an corporate and asset protection attorney based in downtown Chicago. He can be reached at (312) 498-6080 or Sean@RobertsonLawGroup.com.
Tuesday, January 18, 2011
Basic Business Contracts
There are basic business contracts, which all business owners should strongly consider such as employment agreements, independent contractor agreements, consulting agreements, and vendor agreements.
There are basic provisions that should occur in these agreements. The first provision is a choice of jurisdiction. The choice of jurisdiction is the State or County where one must file lawsuit if a lawsuit will be filed. The second provision is no oral modification without the consent of all parties. The third provision is whether reasonable attorney's fees should be awarded when there is a breach of the contract. This is a big deal because this gives the non-breaching party the ability to get their attorney's fees and costs reimbursed in case of a dispute. The fourth provision is a severability clause. A severability clause is a clause that means that if one provision is found invalid, than the remaining contract is still valid.
Sean Robertson is a corporate, asset protection, and commercial litigation attorney with expertise in representing small to medium sized business owners. Sean Robertson can be reached at (630) 364-2318 or (312) 498-6080 or Sean@RobertsonLawGroup.com.
There are basic provisions that should occur in these agreements. The first provision is a choice of jurisdiction. The choice of jurisdiction is the State or County where one must file lawsuit if a lawsuit will be filed. The second provision is no oral modification without the consent of all parties. The third provision is whether reasonable attorney's fees should be awarded when there is a breach of the contract. This is a big deal because this gives the non-breaching party the ability to get their attorney's fees and costs reimbursed in case of a dispute. The fourth provision is a severability clause. A severability clause is a clause that means that if one provision is found invalid, than the remaining contract is still valid.
Sean Robertson is a corporate, asset protection, and commercial litigation attorney with expertise in representing small to medium sized business owners. Sean Robertson can be reached at (630) 364-2318 or (312) 498-6080 or Sean@RobertsonLawGroup.com.
Tuesday, January 4, 2011
Setting Up Your Entity and Corporate Structure
In today's economy, the choice of corporate or entity structure is a crucial decision although most business owners fail to understand the importance of their corporate or business structure. The appropriate business or corporate structure is vital for several reasons. The first reason is liability protection. Unfortunately, most business owners fail to properly structure their ownership of their corporation or LLC. For example, John Smith owns ABC Trucking, LLC and is a member of his LLC in his personal name along with another business partner, Jack Johnson. First, John Smith should not in many instances because a member of his LLC in his personal name. The first risk is liability exposure from items such as unpaid payroll taxes, business and vendor disputes, and other creditor concerns. Obviously, most small business owners do not foresee having creditor issues. In this econonmy, small business owners are filing bankruptcy because of their lack of proper corporate structure. Incorporating your membership interest of an LLC is a better way to structure your business interest. The business purpose is to alleviate liability concerns in case you must file bankruptcy. Often times, a creditor will sue your business and you in your personal name. The second reason is growth purposes. An LLC versus a Corporation offers one the opportunity to utilize the flexibility of an LLC, which is critical if you want to add key employees or possibly business owners. In essence, the LLC is a much more flexibile business entity and offers more liability protection.
Sean Robertson is managing Partner of Robertson Law Group, LLC, which is a asset protection, litigation, and corporate law firm. Sean Robertson can be reached at either (312) 498-6080 or (630) 364-2318. Robertson Law Group, LLC has a downtown Chicago and Naperville location. Robertson Law Group, LLC services Cook, Dupage, Will, Kane, and Kendall Counties.
Keywords: Naperville business attorney, LLC attorney Naperville, LLC business attorney Chicago, western suburbs business attorney.
Sean Robertson is managing Partner of Robertson Law Group, LLC, which is a asset protection, litigation, and corporate law firm. Sean Robertson can be reached at either (312) 498-6080 or (630) 364-2318. Robertson Law Group, LLC has a downtown Chicago and Naperville location. Robertson Law Group, LLC services Cook, Dupage, Will, Kane, and Kendall Counties.
Keywords: Naperville business attorney, LLC attorney Naperville, LLC business attorney Chicago, western suburbs business attorney.
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