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
Saturday, March 12, 2011
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.
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