Post-Judgment Planning for Entrepreneurs with Judgments

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

Are Non-Compete Agreements Enforceable for Physicians in Illinois?

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

New Citations to Discover Law Effects Small Business

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

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

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

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

Wealth Planning for Healthcare Professionals

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

S corporation vs. LLC in Practical Terms

S Corporation vs. Limited Liability Corporation (LLC)

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

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

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

FLEXIBILITY

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

TAXATION

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

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


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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.

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.

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.

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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.

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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.

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.

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.

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.

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.

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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.

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.

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.

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.