It is very important to maintain your business, and it is often something that is forgotten about while you focus on building your business and taking care of clients.
Often life changes impact your business that you may not expect. We will be exploring some recent issues we have come across that people should be aware of.
Choosing what type of entity your business will be is an essential part of business planning. A partnership is two or more people working together for a profit. There are two basic types of partnerships, general partnerships and limited partnerships.
There is no requirement to create a partnership agreement, however it is smart to do so. A Written partnership agreement helps to avoid misunderstandings between partners and a failure to have a written agreement will result in default rules based on the states statute. A written agreement also permits the partners to discuss various aspects of the business and expectations of the partners.
In Part 1, we discussed the non-legal issues that can influence where to incorporate, such as financial, convenience of where they are doing business, and continuing operations. Now we will discuss some of the legal considerations for where to incorporate. As we mentioned in Part 1, Delaware, Nevada, and Wyoming are three states considered corporate havens, so we will discuss some basic information about these three states.
Where should I incorporate?
This is a question that I am often asked, and although we can explore the legal issues as to where you should incorporate, there are non-legal issues to consider as well. People often hear advertising focusing on “Incorporate here, it is tax free!” The problem with the advertising is people don’t really understand how things work, and that will end up just costing more money when their only focus is to save money, and that just leaves people feeling ripped off.
In part 2, we explored some methods to limit liability for your business with limited partnerships and limited liability companies. In Part 3, we will explore Corporations and tax considerations in business formation.
The Corporation, according to Black’s Law Dictionary, is an entity having authority under law to act as a single person distinct from shareholders who own it and having rights to issue stock and exist indefinitely; a group or succession of persons established in accordance with legal rules into a legal or juristic person that has a legal personality distinct from the natural persons who make it up, exists indefinitely apart from them, and has the legal powers that its constitution gives it. A corporation is an artificial being, invisible, intangible, and existing only in contemplation of the law…[I]t possesses only those properties which the charter of its creation confers upon it.
In Part 1, we explored Sole Proprietorships and General Partnerships, neither of which limit liability for a business owner. In Part 2, we will explore some options to limit liability within a Partnership or a Limited Liability Company.
Limited-Liability Partnership Continue reading
Starting a business can be a fun, exciting, and terrifying ordeal. It takes a vision, a plan, and the execution of the plan while also adjusting for events as they affect the plan.
During a lecture I was attending once, the speaker said, “Anyone can start a business, but not everyone can run a business.” That, combined with a recent conversation I had got me thinking that I should write about this topic, and all of the questions that come with starting a business. While this is a general discussion of legal principles, it will provide a good foundation of information to think about and discuss with your attorney. Continue reading
The Affordable Care Act, commonly referred to as ObamaCare places requirements on some businesses to offer health insurance for their employees.
The Affordable Care Act has become a highly debated topic and this article is not addressing the merits or drawbacks to the law, it is simply explaining what is required.
In Part 1, we started exploring do-it-yourself (DIY) legal products compared to hiring an attorney. DIY legal products can be appealing because they can be far less expensive than hiring an attorney, but it may not meet your needs.
In a comparison of a will provided by LegalZoom and a will from an attorney, I think most people would agree that a more educated and legally proficient person may be able to obtain a better end-result with DIY product than a less educated and less-proficient person. In exploring this theory, a Minnesota attorney named Gregory Luce decided to compare LegalZoom with a will drafted by an attorney. The article about his experience can be found here.
Do-it-yourself (DIY) options have become a lot more common in the world of legal services. You can now go on-line to prepare your taxes, write your own estate plan, and open your own business, among numerous other options.
While these DIY options to establish a plan do exist, the question remains of the quality of the plan that these DIY options create. Continue reading
Estate Planning Attorney Blog