7 13 11legal structure presentation

427 views

Published on

Published in: Business, Career
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
427
On SlideShare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
3
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

7 13 11legal structure presentation

  1. 1. A. Page Beetem, Asst. Prof. Legal Studies, University of Cincinnati, Clermont beetemap@ucmail.uc.edu Christopher Gulinello Professor of Law Chase College of Law, Northern Kentucky University GULINELLOC@nku.eduBGVLegal Structuring- Information contained in this presentation is not meant to be legal advice. Please consult with an attorney for legal advice specific to your business.
  2. 2. Basic Business Structuring • Sole Proprietorship • Partnership • Limited Liability Company • Corporations • S Corporation BGVLegal Structuring- Information contained in this presentation is not meant to be legal advice. Please consult with an attorney for legal advice specific to your business.
  3. 3. Structures So Far… S. P. Global to Local Healthy Kids Fast! Language Solutions LLC S. P. Premium Sealcoat S. P. S. P. Chocolats LatourVenueAgent Daelias Food Company, Ltd. Emerald S. P. Construction S. P. Management, Tiburon Energy &CultureSpeak Construction Subsidiary? Inc. Consulting Dean Family Farm Rosies Turkey Corner
  4. 4. How do I choose? 1.Taxes 2.Liability 3.ControlBGVLegal Structuring- Information contained in this presentation is not meant to be legal advice. Please consult with an attorney for legal advice specific to your business.
  5. 5. A Comparison of the Basic Types of BusinessesType of Business Taxation Liability ControlSole Single Unlimited Total AutonomyProprietorshipPartnership Single Unlimited Shared GovernanceCorporation Double Limited to Board capital Governance contributionLimited Liability Single Limited to Member vsCompany capital Manager contribution managedS Corporation Election Limited to Board capital Governance contribution BGVLegal Structuring- Information contained in this presentation is not meant to be legal advice. Please consult with an attorney for legal advice specific to your business.
  6. 6. Sole Proprietorship- Advantages• The simplest form to start and maintain;• Business profits are taxed as ordinary personal income;• Owner retains complete control over the business operation. BGVLegal Structuring- Information contained in this presentation is not meant to be legal advice. Please consult with an attorney for legal advice specific to your business.
  7. 7. Sole Proprietorship Disadvantages• The major disadvantage of the sole proprietorship is that all the owners personal assets, regardless of whether they are related to the operation of the business, are available to satisfy business-incurred debts.• The business dies with the owner and the owner is often limited in funding to his or her own resources. BGVLegal Structuring- Information contained in this presentation is not meant to be legal advice. Please consult with an attorney for legal advice specific to your business.
  8. 8. Partnership- Advantages• a number of people can form a partnership and that the partnership• Shared Management• assets are only taxed once as personal income to the partners. BGVLegal Structuring- Information contained in this presentation is not meant to be legal advice. Please consult with an attorney for legal advice specific to your business.
  9. 9. Partnership- Disadvantages• every partner assumes liability for the actions of every other partner• Shared Management• personal assets can be taken to pay for business liabilities. BGVLegal Structuring- Information contained in this presentation is not meant to be legal advice. Please consult with an attorney for legal advice specific to your business.
  10. 10. Corporations- Advantages• Investors have the advantage of being owners without having to assume any liability beyond the cost of their individual shares,• Corporate form has perpetual existence, and• Shares are transferable. BGVLegal Structuring- Information contained in this presentation is not meant to be legal advice. Please consult with an attorney for legal advice specific to your business.
  11. 11. Corporations- Disadvantages“double taxation” • The corporations profits are taxed at the corporate level before dividends are distributed to shareholders. The shareholders then are taxed again on the dividends they receive. • Also, limited liability may be illusory at least as to business debts as banks and other creditors often require shareholders in small corporations to provide personal guarantees to secure loans. BGVLegal Structuring- Information contained in this presentation is not meant to be legal advice. Please consult with an attorney for legal advice specific to your business.
  12. 12. To qualify for S corporation status, the corporation must meet the following IRS requirements:• Be a domestic corporation• Have only allowable shareholders – including individuals, certain trust, and estates and – may not include partnerships, corporations or non- resident alien shareholders• Have no more than 100 shareholders• Have one class of stock• Not be an ineligible corporation i.e. certain financial institutions, insurance companies, and domestic international sales corporations.
  13. 13. S Corporation- Advantages• The independent life of the corporation makes possible its continuation, and the relatively undisturbed continued operation of the business regardless of incapacity or death of one or more stockholders.• Fractional ownership shares are easily accommodated in the initial offering of stock.• The purchase, sale, and gifting of stock make it possible to have changes in ownership without disturbing the corporations ability to conduct business.• With only a few exceptions, under the Subchapter S election for taxation as a partnership the S corporation pays no income taxes and corporation income or loss is passed through direct to the stockholders.• Limited Liability• Earnings representing "return on investment" (interest, rental payments, etc.) are not subject to self-employment tax as long as stockholder- employees receive adequate compensation for labor and management of the business. BGVLegal Structuring- Information contained in this presentation is not meant to be legal advice. Please consult with an attorney for legal advice specific to your business.
  14. 14. S Corporation- Disadvantages• Lenders may require personal guarantees from corporate officers as a condition of supplying credit, thus negating the limitation of liability.• Conflicts or disagreements among the stockholders may immobilize decision making.• Through the processes of gifting and inheritance, stock ownership can become divided among many persons who are not active in the business and they may become a voting block that does not support needs and decisions believed desirable by managing stockholders.• If appreciated assets are owned by the corporation and the corporation is dissolved, significant income taxes on the appreciation amount will be generated. BGVLegal Structuring- Information contained in this presentation is not meant to be legal advice. Please consult with an attorney for legal advice specific to your business.
  15. 15. Limited Liability Company- Advantages limited liability that is afforded by the corporate form single taxation that occurs in a partnership. Member managed OR Manager Managed BGVLegal Structuring- Information contained in this presentation is not meant to be legal advice. Please consult with an attorney for legal advice specific to your business.
  16. 16. Limited Liability Company- Disadvantages• The minor disadvantage is that because the statutes authorizing these new forms are of very recent origin (generally the early 1990s) there is very little case law as yet to guide us in understanding how the courts will view these new business forms BGVLegal Structuring- Information contained in this presentation is not meant to be legal advice. Please consult with an attorney for legal advice specific to your business.
  17. 17. LLC or S-Corp?
  18. 18. What can be done to prevent a creditor from "piercing the corporate/LLC veil“?• Make sure your corporation or LLC is properly set up. If you are setting up an entity without the help of an attorney, you may not be taking all the necessary steps to make sure that the entity is properly formed.• Observe formalities once the entity is formed. Corporations should hold annual meetings of shareholders. There should be meetings of the Board of Directors.• An LLC should have an Operating Agreement, and the terms of that Operating Agreement should be followed.• Your entity should have a separate bank account and be treated as a separate entity.• Your corporation or LLC should have usual and customary insurance for whatever business it is conducting.• Follow good business practices. Forming an entity will not shield an individual owner from fraud or illegal acts.• Avoid undercapitlization. BGVLegal Structuring- Information contained in this presentation is not meant to be legal advice. Please consult with an attorney for legal advice specific to your business.
  19. 19. •Tiburon Energy &Construction Who Am I?•Healthy Kids Fast!•Global to LocalLanguage Solutions ABC, Inc.LLC By: ________________•VenueAgent•Premium Sealcoat Page Beetem, President•Daelias Food ORCompany, Ltd.•CultureSpeakConsulting ABC, LLC•Dean Family FarmRosies Turkey Corner By: ________________•Emerald Construction Page Beetem, MemberManagement, Inc.•Chocolats Latour
  20. 20. LLC Records requirements- ORC 1705.28• 1705.28 Principal office shall keep certain records.• (A) The company shall keep at its principal office all of the following:• (1) A current list of the full names, in alphabetical order, and last known business or residence address of each member;• (2) A copy of the articles of organization, all amendments to the articles, and executed copies of any powers of attorney pursuant to which the articles or the amendments have been executed;• (3) A copy of any written operating agreement, all amendments to that operating agreement, and executed copies of any written powers of attorney pursuant to which the operating agreement and the amendments have been executed;• (4) Copies of any federal, state, and local income tax returns and reports of the company for the three most recent years;• (5) Copies of any financial statements of the company for the three most recent years;• (6) Unless contained in a written operating agreement, a writing setting forth all of the following:• (a) The amount of cash, and a description and statement of the agreed value of any other property or services, that each member has contributed and has agreed to contribute in the future;• (b) Each time at which and each event on the occurrence of which any additional contribution agreed to be made by each member is to be made;• (c) Any right of the company to make to a member, or of a member to receive, any distribution that includes a return of all or any part of his contribution;• (d) Each event upon the occurrence of which the company is to be dissolved and its affairs wound up.
  21. 21. A Comparison of the Basic Types of BusinessesType of Business Taxation Liability ControlSole Single Unlimited Total AutonomyProprietorshipPartnership Single Unlimited Shared GovernanceCorporation Double Limited to Board capital Governance contributionLimited Liability Single Limited to Member vsCompany capital Manager contribution managedS Corporation Election Limited to Board capital Governance contribution BGVLegal Structuring- Information contained in this presentation is not meant to be legal advice. Please consult with an attorney for legal advice specific to your business.
  22. 22. How do I start?http://tinyurl.com/Clermont-Business-PlanOhio Secretary of State-http://www.sos.state.oh.us/sos/upload/business/filingformsfeeschedule.aspx?page=251Citizen Media Law Project-http://www.citmedialaw.org/legal-guide/forming-business-and-getting-online BGVLegal Structuring- Information contained in this presentation is not meant to be legal advice. Please consult with an attorney for legal advice specific to your business.
  23. 23. A. Page Beetem, Asst. Prof. Legal Studies, University of Cincinnati, Clermont beetemap@ucmail.uc.edu Christopher Gulinello Professor of Law Chase College of Law, Northern Kentucky University GULINELLOC@nku.eduBGVLegal Structuring- Information contained in this presentation is not meant to be legal advice. Please consult with an attorney for legal advice specific to your business.

×