The legal form of any business will depend on the nature of the enterprise in which it is engaged and the financial objectives of its owners. Businesses are typically organized as sole proprietorships, general partnerships, limited liability partnerships, limited liability companies, Subchapter S corporations and C-corporations. Our firm advises you on the advantages and disadvantages of each entity form and helps you consider various factors, including:
- Exposure to obligations and liabilities of the business;
- Differences in state law of organization;
- Obtaining authority to do business in other jurisdiction where the entity is not organized;
- Tax treatment (e.g., the treatment of an LLC’s profits, losses, and distributions to its members for tax purposes are treated differently than the taxation of a C-corporation and its shareholders);
- Management Structure;
- Transferability of shares or ownership interests;
- Implications of changing organizational form; and
- Up-to-Date maintenance of the business’s organizational documents.
We also work closely with our clients in filing the state-required paperwork for entity formation and drafting by-laws & operating agreements that thoroughly spell out each shareholder’s and members’ rights and obligations as owners in the entity. A properly drafted operating agreement will govern essential issues including management structure and decision making authority; voting among owners on the company’s transactions and business decisions; distributions of profits and dividends, restrictions and requirements on sale and transferability of shares or ownership interests, valuation of a shareholder’s or owner’s interest and protocols for dissolution of the entity.
