Small Business Essentials: Bringing Business Law Down to Earth

Save this PDF as:
 WORD  PNG  TXT  JPG

Size: px
Start display at page:

Download "Small Business Essentials: Bringing Business Law Down to Earth"

Transcription

1 Small Business Essentials: Bringing Business Law Down to Earth A SERIES OFFERED BY Attorneys aren t from Mars. Business clients aren t from Venus. PRESENTED BY

2 Business Risk Two phases of the business cycle where a business has the greatest risk of failure: Start up phase Initial formation The I love you phase Clearly define relationship of owners to avoid issues with future disagreement Business plan Financial forecast Clearly monitor progress Retirement/transition phase The transition of management and ownership to a new group of individuals.

3 Part I Start up Considerations Legal Structure Liability issues Future plans Corporate governance Complexity Possibility of future owners Tax Considerations Taxation at entity level Flow through taxation Owner compensation Compliance Responsible person issues

4 Part I Start up Considerations Internal Considerations Hierarchy Employee manuals Company policies (i.e. document retention, policy) HR issues Interaction with outside counsel and CPAs Liability Protection Personal guarantee Piercing the corporate veil Insurance (business, umbrella, E+O) Compensation issues 401(k), medical insurance, stock options, etc

5 Part I Start up Considerations Funding Owner contributions Venture capital Bank financing Additional capital calls (required? dilution?)

6 Typical Business Structures Sole proprietorship Partnership Corporation S Corporation Limited Liability Company

7 Characteristics of Sole Proprietorship No formal legal entity Alter ego of owner Business profits taxed as ordinary personal income Unlimited personal liability for owner Business ceases to exist on owner s death This is generally not a recommended form of business ownership

8 Characteristics of a Partnership Owned by two or more parties No formal business entity filing necessary, but may file statement with Secretary of State Management rights determined by statute unless all partners have adopted a partnership agreement Pass through taxation

9 Partnerships Liability Issues Two types of partners: General partners a partner who has management and financial rights in the company. A general partner has unlimited personal liability for company debts. Limited partner a partner who has only financial rights in the company (essentially just an investor). A limited partner s liability is limited to his investment in the company, no personal liability other than investment in partnership.

10 Characteristics of Corporations Formal legal entity formed by state filing One to unlimited number of shareholders Management authority vested in Board of Directors Double taxation income taxed at business level and upon distribution to owners Limited liability shareholders have no personal liability other than investment in corporation More corporate formalities No special allocations

11 Characteristics of Limited Liability Companies (LLC) Formal legal entity formed by state filing One to unlimited number of owners Management authority may be vested in all owners (members) or in selected managers Pass through taxation (unless elected otherwise) Limited liability generally owners have no personal liability other than investment in LLC Less formalities than a corporation Ability to have special allocations

12 What is an S Corporation? Structured like a corporation Pass through taxation shareholders (must be natural persons who are U.S. citizens with limited exceptions) Limitations on the types of shares that can be issued (only one class of stock) Shareholder compensation issues Both corporations and LLCs can elect to be treated as an S Corporation for tax purposes Limited liability generally owners have no personal liability other than investment in S corporation

13 What does limited liability really mean? Generally an owner of a company with limited liability (LLC, Corp, S Corp) will not be personally liable to creditors of the business. There are however, some limitations: Liability for your own personal actions For start ups, creditors will often ask owner to guaranty or cosign on loans or contracts Creditors may try to Pierce the Veil and collect company debts from owners personally

14 Piercing the Veil Piercing the Veil is a phrase commonly used to describe creditors breaking the liability protection of an LLC or corporation to hold an owner personally liable for company debts. This is relatively difficult for creditors to achieve, but not impossible Risk factors: i) Fraud ii) Failure to adhere to corporate (or LLC) formalities iii) Inadequate capitalization iv) Commingling of assets

15 How to Minimize Owner s Risk: Make sure that business is formed properly, i.e. registered with the proper state Don t commingle personal and business assets Ensure all business assets are titled in the company s name Business should have separate financial accounts Keep adequate records Execute documents in your capacity for the business, rather than individually. It is important that it is clear that the business is entering into an agreement rather than an individual.

16 Internal Organization When there are multiple owners, it becomes critically important to think about how a business will be run. Typically governed by agreement, but there are some default statutory provisions. Structure Partnership Corporation S Corp LLC Internal Agreement Partnership Agreement By laws or Regulations By laws or Regulations Operating Agreement

17 Internal Agreement Considerations Voting who will have control? What happens if there is deadlock? Supermajority/unanimous decision for certain items (i.e. additional borrowing, expenses over certain amounts, etc) Allocation of profits and losses Distributions Delineation of duties Will there be restrictions on transfer? What happens if someone dies, retires? Buy sell restrictions

18 Part II Retirement/Transition Phase I have a successful business, but I m ready to retire, now what? Failure to plan for the transition of owners and/or key individuals out of the business is a recipe for disaster.

19 Why Plan Ahead? Taxes Transfers of business interests, whether by sale, inheritance or otherwise, could have major tax implications. Planning must be done in advance to minimize taxes Risk The smaller the business, the more likely it is that a few key individuals drive the company s success. Failure to have a succession plan in place raises the risk that the exit of a key individual will lead to business failure. Key man insurance to provide funds to replace individual

20 Why Plan Ahead? Control Having a plan in place allows the owners to exercise some control over their exit and the future of the business. Value Failure to have a succession plan in place could result in the rapid decline of the business (and its corresponding value) upon the departure of a key person.

21 Succession Planning Considerations What are the owners personal goals? Keep the business in the family? Continued income stream? Lump sum buyout? Will successors have the knowledge and skills to adequately operate the business? Protecting the longevity of the business and all parties involved. Co owners may want to avoid dealing with a deceased owner s spouse or family A plan should appropriately compensate an exiting party without destroying the viability of the business

22 Common Exit Strategies Buy Sell Agreements Gifting (for family owned businesses) Management Buyouts Sale to Outsiders

23 Buy Sell Agreements A buy sell agreement is a binding agreement among the owners that governs the terms of sale and purchase of an exiting owner s business interest. Typically defines: Who can purchase If purchase is required or at option of remaining owners Timing of purchase Purchase price and security for payment The terms of the purchase and payment of the purchase price Permitted transfers (i.e. Grantor trusts or immediate family members)

24 Buy Sell Agreements Common Buy Sell Events Death Bankruptcy Disability Divorce Voluntary Withdrawal

25 Common Types of Buy Sell Agreements Stock Redemption The company will purchase an exiting owner s interest upon specified events Results in proportionate increase in remaining owners interest Cross Purchase The other owners will purchase an exiting owner s interest upon specified events May bind all owners equally or specific owners Could change the management dynamics

26 Funding the Buy Sell Agreement Life or Disability Insurance Owners can insure others lives or company can insure owners lives or disability to fund the buyout. Important to evaluate coverage periodically. Installment Payout The exiting owner can be bought out over a set period of years. Avoids large cash outlays by purchasers up front. Owners will need to determine interest rate and security for repayment. Sinking Fund A sinking fund is an investment fund contributed to by the company over time to pay for a buyout. Debt Cash

27 Gifting of Family Owned Businesses If a business is solely or largely family owned, the owners may desire to pass the business on to their children. Additional planning techniques are available in this situation. Tax considerations may shift to federal and state estate tax issues, as well as income tax considerations. Part sale/part gift

28 Gifting of Family Owned Businesses Current estate tax laws are very favorable, but are subject to change Annual Gift Exclusion Owners may gift assets (including business interest) with value up to the federal annual gift exclusion (currently $14,000) yearly with no estate tax impact Trusts There are several types of trusts that can be used as transfer vehicles in tax neutral or tax advantageous ways. These may be tailored to meet the current owner s needs and control the future of the business Appraisal necessary

29 Management Buyouts Sale of business to management team May be financed by individual (cash, bank or seller financing, personal notes, etc) or by business (cash flow, pledges of future income, etc). Depending on structure, seller may have risk based on the future success of the business. Employee Stock Option Plans (ESOP) Company can purchase owner stock through ESOP Ability to use pre tax dollars (tax savings) Qualified employment benefit plan No tax on participants (employees) until they cash them out

30 Sale to Outsiders Cleaning up the business to make the business marketable it will need to be clean. Action should be taken to minimize liabilities, tax issues, lawsuits, etc. Valuation a valuation should be obtained to give the owners a sense of the market value of the business Owners should engage outside individuals to assist with marketing, negotiating, and structuring sale of business

31 Keeping The Succession Plan Updated A business succession plan is often built around the circumstances that exist at the time the plan is formulated. As such, it is important that it be revisited periodically to ensure that it still meets the needs of the business and its owners. The plan should be revisited at a minimum every two years by the owners. This should be more often if dramatic changes occur for the business or any of its owners.

32 Keeping The Succession Plan Updated Additionally, the plan should be reviewed upon the occurrence of any of the following: Divorce or remarriage of an owner Death, disability, retirement or other exit of a major stakeholder Substantial change in the profits of the business Substantial change in tax laws

33 Miscellaneous Considerations Keeping business on cutting edge (new equipment, social media, knowledgeable employees, etc) Importance of up to date financial information Growth (internal and external acquisitions) Image protection (trademark, copyright, etc) Worker classification (employee vs. independent contractor)

34 Proudly Presented by Cors & Bassett, LLC Kenneth H. Kinder, II Nathaniel J. Arnett

COLORADO LIMITED LIABILITY COMPANY CHECKLIST

COLORADO LIMITED LIABILITY COMPANY CHECKLIST COLORADO LIMITED LIABILITY COMPANY CHECKLIST ARTICLES OF ORGANIZATION Name of Entity: A business name must be distinguishable from any other active business name in Colorado the Secretary of State s records.

More information

Choosing a Business Entity For Your Real Estate Brokerage

Choosing a Business Entity For Your Real Estate Brokerage Choosing a Business Entity For Your Real Estate Brokerage Presented by Jon Sargent, Esq. JonS@frascona.com Frascona, Joiner, Goodman and Greenstein, P.C. www.frascona.com Entity Choices Sole Proprietorship

More information

FRISSE & BREWSTER LAW OFFICES

FRISSE & BREWSTER LAW OFFICES FRISSE & BREWSTER LAW OFFICES ADVANTAGES AND DISADVANTAGES OF VARIOUS BUSINESS ENTITIES SOLE PROPRIETORSHIP A sole proprietorship is simple to establish and operate; little ongoing documentation is needed.

More information

Robert Moore Attorney, Wright Law Co., LPA, Dublin, Ohio Barry Ward Leader, Production Business Management, The Ohio State University

Robert Moore Attorney, Wright Law Co., LPA, Dublin, Ohio Barry Ward Leader, Production Business Management, The Ohio State University FACT SHEET Agriculture and Natural Resources Building for the Successful Transition of Your Agricultural Business Fact Sheet Series Starting, Organizing, and Managing an LLC for a Farm Business Robert

More information

Overcome Common Problems When Starting a LLC Company:

Overcome Common Problems When Starting a LLC Company: 1 How to overcome some of the most common problems business owners run into when starting a if you form a Limited Liability Company (LLC). Business Problems Overview: Did you know 90% of new businesses

More information

FARM LEGAL SERIES June 2015 Choosing the Right Business Entity

FARM LEGAL SERIES June 2015 Choosing the Right Business Entity Agricultural Business Management FARM LEGAL SERIES June 2015 Choosing the Right Business Entity Phillip L. Kunkel, S. Scott Wick Attorneys, Gray Plant Mooty INTRODUCTION There are many types of business

More information

Moss Adams Introduction to ESOPs

Moss Adams Introduction to ESOPs Moss Adams Introduction to ESOPs Looking for an exit strategy Have you considered an ESOP? Since 1984, we have performed over 2,000 Employee Stock Ownership Plan (ESOP) valuations for companies with as

More information

CHAPTER 9 BUSINESS INSURANCE

CHAPTER 9 BUSINESS INSURANCE CHAPTER 9 BUSINESS INSURANCE Just as individuals need insurance for protection so do businesses. Businesses need insurance to cover potential property losses and liability losses. Life insurance also is

More information

OWNERSHIP TRANSITION

OWNERSHIP TRANSITION OWNERSHIP TRANSITION PLANNING AHEAD Peter W. Bennett, Esquire Winer and Bennett, LLP 111 Concord Street, P.O. Box 488 Nashua, NH 03061-0488 (603) 882-5157 pbennett@winerbennett.com DEFINING THE PROBLEM

More information

BUY/SELL AGREEMENTS CHECKLIST INFORMATION ABOUT OWNERS

BUY/SELL AGREEMENTS CHECKLIST INFORMATION ABOUT OWNERS 523 Park Point Dr., Ste. #350 Golden, CO 80401 (303) 670-9855 Phone (303) 670-5381 Fax 7887 E. Belleview Ave., Ste. #820 Denver, CO 80111 (303) 670-9855 Phone (303) 762-0014 Fax BUY/SELL AGREEMENTS CHECKLIST

More information

Buy Sell For Business Owners

Buy Sell For Business Owners ADVISOR PLANNING CONCEPTS Buy Sell For Business Owners One of the major concerns facing owners of family or closely held businesses is how to effect an orderly transfer of the business to the next generation

More information

An Overview of Business Insurance Copyright 2015 RegEd Inc. 2100 Gateway Centre Blvd. Suite 200

An Overview of Business Insurance Copyright 2015 RegEd Inc. 2100 Gateway Centre Blvd. Suite 200 An Overview of Business Insurance Copyright 2015 RegEd Inc. 2100 Gateway Centre Blvd. Suite 200 Morrisville, NC 27560 800-334-8322 email: info@reged.com All rights reserved. No portion may be reproduced

More information

A Guide to Incorporating Your Business

A Guide to Incorporating Your Business A Guide to Incorporating Your Business Forming a C or S Corporation Advantages of Incorporating Operating and Maintaining a Corporation Comparing C Corps., S Corps. and LLCs Table of Contents INTRODUCTION....................................................

More information

The Advantages and Disadvantages of Forming a Florida Limited Liability Company (LLC) Versus a Florida Corporation. by Karen J.

The Advantages and Disadvantages of Forming a Florida Limited Liability Company (LLC) Versus a Florida Corporation. by Karen J. The Advantages and Disadvantages of Forming a Florida Limited Liability Company (LLC) Versus a Florida Corporation by Karen J. Orlin This Note outlines advantages and disadvantages of forming a new business

More information

Wyoming Secretary of State State Capitol Cheyenne, WY 82002 (307) 777-7311. This document is available in alternate formats upon request.

Wyoming Secretary of State State Capitol Cheyenne, WY 82002 (307) 777-7311. This document is available in alternate formats upon request. The Choice is Yours Sole Proprietorship General Partnership Limited Partnership Corporation Close Corporation Limited Liability Company Close Limited Liability Supplement Statutory Trust Limited Liability

More information

Insurance-Related Best Practices Guide for Buy-Sell Agreements

Insurance-Related Best Practices Guide for Buy-Sell Agreements Insurance-Related Best Practices Guide for Buy-Sell Agreements The buy-sell agreement review and feedback process at the Principal Financial Group has allowed us to observe many different drafting approaches

More information

By: Craig A. Taylor, Attorney

By: Craig A. Taylor, Attorney WHEN A LIMITED LIABILITY COMPANY IS THE BEST CHOICE By: Craig A. Taylor, Attorney Carruthers & Roth, P.A. 235 N. Edgeworth Street Greensboro, NC 27401 Telephone: (336) 379-8651 Fax: (336) 273-7885 cat@crlaw.com

More information

Using ESOPS to Fund Owner Buyouts and Provide Business Capital

Using ESOPS to Fund Owner Buyouts and Provide Business Capital Using ESOPS to Fund Owner Buyouts and Provide Business Capital Harry I. Atlas John A. Wilhelm October 2012 1 What Is An ESOP An ESOP is a tax-qualified employee retirement plan (similar to a 401(k) plan).

More information

Business Succession Planning. 2011 Morgan Stanley Smith Barney LLC. Member SIPC

Business Succession Planning. 2011 Morgan Stanley Smith Barney LLC. Member SIPC 2011 Morgan Stanley Smith Barney LLC. Member SIPC 2011-PS-541 Expires: February 2012 Date of First Use: February 2011 Updated/Reviewed: February 2011 Overview Why Succession Planning is Important Common

More information

PROTECTING BUSINESS OWNERS AND PRESERVING BUSINESSES FOR FUTURE GENERATIONS

PROTECTING BUSINESS OWNERS AND PRESERVING BUSINESSES FOR FUTURE GENERATIONS BASICS OF BUY-SELL PLANNING A buy-sell arrangement (or business continuation agreement ) is an arrangement for the disposition of a business interest upon a specific triggering event such as a business

More information

LIMITED LIABILITY COMPANY (LLC) (COLORADO)

LIMITED LIABILITY COMPANY (LLC) (COLORADO) LIMITED LIABILITY COMPANY (LLC) (COLORADO) A LLC is normally utilized by investors and businesses to obtain the tax advantages of a partnership, limited partnership, or sole proprietorship, but enjoy more

More information

LEGGO MY ALTER EGO! WHAT YOU NEED TO KNOW ABOUT PIERCING THE CORPORATE VEIL

LEGGO MY ALTER EGO! WHAT YOU NEED TO KNOW ABOUT PIERCING THE CORPORATE VEIL LEGGO MY ALTER EGO! WHAT YOU NEED TO KNOW ABOUT PIERCING THE CORPORATE VEIL K AREN L. HART, PARTNER B ELL NUNNALLY & MARTIN LLP 3232 MC K INNEY AVE., STE. 1400 D ALLAS, TEXAS 75204 (214) 740-1444 KARENH@

More information

Business Organization\Tax Structure

Business Organization\Tax Structure Business Organization\Tax Structure One of the first decisions a new business owner faces is choosing a structure for the business. Businesses range in size and complexity, from someone who is self-employed

More information

The ABCs of Entity Choice By Thomas A. Brumgardt

The ABCs of Entity Choice By Thomas A. Brumgardt Legal Basics Part 4 in a series The ABCs of Entity Choice By Thomas A. Brumgardt Every lawyer needs to know the basics of advising clients on choice of entity. Even if you do not regularly practice in

More information

Arizona Limited Liability Company Discussion

Arizona Limited Liability Company Discussion Arizona Limited Liability Company Discussion If you will be setting up a limited liability company in Arizona, the best time for discussion of questions is before preparing the operating agreement and

More information

CHOOSING A BUSINESS ENTITY: PRACTICAL CONSIDERATIONS

CHOOSING A BUSINESS ENTITY: PRACTICAL CONSIDERATIONS CHOOSING A BUSINESS ENTITY: PRACTICAL CONSIDERATIONS Dean P. Cazenave KEAN, MILLER, HAWTHORNE, D ARMOND, MCCOWAN & JARMAN, L.L.P. One American Place Baton Rouge, Louisiana 70825 I. THE CHOICES The decision

More information

BUSINESS SUCCESSION: PLAN NOW FOR SUCCESS

BUSINESS SUCCESSION: PLAN NOW FOR SUCCESS BUSINESS SUCCESSION: PLAN NOW FOR SUCCESS 6 STEPS TO ACHIEVE YOUR VISION As a business owner, you ve invested time and effort to build a business that supports your family and many others, including employees,

More information

Beyond the Employment Agreement: The Life-Cycle of a Dental Practice Entity From Buy-In to Buy-Out A Practical Approach to the Major Issues

Beyond the Employment Agreement: The Life-Cycle of a Dental Practice Entity From Buy-In to Buy-Out A Practical Approach to the Major Issues Beyond the Employment Agreement: The Life-Cycle of a Dental Practice Entity From Buy-In to Buy-Out A Practical Approach to the Major Issues View from the Practice and the New Owner A Presentation For:

More information

Buy-Sell Agreement Planning Checklist

Buy-Sell Agreement Planning Checklist Buy-Sell Agreement Planning Checklist The Buy-Sell Agreement 1 Whenever a corporation has more than one shareholder, it is commonly recommended that the shareholders enter into a buy-sell agreement to

More information

Buy-Sell Planning. Succession Planning for Business Owners. Guiding you through life. SALES STRATEGY BUSINESS. Advanced Markets. Situation.

Buy-Sell Planning. Succession Planning for Business Owners. Guiding you through life. SALES STRATEGY BUSINESS. Advanced Markets. Situation. Guiding you through life. SALES STRATEGY BUSINESS Buy-Sell Planning Succession Planning for Owners Situation owners should plan to protect their business in case of the sudden death, retirement, or disability

More information

The CED Clinic is supported by the Economic Development Administration, U. S. Department of Commerce, through its University Centers Program.

The CED Clinic is supported by the Economic Development Administration, U. S. Department of Commerce, through its University Centers Program. The CED Clinic is supported by the Economic Development Administration, U. S. Department of Commerce, through its University Centers Program. 1 Community Economic Development Clinic Creighton Univ. School

More information

Choosing the Right Entity for Maximum Tax Benefits for Your Construction Company

Choosing the Right Entity for Maximum Tax Benefits for Your Construction Company Choosing the Right Entity for Maximum Tax Benefits for Your Construction Company Timely re-evaluation of choice of entity will enhance the shareholder value of your contractor client By Theran J. Welsh

More information

2015 MDRT Annual Meeting e Handout Material. Key Concepts of Business Ownership Agreements

2015 MDRT Annual Meeting e Handout Material. Key Concepts of Business Ownership Agreements 2015 MDRT Annual Meeting e Handout Material Title: Speaker: Key Concepts of Business Ownership Agreements David T. Lyons, J.D., CPA Presentation Date: Tuesday, June 16, 2015 10:00 11:30 a.m. The Million

More information

Types of Business Ownership

Types of Business Ownership Types of Business Ownership Sole Proprietorship A sole proprietorship is the easiest and simplest form of business ownership. It is owned by one person. There is no distinction between the person and the

More information

GETTING THE MOST OUT OF YOUR ESOP

GETTING THE MOST OUT OF YOUR ESOP GETTING THE MOST OUT OF YOUR ESOP Michael G. Keeley Hunton & Williams LLP 1445 Ross Avenue Suite 3700 Dallas, Texas 75202 (214) 468-3345 mkeeley@hunton.com Traditional Sources of Capital for Community

More information

LLCs In The Real World. Larry L Gray, CPA

LLCs In The Real World. Larry L Gray, CPA LLCs In The Real World Larry L Gray, CPA What is a LLC? 2 Legal entity LLC is a term of state law, not of federal law Combine Individual, Partnership and Corporate rules Organized separate and apart from

More information

Incorporating Your Business

Incorporating Your Business A Guide To Incorporating Your Business How to Form a Corporation or LLC Reduce Your Taxes Protect Your Assets Minimize Your Liability Improve Financial Flexibility By Attorney Brian P.Y. Liu Founder of

More information

Buy-Sell Planning Agent Training Guide

Buy-Sell Planning Agent Training Guide Advanced Sales Buy-Sell Planning Agent Training Guide Tutorial for use with: Buy-Sell Planning (Form 2412) Buy-Sell Planning Client Guide (Form 2301) ON-Net>Quick Hits>Advanced Sales>Buy-Sell Section Small

More information

Planning Using and Business Valuation. For producer use only. Not for presentation to the public.

Planning Using and Business Valuation. For producer use only. Not for presentation to the public. Business Succession Planning Using Buy-Sell Agreements and Business Valuation This material was not intended or written to be used, and cannot be used, to avoid penalties imposed under the Internal Revenue

More information

EMPLOYEE STOCK OWNERSHIP PLANS

EMPLOYEE STOCK OWNERSHIP PLANS EMPLOYEE STOCK OWNERSHIP PLANS AN EXTRAORDINARY FINANCIAL AND EMPLOYEE BENEFIT TOOL FOR THE CLOSELY-HELD COMPANY Copyright 2015 Olson Mills Law Firm, LLC All Rights Reserved PART TOPIC PAGE INTRODUCTION...1

More information

GUIDE TO SELECTING YOUR SMALL BUSINESS LEGAL STRUCTURE

GUIDE TO SELECTING YOUR SMALL BUSINESS LEGAL STRUCTURE GUIDE TO SELECTING YOUR SMALL BUSINESS LEGAL STRUCTURE To make your business #CPAPOWERED, call today and let s get started. 2015 American Institute of CPAs. All rights reserved. 15607-312 One important

More information

GUIDE TO SELECTING YOUR SMALL BUSINESS LEGAL STRUCTURE. To make your business #CPAPOWERED, call today and let s get started.

GUIDE TO SELECTING YOUR SMALL BUSINESS LEGAL STRUCTURE. To make your business #CPAPOWERED, call today and let s get started. GUIDE TO SELECTING YOUR SMALL BUSINESS LEGAL STRUCTURE To make your business #CPAPOWERED, call today and let s get started. One important consideration when starting your business is determining the best

More information

Employee Stock Ownership Plan (ESOP)

Employee Stock Ownership Plan (ESOP) Employee Stock Ownership Plan (ESOP) The basics: The ESOP is essentially a stock bonus plan in which employer stock may be used for contributions. How It Works Employer contributes company stock or cash

More information

Organizational Types and Considerations for a Small Business

Organizational Types and Considerations for a Small Business Table of Contents Welcome... 3 What Do You Know? Organizational Types and Considerations for a Small Business... 4 Pre-Test... 5 Factors for Choosing an Organizational Type... 7 Discussion Point #1: Organizational

More information

Keys to Sound Business Succession and Continuity Planning

Keys to Sound Business Succession and Continuity Planning Keys to Sound Business Succession and Continuity Planning Prepared by Kenneth S. Aneckstein Esquire, DLA Piper US LLP I. INTRODUCTION In a closely held business, the owner whether alone or with a group

More information

How It Works. Additional Considerations. The basics: The ESOP is essentially a stock bonus plan in which employer stock may be used for contributions.

How It Works. Additional Considerations. The basics: The ESOP is essentially a stock bonus plan in which employer stock may be used for contributions. The basics: The ESOP is essentially a stock bonus plan in which employer stock may be used for contributions. How It Works Employer contributes company stock or cash to the plan. Employer contributions

More information

SAALFELD GRIGGS DENTAL INDUSTRY TEAM WHITE PAPER: CHOICE OF ENTITY FOR DENTISTS

SAALFELD GRIGGS DENTAL INDUSTRY TEAM WHITE PAPER: CHOICE OF ENTITY FOR DENTISTS SAALFELD GRIGGS DENTAL INDUSTRY TEAM WHITE PAPER: CHOICE OF ENTITY FOR DENTISTS BY Th AMY GEERHART & DAVID MYERS I. Introduction Dentists may operate their practices through several forms of entities,

More information

Six Forms of Doing Business

Six Forms of Doing Business Excerpted from FastTrac NewVenture When identifying an appropriate legal form of business, most often entrepreneurs consider these factors control, taxes, liability, transferability of ownership, longevity

More information

Protect your business, your family, and your legacy.

Protect your business, your family, and your legacy. An Educational Guide for Business Owners Protect your business, your family, and your legacy. Take a closer look at buy-sell agreements. Needs-based Strategies Your business is probably your single largest

More information

CHOOSING THE FORM OF BUSINESS ORGANIZATION

CHOOSING THE FORM OF BUSINESS ORGANIZATION CHOOSING THE FORM OF BUSINESS ORGANIZATION TAX AND NON-TAX CONSIDERATIONS INTRODUCTION One of the fundamental initial decisions a new business owner faces is choosing the form of organization for the business.

More information

Business Succession Planning

Business Succession Planning Business Succession Planning with Key Person Coverage and Buy-Sell Agreements Program Highlights & Fact Finder You put maximum effort into establishing and running your business. But are you taking the

More information

SHOULD MY BUSINESS BE AN S CORPORATION OR A LIMITED LIABILITY COMPANY?

SHOULD MY BUSINESS BE AN S CORPORATION OR A LIMITED LIABILITY COMPANY? SHOULD MY BUSINESS BE AN S CORPORATION OR A LIMITED LIABILITY COMPANY? 2015 Keith J. Kanouse One Boca Place, Suite 324 Atrium 2255 Glades Road Boca Raton, Florida 33431 Telephone: (561) 451-8090 Fax: (561)

More information

The Business Organization: Choosing an Entity

The Business Organization: Choosing an Entity The Business Organization: Choosing an Entity The subject matter is divided into two sections: 1. Section A shows direct comparison of different types of organizational structures. 2. Section B details

More information

Business Organization\Tax Structure

Business Organization\Tax Structure Business Organization\Tax Structure Kansas Secretary of State s Office Business Services Division First Floor, Memorial Hall 120 S.W. 10th Avenue Topeka, KS 66612-1594 Phone: (785) 296-4564 Fax: (785)

More information

LLC Equity Incentive Compensation Alexander G. Domenicucci

LLC Equity Incentive Compensation Alexander G. Domenicucci LLC Equity Incentive Compensation Alexander G. Domenicucci Agenda Advantages of LLCs Taxation of LLCs Types of LLC equity incentive compensation Capital interests Profits interests Tax consequences of

More information

Corps, Fed IDs, Why Me?

Corps, Fed IDs, Why Me? Corps, Fed IDs, Why Me? THE BUSINESS OF INNOVATION F R E E F O O D a n d F R E E F I N A N C I A L A D V I C E Choice of Entity Understanding the Pros and Cons of Entity Types Available Entity Types 4

More information

OUTLINE OF PROVISIONS AND SUBJECTS TO DISCUSS FOR INCLUSION IN A LLC OPERATING AGREEMENT

OUTLINE OF PROVISIONS AND SUBJECTS TO DISCUSS FOR INCLUSION IN A LLC OPERATING AGREEMENT OUTLINE OF PROVISIONS AND SUBJECTS TO DISCUSS FOR INCLUSION IN A LLC OPERATING AGREEMENT A limited liability company ( LLC ) offers pass-through income tax treatment like a partnership but with limited

More information

BUY-SELL AGREEMENTS FOR OWNERS OF CLOSELY-HELD BUSINESSES: AN OVERVIEW. William C. Staley, Attorney www.staleylaw.com (818) 936-3490.

BUY-SELL AGREEMENTS FOR OWNERS OF CLOSELY-HELD BUSINESSES: AN OVERVIEW. William C. Staley, Attorney www.staleylaw.com (818) 936-3490. BUY-SELL AGREEMENTS FOR OWNERS OF CLOSELY-HELD BUSINESSES: AN OVERVIEW William C. Staley, Attorney www.staleylaw.com (818) 936-3490 Presented to the SAN FERNANDO VALLEY BAR ASSOCIATION May 28, 2008 BUY-SELL

More information

Employee Stock Ownership Plans ESOPs 101

Employee Stock Ownership Plans ESOPs 101 Employee Stock Ownership Plans ESOPs 101 BTA INC 2013 Complete Turn Key Services Full Service ESOP Implementation Services Preliminary Analysis Feasibility Studies Valuation Consulting Plan and Transaction

More information

Succession Planning. Succession Planning. James F. Weber, CPA, CGMA Managing Member

Succession Planning. Succession Planning. James F. Weber, CPA, CGMA Managing Member James F. Weber, CPA, CGMA Managing Member This session is eligible for 1 Continuing Education Hour and 1 Contact Hour. To earn these hours you must: Have your badge scanned at the door Attend 90% of this

More information

A DOZEN SECRET TECHNIQUES OF A BUSINESS AND TAX ATTORNEY 1. William C. Staley, Attorney www.staleylaw.com 818 936-3490

A DOZEN SECRET TECHNIQUES OF A BUSINESS AND TAX ATTORNEY 1. William C. Staley, Attorney www.staleylaw.com 818 936-3490 A DOZEN SECRET TECHNIQUES OF A BUSINESS AND TAX ATTORNEY 1 William C. Staley, Attorney www.staleylaw.com 818 936-3490 Warner Center Estate and Tax Planning Council Woodland Hills October 1, 2008 1 This

More information

CHAPTER 1 ESTABLISHING A NEW BUSINESS IN THE UNITED STATES

CHAPTER 1 ESTABLISHING A NEW BUSINESS IN THE UNITED STATES CHAPTER 1 ESTABLISHING A NEW BUSINESS IN THE UNITED STATES 1. CHOICE OF ENTITY A foreign investor may choose from a variety of forms of entities to do business in the United States. Such forms of entities

More information

FORMALIZING YOUR FIRM: LLC VERSUS S CORPORATION VERSUS C CORPORATION

FORMALIZING YOUR FIRM: LLC VERSUS S CORPORATION VERSUS C CORPORATION FORMALIZING YOUR FIRM: LLC VERSUS S CORPORATION VERSUS C CORPORATION by Stephanie L. Chandler 1 and Lisa S. Miller 2, Jackson Walker L.L.P. As we work with entrepreneurs in setting up the structures for

More information

ESOP CONNECT MANAGING THE ESOP REPURCHASE OBLIGATION. A company sponsoring an ESOP must make a market for vested plan participants.

ESOP CONNECT MANAGING THE ESOP REPURCHASE OBLIGATION. A company sponsoring an ESOP must make a market for vested plan participants. ESOP CONNECT MANAGING THE ESOP To ensure the success of an Employee Stock Ownership Plan (ESOP) as an employee motivational tool and as a means of corporate finance and succession planning, a company sponsoring

More information

Choice of Entity: Corporation or Limited Liability Company?

Choice of Entity: Corporation or Limited Liability Company? September 2012 Choice of Entity: Corporation or Limited Liability Company? By Gianfranco A. Pietrafesa* Attorney at Law There are many different types of business entities, including corporations, general

More information

Equity Compensation in Limited Liability Companies

Equity Compensation in Limited Liability Companies Equity Compensation in Limited Liability Companies October 6, 2010 Presented by: Pamela A. Grinter Frank C. Woodruff Introduction to Limited Liability Companies Limited liability companies were created

More information

Understanding business insurance

Understanding business insurance Version 4.2 This document provides some additional information to help you understand the financial planning concepts discussed in the SOA in relation to. Important information This document has been published

More information

THE LEGAL ASPECTS OF GOING INTO BUSINESS

THE LEGAL ASPECTS OF GOING INTO BUSINESS THE LEGAL ASPECTS OF GOING INTO BUSINESS Copyright 1997 Board of Regents, University of Wisconsin System Mark Stover, Vicki Lobermeier, Kathy Bartelt, Editors Small Business Development Center This publication

More information

Buy-Sell Review SAMPLE. Summary and Analysis. Prepared for Hawkeye Medical Group, P.C. Sample City, IL

Buy-Sell Review SAMPLE. Summary and Analysis. Prepared for Hawkeye Medical Group, P.C. Sample City, IL Buy-Sell Review Summary and Analysis SAMPLE Prepared for Hawkeye Medical Group, P.C. Sample City, IL Thank you for requesting a Principal Buy-Sell Review. We have received the following documents: Hawkeye

More information

Employee Stock Ownership Plans for Banks and Bank Holding Companies The Tax-Exempt Stock Market

Employee Stock Ownership Plans for Banks and Bank Holding Companies The Tax-Exempt Stock Market Employee Stock Ownership Plans for Banks and Bank Holding Companies The Tax-Exempt Stock Market Presenters: W. William Gust, J.D., LLM President of Corporate Capital Resources, LLC Michael A. Coffey Managing

More information

OPERATING AGREEMENT of. This Operating Agreement (the "Agreement") made and entered into this 21st day of June, 2016 (the "Execution Date"), of,,

OPERATING AGREEMENT of. This Operating Agreement (the Agreement) made and entered into this 21st day of June, 2016 (the Execution Date), of,, OPERATING AGREEMENT of This Operating Agreement (the "Agreement") made and entered into this 21st day of June, 2016 (the "Execution Date"), BY: of,, (the "Member"). BACKGROUND: A. The Member wishes to

More information

The sole proprietor is free to make any decision he or she wishes to concerning the business. The major disadvantage is

The sole proprietor is free to make any decision he or she wishes to concerning the business. The major disadvantage is Chapter 11 Corporate Governance & Business Organizations An entrepreneur is one who initiates and assumes the financial risks of a new enterprise and undertakes to provide or control its management. One

More information

EMPLOYEE STOCK OWNERSHIP PLANS

EMPLOYEE STOCK OWNERSHIP PLANS EMPLOYEE STOCK OWNERSHIP PLANS AN EXTRAORDINARY FINANCIAL AND EMPLOYEE BENEFIT TOOL FOR THE CLOSELY-HELD COMPANY Ice Miller LLP Legal Counsel 2013 Ice Miller LLP All Rights Reserved TABLE OF CONTENTS PART

More information

FORMATION AND OPERATION OF AN LLC IN CALIFORNIA

FORMATION AND OPERATION OF AN LLC IN CALIFORNIA FORMATION AND OPERATION OF AN LLC IN CALIFORNIA This LLC corpus contains informational documentation provided as a service to help people understand California LLCs. Forms and instructions for many of

More information

Business Structures. College of Menominee Nation 1. Presented by: Mwata Chisha Business and Public Administration

Business Structures. College of Menominee Nation 1. Presented by: Mwata Chisha Business and Public Administration Business Structures Presented by: Mwata Chisha Business and Public Administration College of Menominee Nation 1 MEET MWATA CHISHA 2 OBJECTIVES Discuss the various types of business entities and their general

More information

2:4 Letter to client regarding choice between LLC and S corporation

2:4 Letter to client regarding choice between LLC and S corporation 2:4 Letter to client regarding choice between LLC and S corporation Dear [Client]: I understand that you are interested in creating a new business entity for a [type of business] business. This letter

More information

Business Succession Planning With ESOPs

Business Succession Planning With ESOPs acumen insight Business Succession Planning With ESOPs Presented by Alan Taylor, CPA Partner ideas attention reach expertise depth agility talent Disclaimer Information contained herein is of a general

More information

BUSINESS ENTITIES IN COLORADO

BUSINESS ENTITIES IN COLORADO BUSINESS ENTITIES IN COLORADO Types of Colorado Business Entities When starting a business there are many different formats available. In fact, there are so many choices it can be quite dizzying. In general

More information

THE PATIENT-CENTERED & DATA-DRIVEN ISSUE

THE PATIENT-CENTERED & DATA-DRIVEN ISSUE THE PATIENT-CENTERED & DATA-DRIVEN ISSUE Should Your Practice be a Corporation, LLC or? BY JEREMY KIECKER, CPA Having the right entity is important financially and legally Whether you are just starting

More information

CHOOSING THE RIGHT BUSINESS STRUCTURE

CHOOSING THE RIGHT BUSINESS STRUCTURE CHOOSING THE RIGHT BUSINESS STRUCTURE One type of business structure is not necessarily better than another, therefore, it is important to evaluate your needs now and into the future, and consider the

More information

Combining Buy-Sell with Retirement Planning

Combining Buy-Sell with Retirement Planning Combining Buy-Sell with Retirement Planning A Limited Liability Company (LLC) is an entity that offers business owners the liability protection of a corporation and the flexible tax characteristics of

More information

Contents. Define ESOP 3. ESOP Advantages 4. Creating an ESOP 5. ESOP Tax Advantages 6. ESOP Laws 7. ESOP Rollover (Section 1042) 8.

Contents. Define ESOP 3. ESOP Advantages 4. Creating an ESOP 5. ESOP Tax Advantages 6. ESOP Laws 7. ESOP Rollover (Section 1042) 8. ESOPs Contents Define ESOP 3 ESOP Advantages 4 Creating an ESOP 5 ESOP Tax Advantages 6 ESOP Laws 7 ESOP Rollover (Section 1042) 8 ESOP Valuation 9 ESOP Distribution 10 Repurchase Obligation 11 Disadvantages

More information

SAMPLE BUY-SELL AGREEMENT Should be reviewed by an attorney familiar with the laws in your state before using for your business.

SAMPLE BUY-SELL AGREEMENT Should be reviewed by an attorney familiar with the laws in your state before using for your business. SAMPLE BUY-SELL AGREEMENT Should be reviewed by an attorney familiar with the laws in your state before using for your business. This Buy-Sell Agreement (this "Agreement") is made effective as of, between

More information

A partnership having one or more general partners and one or more limited partners.

A partnership having one or more general partners and one or more limited partners. 1. Definition A business association of two or more persons to conduct a business unless formed under any other statute. A partnership having one or more general partners and one or more limited partners.

More information

Sample Corporate Cross Purchase Agreement

Sample Corporate Cross Purchase Agreement Sample Corporate Cross Purchase Agreement (Optional Disability Buy-Out) This sample agreement has been prepared as a guide to assist attorneys. Our publication, Buy-Sell Arrangements, A Guide for Professional

More information

Transferring Your Business Interest with a Buy-Sell Agreement

Transferring Your Business Interest with a Buy-Sell Agreement Besselman & Associates Patricia Ann Besselman CFP James M. Besselman, CLU, ChFC 111 Veterans Blvd. Ste. 360 Metairie, LA 70005 504-831-3506 pbesselman@besselmanandassoc.com Transferring Your Business Interest

More information

Options for Worker Co-op Legal Structure

Options for Worker Co-op Legal Structure Options for Worker Co-op Legal Structure California Co-op Conference Jenny Kassan, Katovich Law Group jenny@katovichlaw.com (510) 834-4530 August 16, 2009 Options for Worker Co-op Legal Structure Cooperative

More information

Understanding Business Insurance

Understanding Business Insurance Version 4.0 Preparation Date: 2 November 2009 This document provides some additional information to help you understand the financial planning concepts discussed in the SOA in relation to business insurance.

More information

The ESOP Business Model. February 2013

The ESOP Business Model. February 2013 The ESOP Business Model February 2013 Topics to be Covered + Purpose and Regulatory Environment + Major Benefits of ESOPs + ESOP Transactions + Business Valuation Standards + ESOP Accounting Rules + ESOP

More information

AGRICULTURAL & APPLIED ECONOMICS

AGRICULTURAL & APPLIED ECONOMICS University of Wisconsin-Madison Department of Agricultural & Applied Economics April 2004 Staff Paper No. 473 Limited Liability Company: A Farm Business Arrangement Alternative By Mary Meehan-Strub and

More information

Basic Legal and Accounting Considerations in Starting a New Business

Basic Legal and Accounting Considerations in Starting a New Business Basic Legal and Accounting Considerations in Starting a New Business By: Everett Petronio, Jr., Kalander & Shaw, Ltd. Judy Hetherman, CPA, CHBC, Judith Hetherman & Co., CPAs If you re considering starting

More information

What to Consider When Faced With the Pension Election Decision

What to Consider When Faced With the Pension Election Decision PENSION ELECTION Key Information About Your Pension (Optional Forms of Benefits) Pension Math and Factors to Consider Pension Maximization What Happens if Your Company Files for Bankruptcy and Your Company

More information

ANATOMY OF AN ESOP. Employee Stock Ownership Plans From the Perspective of the Business Owner

ANATOMY OF AN ESOP. Employee Stock Ownership Plans From the Perspective of the Business Owner ANATOMY OF AN ESOP Employee Stock Ownership Plans From the Perspective of the Business Owner MARK D. WELKER mark.welker@huschblackwell.com 816-983-8148 KCP-1712449-3 Copyright Mark D. Welker 1/23/09 TABLE

More information

Boston Executive Briefing Series

Boston Executive Briefing Series Boston Executive Briefing Series Company: Solving the Puzzle of C Corp, Presented by: Kenneth R. Appleby and Thomas A. Rosenbloom INTRODUCTION Selection of the form of legal entity is one of the most important

More information

COMPREHENSIVE GUIDE TO CHOOSING A NEW BUSINESS STRUCTURE

COMPREHENSIVE GUIDE TO CHOOSING A NEW BUSINESS STRUCTURE COMPREHENSIVE GUIDE TO CHOOSING A NEW BUSINESS STRUCTURE 1. Corporations and LLCs: The most common entities 2. Comparing corporations and LLCs 3. Things to consider when forming a business entity 4. Which

More information

Vertex Wealth Management LLC

Vertex Wealth Management LLC Vertex Wealth Management LLC Michael Aluotto President Private Wealth Manager 1325 Franklin Ave., Ste. 335 Garden City, NY 11530 516-294-8200 mjaluotto@1stallied.com S Corporation Page 1 of 7, see disclaimer

More information

Business Su c c e s s i o n Pl a n n i n g

Business Su c c e s s i o n Pl a n n i n g Business Su c c e s s i o n Pl a n n i n g w i t h Key Pe r s o n Co v e r a g e and Buy-Sell Agreements Program Highlights & Fact Finder You put maximum effort into establishing and running your business.

More information

Transferring Business Assets

Transferring Business Assets Transferring Business Assets In the future, you may either want to transfer your business to heirs or sell your business to employees, competitors, or others. Planning for transfer of a family business

More information

Equity Financings and Structures

Equity Financings and Structures Equity Financings and Structures November 2011 Table of Contents C:\Documents and Settings\friedara\Local Settings\Temporary Internet Files\OLK9E4\Equity Overview 11 14 11.ppt\A2XP\15 NOV 2011\9:27 AM\2

More information

LIMITED LIABILITY COMPANIES AND LIMITED LIABILITY PARTNERSHIPS IN ILLINOIS: PRACTICAL OPERATING ISSUES

LIMITED LIABILITY COMPANIES AND LIMITED LIABILITY PARTNERSHIPS IN ILLINOIS: PRACTICAL OPERATING ISSUES LIMITED LIABILITY COMPANIES AND LIMITED LIABILITY PARTNERSHIPS IN ILLINOIS: PRACTICAL OPERATING ISSUES David K. Staub* Stahl Cowen Crowley LLC Chicago, Illinois The limited liability company ("LLC") and

More information