CORPORATIONS, LLC’S AND PARTNERSHIPS
Small and medium size businesses are one of our greatest assets in the United States. Almost everyone probably dreams of owning their own business and many people at one point or another in their lives actually operate their own business. Some people originate the business themselves. Others purchase an existing business. An experienced attorney cannot insure that your business succeeds, but he can be sure that you are organized properly so that your business development is not hampered by organizational or government regulations. Starting and maintaining a business requires sound legal advice and counsel. Attorney Mark Heimsoth works with business owners to identify effective solutions for protecting your long term goals. He offers a wide variety of business law related legal services – evaluating business formation options (corporation, limited liability company, sole proprietorship), reviewing shareholder or operating agreements, handling ongoing legal and contract issues, and submitting annual filings with the state.
If you have questions regarding your business call or e-mail the law firm of Mark Heimsoth today to schedule an initial consultation. His clients include businesses within DuPage County, DeKalb County, Will County, Kane County, and Kendall County.
I. Choosing a Business Entity:
The five major business organization forms are:
a) Sole Proprietorship
b) General Partnership
c) Limited Partnership
d) Limited Liability Company, and
There are many questions which must be asked to determine which of these entitles is most suitable for a business. For example, how many owners will there be and will each owner be active in running the business? Sole proprietorships are simple and inexpensive for starting a one person business but when more people are involved, this business type has its limitations. Will some of the owners be investors only? If so, will they want to limit their liability? Partnerships and corporations offer a variety of ways to structure a business in which investors provide cash, but do not wish to operate the business.
Another important question for multiple owners is whether or not they will be equal partners or whether one or more individuals will be dominant. If there are going to be owners who will own only a small fraction of the company, how will their minority interests be protected? Will the minority operation of the new business create risks that could jeopardize an owners assets? Sole proprietorships and general partnerships are less complicated business entities, but the owners and partners are personally liable for the debts and liabilities of the business. Corporate business forms (including LLC’s) can shield owners from personal liability.
II. Buying an Existing Business
An experienced business law attorney can be invaluable when purchasing an existing business. If the business is already incorporated, the first question to review is whether to buy the corporation’s stock or form a new corporation and buy the assets of the corporation. Buying the stock transfers all assets and liabilities of the existing corporation. Where the business is risky or the record keeping in the business has not been good, it may be more advantageous to form a new corporation and buy the assets of the other business to avoid having to deal with the old owner’s problems.
If there is a daily changing inventory, how does one set the price and freeze the inventory being sold? What employee rights and obligations will be carried forward? Are receivables part of the transaction? Are there any environmental issues to be considered or any government licenses which will need to be obtained or transferred? Will the prior owner be required to consult for a period of time and be prohibited from entering a similar business?
These and many other questions must be considered in buying a business. A comprehensive discussion with your attorney can help make sure that when you purchase a business it will be productive from the beginning and not be loaded with problems which have to be resolved before the business can really begin to function.
As you organize your business and move forward, there are many other matters you will want to discuss with your attorney including, but not limited to:
a) Purchase contracts,
b) Zoning compliances,
c) Employee hiring,
d) Employee compensation,
e) Use of independent contractors,
f) Privacy rights,
g) Avoiding discrimination.
Some of these matters will not impact a business immediately, but having formed a business with a clear understanding of the issues that might arise can help one be prepared to recognize and properly deal with such questions.
A business is a complicated, evolving entity. Attorney Mark Heimsoth is ready to partner with businesses in an ongoing consultative relationship to ensure your business is secure. He understands how changes in the law can affect taxes, liability, accounting and reporting requirements. The law can directly impact business operations. Attorney Mark Heimsoth can monitor developments and provide you with important information that facilitates your business planning.
Contact the law office of Attorney Mark Heimsoth to schedule a free half hour initial consultation.