Lawyer Monthly Magazine - October 2019 Edition

Family Health Insurance (via the Affordable Health Care Act). C. A Limited Liability Company (LLC): An LLC is a business structure allowed by state statute that lets its owners take advantage of the benefits of both the corporation and partnership business structures. Owners of an LLC are called members. Most states do not restrict ownership, and so members may include individuals, corporations, other LLCs and foreign entities. There is no maximum number of members. Most states also permit “single-member” LLCs, those having only one owner. LLCs protect you from personal liability in most instances; your personal assets — like your vehicle, house, and savings accounts — won’t be at risk in case your LLC faces bankruptcy or lawsuits. Profits and losses can get passed through to your personal income without facing corporate taxes. However, (via the Affordable Health Care Act). B. A partnership: A partnership is the relationship existing between two or more persons who join together to carry on a trade or business. Each person contributes money, property, labor or skill, and expects to share in the profits and losses of the business. There are two common kinds of partnerships: limited partnerships (LP) and limited liability partnerships (LLP). Limited partnerships have only one general partner with unlimited liability, and all other partners have limited liability. The partners with limited liability also tend to have limited control over the company, which is documented in a partnership agreement. Limited liability partnerships are similar to limited partnerships, but give limited liability to every owner. An LLP protects each partner from debts against the partnership; they won’t be responsible for the actions of other partners. members of an LLC are considered self-employed and must pay self-employment tax contributions towards Medicare and Social Security. LLCs can have a limited life in many states. When a member joins or leaves an LLC, some states may require the LLC to be dissolved and re-formed with new membership — unless there’s already an agreement in place within the LLC for buying, selling, and transferring ownership. LLCs can be a good choice for medium- or higher- risk businesses, owners with significant personal assets they want to protect, and owners who want to pay a lower tax rate than they would with a corporation. An LLC should consider obtaining the following insurance: 1. General Liability insurance; 2. Commercial Property Insurance; 3. Business Owner’s Policy (BOP); 4. Commercial Auto Insurance; 5. Worker’s Compensation Insurance; 6. Professional liability Insurance; 7. Data Breach Insurance; 8.Commercial Renter’s Insurance; 9. Life Insurance (Key Person Insurance); 10. Family Health Insurance (via the Affordable Health Care Act). D. A C-Corporation: A regular corporation, sometimes called a C Corp, is a legal entity that’s separate from its owners. By forming a corporation, prospective shareholders exchange money, property, or both, for the corporation’s capital stock. For federal income tax purposes, a C-corporation is recognized as a separate taxpaying entity. A corporation conducts business, realizes net income or loss, pays taxes and distributes profits to shareholders. Corporations can make a profit, be taxed, and can be held legally liable. Corporations offer the strongest A partnership must file an annual information return to report the income, deductions, gains, losses, etc., from its operations, but it does not pay income tax. Instead, it “passes through” any profits or losses to its partners. Each partner includes their share of the partnership’s income or loss on their individual tax return. Partners are not employees and should not be issued a Form W-2. The partnership must furnish copies of Schedule K-1 (Form 1065) to the partners by the date Form 1065 is required to be filed, including extensions. A partnership should consider obtaining the following insurance: 1. General Liability insurance; 2. Commercial Property Insurance; 3. Business Owner’s Policy (BOP); 4. Commercial Auto Insurance; 5. Worker’s Compensation Insurance; 6. Professional Liability Insurance; 7. Data Breach Insurance; 8.Commercial Renter’s Insurance; 9. Life Insurance (Key Person Insurance); 10. First Choice Lawyers By Selwyn D. Whitehead, Esq., Law Offices Of Selwyn D. Whitehead 70 WWW.LAWYER-MONTHLY.COM | OCT 2019 II. What 10 Factors Should You Consider in Forming Your Business? 1. First, the owner must determine how much control she requires over the business. Said another way: the owner must determine how much control she is willing to give up to others. 2. Second, the owner must determine her initial and reoccurring structuring costs and what ongoing administrative formalities are associated with her selected structure. 3. Next, the owner must consider which structure will best serve to limit her personal liability from the debts of the business. 4. The owner must then determine which structure will provide her with the most advantageous tax treatment. 5. Next, the owner must decide which structure will best help her reach the desired level of potential business growth and expansion. 6. The owner must establish what is the best structure for meeting her industry’s regulatory compliance requirements. 7. The best structure for raising capital and obtaining credit must then be determined. 8. Then they need to finalize the best structure for attacking the “partners” and/or employees desired. 9. Second to last, the owner must determine what is the best structure for obtaining the appropriate kinds and amount of insurance required to protect the business’s assets and shield the owner from as must liability as possible. 10. And finally, she must conclude what is the best structure for her desired exit strategy, including succession planning.