Starting a business? You need a business formation attorney. While it may be simple to set up a Sole Proprietorship, doing so is rarely the smart decision. A sole proprietorship will leave the business owner without any protection against them personally.
When starting a new business it is vitally important to protect not only the business, but also the best interests of all the company founders. Choosing between forming a Limited Liability Company, C-Corp, S-Corp, Partnership or other entity can be confusing and difficult, but it can have a tremendous impact on success of the company and the security of the founders. At Marcellino & Tyson, we will work with you to determine what structure makes the most sense for you to ensure that your company is protected and in the best position to thrive.
Once a structure of the company is decided, we handle all necessary steps in form the company. We draft and file Articles of Organization or Articles of Incorporation to ensure the company and the founders are protected as they begin the process of starting a new company.
One of the primary legal decisions a business must make is which type of entity to form. LLCs, partnerships, S-corporations, C-corporations, and nonprofits all have positive and negative characteristics.
Some entity types are more flexible than others, so making the wrong choice could bring unexpected consequences or even cause an expensive conversion in the future. This decision could even prevent your company from making money. Marcellino & Tyson can guide you to the right decision. Take a look at your options below.
- LLC (Limited Liability Company): A limited liability company is a business model that combines aspects of a partnership or sole proprietorship and a corporation. Like owners of a partnership or sole proprietorship, business owners of LLCs report business earnings and losses on their personal income tax returns, so the LLC itself is not a different taxable entity. However, like corporations, LLC owners’ personal liability for debts and claims is protected, hence the name “limited liability.” The result of this is that if the business acquires debt or faces a lawsuit, only the business’s assets are at risk.
- LLP (Limited Liability Partnership): A limited liability partnership is a business partnership in which all partners have the right to control the entity. However, each partner is protected from negligent acts or personal liability of the other partners, and employees not under their control. Partners must have individual licenses in the field performed by the LLP, and are permitted to partake in the management of the partnership without subjecting their personal liability. Partners in an LLP have the right to directly manage the business, unlike corporate shareholders.
Choosing the right corporation status is also an important matter to address. Our attorneys will advise your corporation to operate under the most appropriate status.
- S Corporation: An S corporation is a corporation in which owners have the limited liability of a corporate shareholder, but pay income taxes like a sole proprietor or partner would. The business profits pass through to owners who report them on personal tax returns, meaning the corporation itself does not pay income tax. Owners can also pass losses through to their personal income tax return, which can offset any income that they have from other sources. Additionally, S corporation shareholders do not pay self-employment taxes like active LLC owners do.
- C Corporation: A C corporation is taxed on business profits. Owners pay individual income taxes only on money received from the corporation as a salary and dividends, not profits and losses.
- Non-Profit Corporation: Non- profit corporations are businesses formed for reasons other than generating profit. They can also be referred to as 501(c) corporations in IRS documents. After a non-profit reaches 501(c) status, it may be eligible to omit payment of state taxes, including federal income taxes. The non-profit’s purpose and structure will determine whether it qualifies for tax exemption
Filing with the Secretary of State
After choosing an entity, your new company can file the appropriate document with the Secretary of State. It is very important to file organizational documents and receive notice back from the Secretary of State before beginning business operations. After notice is received, you may enjoy liability protections. It is extremely helpful to have an experienced attorney guiding you through these steps if you have never started a company before or need to form it quickly.
There is a standard set of formation documents for each type of entity. These documents are mainly used when the company runs into issues, not when things are going well. Drafting the founding documents should be collaborative and involved all owners.
Business incorporation is the action of forming a new legal entity that the law recognizes. Incorporation allows business owners, managers and entrepreneurs to receive multiple benefits. Incorporating your business reduces your risk and liability and offers protection of personal assets. If your business is a corporation, your personal assets can be guarded against the company’s debts.
Business Purchase & Sale
Buying and selling a business can be pretty complicated. Luckily, we can help. Our attorneys can efficiently guide business owners through the process, attending to every aspect of the transaction.
There are many considerations for business owners to address that may affect the result of the transaction or lead to business litigation. Marcellino and Tyson’s attorneys are prepared to help clients with intellectual property, real property, trademarks, taxes, employment agreements, business valuations.. Etc (fill in what you can do here). Our attorneys will work with you to form a strategy for the successful purchase or sale of the company. Additionally, Marcellino and Tyson have experience with mergers and acquisitions and are able to advise clients on these transactions that may not include a direct sale.
Intellectual Property & Trademarks
Have you finally come up with a golden idea? If so, it’s probably worth protecting. Marcellino and Tyson are equipped to establish security for your intellectual property so that it can flourish in the future.
Intellectual property can be inventions, names, literary work, logos, designs, and art. Intellectual property law grants owners rights to many assets. Some of these include trademarks, copyrights, and patents. These laws were made to give business owners, entrepreneurs, and inventors safety in their innovative endeavors. Our attorneys are happy to assist you in finding the right type of intellectual property protection for your next great idea.