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Business and Corporate Law. Chuff and Kosierowski will be handling legal issues for businesses.Services by Chuff and Kosierowski, exceeding your expectations.
Chuff and Kosierowski, p.c. Attorneys at Law
Services at the law firm Chuff & Kosierowski

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Business and Corporate Law

Running your own business demands a lot of perseverance and determination. This often leaves little time to deal with the legal issues that constantly plague small businesses. Having the law firm Chuff and Kosierowski on your side can make a huge difference in the day-to-day operations of your business, helping you deal with a wide range of issues related to taxes, finance, business formations, acquisitions, mergers, contract negotiations, and litigation.

The law firm Chuff and Kosierowski are helping you plan out your business.

Types of Business Structures

There are many different ways that you can structure your business. If you are just starting out and aren’t sure what structure would be best for your circumstances, or have been in business for awhile and need to restructure your business, the law firm Ridley, Chuff, Kosierowski and Scanlon, P.C. can help. Major types of business structures in the United States include:

Sole-Proprietorship

A sole-proprietorship is a business that is owned by a single individual (or by a husband and wife) that is not a corporation or a limited liability company. There are no legal requirements to comply with in order to create and maintain the business structure. The biggest disadvantage is that you, the business owner, are held personally liable for the debts of the business. This means that if someone sues your business and obtains a judgment against it, you will be responsible for paying it even if it exceeds the entire worth of your business. You should evaluate the potential risk of this kind of liability for your type of business to determine whether you should operate as a corporation or limited liability company instead. An attorney who practices in the area of business law can help you make this determination and can also help you understand which business structure makes the most sense for you from a tax perspective.

Partnership

A partnership is a business that is owned by more than one individual (not a husband and wife) that is not a corporation or limited liability company. Nothing is required to establish the business as a partnership, it happens automatically when two or more people own a business that is not a corporation or a limited liability company. However, it is a good idea to have a written partnership agreement which spells out the commitments of the parties, including how much and what they will contribute to the business, how they will draw profits and share losses, and who will have authority and responsibility for making various decisions among other things. If the owners of the business do not make a written partnership agreement, state partnership law determines the obligations of the owners.

Corporation

A corporation can be owned by one or more individuals. Each state’s laws spell out the requirements for setting up a corporation in that state. Generally, establishing a corporation involves drafting Articles of Incorporation and Bylaws and issuing stock. The Articles of Incorporation are filed with the State and a Certificate of Incorporation is issued to the business. The main advantage of operating a business as a corporation is that the liability of the owners for the debts of the corporation is limited to their investment in the business. The biggest disadvantage is that the business must adhere to the corporate structure by conducting shareholders and directors meetings, which can be cumbersome for a small business.

Limited Liability Company (LLC)

Each state’s laws spell out the requirements for operating a business as a limited liability company. The basic structure of an LLC is that it combines the management aspects of a partnership with the liability advantage of a corporation. This makes it a very desirable structure for a business. However, like a corporation, there are legal requirements that must be met in order to preserve the status of the business as an LLC. Special care is also required in establishing the LLC to make sure the desired tax status is obtained.

Choosing Between a Corporation and a LLC

What is a Limited Liability Company (LLC) and is it a better form for your business than a corporation? LLCs generally have all the benefits of a corporation when it comes to limiting the business owner’s liability. The advantage of an LLC is the management flexibility it allows, and the potential tax benefits.

LLCs allow a business to have the limited personal liability of a corporation as provided by state law, while being treated as a partnership for purposes of Federal tax laws. The downside to an LLC is that you don’t get the free transferability of ownership, perpetual existence, and the ability to be totally owned by a single individual that you’d get with a Corporation. That is the trade off you make to get the Partnership tax status and greater management flexibility.

If the company’s business plan includes raising capital by someday admitting new owners or going public, then a Corporation is probably the more desirable form for the business. Limited Liability Companies generally restrict the transfer of ownership interests in the business to make sure the business is classified as a Partnership under federal tax law. An LLC usually has a limited existence in that it will end after a specified number of years or upon the occurrence of some specified event. This requirement is intended to help the business qualify as a Partnership for purposes of tax law.

Being taxed as a Partnership makes the LLC structure particularly attractive because it gives the owners a great deal of flexibility in allocating profit and loss. Operating as a Limited Liability Company also gives the owners greater flexibility in determining who manages the business and what each owner’s particular duties are in that regard.