In a fast-paced, ever-changing, and sometimes volatile environment you need guidance from highly trained, responsive, and competent business law attorneys to answer questions, provide guidance on laws that govern your business practice and entity, and offer practical and accurate advice in meeting your business-related needs. Dickson Frohlich Phillips Burgess offers a wide range of services in this area. From determining which business entity works best for your business needs, the formation of your business entity including registering it with the state, partnership agreement drafting and review, conflict resolution and negotiations for breach of contract, breach in fiduciary duties, transfer of partnership interest, to dissolution.
Type of Entity
The type of entity you should choose depends on a lot of factors, including type of business, number of owners in the business, initial funding of business, and how a person may want the tax structure to be set up. Following are the most common types of business entities used:
Limited Liability Company (LLC) – The most simple and commonly used type of business entity. Can be made up of one or more members, who are the owners of the LLC. Can be managed by all of the members, or just certain members. Offers flow through taxation, where the LLC does not get taxed, but only the individual members get taxed, at a rate based on their annual earnings from all income sources.
Corporation – Owned by one or more shareholders. More complicated to manage than a LLC. There is a requirement to have annual meetings, as well as documentation, such as corporate resolutions, is required for simplest of undertakings. It also does not offer the same flow through taxation system as the LLC does, but instead, it has double taxation where the Corporation is taxed at a Corporate tax rate, and then the individual shareholders get taxed on the dividends received. Generally, should only be used by persons with over a hundred shareholders, or who are attempting to raise a large amount of investment capital.
Subchapter S Corporation – Similar to a Corporation, but allows for flow through taxation mechanism. Internal Revenue Service places restrictions on who can be eligible to be a Subchapter S Corporation. There are additional tax benefits to this type of entity, as it allows for certain savings, when it comes to payment of self-employment taxes.
Partnership – Intended for two or more owners. A type of entity that is rarely used anymore, as it is not a great type of entity when it comes to asset protection of individual partners. It does allow for a lot more freedom, especially if there are certain situations where business owners may want all owners to be held liable for actions of the partnership in order to better distribute risks.
Side Note: For professionals that are licensed by the State, the State may require you to form a Professional Limited Liability Company (PLLC), or a Professional Service Corporation (PS).
Generally, the formation process requires a registration with the Secretary of State. Getting an EIN/FEIN (Employer Identification Number) from the Internal Revenue Service. Getting a Business License from the Department of Revenue. Drafting an operating agreement/partnership agreement/bylaws (depending on the type of entity you choose to create). Your specific business may have other requirements based on the industry you will be operating in.
Once a business is established, there may be other requirements you may need to consider. If you have employees, you would need to think about Workers Compensation Insurance, Unemployment Insurance, and Payroll Deductions. You may want to have a comprehensive Employee guide. If you have Independent Contractors, you may want to look into 1099-MISC and other related IRS forms.
Additionally, depending on how your business in progressing, you may want to bring in more owners into the company, or terminate some of them. You may want to do joint ventures with other companies, merge with or acquire other companies, or decide to sell your business altogether. All these are delicate decisions, with extensive tax consequences and depend on your particular business and your particular situation.
Finally, you may eventually decide to shut down your business. Dissolution can be voluntary, where all the owners agree and no state or federal law has been violated, or involuntary. Involuntary is where either one of the owners, or a creditor of the entity petitions the court to cease business operations. The process of dissolving, or winding down a company, can be lengthy and stressful, especially if a court is involved. If you find yourself in that situation, we can consult with you regarding your course of action, based on your current situation.
I highly recommend Dickson Frohlich Phillips Burgess and if I ever need a lawyer again they will be my first call.
- Jeremy H.
I can’t even tell you how much I appreciate this firm! These guys helped me through one of the most challenging legal situations I’ve faced in my life. Their skill and expertise literally saved my business. I’ve dealt with other counsel in the past but the Dickson firm was by far the most competent and tactful counsel I’ve ever received. I would recommend this group to anyone!
- Keith D.
It’s a pleasure to work with the guys at Dickson Frohlich Phillips Burgess. One of the first things that stood out to me was how down to earth and friendly everyone at the firm is. I would definitely recommend them.