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Welcome to the 2008 Small Business Development Workshops

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Presentation on theme: "Welcome to the 2008 Small Business Development Workshops"— Presentation transcript:

1 Welcome to the 2008 Small Business Development Workshops
Burton A. Brown, a HACIA member The Law Offices of Burton A. Brown 205 W. Wacker Dr., Suite 922 Chicago, IL 60606 (312)

2 Business Formation & Incorporation

3 Business Formation & Incorporation
THE ANATOMY OF AN ENTITY Different Types of Entities Structure Pros & Cons Registration

4 Business Formation & Incorporation
Different Types of Entities Sole Proprietorship Partnership Corporation Limited Liability Company (LLC) Limited Liability Partnership (LLP)

5 SOLE PROPRIETORSHIP A business in which one person owns all the assets, owes all the liabilities and operates in his or her personal capacity.

Full Management Authority “You are your own Boss.” Limited legal expense Minimal Formalities and Regulatory and Reporting Requirements Unlimited Liability: Owner is solely responsible for all debts and obligations No diversity in management Limited ability to Raise Capital

7 PARTNERSHIP A voluntary association of two or more persons who jointly owns and carry on a business for profit. Under the Uniform Partnership Act, a partnership is presumed to exist if the persons agree to share proportionally the business’s profits or losses.

8 PARTNERSHIP PROS CONS All partners are entitled to manage the partnership equally Minimal formalities and regulatory and reporting requirements Low cost of Organization Unlimited Liability Partnership can cause problems when partners disagree on fundamental issues Limited ability to raise capital

9 CORPORATION An entity having authority under law to act as a single person distinct from the shareholders who own it and having rights to issue stock and exit indefinitely.

10 CORPORATION PROS CONS Limited Liability for Shareholders
Business continuity Ability to raise capital Centralized management - Shareholders - Board of Directors - Officers/ Managers Increased legal expenses Corporate Formalities and Reporting Requirements: - Annual Report - Annual Corporate Minutes Double Taxation - Corporate income - Shareholders: Pay taxes on income & dividends Double Taxation: Corporation is responsible for tax on corporate income. Shareholders responsible for income tax on income and dividends received.

A company – statutorily authorized in certain states – that is characterized by limited liability, management by members or managers, and limitations on ownership transfer.

PROS CONS Limited Liability for all owners Unrestrictive ownership Ability to raise capital for business Beneficial tax treatment Flexibility of management Higher Legal Expenses Limited Transferability of Ownership Possibility of Piercing the LLC Veil Strict Formalities and Reporting Requirements - Articles of Organization - Annual Reports

A partnership in which a partner is not liable for a negligent act committed by another partner or by an employee not under the partner’s supervision.

PROS CONS Limited Liability Business Continuity Diversified Capital Resources Operating Agreement General Partner Higher Legal and Organizational Expenses Strict Formalities and Regulatory and Reporting Requirements

15 Registration & Recording
Secretary of State - Forms - Fees Recorder of Deed Office

16 How to Decide Which Entity is Best for You
Conference with your Accountant & Attorney Discuss: - Present - Near Future - Future Cost Effective

17 Thank You for Joining Us.
To Be Continued… Thank You for Joining Us. Law Offices of Burton A. Brown Burton A. Brow, a HACIA member Stephen Spiegel Patty Rodriguez Maria Hernandez

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