Presentation on theme: "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."— Presentation transcript:
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 (312)
Business Formation & Incorporation
THE ANATOMY OF AN ENTITY Different Types of Entities Structure Pros & Cons Registration
Business Formation & Incorporation Different Types of Entities Sole Proprietorship Partnership Corporation Limited Liability Company (LLC) Limited Liability Partnership (LLP)
SOLE PROPRIETORSHIP A business in which one person owns all the assets, owes all the liabilities and operates in his or her personal capacity.
SOLE PROPRIETORSHIP PROS Full Management Authority You are your own Boss. Limited legal expense Minimal Formalities and Regulatory and Reporting Requirements CONS Unlimited Liability: Owner is solely responsible for all debts and obligations No diversity in management Limited ability to Raise Capital
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 businesss profits or losses.
PARTNERSHIP PROS All partners are entitled to manage the partnership equally Minimal formalities and regulatory and reporting requirements Low cost of Organization CONS Unlimited Liability Partnership can cause problems when partners disagree on fundamental issues Limited ability to raise capital
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.
CORPORATION PROS Limited Liability for Shareholders Business continuity Ability to raise capital Centralized management - Shareholders - Board of Directors - Officers/ Managers CONS Increased legal expenses Corporate Formalities and Reporting Requirements: - Annual Report - Annual Corporate Minutes Double Taxation - Corporate income - Shareholders: Pay taxes on income & dividends
LIMITED LIABILITY COMPANY (LLC) A company – statutorily authorized in certain states – that is characterized by limited liability, management by members or managers, and limitations on ownership transfer.
LIMITED LIABILITY COMPANY (LLC) PROS Limited Liability for all owners Unrestrictive ownership Ability to raise capital for business Beneficial tax treatment Flexibility of management CONS Higher Legal Expenses Limited Transferability of Ownership Possibility of Piercing the LLC Veil Strict Formalities and Reporting Requirements - Articles of Organization - Annual Reports
LIMITED LIABILITY PARTNERSHIP (LLP) A partnership in which a partner is not liable for a negligent act committed by another partner or by an employee not under the partners supervision.
LIMITED LIABILITY PARTNERSHIP (LLP) PROS Limited Liability Business Continuity Diversified Capital Resources CONS Operating Agreement General Partner Higher Legal and Organizational Expenses Strict Formalities and Regulatory and Reporting Requirements
Registration & Recording Secretary of State - Forms - Fees Recorder of Deed Office - Fees
How to Decide Which Entity is Best for You Conference with your Accountant & Attorney Discuss: - Present - Near Future - Future Cost Effective
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