BUSINESS & CONTRACT LAW
Entity formation, incorporation, dissolution, contracts and more
At Latif Law, LLC we understand that your business is your livelihood and deserves the utmost care and attention.
We strive to make the legal concerns of your business as simple as possible so you can focus on building a successful enterprise.
Let us be your trusted business advisors. Whether it is negotiating the terms of a contract, determining the best entity type for your new business, registering your business in Ohio, obtaining a Federal Tax ID (EIN) number, or helping to wind down operations for an old business, we are here for you!
Business Issues we can help with:
When choosing the right business entity, there are many factors to consider. Ownership rights, management structure, taxation, personal liability, ease of formation and deductibility of losses are only a few of the elements you need to consider. We are experienced in evaluating your business, proactive in assessing your needs going forward, and enjoy helping you decide upon a structure that works best for you!
Business/ Entity Formation
Entity Types
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Sole Proprietorships - A form of business in which one person owns all of the assets of the business as opposed to a partnership, trust or corporation.
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Advantages: This entity is the default setup for single business owners. It requires little or no paperwork and is easy to set up. In this structure, profits pass through to the owner's personal tax return.
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Disadvantages: The main, and potentially devastating problem with this structure is that there is no separation between business and personal liability. This means that in the event of a lawsuit your personal assets are at risk. This entity is also a poor vehicle for raising money from investors as it lacks the safeguards and structure of other entities.
2. General Partnerships -A form of business in which two or more persons carry on business as co-
owners for profit, and who are personally liable for all debts of the partnership.
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Advantages: This entity is the default setup for multiple business owners. It is a form of business in which two or more persons carry on business as co-owners for profit, and who are personally liable for all debts of the partnership. It requires little or no paperwork, except partners usually need a partnership agreement. In this structure, profits pass through to each of the owners' personal tax returns. Additionally, the owners can divide control as they see fit.
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Disadvantages: Again, similar to sole proprietorships, the main disadvantage of the general partnership is that there is no separation between business and personal liability. If the partnership is sued or unable to pay its debts, the partners' personal assets are at risk. The partnership also raises the possibility of conflicts among the partners as to how to run the business, which often leads to litigation in itself. This entity is also not the best choice for raising money from investors
3. Limited Partnerships - A type of partnership comprised of one or more general partners who
manage the business, and who are personally liable for partnership debts, and one or more limited
partners who contribute capital and share in profits but who do not take part in running the business and incur no liability with respect to the partnership obligations beyond contribution.
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Advantages: This entity is the provides the same benefits of a partnership structure but also makes it easier to raise capital from outside investors as they have a method to limit their risk.
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Disadvantages: The main disadvantage is that limited partners have no control in the management of the business.
4. C Corporations - An entity created by one or more person(s) where the ownership is represented by
shares of stock. A corporation is legally recognized as a separate and distinct entity from that of its
shareholders who are not personally responsible for the corporation’s acts and debts.
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Advantages: Protection from personal liability; easy to raise capital; seen as an established entity
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Disadvantages: Costly to form; double taxation; extensive paperwork requirements
5. S Corporations
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Advantages: Protection from personal liability; Profits pass through to owners' personal tax returns
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Disadvantages: Only some companies eligible; more limits on issuing shares
6. LLCs
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Advantages: Protection from personal liability; less record-keeping than corp; profits and responsibilities can be easily divided among members
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Disadvantages: Not appropriate if you want to raise venture capital or investor money. Entire income of LLC members are subject to self-employment tax contributions, which you can avoid with a Corp (Medicare and Social Security)
Drafting and Preparing Business Documents
We can help in preparing operating agreements, employment agreements, independent contractor agreements, non-compete agreements, and several other business agreements
Litigating, Mediating or Arbitrating Business Disputes
Sometimes agreements don't go as planned, and you need a dedicated representative to protect your assets and business dealings. In some circumstances, you may want to enforce your rights in court. Other times, it is prudent to consider alternative means of dispute resolution to efficiently resolve your business difficulties.
Reviewing & Negotiating Contracts
Unsure if you are receiving the benefit of your bargain? We are proud to offer contract review and negotiation services to ensure you understand what you are agreeing to, minimize your risk and maximize the benefits you receive from your negotiated agreements.
Frequently Asked Questions Regarding Business and Contracts
1. What is the best entity type for my business?
Choosing an entity type is not something that should be taken lightly. It requires a thorough overview of your business goals, resources, and parties involved. Latif Law, LLC takes pride in helping our clients make informed business decisions and offers free 30 minute consultations to discuss all options available to you and their advantages and disadvantages.
2. How can I form a 501(c)(3) tax-exempt organization?
501(c)(3) organizations must meet strict standards in order to obtain this status.
3. How much is the initial consultation for business matters?
Your first 30 minute consultation is completely free!
4. I know a lot about business, do I really need to have an attorney?
It is highly advisable. As with many things, it depends on your level of knowledge and experience. Even if you are very knowledgeable in business operations, you may not know the intricacies of Ohio Business law. Therefore, it is always best to consult with an attorney to determine your legal rights and obligations.
5. What is business law anyway?
Business law establishes what businesses can and cannot do, defines the type of business structures that can be created, ensures that both employees and employers are protected, and establishes certain guidelines to keep the business world fair and balanced. There are many more topics to consider.
6. What does it mean to "pierce the corporate veil"?
One of the most attractive features of a corporate entity is its limited liability protection. Corporations provide protection to shareholders and directors of the company by shielding their personal assets in the event a corporation is sued or becomes insolvent. However, in order to maintain this protection, individuals in the company must follow corporate formalities, such as not commingling personal and corporate assets and not being under-capitalized at the time of incorporation, to name a few. Piercing the corporate veil refers to a situation where a court bypasses or "pierces" the protections of a corporate entity and decides to hold the shareholders and/or directors personally liable for the company's financial dealings. Courts typically are not in favor of piercing the corporate veil, but will often do so if there has been egregious conduct on the part of the corporate actors.
7. What are "common" shares of stock vs. "preferred" shares of stock?
Stocks or "shares" represent a piece of ownership in a company. There are several differences between these two types of stock. The main difference is that common stock comes with voting rights, whereas preferred stock usually does not afford voting rights to shareholders. The main advantage of holding preferred stock is that preferred shareholders have "priority" and are paid dividends first before common shareholders, and will have more protection than common shareholders in times of company insolvency and liquidation.
8. What is the difference between an S-Corporation and a C-Corporation?
The C- Corporation is the standard corporate form, whereas the S-Corporation has chosen a special tax status with the IRS. Both structures share many similarities (limited liability protection, classification as separate entities, require following corporate formalities, can be similarly structured with officers, directors, shareholders). The main differences are in how they are taxed, and how their ownership structure is set up.
C-Corporations are separately taxed corporate entities; they pay taxes at the corporate level and again at the individual level. In contrast, S-Corporations are "pass-through" entities. Taxes due on the S-Corp are paid at the individual level by it's owners.
With regard to ownership structure, C-Corporations have no restrictions on ownership, whereas S-Corporations are subject to several restrictions such as: limitation of 100 shareholders or less, requirement that shareholders be US Citizens or residents, and maximum of one single class of stocks, to name a few. Consult with an attorney to fully understand the characteristics of both corporate structures and see which one best meets your company's needs.
9. What is the difference between a "trade name" and a "fictitious name"?
A trade name is a name used in business or trade to designate the business of the user. Registration of a trade name gives the registrant exclusive use of the name. In contrast, a fictitious name is a name used in business or trade that the user has not registered as a trade name or is not entitled to register as a trade name. Registration of a fictitious name does not give the user any exclusive right to use the name.
10. How can a non-citizen attain an ITIN number or an EIN number?
Sometimes immigration clients who are ineligible for social security numbers are concerned with obtaining ITIN (individual taxpayer identification numbers). You can apply using an original foreign identification document such as your government ID, passport, or birth certificate. ITINs are issued regardless of immigration status because both resident and non-resident aliens may have a U.S. filing or reporting requirement under the Internal Revenue Code.
EIN numbers (Employer Identification Number) are also known as FTINs (Federal Tax Identification Number)and are used by the IRS to identify businesses. Once non-citizens have received their ITIN they may be eligible to apply for an EIN for their business. However, there are fact-intensive inquiries that must be made into your specific circumstances to determine the proper course of action for you and your business.