New business owners these days have enough to be concerned with besides their “legal entity”. Should I incorporate?...Can I be an LLC?...Just what is an LLC?.. Do I need a Partnership agreement if I have a partner? Do I need a shareholders’ agreement if there is more than one shareholder?...These questions are the most common when someone wants to make sure they are legally protected.
First, what do you need to protect? Unless you have more than $75,000 equity in your primary residence or if you have other investment property (including other businesses), you may not need to incorporate or form an LLC. You could be a sole proprietorship.
Here are the possible forms of doing business: sole proprietorship, general partnership, joint venture, limited partnership, limited liability partnership, limited liability company (LLC), S- Corporation, C-Corporation , Non-Profit Corporation, Professional Corporation.
In this short space, it is not possible to give all of the details, but generally speaking you should either incorporate or file an LLC if you want protection of your personal assets separate from your business. Both a corporation and an LLC require filings with the Secretary of State, payment of minimum taxes of $800 per year, keeping funds segregated (no paying your house payment out of your corporate bank account), and signing documents .
The difference between a corporation and an LLC is that an LLC does not require annual minutes, although you can opt to do them, and you can choose to treat your LLC like a partnership from a tax perspective while still providing protection from personal liability just like a Corporation does. Certain professions that are licensed by the State of California, such as Contractors, Cosmetologists, Auto Repair Shops, eg. cannot be LLC’s and must incorporate. You can be a single member LLC.
If you do not have a partnership or shareholders’ agreement in California, your partnership or corporation will be subject to the California Partnership Act, and the laws related to Shareholders’ agreements in the Corporations Code.
Alvis Frantz and Associates, A PC, located in East Contra Costa County emphasizes business, real estate and construction law as wells as trusts, estates and probate. You can reach us at info@alvisfrantzlaw.com or visit our website http://www.alvisfrantzlaw.com/ .
The information above is for general information only. It is not a substitute for seeking legal advice. Alvis Frantz and Associates A Professional Law Corporation - 2010 All Rights Reserved
Thursday, September 16, 2010
Thursday, August 19, 2010
LIVING TRUSTS AND ESTATE PLANNING: A MUST FOR EVERY BUSINESS OWNER
Business owners survive many challenges and for family businesses, there are some unique challenges to protect and preserve your business… and your family. A living trust is an estate planning tool business owners can use to help their business continue to run after their death.
LIVING TRUSTS CAN:
• Avoid probate. Probate is the legal process where the court validates your will, sees that your debts are paid, and interprets your will to determine how and to whom your assets are distributed. The major problems with probate are that it is expensive, lengthy, public, and it places all the control in the hands of the probate courts.
Having a living trust will ensure that your estate will be settled quickly, privately, and inexpensively as it keeps your estate out of probate and allows you to maintain full control over the distribution of your assets and your business.
• Minimize or Eliminate Estate Taxes. A living trust can provide a means to reduce, or even eliminate estate taxes. With fewer tax burdens, there are fewer debts to satisfy and a better outlook for the continued health of the business as well as your families’ future.
• Create a Business Succession Plan. Establishing a system within your business will create a plan for someone to succeed you so that your business can continue to run smoothly without you. The death of a business owner causes a number of problems which can be addressed with proper planning, one of which is that the value of your business may be drastically reduce without you there to run the show unless you plan ahead. Ask yourself:
• Should the business remain in the family?
• Are there capable successors/owners?
• Should the business be sold? If so, to whom and at what price.
ESTATE PLANNING CAN:
• Minimize loss of business assets: What people may not consider is that often, assets from a business may have to be used to satisfy the personal debts of a business owner. When there are not enough personal assets to satisfy personal debts, the creditors/government will go after business assets to satisfy these debts. This may leave a business strapped or even insolvent. However, with proper estate planning, you can protect your business and allow it to continue and grow after you die.
• Plan for the financial needs of your estate. Take a look at your personal assets and debts. Can your family continue to survive based on your financial picture as it is today? If you do not have enough personal assets to cover your personal debts, start to put more money aside to cover those debts. Another option is to purchase life insurance. For many, life insurance can be a quick and less costly solution. Life insurance will provide you and your heirs with an immediate guarantee that when you die, the proceeds from the life insurance can be used to satisfy the personal debts, thereby, allowing your business to continue unharmed.
For many small business owners, it can be difficult to separate business and estate planning as they are each contingent on the other. With proper planning and advice, you can ensure that your family and your business will continue to survive when you are no longer there to hold the reins.
The purpose of this article is to provide information. Nothing stated herein should be construed as legal, tax, or financial advice. Consult an attorney, CPA or financial advisor for advice specific to your individuals needs.
LIVING TRUSTS CAN:
• Avoid probate. Probate is the legal process where the court validates your will, sees that your debts are paid, and interprets your will to determine how and to whom your assets are distributed. The major problems with probate are that it is expensive, lengthy, public, and it places all the control in the hands of the probate courts.
Having a living trust will ensure that your estate will be settled quickly, privately, and inexpensively as it keeps your estate out of probate and allows you to maintain full control over the distribution of your assets and your business.
• Minimize or Eliminate Estate Taxes. A living trust can provide a means to reduce, or even eliminate estate taxes. With fewer tax burdens, there are fewer debts to satisfy and a better outlook for the continued health of the business as well as your families’ future.
• Create a Business Succession Plan. Establishing a system within your business will create a plan for someone to succeed you so that your business can continue to run smoothly without you. The death of a business owner causes a number of problems which can be addressed with proper planning, one of which is that the value of your business may be drastically reduce without you there to run the show unless you plan ahead. Ask yourself:
• Should the business remain in the family?
• Are there capable successors/owners?
• Should the business be sold? If so, to whom and at what price.
ESTATE PLANNING CAN:
• Minimize loss of business assets: What people may not consider is that often, assets from a business may have to be used to satisfy the personal debts of a business owner. When there are not enough personal assets to satisfy personal debts, the creditors/government will go after business assets to satisfy these debts. This may leave a business strapped or even insolvent. However, with proper estate planning, you can protect your business and allow it to continue and grow after you die.
• Plan for the financial needs of your estate. Take a look at your personal assets and debts. Can your family continue to survive based on your financial picture as it is today? If you do not have enough personal assets to cover your personal debts, start to put more money aside to cover those debts. Another option is to purchase life insurance. For many, life insurance can be a quick and less costly solution. Life insurance will provide you and your heirs with an immediate guarantee that when you die, the proceeds from the life insurance can be used to satisfy the personal debts, thereby, allowing your business to continue unharmed.
For many small business owners, it can be difficult to separate business and estate planning as they are each contingent on the other. With proper planning and advice, you can ensure that your family and your business will continue to survive when you are no longer there to hold the reins.
The purpose of this article is to provide information. Nothing stated herein should be construed as legal, tax, or financial advice. Consult an attorney, CPA or financial advisor for advice specific to your individuals needs.
Wednesday, August 11, 2010
SO WHAT'S IN A BUSINESS NAME?
When clients come to ALVIS FRANTZ AND ASSOCIATES to start a business, the last thing on their mind is protecting their name. Often, it is presumed that when you incorporate it is covered. But that is far from the truth. Here are some of the ways most businesses address naming their company:
Fictitious Business Name (aka DBA - or "doing business as"). You can not always just start doing business tomorrow under any name you chose. You must first determine if a FBN is even required and then, if you determine it is, a Fictitious Business Name Statement (FBNS) must be filed in each county you conduct business. How do you know if your business name will require a FBN and how do you get one, have one of our attorneys contact you or call (925) 516-1617 to speak with an attorney or schedule a consultation today.
Corporate Name: When you incorporate, you must give your company a unique corporate name. Did you know though that you do NOT have to use that same name to market your business? You can actually do business under a FBN as well. It is important however to know where and when to use each name. Additionally, once you are incorporated, when you as an individual sign documents on behalf of your corporation, it is EXTREMELY important HOW you sign your name. If you sign documents incorrectly, you could be opening yourself up to personally liability of claims against the corporation.
Trade Name: A trade name is your company name as it is most commonly used. So for example, if you use your name as a return address on a purchase order, that does not constitute a trademark, only your trade name.
Trademark or Service mark: A trademark is a word, phrase, symbol or design, or a combination of words, phrases, symbols or designs, that identifies and distinguishes the source of the goods of one party from those of others. A service mark is the same as a trademark, except that it identifies and distinguishes the source of a service rather than a product. Trade Marks may or may not be registered. If a person has a federally registered mark, you can be stopped from using your name even if it is your corporate name, or your FBNS. To fin out what is right for your business, have one of our attorneys contact you or call (925) 516-1617 to speak with an attorney or schedule a consultation today.
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