From corporations to limited liability companies, partnerships and privately owned firms
Fillmore Spencer attorneys have counseled and litigated business matters across many sectors and enterprise types, from major software manufacturers to single-physician practices. We not only protect and assert your enterprise’s rights, we help you better manage legal costs and risk. We also counsel businesses on how to structure themselves optimally for ownership, regulatory compliance, tax planning and management succession considerations.
Fillmore Spencer LLC works with your management to ensure your current structure or restructuring will continue to serve your success and aspirations. We regularly deal with sole proprietorships, corporations, partnerships, limited liability companies (LLCs) and limited partnerships (LPs).
Fillmore Spencer attorneys bring more than 30 years’ experience with business laws and ensure that enterprises ranging from startups to established corporations are organized properly so operations proceed smoothly and with minimal risk.
Sole proprietorships and general partnerships can leave the owners personally liable for business obligations. A lawsuit can wipe out both the assets of the business and the owner. In limited partnerships, the general partners are personally liable for the business’s obligations, while the limited partners are not liable beyond their initial investment.
Those seeking to insulate personal assets from the business’s liabilities should generally consider incorporating or implementing an LLC structure.
Sole proprietorships are highly transferable, but partnerships are not. Typically, you need the other partners’ agreement in reassigning your share of the business. Nor are general partners’ and limited partners’ shares freely transferrable in most limited partnerships.
In an LLC, the operating agreement determines whether a member may transfer or assign their economic rights. Because ownership interest in an LLC is structured like a partnership, the transfer is likely to require other LLC members’ approval. If the LLC has a simple membership interest, transfer is often simpler, but if the interest is held by a member-manager, the interest may be more complex and less easy to transfer. In any case ,we can work with you to shape or limit the steps required for transfer of an LLC interest.
Corporate ownership is typically very easy to effect, with shares easily transferred or liquidated into cash, provided they are not “restricted” by the corporation (as shares awarded to executives often are) and a market exists for the shares.
For sole proprietorships and partnerships, if the owner or a partner dies, the business may be closed. Under certain circumstances, however, a partnership may continue.
In a limited partnership, the death of a general partner may dissolve the partnership, absent a contrary agreement of the partners. The withdrawal of a limited partner does not automatically dissolve a limited partnership. Though the general partners decide whether to reduce or add the number of limited partners, the partnership’s governing agreements should state what will happen in each scenario.
In an LLC, the decision of what to do with the LLC share will largely depend on what sort of membership interest the deceased member held, and how crucial that member was to actual operation of the LLC. The LLC should state in writing how departures will be handled.
All business structures can attract capital by creating any number of agreements. Limited partnerships and LLCs can attract capital by taking on new members, for instance. A corporate structure is most likely to facilitate venture capital funding, though LLCs are being used more and more in all settings.
In particular, a C corporation enables your organization to issue multiple classes of stocks — a must if you plan phased fundraising, and you can easily issue options and transfer stock. A C corporation carries at least one serious drawback in that profits are taxed twice: once as corporate profits and again as dividends. For that reason, an S corporation (small business corporation) is often preferable. But an S corporation carries some significant drawbacks as well. It’s also limited to issuing only one class of stock, and has a complex pass-through tax treatment that may generate unrelated business taxable income for your investors.
Tax liability is a key concern, which Fillmore Spencer LLC’s tax planning practice can assist you. Another critical area for many businesses is the protection of intellectual property (IP). Many enterprises create a holding company or sister company to insulate their IP operating risks. The holding company may then license the IP — trademarks, copyright and trade secrets — to one or more sister companies responsible for selling products leveraging the IP.
Another consideration is whether you intend to motivate or reward employees with ownership in your enterprise. We can counsel with you about the pros and cons of sharing ownership, and the different ways of doing so. There are outside factors, too — government departments, banks, insurers, landlords and other third parties may all interact with your entity differently depending upon its structure. Fillmore Spencer attorneys are attuned to current laws and practices regarding each type of business structure and draw on a wealth of business law experience to ensure our clients are optimally positioned.
No matter what sector your business competes in — consumer, manufacturing, biotech, financial, telecommunications, healthcare, energy or technology — and no matter its size, it stands to benefit from the extraordinary skills, insights and professionalism of our attorneys. Through litigation and best-practices audits of your operations, we remove legal obstacles and helps you avoid legal risks that might otherwise compromise your operations. Call Fillmore Spencer LLC at (801) 426-8200 or contact us online.