Legal structures for small business
Download as PPT, PDF1 like989 views
The document outlines legal basics for small businesses, focusing on different legal structures such as sole proprietorships, corporations, S-corporations, and limited liability companies (LLCs). It emphasizes the importance of choosing the right structure, maintaining corporate formalities, and understanding employment issues, such as agreements and risk management practices. Additionally, it provides a disclaimer that the content is for informational purposes and not a substitute for professional legal advice.
Legal structures for small business
- 1. Asian Women In Business Legal Basics for Small Business Monday Nov. 10th 2014 Presented by Samiya (Simi) Mir, Katona & Mir LLP 49 W. 37th St, 7th floor New York, NY 10018 P:(212) 944-1529 F:(212) 553-7370 smir@katonamir.com
- 2. Disclaimer This material is meant to assist you in thinking about legal issues that may come up in starting or running your business. It is not legal advice and does not substitute for the advice of a lawyer or accountant.
- 3. A. CHOOSING THE RIGHT LEGAL STRUCTURE 1. SOLE PROPRIETORSHIP -Not a separate entity -Personal liability 2. CORPORATION -Legal entity separate and distinct -Limited liability -Entity powers (can sue, be sued, contract in its own name, be held criminally liable) -Corporate formalities in formation
- 4. A. CHOOSING THE RIGHT LEGAL STRUCTURE 3. S- CORPORATION -Corporate formalities -Pass through taxation -No more than 100 shareholders -Different classes of stock not permitted -Limited liability 4. LIMITED LIABILITY COMPANY(LLC) -More shareholders permitted -Filing, publishing requirement -Limited liability -Pass through taxation -Profit distribution flexibility -Can have different classes of stock
- 5. B. WHEN CORPORATE ENTITY MAY NOT BE RECOGNIZED -Piercing the corporate veil -Such domination that corporation is merely agent of shareholders -Shareholders are carrying business in personal capacity/for personal needs rather than corporate needs -Where corporation is used as cloak for illegality -Professional services corporations -When necessary to prevent fraud
- 6. C. CORPORATE FORMALITIES I. COPORATE DOCUMENTS -Certificate of incorporation -Bylaws/Operating Agreement -Initial resolutions: approving bylaws, election of initial owners, opening bank account, etc. -Make sure to update change of address
- 7. C. CORPORATE FORMALITIES II. OPERATING AGREEMENTS - Effective Communication & Clarity Among Owners - Please see an attorney to go over details
- 8. C. CORPORATE FORMALITIES Terms include: -Clarify roles of members -Ownership interest - Restrictions on transferability - Non- compete clause - What if one owner wants to leave - Confidentiality - Contributions - How to resolve disputes - Admitting new members/partners - Dissolutions issues
- 9. C. CORPORATE FORMALITIES III. IMPORTANCE OF GOOD RECORD KEEPING -Risk of loss of insulation from personal liability -May negate certain actions taken by the entity
- 10. D. EMPLOYMENT ISSUES FOR BUSINESSES AND INDIVIDUALS I. Types of Employment Agreements -Non-Competes & Confidentiality -At Will Employment vs. Contract -Consulting Agreements II. Employment Practices Risk Management Practices -Employment Manual - Performance Appraisals/Evaluation process - Procedures to deal with complaints III. Common Employment Issues -1099 vs. Employees -Intern Issues/Lawsuits -Wage and Hour/Minimum Wage/Overtime Rules
- 11. Asian Women In Business 42 Broadway, Suite 1748 New York, New York 10004 Tel: 212.868.1368 - Fax: 877.686.6870 Email: info@awib.org