The information provided here is for informational purposes only. It is not,
nor is it intended to be, legal advice.
You should consult an attorney for
individual advice regarding your own situation.

© 2005 David A. Solitare
 
 

Attorneys in the Law Offices of David A. Solitare are experienced in handling each phase of the business cycle, including entity formation, annual maintenance and dissolution. We assist you in selecting and implementing the optimal legal entity for your business objectives.

We focus our counsel on maintaining the success of your business: documenting clear expectations for business principals, ensuring timely compliance, preventing costly errors, optimizing future business opportunities, and protecting assets.

Business Formation, Maintenance and Dissolution Services:
Corporate
Business Corporations ("C" and "S" Corporations)
Professional Corporations
Nonprofit Corporations
Annual Corporate Upkeep
Partnership
General Partnerships
Limited Partnerships
Limited Liability Partnerships for Certain Professionals
Limited Liability Companies

We document the relationships between the principals in the business through shareholder's agreements, LLC operating agreements, and employment agreements. We provide ongoing counsel for everyday business needs, significant transactions, and maximizing the entity's position in the case of a sale, spin-off, or merger.

Business Transactions Services:
Contract Drafting
Optimal Deal Structuring
Negotiating Terms
Contract Review
Sales and Purchases of Going Businesses




Situation:
Three parties wanted to structure their interest in a business as follows:

Shareholder Profit Control Hours Worked
Individual 80% 50% Almost full time
Husband and Wife 20% 50% Part time

The clients required the liability protection provided by incorporating, but wanted to eliminate the double taxation of a corporation. As with most small businesses, they wanted to put limitations on the transfer of shares. The unique aspect of their agreement was in wanting to have their voting and control structure different from their profit payout percent. Specifically, the couple did not want to allow the individual to use his 80% voting rights to control the selection of the two directors on their board.
Solution:
Establish an S Corporation to enable taxes to be passed through and taxed on the owner's individual tax returns. Craft the agreement to limit the transfer of shares. Issue shares in proportion to shareholders' interest in profits. Clarify the desired control and voting structure to ensure equal power between the individual and the couple.

Benefit:
Clearly documented expectations regarding profit, control, and the transfer of
shares.
Cost savings in using a simple entity in place of multiple complex entities.

Learn more about Choosing Your Business Entity: Corporation, S Corporation, Limited Liability Company.
 

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