1. What exactly is Business Law?
A. Business law ensures that employees and employers alike are protected and follow certain guidelines to keep things fair and balanced. While there are many different aspects to business law, the main purpose is to ensure fairness and protection of both parties.
2. What is the difference between an LLC, Corporation and Sole Proprietorship?
Corporations are business entities that are separate from their owners. Owners of a corporation have limited liability in that they are not personally responsible for the corporation's debts. Corporations may issue stocks, have a board of directors that oversee the activities of the corporation, and must pay corporate income taxes on its profits.
A partnership is the relationship between two or more persons who join to carry on a trade or business. Each partner does not pay income tax but includes their share of the partnership's income or loss on their individual tax return. One major disadvantage is that partners are personally liable for all business debts and obligations, including court judgments. Therefore it is essential that you go into business with a partner(s) you completely trust given that the business-related acts of one partner legally bind all others.
A Limited Liability Company (LLC) is a type of business entity that combines the personal liability protection of a corporation with the tax benefits and simplicity of a partnership.
3. What level of personal attention will I receive?
I return all phone calls and messages the same day between the hours of 11 a.m. to 6:30 p.m. I do not charge for phone calls or emails. When you call, you will always speak to the Attorney.
4. Why can't I just use a Web service like LegalZoom or Clerky?
You can — but as the saying goes, “you get what you pay for.” If your particular project or transaction is significant, it makes sense to hire a good lawyer for the same reason it makes sense to see a good doctor if you're very sick. Moreover, Web services like LegalZoom or Clerky are not law firms and do not provide legal advice; they simply provide fill-in-the-blank forms, which often have no context and are not tailored to your particular situation. The role of a good corporate lawyer is more than just providing a form — she is a trusted advisor, who will strategize with you and will help you think through key legal and business issues.
5. Why should I form a business entity?
When determining whether you want to create a business entity or operate without one, you should consider the amount of liability you could face in your business venture. Creating a business entity can help provide you some protection from personal liability that may be occur in the course of your business. Additionally, business entities offer certain tax advantages that may not otherwise be available to you. If you have any questions about how creating a business entity could help you with your business venture, please do not hesitate to contact our office for a consultation.
6. How long does it take to form a business entity?
Typically, a simple business entity can be completely formed within two weeks. However, depending on the business entity's needs, more documents may be necessary to allow the entity to be functional. For a free estimate of how quickly we can your business could get your business entity formed, please contact our office.
7. What are the advantages and disadvantages of a sole proprietorship?
The primary benefit of a sole proprietorship is its simplicity: it is easy to establish and operate which makes it ideal for small business. The primary disadvantages are: (i) any income earned in a sole proprietorship flows directly to the individual proprietor resulting in any income earned being taxed at the personal versus corporate level and (ii) the lack of separation between the individual and the business means that the individual proprietor is personally liable for the debts and legal liabilities of the business.
8. What is the difference between a subchapter C and S corporation?
The Internal Revenue Code allows for two different levels of corporate tax treatment. Subchapters C and S of the code define the rules for applying corporate taxes.
Subchapter C corporations include most large, publicly-held businesses. These corporations face double taxation on their profits if they pay dividends: C corporations file their own tax returns and pay taxes on profits before paying dividends to shareholders, which are subsequently taxed on the shareholders' individual returns.
Subchapter S corporations meet certain requirements that allow the business to insulate shareholders from corporate debts but avoid the double taxation imposed by subchapter C. In order to qualify for subchapter S treatment, corporations must meet the following criteria:
- Must be domestic
- Must not be affiliated with a larger corporate group
- Must have no more than one hundred shareholders
- Must have only one class of stock
- Must not have any corporate or partnership shareholders
- Must not have any nonresident alien shareholders.
Additionally, after a business is incorporated, all shareholders must agree to subchapter S treatment prior to electing that option with the Internal Revenue Service.
9. Should a Business Use a DBA?
Depending on the business marketing strategy, a business may need to use a “doing business as” name, also known as a “d/b/a” or a “fictitious business name.”
For instance, a sole proprietor runs the business alone and the business's legal name will be the sole proprietor's full name. But the sole proprietor may market the business as AA Appliances. In that case, the business's legal name is different than the name under which it operates and is known by customers. The sole proprietor is using a “doing business as” name. A “doing business as” or “d/b/a” name is also known as a “fictitious business name.” Most states require that businesses register fictitious business names or d/b/a names.
Using a “doing business as” name is common practice for businesses. The d/b/a name will usually be the cornerstone for marketing efforts, and will work much more effectively than the business's name. Some business entities may be barred from using a d/b/a name in some states, however. This usually involves professional business entities that must be known by the names of their owners. In most other cases, using a “doing business as” name or “fictitious business name” is permissible, as long as it is registered with the state.
10. Why is it important to keep business records?
Small businesses are required to maintain a number of receipts and records for tax and corporate compliance purposes. Depending on the nature of your business, some documents may help limit your liability in the event of a lawsuit. In addition, some of the other paperwork generated by your business will prove incredibly valuable later on because it will allow you to analyze the growth of your business and the efficiency of your operations. As a result, it's important to ask your attorney what type of records and other documents you should be generating and maintaining as part of your business operations. It's much easier to keep the right records from the beginning than try to find or recreate them later.
11. Do you do litigation?
We do not do litigation. At Campbell Business Law we prefer to help keep our clients out of court and anticipate and prevent problems from occurring.
12. How can I limit my personal liability and protect my assets?
Knowing the risks, penalties and business laws is the best way to minimize any risk of failure. In order to protect your business and ideas from being stolen, you can register your business name, logos, slogan and anything else that can be trademarked with the U.S. Patent and Trademark Office. Copyright protection might also be necessary, depending on your type of business.
13. What contracts does my business need?
A business attorney can help in deciding necessary contracts for your business and assist in drafting or reviewing them for use. Contracts you may want your business to draft and have on hand include operating agreements, service agreements, employment offer letters, confidentiality agreements, service contracts and lease agreements.
14. What is an LLC?
Like a corporation, the members of an LLC are generally shielded from personal liability for the LLC's debts and obligations if the LLC follows certain formalities. The owners of an LLC, called members, get many of the same tax benefits as partners in a partnership and enjoy the limited liability benefits of a corporation. Typically, unless the members choose otherwise, an LLC is taxed almost exactly the same way as partnerships and sole proprietorships. Profits and losses are passed through to the members of the LLC, and there is no income tax at the business level, or double taxation.
15. Do I need separate tax advice?
Campbell Business Law always recommends that a client obtain competent tax advice before making significant financial decisions.