Business formation and transaction guidance aids business success
Since 1992, The Clinton Law Firm has counseled businesses in Chicago and throughout Illinois in business transactions and business law issues, including assisting in both trials and arbitration.
The first question every business owner should ask is “Do I need an entity to conduct business?” The answer is technically “No,” but we strongly encourage business owners to place the assets of the business in corporation, partnership or limited partnership or limited liability company. When you form an entity and conduct business through that entity, you have accomplished several things; (a) your personal affairs and your business are separate; (b) if the business incurs a liability, that liability is less likely to be assessed against you personally. So if the business is sued, there is less risk that you will be held personally liable. Please note that you may not need to form an entity if your sales are very small or the business is more like a hobby. In those instances, the cost of the entity would outweigh the benefits of using an entity. In all other situations, our Chicago Limited Liability Company lawyers strongly recommend that you use an entity to conduct business.Proper Entity Selection and Formation is an Essential First Step
Choosing the proper business structure is imperative to smooth operations and a thriving enterprise. We have experience in setting up:
- "S" corporations
- Limited partnerships
- Limited liability companies
We often recommend that a business be incorporated as a limited liability company, because that corporate format provides for flexible governance and, with the appropriate operating agreement, can be tailored to a variety of business situations. The LLC can be set up to be taxed as a partnership or a corporation. The tax treatment of an LLC is very similar to the tax treatment of an S Corporation, where the individual shareholders bear the taxes of the business.
Clinton Law Firm lawyers have established many entities and have drafted numerous operating agreements for limited liability companies. We recommend that entrepreneurs consider retaining an attorney to form the business entity. While lawyers are more expensive than websites and other vendors offering speedy incorporation, lawyers can often foresee issues and other problems that could potentially cripple a new enterprise. For example, it may be necessary to have an employment agreement or non-competition agreement with a key employee or company founder. We have the skills to prepare these documents quickly and efficiently.
For limited liability companies, we strongly recommend that entrepreneurs consult with an attorney to draft an appropriate operating agreement. A well-drafted operating agreement sets the basic rules by which the business will exist. It will identify the manager, the manager’s duties and responsibilities, the manner and means by which the business will be capitalized, how distributions are made, how the business can be wound up and how disputes are resolved. The failure to draft an operating agreement can be disastrous, as that will require a court to hear evidence to determine the parties’ intent. Many individuals succeed in forming an entity on the internet, only to learn later that the operating agreement is flawed.
Legal representation is most important when there are two or more owners of the business. A business lawyer can represent one owner and negotiate the terms of the operating agreement. That operating agreement is essential to sort out in writing how (a) profits are to be divided; (b) losses are to be shared; (c) what each member will contribute to the entity. If there is a dispute between the two owners or you sense that there are conflicting goals, it is very important to obtain a lawyer. It is extraordinarily important also to understand that where there are two or more owners, there is a potential conflict of interest. Each should obtain a lawyer. Making the decision to forgo obtaining counsel can be a serious mistake. Our Chicago Limited Liability Company Lawyers understand the potential conflicts of interest and how to protect each owner’s interest in the business.
The Clinton Firm traditionally handles the formations of business entities for a flat fee. That flat fee charged is competitive with fees charged by Legalzoom and other internet providers. In the formation of an LLC, the largest portion of the fee paid is the fee paid to the state of incorporation. Contrary to popular belief, Legalzoom must also pay this fee to the state of incorporation. The Clinton Law Firm has the ability to tailor the LLC to your individual needs. An LLC can be designed to protect an investor and/or an inventor. It can contain non-competition provisions and dispute resolution provisions. The LLC operating agreement should be modified to meet the needs of your business and should not be a form printed from a computer. Legalzoom and other internet providers can be effective when the business has only one owner. If there are two or more owners, no software program can properly evaluate and negotiate any conflicts of interest between the two owners.
Finally, for most start-up companies, we can incorporate the company and prepare the organizing documents very quickly. We believe that the personalized service of a law firm can be invaluable to an entrepreneur starting a business in a complex and challenging environment.Legal Assistance Protects Your Rights in Business Transactions
Our attorneys also assist Chicago-area businesses with a broad range of transactional matters:
- Contract matters, including carefully drafting and reviewing all types of business contracts and employment agreements
- Shareholder and LLC member issues, including drafting and negotiating shareholder agreements and operating agreements for limited liability companies
- Sale of business transactions
- Real estate transactions
- Employment contracts
- Non-competition agreements
- We also represent clients in business litigation cases, effectively and efficiently resolving disputes that can hamper business operations and profitability.
The Clinton Law Firm looks forward to assisting businesses in the Chicago area succeed. Call us at 312.357.1515 or contact us online today to schedule your free initial consultation and discuss your situation with our experienced business lawyers.