FAQs

Business and Commercial Law

What forms of business can I operate under?
There are generally three forms under which an individual may conduct business: as a sole proprietorship, a corporation, or a limited liability company ("LLC"). If more than one person is involved in establishing the business, then they may, alternatively, choose to form a partnership.

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If I operate my business under my personal name, is it necessary to register it someplace?
You do not need to register your own name if you are using it as your business name. If you are using another name, you must file an assumed business certificate in the local County Clerk's office.

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What are the advantages of forming a limited liability company?
The LLC is generally considered advantageous for small businesses because it combines the limited personal liability feature of a corporation with the tax advantage of a partnership or sole proprietorship. Profits and losses can be passed through the company to its members, or the LLC can elect to be taxed like a corporation. LLC's do not have stock and are not required to observe corporate formalities. Owners are called members, and the LLC is managed by these members or by appointed managers.

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What should I know about forming a corporation?
A corporation is a complex business structure with more start-up costs than many other types of businesses. A corporation is a legal entity separate from its owners, who own shares of stock in the company. It can be created for profit or nonprofit purposes, and may be subject to increased licensing fees and more government regulation than other forms of business. Profits are taxed both at the corporate level and again when distributed to shareholders. Shareholders are not personally liable for corporate obligations unless corporate formalities have not been observed. Observing such formalities provides evidence that the corporation is a separate legal entity from its shareholders. Failure to do so may open up the shareholders to liability of the corporation's debts. Corporate formalities include: issuing stock certificates, holding annual meetings, recording the minutes of the meetings, and electing directors or ratifying the status of existing directors. You are advised to always use the assistance of a qualified attorney when forming a corporation.

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What is the advantage of forming an "S" corporation?
The structure of an "S" corporation is identical to the "C" corporation in many ways, but offers avoidance of double taxation. If a corporation qualifies for S status with the IRS, it is taxed like a partnership: the corporation is not taxed, but the income flows through to shareholders that report the income on their individual returns.

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Intellectual Property
Many intangible assets of a business should be legally protected. A company's name, logo, brand name and distinctive goods and services are entitled to copyright protection. Proprietary computer software, designs and many other creations may be eligible for trademark registration. Patents are often thought to cover only machines and other manufactured products, but can also protect processes. Trademark, copyright and patent registrations can help a business protect the elements that give it a competitive advantage in the marketplace.

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Employment Agreements
Many companies, especially technology companies, count the knowledge of their employees as some of their most important assets. Yet they fail to protect those assets through non-disclosure and non-compete agreements with their employees.

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If you have further questions, please contact us at 1-800-430-7001 or e-mail us at: gm@goldsteinmetzger.com.