SlideShare una empresa de Scribd logo
1 de 26
Descargar para leer sin conexión
1Lexis Practice Advisor®
Lexis Practice Advisor®
Business & Commercial
Choosing a Business Entity:
What’s the Right Fit for Your Client?
2Lexis Practice Advisor®
WHERE DO I BEGIN WHEN CHOOSING AN ENTITY?
Three basic questions:
1. LIABILITY
2. COST
3. CONTROL
3Lexis Practice Advisor®
LIABILITY
4Lexis Practice Advisor®
LIABILITY
• To help you determine the best choice of
entity, assess your client’s risk of liability.
• Your client’s appetite for dealing with legal
paperwork and statutory formalities also
factors into the liability analysis.
• Liability insurance is an option.
5Lexis Practice Advisor®
COST
COST
MaintenanceEntry
Taxes Capital
6Lexis Practice Advisor®
COST – 4 Factors
1. Entry Costs
•Filing Fees (State)
•Filing Fees (Federal)
•Licenses, Registrations and Permits
•Publication Requirements
7Lexis Practice Advisor®
COST
2. Maintenance Costs
•Upfront vs. Long-Term Considerations
•Annual Reports /Statements of Information
8Lexis Practice Advisor®
COST
3. Taxes
•Taxable Entity
•Pass-through or Conduit Entity
•Not-For-Profit Entity
9Lexis Practice Advisor®
COST
4. Raising Capital
•General Partnerships → Limited Ability
•Limited Liability Companies → Limited Ability
10Lexis Practice Advisor®
CONTROL
11Lexis Practice Advisor®
CONTROL
• Ownership structure is key
• The number of owners drives
business entity choice
• Control has both external and internal
importance
o External: Third party perception
o Internal: Flexibility and predictability
among owners
12Lexis Practice Advisor®
REMINDERS…
It’s a balancing act!
Do your state homework!
13Lexis Practice Advisor®
Sole Proprietorships
Step 1 – What is it?
Step 2 – Liability → Unlimited
Step 3 – Cost → Minimal Entry and Tax,
High Capital
Step 4 – Control → Maximal
14Lexis Practice Advisor®
Sole Proprietorships
Scorecard
Best Suited For:
• A sole proprietorship would be a good choice for
someone who is looking to start a one-person
business quickly and at a low entry cost. Their
business should not have excessive outside
investment needs and should be extremely low-risk.
o Example: Assuming they could procure outside
malpractice insurance, an accountant may
choose the sole proprietorship form of entity.
LIABILITY COST CONTROL
- +/- +
15Lexis Practice Advisor®
General Partnerships
Step 1 – What is it?
Step 2 – Liability → Unlimited
Step 3 – Cost → Minimal Entry and Tax,
High Capital
Step 4 – Control → Maximal
16Lexis Practice Advisor®
General Partnerships
Scorecard
Best Suited For:
• A general partnership would be a good choice for
two or more individuals who are looking to start a
business quickly and at a low entry cost. Their
business should not have excessive outside
investment needs and should be relatively low-risk.
o Example: Assuming they could procure outside
malpractice insurance, an accounting firm may
choose to operate as a general partnership.
LIABILITY COST CONTROL
- +/- +
17Lexis Practice Advisor®
Limited Partnerships
Step 1 – What is it?
Step 2 – Liability → Both Limited and Unlimited
Step 3 – Cost → High Entry, Low Tax and Capital
Step 4 – Control → Maximal
18Lexis Practice Advisor®
Limited Partnerships
Scorecard
Best Suited For:
• A limited partnership would be a good choice for a
business in which there is a clear division between those
providing labor and those providing capital. It would also
be a good choice for a one-off venture or a venture that is
limited in duration.
o Example: Real estate ventures are often organized as
limited partnerships. Typically, an experienced
property manager or developer serves as the general
partner and outside investors provide financing for
the project in exchange for a share of ownership as
limited partners.
LIABILITY COST CONTROL
+/- +/- +
19Lexis Practice Advisor®
Limited Liability Partnerships
Step 1 – What is it?
Step 2 – Liability → Limited
Step 3 – Cost → High Entry, Minimal Tax,
High Capital
Step 4 – Control → Maximal
20Lexis Practice Advisor®
Limited Liability Partnerships
Scorecard
Best Suited For:
• A limited liability partnership would be a good
choice for a professional service business that
requires a state license in order to operate.
o Example: Groups of attorneys, architects,
chiropractors, dentists and doctors are often
organized as limited liability partnerships.
LIABILITY COST CONTROL
+ - +
21Lexis Practice Advisor®
Corporations
Step 1 – What is it?
Step 2 – Liability → Limited
Step 3 – Cost → High Entry, High Tax,
Minimal Capital
Step 4 – Control → Mixed
• Transparency in Governance (+)
• Transferability of Ownership Interests (+)
• Compliance (-)
22Lexis Practice Advisor®
Corporations
Scorecard
Best Suited For:
• A C corporation would be a good choice for a business that
requires strong liability protection and will be seeking venture
capital financing in the near future. If the owners will initially
be investing significant amounts of their own money and
would like to write off losses (i.e. via a pass-through
structure), then an S corporation may be considered.
o Example: A startup tech company that is looking to
become the next social media success would likely choose
the corporate form.
LIABILITY COST CONTROL
+ +/- +/-
23Lexis Practice Advisor®
Limited Liability Companies
Step 1 – What is it?
Step 2 – Liability → Limited
Step 3 – Cost → Minimal Entry, Minimal Tax,
High Capital (but changing)
Step 4 – Control → Maximal
24Lexis Practice Advisor®
Limited Liability Companies
Scorecard
Best Suited For:
• A limited liability company would be a good choice for a
business that (i) needs liability protection, (ii) wants to
avoid dual taxation, and (iii) requires flexibility with respect
to how the business is managed and allocations are made.
o Example: LLCs are ideal for real estate companies,
because each separate property can be owned by its
own, individual LLC, thereby shielding not only the
owners, but their other properties from cross-liability.
LIABILITY COST CONTROL
+ +/- +
25Lexis Practice Advisor®
Top 5 Takeaways from Today’s Presentation
1. Sole Proprietorship – Should generally be avoided by entrepreneurs due to
unlimited personal liability and high capital costs.
2. General and Limited Partnerships – Similar to a sole proprietorship and should
generally be avoided by entrepreneurs due to unlimited personal liability and high
capital costs. Limited partnerships may come into play in specific types of deals,
but will generally not be used otherwise.
3. Limited Liability Partnerships – Solid choice for the professional business.
4. Corporation – A corporation should be the first choice for an entrepreneur that
will be seeking venture capital financing. Trade compliance burden for liability
protection.
5. LLC – Because of their flexibility, tax benefits and liability shield, LLCs are a very
attractive option for many types of businesses, assuming venture capital financing
is not needed.
26Lexis Practice Advisor®
Q&A Session
Rob Cortes, Esq.
LexisPracticeAdvisorCLEs@lexisnexis.com
www.lexisnexis.com/practice-advisor

Más contenido relacionado

La actualidad más candente

New Uses and Benefits of Captive Insurance-Mrotek Tortorich May 20 2015
New Uses and Benefits of Captive Insurance-Mrotek Tortorich May 20 2015New Uses and Benefits of Captive Insurance-Mrotek Tortorich May 20 2015
New Uses and Benefits of Captive Insurance-Mrotek Tortorich May 20 2015Kyle Mrotek
 
Deloitte Risk Consulting Flyer - Lapman Lee Netherlands Lead
Deloitte Risk Consulting Flyer - Lapman Lee  Netherlands LeadDeloitte Risk Consulting Flyer - Lapman Lee  Netherlands Lead
Deloitte Risk Consulting Flyer - Lapman Lee Netherlands LeadLapman Lee ✔
 
Lawyers are from Venus, businessmen are from Mars...
Lawyers are from Venus, businessmen are from Mars...Lawyers are from Venus, businessmen are from Mars...
Lawyers are from Venus, businessmen are from Mars...Caroline Lé-Girard
 
Understanding the true cost of property
Understanding the true cost of propertyUnderstanding the true cost of property
Understanding the true cost of propertyIain Shipley
 
Taxation and Corporate Citizenship
Taxation and Corporate CitizenshipTaxation and Corporate Citizenship
Taxation and Corporate CitizenshipHector Rodriguez
 
Managing conduct and behavioural risk
Managing conduct and behavioural riskManaging conduct and behavioural risk
Managing conduct and behavioural riskTony Moroney
 
Streamlining for success: M&A divestment and separation trends
Streamlining for success: M&A divestment and separation trendsStreamlining for success: M&A divestment and separation trends
Streamlining for success: M&A divestment and separation trendsEversheds Sutherland
 
Single Asset Real Estate Cases (Series: Fairness Issues in Real Estate-Based ...
Single Asset Real Estate Cases (Series: Fairness Issues in Real Estate-Based ...Single Asset Real Estate Cases (Series: Fairness Issues in Real Estate-Based ...
Single Asset Real Estate Cases (Series: Fairness Issues in Real Estate-Based ...Financial Poise
 
Leveraging & Protecting Trade Secrets in the 21st Century (Series: Intellectu...
Leveraging & Protecting Trade Secrets in the 21st Century (Series: Intellectu...Leveraging & Protecting Trade Secrets in the 21st Century (Series: Intellectu...
Leveraging & Protecting Trade Secrets in the 21st Century (Series: Intellectu...Financial Poise
 
Pensco Webinar 10 07 09
Pensco Webinar 10 07 09Pensco Webinar 10 07 09
Pensco Webinar 10 07 09rkm4erisa
 
Own Your Business Risk
Own Your Business RiskOwn Your Business Risk
Own Your Business RiskCraig Tappel
 
The Real Deal Webinar Series: Practical Advice from a Former Chief Compliance...
The Real Deal Webinar Series: Practical Advice from a Former Chief Compliance...The Real Deal Webinar Series: Practical Advice from a Former Chief Compliance...
The Real Deal Webinar Series: Practical Advice from a Former Chief Compliance...Winston & Strawn LLP
 
Corporate Compliance & Disclosure 2015
Corporate Compliance & Disclosure 2015Corporate Compliance & Disclosure 2015
Corporate Compliance & Disclosure 2015Ruoh Yi Tham
 
A Menu of Products for Investors and Lawyers (Series: Commercial Litigation F...
A Menu of Products for Investors and Lawyers (Series: Commercial Litigation F...A Menu of Products for Investors and Lawyers (Series: Commercial Litigation F...
A Menu of Products for Investors and Lawyers (Series: Commercial Litigation F...Financial Poise
 
Property/Business Interruption and Cyber Liability (Series: Insurance for the...
Property/Business Interruption and Cyber Liability (Series: Insurance for the...Property/Business Interruption and Cyber Liability (Series: Insurance for the...
Property/Business Interruption and Cyber Liability (Series: Insurance for the...Financial Poise
 
Valuing Lost Profits for Litigation Purposes (Series: Valuation)
Valuing Lost Profits for Litigation Purposes (Series: Valuation)Valuing Lost Profits for Litigation Purposes (Series: Valuation)
Valuing Lost Profits for Litigation Purposes (Series: Valuation)Financial Poise
 
Browne Jacobson HR for Education 2017 - Workshop 2B - Employment law masterclass
Browne Jacobson HR for Education 2017 - Workshop 2B - Employment law masterclassBrowne Jacobson HR for Education 2017 - Workshop 2B - Employment law masterclass
Browne Jacobson HR for Education 2017 - Workshop 2B - Employment law masterclassBrowne Jacobson LLP
 
Director Risk Mgmt October 2009
Director Risk Mgmt   October 2009Director Risk Mgmt   October 2009
Director Risk Mgmt October 2009waynewilson
 
2016 - IQPC - Understanding and Assessing Corruption Risk
2016 - IQPC - Understanding and Assessing Corruption Risk2016 - IQPC - Understanding and Assessing Corruption Risk
2016 - IQPC - Understanding and Assessing Corruption RiskDr Darren O'Connell AGIA
 
An Introduction to a New Yet Old Funding Alternative (Series: Commercial Liti...
An Introduction to a New Yet Old Funding Alternative (Series: Commercial Liti...An Introduction to a New Yet Old Funding Alternative (Series: Commercial Liti...
An Introduction to a New Yet Old Funding Alternative (Series: Commercial Liti...Financial Poise
 

La actualidad más candente (20)

New Uses and Benefits of Captive Insurance-Mrotek Tortorich May 20 2015
New Uses and Benefits of Captive Insurance-Mrotek Tortorich May 20 2015New Uses and Benefits of Captive Insurance-Mrotek Tortorich May 20 2015
New Uses and Benefits of Captive Insurance-Mrotek Tortorich May 20 2015
 
Deloitte Risk Consulting Flyer - Lapman Lee Netherlands Lead
Deloitte Risk Consulting Flyer - Lapman Lee  Netherlands LeadDeloitte Risk Consulting Flyer - Lapman Lee  Netherlands Lead
Deloitte Risk Consulting Flyer - Lapman Lee Netherlands Lead
 
Lawyers are from Venus, businessmen are from Mars...
Lawyers are from Venus, businessmen are from Mars...Lawyers are from Venus, businessmen are from Mars...
Lawyers are from Venus, businessmen are from Mars...
 
Understanding the true cost of property
Understanding the true cost of propertyUnderstanding the true cost of property
Understanding the true cost of property
 
Taxation and Corporate Citizenship
Taxation and Corporate CitizenshipTaxation and Corporate Citizenship
Taxation and Corporate Citizenship
 
Managing conduct and behavioural risk
Managing conduct and behavioural riskManaging conduct and behavioural risk
Managing conduct and behavioural risk
 
Streamlining for success: M&A divestment and separation trends
Streamlining for success: M&A divestment and separation trendsStreamlining for success: M&A divestment and separation trends
Streamlining for success: M&A divestment and separation trends
 
Single Asset Real Estate Cases (Series: Fairness Issues in Real Estate-Based ...
Single Asset Real Estate Cases (Series: Fairness Issues in Real Estate-Based ...Single Asset Real Estate Cases (Series: Fairness Issues in Real Estate-Based ...
Single Asset Real Estate Cases (Series: Fairness Issues in Real Estate-Based ...
 
Leveraging & Protecting Trade Secrets in the 21st Century (Series: Intellectu...
Leveraging & Protecting Trade Secrets in the 21st Century (Series: Intellectu...Leveraging & Protecting Trade Secrets in the 21st Century (Series: Intellectu...
Leveraging & Protecting Trade Secrets in the 21st Century (Series: Intellectu...
 
Pensco Webinar 10 07 09
Pensco Webinar 10 07 09Pensco Webinar 10 07 09
Pensco Webinar 10 07 09
 
Own Your Business Risk
Own Your Business RiskOwn Your Business Risk
Own Your Business Risk
 
The Real Deal Webinar Series: Practical Advice from a Former Chief Compliance...
The Real Deal Webinar Series: Practical Advice from a Former Chief Compliance...The Real Deal Webinar Series: Practical Advice from a Former Chief Compliance...
The Real Deal Webinar Series: Practical Advice from a Former Chief Compliance...
 
Corporate Compliance & Disclosure 2015
Corporate Compliance & Disclosure 2015Corporate Compliance & Disclosure 2015
Corporate Compliance & Disclosure 2015
 
A Menu of Products for Investors and Lawyers (Series: Commercial Litigation F...
A Menu of Products for Investors and Lawyers (Series: Commercial Litigation F...A Menu of Products for Investors and Lawyers (Series: Commercial Litigation F...
A Menu of Products for Investors and Lawyers (Series: Commercial Litigation F...
 
Property/Business Interruption and Cyber Liability (Series: Insurance for the...
Property/Business Interruption and Cyber Liability (Series: Insurance for the...Property/Business Interruption and Cyber Liability (Series: Insurance for the...
Property/Business Interruption and Cyber Liability (Series: Insurance for the...
 
Valuing Lost Profits for Litigation Purposes (Series: Valuation)
Valuing Lost Profits for Litigation Purposes (Series: Valuation)Valuing Lost Profits for Litigation Purposes (Series: Valuation)
Valuing Lost Profits for Litigation Purposes (Series: Valuation)
 
Browne Jacobson HR for Education 2017 - Workshop 2B - Employment law masterclass
Browne Jacobson HR for Education 2017 - Workshop 2B - Employment law masterclassBrowne Jacobson HR for Education 2017 - Workshop 2B - Employment law masterclass
Browne Jacobson HR for Education 2017 - Workshop 2B - Employment law masterclass
 
Director Risk Mgmt October 2009
Director Risk Mgmt   October 2009Director Risk Mgmt   October 2009
Director Risk Mgmt October 2009
 
2016 - IQPC - Understanding and Assessing Corruption Risk
2016 - IQPC - Understanding and Assessing Corruption Risk2016 - IQPC - Understanding and Assessing Corruption Risk
2016 - IQPC - Understanding and Assessing Corruption Risk
 
An Introduction to a New Yet Old Funding Alternative (Series: Commercial Liti...
An Introduction to a New Yet Old Funding Alternative (Series: Commercial Liti...An Introduction to a New Yet Old Funding Alternative (Series: Commercial Liti...
An Introduction to a New Yet Old Funding Alternative (Series: Commercial Liti...
 

Similar a Choose a Business Entity: What’s the Right Fit for your Client?

What Every Founder/Entrepeneur Must Know (Series: The Start-Up/Small Business...
What Every Founder/Entrepeneur Must Know (Series: The Start-Up/Small Business...What Every Founder/Entrepeneur Must Know (Series: The Start-Up/Small Business...
What Every Founder/Entrepeneur Must Know (Series: The Start-Up/Small Business...Financial Poise
 
6. financing principles
6.  financing principles6.  financing principles
6. financing principlesMahnoorFazal1
 
MSJDN January Webinar - Small Business Formation
MSJDN January Webinar - Small Business FormationMSJDN January Webinar - Small Business Formation
MSJDN January Webinar - Small Business FormationElizabeth Jamison
 
The Very Basics: Forming the Business (Series: The Start-Up/Forming the Busin...
The Very Basics: Forming the Business (Series: The Start-Up/Forming the Busin...The Very Basics: Forming the Business (Series: The Start-Up/Forming the Busin...
The Very Basics: Forming the Business (Series: The Start-Up/Forming the Busin...Financial Poise
 
Chapter 3.pptx
Chapter 3.pptxChapter 3.pptx
Chapter 3.pptxnsahraei83
 
Business Ownership
Business OwnershipBusiness Ownership
Business OwnershipTAYYABA MAHR
 
M&A BOOT CAMP - 2022: Post-Closing Issues -Integration & Potential Buyer Sell...
M&A BOOT CAMP - 2022: Post-Closing Issues -Integration & Potential Buyer Sell...M&A BOOT CAMP - 2022: Post-Closing Issues -Integration & Potential Buyer Sell...
M&A BOOT CAMP - 2022: Post-Closing Issues -Integration & Potential Buyer Sell...Financial Poise
 
Oganizational plan , starting a new venture.pptx
Oganizational plan , starting a new venture.pptxOganizational plan , starting a new venture.pptx
Oganizational plan , starting a new venture.pptxMUHAMMADFAIZAN896219
 
The Devastating Effects of Mismanaged Subsidiary Governance: How You Can Lear...
The Devastating Effects of Mismanaged Subsidiary Governance: How You Can Lear...The Devastating Effects of Mismanaged Subsidiary Governance: How You Can Lear...
The Devastating Effects of Mismanaged Subsidiary Governance: How You Can Lear...Athennian
 
Pros and Cons of Popular Forms of Business
Pros and Cons of Popular Forms of BusinessPros and Cons of Popular Forms of Business
Pros and Cons of Popular Forms of BusinessSamantha McNair
 
Post-Closing Issues: Integration & Potential Buyer/Seller Disputes (Series: M...
Post-Closing Issues: Integration & Potential Buyer/Seller Disputes (Series: M...Post-Closing Issues: Integration & Potential Buyer/Seller Disputes (Series: M...
Post-Closing Issues: Integration & Potential Buyer/Seller Disputes (Series: M...Financial Poise
 
Legal Issues Presentation at Aging2.0 San Francisco Chapter- September 19, 2018
Legal Issues Presentation at Aging2.0 San Francisco Chapter- September 19, 2018Legal Issues Presentation at Aging2.0 San Francisco Chapter- September 19, 2018
Legal Issues Presentation at Aging2.0 San Francisco Chapter- September 19, 2018Brittany Weinberg
 
Small Business CGT Concessions
Small Business CGT ConcessionsSmall Business CGT Concessions
Small Business CGT ConcessionsCraig West
 
Riskpro legal and compliance audits 2013
Riskpro legal and compliance audits 2013Riskpro legal and compliance audits 2013
Riskpro legal and compliance audits 2013Nidhi Gupta
 
Riskpro legal and compliance audits 2013
Riskpro legal and compliance audits 2013Riskpro legal and compliance audits 2013
Riskpro legal and compliance audits 2013Nidhi Gupta
 
Smooth Operator – Managing an Operating Business Successfully
Smooth Operator – Managing an Operating Business SuccessfullySmooth Operator – Managing an Operating Business Successfully
Smooth Operator – Managing an Operating Business SuccessfullyBoast Capital
 
Navigant valuation services disputes and litigation april 2015
Navigant valuation services disputes and litigation april 2015Navigant valuation services disputes and litigation april 2015
Navigant valuation services disputes and litigation april 2015Thomas J. McNulty
 
Advocates Letter Format Shor Tpresentation Printable
Advocates Letter Format Shor Tpresentation PrintableAdvocates Letter Format Shor Tpresentation Printable
Advocates Letter Format Shor Tpresentation PrintableThomas Tysl
 

Similar a Choose a Business Entity: What’s the Right Fit for your Client? (20)

What Every Founder/Entrepeneur Must Know (Series: The Start-Up/Small Business...
What Every Founder/Entrepeneur Must Know (Series: The Start-Up/Small Business...What Every Founder/Entrepeneur Must Know (Series: The Start-Up/Small Business...
What Every Founder/Entrepeneur Must Know (Series: The Start-Up/Small Business...
 
6. financing principles
6.  financing principles6.  financing principles
6. financing principles
 
MSJDN January Webinar - Small Business Formation
MSJDN January Webinar - Small Business FormationMSJDN January Webinar - Small Business Formation
MSJDN January Webinar - Small Business Formation
 
The Very Basics: Forming the Business (Series: The Start-Up/Forming the Busin...
The Very Basics: Forming the Business (Series: The Start-Up/Forming the Busin...The Very Basics: Forming the Business (Series: The Start-Up/Forming the Busin...
The Very Basics: Forming the Business (Series: The Start-Up/Forming the Busin...
 
Chapter 3.pptx
Chapter 3.pptxChapter 3.pptx
Chapter 3.pptx
 
Business Ownership
Business OwnershipBusiness Ownership
Business Ownership
 
0277C-15 BCVI Incorporation Brochure-HR
0277C-15 BCVI Incorporation Brochure-HR0277C-15 BCVI Incorporation Brochure-HR
0277C-15 BCVI Incorporation Brochure-HR
 
M&A BOOT CAMP - 2022: Post-Closing Issues -Integration & Potential Buyer Sell...
M&A BOOT CAMP - 2022: Post-Closing Issues -Integration & Potential Buyer Sell...M&A BOOT CAMP - 2022: Post-Closing Issues -Integration & Potential Buyer Sell...
M&A BOOT CAMP - 2022: Post-Closing Issues -Integration & Potential Buyer Sell...
 
Oganizational plan , starting a new venture.pptx
Oganizational plan , starting a new venture.pptxOganizational plan , starting a new venture.pptx
Oganizational plan , starting a new venture.pptx
 
Capital structure
Capital structureCapital structure
Capital structure
 
The Devastating Effects of Mismanaged Subsidiary Governance: How You Can Lear...
The Devastating Effects of Mismanaged Subsidiary Governance: How You Can Lear...The Devastating Effects of Mismanaged Subsidiary Governance: How You Can Lear...
The Devastating Effects of Mismanaged Subsidiary Governance: How You Can Lear...
 
Pros and Cons of Popular Forms of Business
Pros and Cons of Popular Forms of BusinessPros and Cons of Popular Forms of Business
Pros and Cons of Popular Forms of Business
 
Post-Closing Issues: Integration & Potential Buyer/Seller Disputes (Series: M...
Post-Closing Issues: Integration & Potential Buyer/Seller Disputes (Series: M...Post-Closing Issues: Integration & Potential Buyer/Seller Disputes (Series: M...
Post-Closing Issues: Integration & Potential Buyer/Seller Disputes (Series: M...
 
Legal Issues Presentation at Aging2.0 San Francisco Chapter- September 19, 2018
Legal Issues Presentation at Aging2.0 San Francisco Chapter- September 19, 2018Legal Issues Presentation at Aging2.0 San Francisco Chapter- September 19, 2018
Legal Issues Presentation at Aging2.0 San Francisco Chapter- September 19, 2018
 
Small Business CGT Concessions
Small Business CGT ConcessionsSmall Business CGT Concessions
Small Business CGT Concessions
 
Riskpro legal and compliance audits 2013
Riskpro legal and compliance audits 2013Riskpro legal and compliance audits 2013
Riskpro legal and compliance audits 2013
 
Riskpro legal and compliance audits 2013
Riskpro legal and compliance audits 2013Riskpro legal and compliance audits 2013
Riskpro legal and compliance audits 2013
 
Smooth Operator – Managing an Operating Business Successfully
Smooth Operator – Managing an Operating Business SuccessfullySmooth Operator – Managing an Operating Business Successfully
Smooth Operator – Managing an Operating Business Successfully
 
Navigant valuation services disputes and litigation april 2015
Navigant valuation services disputes and litigation april 2015Navigant valuation services disputes and litigation april 2015
Navigant valuation services disputes and litigation april 2015
 
Advocates Letter Format Shor Tpresentation Printable
Advocates Letter Format Shor Tpresentation PrintableAdvocates Letter Format Shor Tpresentation Printable
Advocates Letter Format Shor Tpresentation Printable
 

Más de LexisNexis

2022-California-Product-Listing.pdf
2022-California-Product-Listing.pdf2022-California-Product-Listing.pdf
2022-California-Product-Listing.pdfLexisNexis
 
2022-MidAtlantic-State-Catalog.pdf
2022-MidAtlantic-State-Catalog.pdf2022-MidAtlantic-State-Catalog.pdf
2022-MidAtlantic-State-Catalog.pdfLexisNexis
 
2022-New-York-Catalog.pdf
2022-New-York-Catalog.pdf2022-New-York-Catalog.pdf
2022-New-York-Catalog.pdfLexisNexis
 
2022-Bankruptcy-Product-Listing.pdf
2022-Bankruptcy-Product-Listing.pdf2022-Bankruptcy-Product-Listing.pdf
2022-Bankruptcy-Product-Listing.pdfLexisNexis
 
2022-New-York-Product-Listing.pdf
2022-New-York-Product-Listing.pdf2022-New-York-Product-Listing.pdf
2022-New-York-Product-Listing.pdfLexisNexis
 
2022-Intellectual-Property-Catalog.pdf
2022-Intellectual-Property-Catalog.pdf2022-Intellectual-Property-Catalog.pdf
2022-Intellectual-Property-Catalog.pdfLexisNexis
 
2021 Washington State catalog
2021 Washington State catalog2021 Washington State catalog
2021 Washington State catalogLexisNexis
 
2021 Southwest Product Listing
2021 Southwest Product Listing2021 Southwest Product Listing
2021 Southwest Product ListingLexisNexis
 
2021 Southeastern States Product Listing
2021 Southeastern States Product Listing2021 Southeastern States Product Listing
2021 Southeastern States Product ListingLexisNexis
 
2021 Ohio Product Listing
2021 Ohio Product Listing2021 Ohio Product Listing
2021 Ohio Product ListingLexisNexis
 
2021 Illinois Product Listing
2021 Illinois Product Listing2021 Illinois Product Listing
2021 Illinois Product ListingLexisNexis
 
2021 Florida Product Listing
2021 Florida Product Listing2021 Florida Product Listing
2021 Florida Product ListingLexisNexis
 
2021 Estate Planning Catalog
2021 Estate Planning Catalog2021 Estate Planning Catalog
2021 Estate Planning CatalogLexisNexis
 
2021 California Product Listing
2021 California Product Listing2021 California Product Listing
2021 California Product ListingLexisNexis
 
2021 Workers Compensation product listing
2021 Workers Compensation product listing2021 Workers Compensation product listing
2021 Workers Compensation product listingLexisNexis
 
2020 New England Product Listing
2020 New England Product Listing2020 New England Product Listing
2020 New England Product ListingLexisNexis
 
Voss on Delaware Contract Law
Voss on Delaware Contract LawVoss on Delaware Contract Law
Voss on Delaware Contract LawLexisNexis
 
Be Confident in Your Research with LexisNexis
Be Confident in Your Research with LexisNexisBe Confident in Your Research with LexisNexis
Be Confident in Your Research with LexisNexisLexisNexis
 
Legal Research Solutions for Correctional Facilities
Legal Research Solutions for Correctional FacilitiesLegal Research Solutions for Correctional Facilities
Legal Research Solutions for Correctional FacilitiesLexisNexis
 
Real Estate Product Listing
Real Estate Product ListingReal Estate Product Listing
Real Estate Product ListingLexisNexis
 

Más de LexisNexis (20)

2022-California-Product-Listing.pdf
2022-California-Product-Listing.pdf2022-California-Product-Listing.pdf
2022-California-Product-Listing.pdf
 
2022-MidAtlantic-State-Catalog.pdf
2022-MidAtlantic-State-Catalog.pdf2022-MidAtlantic-State-Catalog.pdf
2022-MidAtlantic-State-Catalog.pdf
 
2022-New-York-Catalog.pdf
2022-New-York-Catalog.pdf2022-New-York-Catalog.pdf
2022-New-York-Catalog.pdf
 
2022-Bankruptcy-Product-Listing.pdf
2022-Bankruptcy-Product-Listing.pdf2022-Bankruptcy-Product-Listing.pdf
2022-Bankruptcy-Product-Listing.pdf
 
2022-New-York-Product-Listing.pdf
2022-New-York-Product-Listing.pdf2022-New-York-Product-Listing.pdf
2022-New-York-Product-Listing.pdf
 
2022-Intellectual-Property-Catalog.pdf
2022-Intellectual-Property-Catalog.pdf2022-Intellectual-Property-Catalog.pdf
2022-Intellectual-Property-Catalog.pdf
 
2021 Washington State catalog
2021 Washington State catalog2021 Washington State catalog
2021 Washington State catalog
 
2021 Southwest Product Listing
2021 Southwest Product Listing2021 Southwest Product Listing
2021 Southwest Product Listing
 
2021 Southeastern States Product Listing
2021 Southeastern States Product Listing2021 Southeastern States Product Listing
2021 Southeastern States Product Listing
 
2021 Ohio Product Listing
2021 Ohio Product Listing2021 Ohio Product Listing
2021 Ohio Product Listing
 
2021 Illinois Product Listing
2021 Illinois Product Listing2021 Illinois Product Listing
2021 Illinois Product Listing
 
2021 Florida Product Listing
2021 Florida Product Listing2021 Florida Product Listing
2021 Florida Product Listing
 
2021 Estate Planning Catalog
2021 Estate Planning Catalog2021 Estate Planning Catalog
2021 Estate Planning Catalog
 
2021 California Product Listing
2021 California Product Listing2021 California Product Listing
2021 California Product Listing
 
2021 Workers Compensation product listing
2021 Workers Compensation product listing2021 Workers Compensation product listing
2021 Workers Compensation product listing
 
2020 New England Product Listing
2020 New England Product Listing2020 New England Product Listing
2020 New England Product Listing
 
Voss on Delaware Contract Law
Voss on Delaware Contract LawVoss on Delaware Contract Law
Voss on Delaware Contract Law
 
Be Confident in Your Research with LexisNexis
Be Confident in Your Research with LexisNexisBe Confident in Your Research with LexisNexis
Be Confident in Your Research with LexisNexis
 
Legal Research Solutions for Correctional Facilities
Legal Research Solutions for Correctional FacilitiesLegal Research Solutions for Correctional Facilities
Legal Research Solutions for Correctional Facilities
 
Real Estate Product Listing
Real Estate Product ListingReal Estate Product Listing
Real Estate Product Listing
 

Último

Islamabad High Court Judges wrote a letter to Supreme Judicial Council.pdf
Islamabad High Court Judges wrote a letter to Supreme Judicial Council.pdfIslamabad High Court Judges wrote a letter to Supreme Judicial Council.pdf
Islamabad High Court Judges wrote a letter to Supreme Judicial Council.pdfNo One
 
Classification of Contracts in Business Regulations
Classification of Contracts in Business RegulationsClassification of Contracts in Business Regulations
Classification of Contracts in Business RegulationsSyedaAyeshaTabassum1
 
An introduction to Indian Contract Act, 1872 by Shraddha Pandit
An introduction to Indian Contract Act, 1872 by Shraddha PanditAn introduction to Indian Contract Act, 1872 by Shraddha Pandit
An introduction to Indian Contract Act, 1872 by Shraddha PanditSHRADDHA PANDIT
 
The Ultimate Guide to Drafting Your Separation Agreement with a Template
The Ultimate Guide to Drafting Your Separation Agreement with a TemplateThe Ultimate Guide to Drafting Your Separation Agreement with a Template
The Ultimate Guide to Drafting Your Separation Agreement with a TemplateBTL Law P.C.
 
ArtificiaI Intelligence based Cyber Forensic Tools: Relevancy and Admissibili...
ArtificiaI Intelligence based Cyber Forensic Tools: Relevancy and Admissibili...ArtificiaI Intelligence based Cyber Forensic Tools: Relevancy and Admissibili...
ArtificiaI Intelligence based Cyber Forensic Tools: Relevancy and Admissibili...Anadi Tewari
 
xLran: Open source AI for legal hackers.
xLran: Open source AI for legal hackers.xLran: Open source AI for legal hackers.
xLran: Open source AI for legal hackers.mike689707
 
Corporate Sustainability Due Diligence Directive (CSDDD or the EU Supply Chai...
Corporate Sustainability Due Diligence Directive (CSDDD or the EU Supply Chai...Corporate Sustainability Due Diligence Directive (CSDDD or the EU Supply Chai...
Corporate Sustainability Due Diligence Directive (CSDDD or the EU Supply Chai...Dr. Oliver Massmann
 
Women and the World of Climate Change- A Conceptual Foundation by Shraddha Pa...
Women and the World of Climate Change- A Conceptual Foundation by Shraddha Pa...Women and the World of Climate Change- A Conceptual Foundation by Shraddha Pa...
Women and the World of Climate Change- A Conceptual Foundation by Shraddha Pa...SHRADDHA PANDIT
 
Patents and AI: Current Tools, Future Solutions
Patents and AI: Current Tools, Future SolutionsPatents and AI: Current Tools, Future Solutions
Patents and AI: Current Tools, Future SolutionsAurora Consulting
 

Último (10)

Islamabad High Court Judges wrote a letter to Supreme Judicial Council.pdf
Islamabad High Court Judges wrote a letter to Supreme Judicial Council.pdfIslamabad High Court Judges wrote a letter to Supreme Judicial Council.pdf
Islamabad High Court Judges wrote a letter to Supreme Judicial Council.pdf
 
Classification of Contracts in Business Regulations
Classification of Contracts in Business RegulationsClassification of Contracts in Business Regulations
Classification of Contracts in Business Regulations
 
An introduction to Indian Contract Act, 1872 by Shraddha Pandit
An introduction to Indian Contract Act, 1872 by Shraddha PanditAn introduction to Indian Contract Act, 1872 by Shraddha Pandit
An introduction to Indian Contract Act, 1872 by Shraddha Pandit
 
The Ultimate Guide to Drafting Your Separation Agreement with a Template
The Ultimate Guide to Drafting Your Separation Agreement with a TemplateThe Ultimate Guide to Drafting Your Separation Agreement with a Template
The Ultimate Guide to Drafting Your Separation Agreement with a Template
 
ArtificiaI Intelligence based Cyber Forensic Tools: Relevancy and Admissibili...
ArtificiaI Intelligence based Cyber Forensic Tools: Relevancy and Admissibili...ArtificiaI Intelligence based Cyber Forensic Tools: Relevancy and Admissibili...
ArtificiaI Intelligence based Cyber Forensic Tools: Relevancy and Admissibili...
 
xLran: Open source AI for legal hackers.
xLran: Open source AI for legal hackers.xLran: Open source AI for legal hackers.
xLran: Open source AI for legal hackers.
 
Corporate Sustainability Due Diligence Directive (CSDDD or the EU Supply Chai...
Corporate Sustainability Due Diligence Directive (CSDDD or the EU Supply Chai...Corporate Sustainability Due Diligence Directive (CSDDD or the EU Supply Chai...
Corporate Sustainability Due Diligence Directive (CSDDD or the EU Supply Chai...
 
Criminalizing Disabilities & False Confessions
Criminalizing Disabilities & False ConfessionsCriminalizing Disabilities & False Confessions
Criminalizing Disabilities & False Confessions
 
Women and the World of Climate Change- A Conceptual Foundation by Shraddha Pa...
Women and the World of Climate Change- A Conceptual Foundation by Shraddha Pa...Women and the World of Climate Change- A Conceptual Foundation by Shraddha Pa...
Women and the World of Climate Change- A Conceptual Foundation by Shraddha Pa...
 
Patents and AI: Current Tools, Future Solutions
Patents and AI: Current Tools, Future SolutionsPatents and AI: Current Tools, Future Solutions
Patents and AI: Current Tools, Future Solutions
 

Choose a Business Entity: What’s the Right Fit for your Client?

  • 1. 1Lexis Practice Advisor® Lexis Practice Advisor® Business & Commercial Choosing a Business Entity: What’s the Right Fit for Your Client?
  • 2. 2Lexis Practice Advisor® WHERE DO I BEGIN WHEN CHOOSING AN ENTITY? Three basic questions: 1. LIABILITY 2. COST 3. CONTROL
  • 4. 4Lexis Practice Advisor® LIABILITY • To help you determine the best choice of entity, assess your client’s risk of liability. • Your client’s appetite for dealing with legal paperwork and statutory formalities also factors into the liability analysis. • Liability insurance is an option.
  • 6. 6Lexis Practice Advisor® COST – 4 Factors 1. Entry Costs •Filing Fees (State) •Filing Fees (Federal) •Licenses, Registrations and Permits •Publication Requirements
  • 7. 7Lexis Practice Advisor® COST 2. Maintenance Costs •Upfront vs. Long-Term Considerations •Annual Reports /Statements of Information
  • 8. 8Lexis Practice Advisor® COST 3. Taxes •Taxable Entity •Pass-through or Conduit Entity •Not-For-Profit Entity
  • 9. 9Lexis Practice Advisor® COST 4. Raising Capital •General Partnerships → Limited Ability •Limited Liability Companies → Limited Ability
  • 11. 11Lexis Practice Advisor® CONTROL • Ownership structure is key • The number of owners drives business entity choice • Control has both external and internal importance o External: Third party perception o Internal: Flexibility and predictability among owners
  • 12. 12Lexis Practice Advisor® REMINDERS… It’s a balancing act! Do your state homework!
  • 13. 13Lexis Practice Advisor® Sole Proprietorships Step 1 – What is it? Step 2 – Liability → Unlimited Step 3 – Cost → Minimal Entry and Tax, High Capital Step 4 – Control → Maximal
  • 14. 14Lexis Practice Advisor® Sole Proprietorships Scorecard Best Suited For: • A sole proprietorship would be a good choice for someone who is looking to start a one-person business quickly and at a low entry cost. Their business should not have excessive outside investment needs and should be extremely low-risk. o Example: Assuming they could procure outside malpractice insurance, an accountant may choose the sole proprietorship form of entity. LIABILITY COST CONTROL - +/- +
  • 15. 15Lexis Practice Advisor® General Partnerships Step 1 – What is it? Step 2 – Liability → Unlimited Step 3 – Cost → Minimal Entry and Tax, High Capital Step 4 – Control → Maximal
  • 16. 16Lexis Practice Advisor® General Partnerships Scorecard Best Suited For: • A general partnership would be a good choice for two or more individuals who are looking to start a business quickly and at a low entry cost. Their business should not have excessive outside investment needs and should be relatively low-risk. o Example: Assuming they could procure outside malpractice insurance, an accounting firm may choose to operate as a general partnership. LIABILITY COST CONTROL - +/- +
  • 17. 17Lexis Practice Advisor® Limited Partnerships Step 1 – What is it? Step 2 – Liability → Both Limited and Unlimited Step 3 – Cost → High Entry, Low Tax and Capital Step 4 – Control → Maximal
  • 18. 18Lexis Practice Advisor® Limited Partnerships Scorecard Best Suited For: • A limited partnership would be a good choice for a business in which there is a clear division between those providing labor and those providing capital. It would also be a good choice for a one-off venture or a venture that is limited in duration. o Example: Real estate ventures are often organized as limited partnerships. Typically, an experienced property manager or developer serves as the general partner and outside investors provide financing for the project in exchange for a share of ownership as limited partners. LIABILITY COST CONTROL +/- +/- +
  • 19. 19Lexis Practice Advisor® Limited Liability Partnerships Step 1 – What is it? Step 2 – Liability → Limited Step 3 – Cost → High Entry, Minimal Tax, High Capital Step 4 – Control → Maximal
  • 20. 20Lexis Practice Advisor® Limited Liability Partnerships Scorecard Best Suited For: • A limited liability partnership would be a good choice for a professional service business that requires a state license in order to operate. o Example: Groups of attorneys, architects, chiropractors, dentists and doctors are often organized as limited liability partnerships. LIABILITY COST CONTROL + - +
  • 21. 21Lexis Practice Advisor® Corporations Step 1 – What is it? Step 2 – Liability → Limited Step 3 – Cost → High Entry, High Tax, Minimal Capital Step 4 – Control → Mixed • Transparency in Governance (+) • Transferability of Ownership Interests (+) • Compliance (-)
  • 22. 22Lexis Practice Advisor® Corporations Scorecard Best Suited For: • A C corporation would be a good choice for a business that requires strong liability protection and will be seeking venture capital financing in the near future. If the owners will initially be investing significant amounts of their own money and would like to write off losses (i.e. via a pass-through structure), then an S corporation may be considered. o Example: A startup tech company that is looking to become the next social media success would likely choose the corporate form. LIABILITY COST CONTROL + +/- +/-
  • 23. 23Lexis Practice Advisor® Limited Liability Companies Step 1 – What is it? Step 2 – Liability → Limited Step 3 – Cost → Minimal Entry, Minimal Tax, High Capital (but changing) Step 4 – Control → Maximal
  • 24. 24Lexis Practice Advisor® Limited Liability Companies Scorecard Best Suited For: • A limited liability company would be a good choice for a business that (i) needs liability protection, (ii) wants to avoid dual taxation, and (iii) requires flexibility with respect to how the business is managed and allocations are made. o Example: LLCs are ideal for real estate companies, because each separate property can be owned by its own, individual LLC, thereby shielding not only the owners, but their other properties from cross-liability. LIABILITY COST CONTROL + +/- +
  • 25. 25Lexis Practice Advisor® Top 5 Takeaways from Today’s Presentation 1. Sole Proprietorship – Should generally be avoided by entrepreneurs due to unlimited personal liability and high capital costs. 2. General and Limited Partnerships – Similar to a sole proprietorship and should generally be avoided by entrepreneurs due to unlimited personal liability and high capital costs. Limited partnerships may come into play in specific types of deals, but will generally not be used otherwise. 3. Limited Liability Partnerships – Solid choice for the professional business. 4. Corporation – A corporation should be the first choice for an entrepreneur that will be seeking venture capital financing. Trade compliance burden for liability protection. 5. LLC – Because of their flexibility, tax benefits and liability shield, LLCs are a very attractive option for many types of businesses, assuming venture capital financing is not needed.
  • 26. 26Lexis Practice Advisor® Q&A Session Rob Cortes, Esq. LexisPracticeAdvisorCLEs@lexisnexis.com www.lexisnexis.com/practice-advisor

Notas del editor

  1. (PRS)
  2. (PRS)
  3. (PRS)
  4. (PRS)
  5. (PRS)
  6. (PRS)
  7. (PRS)
  8. (EMB)
  9. (EMB) Director Voting – cumulative voting is required when voting for directors in California Basic Limitations on Dividends – e.g., a corporation shall not make any distributions to shareholders if the corporation is likely to be unable to meet its liabilities (Cal. Corp Code 501)
  10. (EMB) Supermajority Vote Requirements – restricts large corporations from requiring any supermajority vote set forth in the articles or bylaws in excess of 66 2/3% of the outstanding shares
  11. (EMB)
  12. (EMB)
  13. (EMB)
  14. (PRS)
  15. (EMB)
  16. (EMB)