Business Law

Business Law

Business Succession Planning

Purchase/Sale of a Business

Business Formation

Starting a business involves making many challenging decisions. At Johnson, Gasink & Baxter, LLP, we can help you choose which business entity is right for you and take care of the filing and preparation of the documents needed to create your new LLC, Partnership, or Corporation.

Which entity should I choose? You should seek an individual consultation with an attorney to discuss which form is best for your business.

 

Sole Proprietor

• A sole proprietorship is a business entity which has no separate existence from its owner.
• The owner is personally liable for all debts of the business.
• ‘Sole’ proprietor has no partners.

Partnership

• General Partnership
•  A partnership is a business entity in which partners share with each other the profits or losses of the business.
•  If 2 or more people engage in a business they are a partnership by default.
• Absent an agreement, the partners share profit and loss equally.
• A partnership agreement can determine how the partnership is managed and how profits and losses are allocated.
• Partners are personally liable for all debts of the business
• By default a partnership is a ‘General Partnership’

Limited Partnership

• A Limited Partnership (e.g. LP or FLP) is a type of partnership in which there are two classes of partners: General Partner and Limited Partners
• General Partners manage the business and are personally liable for all debts of the business.
• Limited Partners do not manage the business
• Limited Partners’ liability is limited to their investment in the business

Corporation

A Corporation is a type of business entity that has its own separate existence. It must be registered with the State to conduct business. Corporations have 3 Major Benefits:

• Shareholders are not personally liable for business debts. Liability is limited to a shareholder’s investment.
• The Corporation can continue in perpetuity.
• Shares of a corporation are easier to transfer than other business interests.

    C Corps and S Corps

• S Corporations are taxed like partnerships (to the shareholders). This is good for companies with high earnings but no likely increase in company value.
• Corporations pay tax on corporate earnings and then shareholders pay tax on dividends (double taxation). Publicly traded companies are usually C Corporations

Limited Liability Company

A limited liability company (LLC) is a business entity which offers limited liability to its owners. LLCs share the major benefits of corporations and are easier to create and manage.

    How is an LLC different from a Corporation?

• A LLC has members instead of shareholders.
• A LLC has managers instead of directors.
• In Virginia, an LLC can have only one member.
• LLCs are more flexible and less burdensome than Corporations.
• A LLC does not require an operating agreement (but should have one)
• A LLC can choose to be taxed as a sole proprietor, a partnership or a C-Corporation

    How is an LLC Similar to a Corporation?

• Both are types of business entity that have their own separate existence.
• Both must be registered with the State to conduct business.
• Both can continue in perpetuity
• Members and shareholders both have limited liability:

Registered Agent

A corporation or LLC must have a registered agent because the State insists a person be designated for service of process by a creditor/lawsuit. The Attorneys of Johnson, Gasink & Baxter, LLP ("JGB") can serve as your company’s Registered agent for an annual fee.

Miscellaneous Business Law

The partners of Johnson, Gasink & Baxter, LLP can assist your business in drafting contracts, promissory notes, and other important legal documents.