Law Matters, LLC
Business Law
Build, Protect, and Transition Your Business with Confidence—Legal Guidance for Every Stage of Ownership.
St. Louis Business Law Firm for Small Businesses and Entrepreneurs
Law Matters LLC
Business Law: if you are starting your own business, there are a number of questions you need to address. The first is what kind of entity, if any, you want to use.
Entity Selection and Formation
you could just do business as yourself. That is a sole proprietorship. Although you could do business just using your Social Security number, since you may need to disclose your taxpayer identification number to people who pay you money, you probably want to apply for an employer identification number (an “EIN”). Your income is reported on schedule C on your form 1040. You still need to get any required municipal licenses, but it’s pretty simple.
If you’re in business with someone else, splitting profits and expenses, you probably have a partnership. If you have a partnership, it is strongly recommended that you have a partnership agreement dealing with splitting profits, what happens if someone dies, and how to sell or break up the business. If you have a partnership, then you also must file an additional tax return – a Form 1065. Your share of profits and losses are reported to you on a Schedule K-1. The information on your K-1 is then put on your Form 1040.
The problem with either a sole proprietorship or a simple partnership is that the business owner is personally 100% liable for any damages for injuries. And if you’re in a partnership, you are 100% liable for any damages or injuries caused by your partner even if you had nothing whatsoever to do with whatever happened. It’s not a good plan.
The way you protect yourself from any personal liability is by forming some sort of a limited liability entity. The most commonly used limited liability entity is a limited liability company (and “LLC”). You can operate a sole proprietorship or a partnership in the shell of an LLC. An LLC limits liability to the business but can be structured almost any way you want, depending upon the owner’s or partners’ needs. They are very flexible. To create an LLC, you need to file articles with the Secretary of State and execute an operating agreement. You also need to obtain an EIN. Depending on how many members there are and some elections you can make, you either report your income on your form 1040 schedule C, a form 1065, a form 1120, or a form 1120-S. With an LLC, there are no annual reports, required meetings, or specific required officers, although you can provide for meetings and officers as you like, if you like. LLCs come in all kinds of sizes and shapes.
Finally, there are corporations. Corporations by law are pretty structured. You have to have directors and officers. Annual meetings are required, and reports must be filed with the Secretary of State. Most business owners don’t want this much structure, but if you plan on having investors, this structure may be helpful. You just need to analyze your business plans.
There are a lot of issues to consider if you were planning on starting a new business for restructuring and existing business. Give me a call if you want to talk.
Contracts
People hate writing contracts. They take time you could use to do work, and they can be tedious. However, you’ll regret not having a written agreement if things go bad. You will likely end up arguing about what it what agreements you made verbally. Oral agreements are generally binding, but there was a problem in proving who agreed to what. Emails and text messages can demonstrate some elements of an agreement, but they usually are not very detailed or comprehensive. Why rely on those kinds of things? Take the time to write it down. Use an attorney if you need to, but write it down.
Business Transitions
We’ve all heard the predictions for years: there will be a huge transfer of wealth and businesses from the “baby boom” generation to younger generations. Although there have been some business transitions, I think the baby boomers are almost desperately holding on to things. However, time marches on, and the passing of the torch is inevitable. The problem, though, is that those transitions not only involve business and financial issues, but there are also a lot of psychological and emotional issues involved. Still, planning and careful transition implementation is necessary or everyone risks losing out.
We have worked through the legal, tax, emotional, and family issues with a number of business clients. Call if you want to talk.
When it comes to estate planning, business law, and real estate law things can get complicated. You don’t need a cookie-cutter approach to law. You can get that online. You need a real person who can look at your situation from all angles, and know the big picture, as well as your specific goals. Plus, you need someone who has experience in all three areas. That’s why you need Law Matters LLC. Law matters to your unique circumstances and needs.
Meet Fred Vilbig
Fred L. Vilbig is an accomplished St. Louis Attorney with over 30 years of expertise in estate and business planning, corporate law, and real estate transactions. Residing in West St. Louis County, Fred actively contributes to his community by serving on civic and nonprofit boards. He brings a wealth of legal knowledge to the table as the Chairman of the Ellisville Board of Adjustment and President of the St. Thomas More Society, the St. Louis Catholic Lawyer’s Association.
Additionally, Fred is a sought-after speaker on legal matters, often lecturing at prestigious universities and delivering continuing education programs for fellow lawyers. His dedication to education extends to his clients, where he enlightens financial planners and CPAs on the implications of the law. Fred is licensed to practice law in Missouri and to present cases to the U.S. Supreme Court.