We can offer assistance in evaluating your business name choices and help to conduct a domain name search to ensure that the business name you are choosing is available.
There are several ways to structure the ownership of a family or start-up business. Our attorneys will help you to evaluate the different options available and choose the structure that will best suit your business needs.
- DBA (Doing Business As) or Sole Proprietorship: This business structure is one that is not separate from its owner. The business owner will be personally liable for the company and its debt. Additionally, all business income is the income of the business owner and will be listed on his/her personal tax return. If there is more than one owner, the business is then classified as a Partnership.
- C-Corporation: A C-Corporation is formed as a separate legal entity from the business owner and can shield the owner from personal liability and responsibility for company debt. Income for a C-Corporation is reported on a completely separate tax return for the corporation.
- S-Corporation: After a corporation is formed, it can elect to become an S-Corporation by adopting a resolution and submitting the proper paperwork to the IRS. For tax purposes, an S-Corporation will be taxed as a partnership or sole proprietorship, rather than a corporation, so that the income is “passed through” to the shareholders. This can be a benefit for newly formed corporations since all profits and losses are accounted for on the individual shareholder’s personal tax returns and the corporation will not need to pay taxes on both profits and dividends otherwise known as “double taxation.”
- Limited Liability Company or LLC: An LLC combines the elements of a both a corporation and a partnership. This business structure provides pass-through taxation treatment (like a partnership), but also affords the liability protection of a corporation. One other similarity to a corporation is that the LLC is treated as a separate legal entity.
When starting up a new business, there are important administrative matters that also must be attended to, including the following:
- Obtaining a Federal Employee Identification Number (EIN)
- Opening a bank account
- Leasing office, warehouse or retail space
- Obtaining proper licenses or permits
Zacharia Brown attorneys are available to assist all of our business clients with these administrative matters as part of the business start-up process.
Partnership Agreements, Operating Agreements and Corporate Bylaws
As part of the business entity formation process, our attorneys will consult with you to draft the appropriate documents depending upon the business structure that you have chosen. (i.e. a Partnership Agreement for Partnerships, an Operating Agreement for LLCs and Corporate Bylaws for your Corporation). These documents will define the duties, responsibilities and powers of the members of the business. Depending upon your business structure, some standard items addressed in these agreements can include the following:
- Percentages of ownership of each member
- Different classes of ownership and the voting rights associated with each class
- Profit and loss distribution
- Voting rights and responsibilities of individual members
- The criteria for raising additional capital and adding additional members
- The schedule of meetings; and
- What constitutes a dissolution of the business
The purpose of drafting these documents to serve as part of your business records is to solidify any verbal agreements among members and to specifically address items that owners/members do not want defined by default provisions under Pennsylvania law.