Business Structuring & Organization
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We are experienced in advising new and existing businesses in the factors that should be considered in choosing a business entity for operating a business or owning investment assets. Generally the factors to be considered involve structural flexibility, liability protection, and taxation issues.
We advise clients on various business entities including "C" corporations, "S" corporations, limited partnerships, limited liability companies, and general partnerships. We recommend the business entity that will best carry out the client's business, financial, and estate planning objectives. We also advise clients regarding the reorganization of existing businesses and implement the legal steps necessary to effect reorganization transactions.
Organizing the Company
We have experience in organizing new companies and providing legal counsel on choice of entity: C-Corp, S-Corp, LLC, PLLC, PA, LLP, etc. We pay particular attention to the shareholder or operating agreements. These agreements allow us to tailor the organization to the client's particular needs. We assist companies with buy-sell, voting, and management agreements.
In addition, we assist our clients in obtaining debt and equity financing and in providing an exit strategy to owners and investors. Our experience includes organizational set-up, issuance of stock to founders, preparations of shareholder and operating agreements, venture capital and other private placement financing, loans, mergers and acquisitions, and other reorganizations.
Limited liability companies
In many situations the limited liability company (LLC) provides the most structural flexibility and tax benefits as compared to other business entities. Available in Idaho since July 1993, the LLC has become the entity of choice in many situations. In most cases, an LLC will be taxed for income tax purposes in the same way that a partnership is. However, it is possible when the situation dictates to have an LLC be taxed as a “C” Corporation or an “S” Corporation by filing elections with the IRS. The LLC provides its owners good liability protection against third parties.
“C” Corporations
For the family and closely-held businesses we typically represent, the “C” corporation generally does not provide the structural flexibility and tax advantages of the other business entities. However, in certain circumstances the “C” corporation is the entity of choice, particularly for businesses that will likely have a public offering in the near future. The “C” corporation provides its owners good liability protection against third parties.
“S” Corporations
The “S” corporation is the same as a “C” corporation with regard to the liability protection and structural flexibility issues. However, by filing an election with the IRS the “S” corporation is subject to a different tax regime for income tax purposes that more closely resembles the advantages of partnership taxation. We regularly advise clients about the differences between “S” corporation taxation and the partnership taxation structure applicable to LLCs and limited partnerships.
Limited Partnerships
The limited partnership has an advantageous tax structure because, like an LLC, it is taxed as a partnership for income tax purposes. However, the limited partnership’s structural flexibility and liability protection are generally not as good as those offered by the LLC. The limited partnership still may be the entity of choice for estate planning reasons or for seed capital funds.
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