Business Incorporation and LLC Formation
In Indiana, there are a number of different business entity choices available, two of which are corporations and limited liability companies (LLCs). We help clients forming new businesses decide whether a corporation, LLC, or some other type of entity will be best for their needs after considering a number of aspects, including:
- How many owners will the company have?
- Will all of the owners be individuals, or will some owners be business entities?
- Will the company have employees, and will any of them potentially become owners?
- What financing needs will the company have, and is it likely that new owners will be brought in soon?
- What is the general nature of the business operations, and is it likely that the company will have significant losses in the early years?
- What business entity will best preserve individual assets or the family farm and farming operation for future generations
Once we understand these and other aspects of a client’s new business, we can advise as to the advantages and disadvantages of various entity types. We then can prepare the organizational documents (Articles of Incorporation or Articles of Organization), the other governing documents (Bylaws or Operating Agreement), documents necessary to memorialize ownership (such as stock certificates), and other documents necessary to undertake certain actions, such as the election of directors and appointment of officers.
Is Subchapter S Taxation Election Available (and Should it be Done)?
Subchapter S election is available for certain types of businesses and their owners. With Subchapter S election, the profits and losses are allocated to the business owners in proportion to their equity ownership interests, and the business itself is not subject to federal income tax.
We help new business owners understand whether their business qualifies for subchapter S taxation, and the potential benefits that may be available. If subchapter S election is desired, we help the owners make a Subchapter S election, and file the appropriate documentation with the IRS.
Shareholder and Other Ownership and Management Agreements
What happens if a key owner dies or wishes to sell his or her shares? What happens if there are major differences between company owners concerning the direction of the company which cannot be resolved? What if a key owner gets divorced – will his or her spouse get half of the shares, and will you need to thereafter be in business with such person?
These circumstances arise at some point with most businesses. However, at the outset of business formation, owners are usually more focused on getting the business started than on considering these possibilities. We help new business owners consider these possibilities so that if they occur, the legal agreements will be in place as to how these issues will be resolved. This can prevent, for instance, business owners from suddenly finding themselves in business with the spouse of another owner due to that other owner’s death or divorce.
Ongoing Advice and Counsel
After a business has been formed, we help owners keep the business in compliance with state laws, such as documenting annual shareholder and director meetings of the corporation or member and manager meetings of the LLC.