A corporate or business law attorney can help business owners and officers face the myriad of issues, problems and opportunities that exist today.

The lawyers of Merritt Webb have a long history of counseling and assisting business clients in all aspects of corporate and business law. We have dealt with almost all the possible issues one can find in corporate and business law, from the formation of various business entities to their dissolution and all matters in between. We have assisted large and small business entities in all manner of endeavors and do so daily.

Examples of the business and corporate legal matters our attorneys handle include asset sales and purchases, corporate finance, state and federal tax issues, regulatory issues, consumer issues, commercial real estate (purchase and sales), collections, ERISA issues, labor law matters, administrative representation, intellectual property concerns, bankruptcy and governmental relations. Regardless of our clients’ business needs, we at Merritt Webb feel we can fill them quickly and competently.

The most common issue unique to business owners is choosing the “right” legal entity for your business.

Choice of Business Entity

There are several forms your business can take. A business can be formed as a sole proprietorship, general or limited partnership, limited liability partnership, limited liability company (LLC) or corporation. In South Carolina, a business can also be formed as a professional corporation. Which is best for you depends on a variety of factors, especially your preferences and needs regarding legal liabilities, tax liabilities, number of and relationship between business owners, the expected purpose and duration of the business, and the level of organizational formalities and controls.

Sole Proprietorship

A sole proprietorship is a business that is owned by an individual who is responsible for all aspects of the business. The owner exercises full control over the management of the business. The business is not a separate legal entity and there is no protection from liability for the owner. The owner is personally responsible for all debts of the business, even in excess of the amount invested in the business.

The sole proprietorship is not a separate taxable entity and can be operated under the owner’s social security number. Income is reported on the owner’s income tax return.

General Partnership

A partnership is a legal entity that is jointly owned by two or more people who enter into a profit making business together. It does not require a written agreement but one is recommended. The partners or owners may be personally responsible for all debts of the business, even those in excess of the amount invested in the business.

The partnership must register with the IRS for an Employer Identification Number (EIN) and must file an informational tax return. The partnership income is reported on the individual partners’ tax returns based on their share of ownership in the partnership.

The partnership is dissolved on the death of any partner.

Limited Partnership (LP)

A Limited Partnership is a type of partnership with two types of partners, general partners and limited partners. The LP is taxed like a general partnership but there are some limitations on the liabilities for the limited partners. It is formed by filing a certificate of limited partnership with the Secretary of State.

An LP must have at least one general partner who runs the business and is personally liable for the debts and liabilities of the partnership. Its limited partners play a passive role in the business but they are provided some protection from personal liability for the debts and liabilities of the partnership.

The partnership must register with the IRS for an Employer Identification Number (EIN) and must file an informational tax return. The partnership income is reported on the individual partners’ tax returns based on their share of ownership in the partnership.

Limited Liability Partnership (LLP)

A Limited Liability Partnership, also known as a registered limited liability partnership, is the same as a general partnership for all purposes except with respect to liability of the partners. It is formed by filing with the Secretary of State.

Partners of an LLP can not be held personally liable for the debts and liabilities of another partner unless they participate with or are responsible for supervising the partner that committed the tort leading to the liability.

Limited Liability Company

A limited liability company (LLC) is an unincorporated business association that provides its owners (members) limited liability and flexible management and financial alternatives. It is formed by filing articles of organization with the Secretary of State.

An LLC can provide pass through taxation or be taxed as a corporation. It usually provides the favorable pass-through tax treatment of partnerships and the limited personal liability of corporations.

The LLC will have an EIN. It can either provide pass through taxation or be taxed as a corporation.

Corporation

A corporation is a business that is formed and authorized by law to act as a single person and is legally endowed with rights and responsibilities. It is a separate legal entity from its owners, who are called shareholders, and operates on its own apart from them. Thus, the owners have some protection from personal liability on corporate debts.

The corporation is required to have an EIN. The corporation can either be taxed as a C Corporation which provides the corporation pays income taxes or as an S Corporation whereby the pass through taxation treatment applies.

Non-Profit Corporations

Nonprofit Corporations are generally recognized to be public or charitable in nature. The nonprofit corporation does not have owners or shareholders who share in the profits of the enterprise. Legal requirements for nonprofit corporations are largely the same as those of for-profit corporations, except there are special rules regarding the name of the corporation, what must be included in its charter and what it can do.

When a nonprofit corporation has been incorporated in a state, the entity may apply for 501(c)(3) status with the IRS, thus granting them an exemption from paying federal income taxes.

In North Carolina, non-profit corporations are governed by the North Carolina Non-Profit Corporation Act.

In Tennessee, non-profit corporations are governed by the Tennessee Non-Profit Corporation Act. Nonprofit corporations are automatically exempt from franchise and excise taxes in Tennessee, and need not apply for it. For Sales Tax exemption, the nonprofit corporation must submit the Application for Registration for Exempt Entities along with the proper attachments.

South Carolina: Professional Corporation (PC) or Professional Association (PA)

A PC or PA is a type of corporation that is governed by statute. The purpose must be to provide a single professional service by licensed individuals. The PC or PA issues shares to its owners but the shares can only be issued and transferred to licensed individuals or other PCs or PAs in the same profession.

 

Our lawyers at Merritt Webb may be able to advise you as to which form of business vehicle best suits your needs and assist you with the incorporation of your business. If you would like to discuss the benefits of incorporation, how it can be done and what form such incorporation should take, you may contact us by calling 1.800.556.8404.