Business Organization

5 Business Name Mistakes You Should Avoid!

You should think about the branding aspects of your business name before you start the business!  There are a few things you should always do first. Missing any of these crucial steps before starting your business or organizing it with the secretary of state (or similar agency) is a mistake that can cost you or your business immensely down the road! I am talking specifically about branding mistakes and the consequences that can potentially arise for your early missteps. Below are some common mistakes you or your partners should avoid before settling on a name for your new business.
1) Choosing a business name that does not also function as a trademark or service mark! Separate product and service branding aside, you will generally want to brand your business name. You or your partners should be thinking about a name that is eligible for state or federal protection. That means you […]

Charging Order Protection Keeps Partners In Control

 
If you own a small business, you face the prospect of losing ownership of your business in certain scenarios. A creditor can attach a judgment to any interest that an individual debtor may have in any business. In a corporation, a creditor may simply attach itself to the shares of the debtor’s stock to gain all the rights that the debtor had in the corporation, including rights to sell the shares, voting rights, the right to view books and records and rights to bring derivative actions. If the corporation is an “S” corporation and the creditor is not an individual, then the creditor’s attachment of the stock may cause the “S” election to be terminated, which would possibly result in unwanted tax consequences to the remaining shareholders. Obviously, allowing a creditor to obtain voting rights and other non-economic rights of the debtor is not in the best interests of the […]

5 Common LLC Taxation Questions

 
 LLC Taxation 101
 
An LLC, or limited liability company, offers the same personal liability shield to each of its owners that a corporation offers. The LLC is essentially an organized partnership offering the same protections as corporations, but with much more flexibility. But, what characterizes LLC taxation?
 
1. Is the LLC entity itself taxed?
The LLC is taxed as a partnership as profits and losses are “passed through” to the members and there is no entity level income tax. The LLC avoids double taxation then just like the S corporation. (Again, some states do impose replacement taxes on the income of LLC’s). The LLC income is reported on Form 1065 and then distributed to owners via Schedule K-1. The owners then report this income on their individual returns (1040) on schedule E. If the LLC has only one owner, the IRS will automatically treat the LLC as if it were a sole […]

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