Business Law and Entity Formation & Maintenance
Selecting the right type of business entity is a crucial decision for anyone beginning a business venture. There are advantages and disadvantages to each form of business organization. The attorneys at Dick, Dick & Corey, LLP have significant experience in advising clients on the type of entity that best suits their needs. In addition to entity formation, the firm also advises clients on maintenance, modification, succession planning and termination of businesses. Among those types of entities are the following:
A sole proprietorship is the simplest form of business organization and has the lowest startup costs. The owner makes all of the decisions, retains all of the profits and is personally liable for all of the business debt. This form of business may limit growth if the owner is the only source of capital and know-how.
A partnership is two or more persons who carry on as co-owners of a business for profit. A partnership agreement may be verbal, but it should be in writing by an attorney. Partners must be chosen carefully, because each partner can bind the others and make them each personally responsible for actions taken by the other partners in conducting business. If conflicts arise between partners, each will require individual advice.
A corporation is a more complex form of business organization, and it exists totally under the provisions of state law, both as to its formation and as to its scope of operation. It is an entity separate and apart from the shareholders but it has the same rights and obligations as an individual. A corporation can own property, can conduct business, can incur liability and can sue or be sued.
Our attorneys help clients form corporations by filing articles of incorporation with the Oregon secretary of state and crafting its bylaws. There are two primary distinguishing features of a corporation. The first is limited liability of the shareholders for corporate debt. That means shareholders are generally not individually liable for company debts unless they sign a personal guaranty. The second distinct characteristic is that a corporation provides continuity of the business and the entity continues in existence even after the death of a shareholder or the transfer of shares. Our attorneys have significant experience in helping with that “business succession” planning.
Limited Liability Companies
A limited liability company or “LLC” is also a statutory entity. It is similar to a corporation in that it provides limited liability protection for its owners, but it is taxed either as a partnership, sole proprietorship or as an entity, like a corporation, depending upon how it is organized. Our attorneys assist clients in the formation of an LLC by filing articles of organization with the Oregon secretary of state and crafting its operating agreement.
Regardless of the type of formation and structure of the business organization, if a client intends to use a business name other than the name or the name of its corporation or LLC, we will register an assumed business name with the corporation division in the secretary of state’s office.
The state of Oregon does not impose a sales tax, but it does impose an income tax on every person and an excise tax on all corporations doing business within the state. Also, most businesses are required to make contributions to the state’s unemployment compensation trust fund in addition to providing workers’ compensation insurance for their employees. Likewise, the federal government will impose a tax on all income from the business. Social Security taxes also will be payable on every employee. For tax purposes, our clients must understand the differences among, and keep careful records of the following: ordinary and necessarybusiness expenses; travel and entertainment expenses; capital expenditures; depreciation; investment tax credit; and other matters relating to assets and income. Generally, the client’s accountant, often in conjunction/collaboration with our attorneys assists clients in complying with government regulations and minimizing the tax burden at all levels.
The city or county in which a business is located may assess an annual business license tax. The requirements of each city or county in which you will do business should be clarified. A business entity must also conform to local zoning laws relating to the location of the business. It is important to check with the applicable planning departments before selecting a business location.
A business also may be subject to other state and federal laws and regulations. For instance, the regulation and control of air, noise, water and solid and hazardous waste is governed by the Oregon Department of Environmental Quality. Oregon also has laws dealing with minimum wages, length of hours of work and working conditions. The employees of a business will be subject to federal and state labor laws.
These are a few of the things clients need to consider when thinking of going into business, or successfully maintaining a business. The attorneys at Dick, Dick & Corey, LLP are ready to assist its clients to address these matters.