Structuring Your Business – Limited Liability Partnerships versus Limited Liability Companies

Wheaton business law attorneysThe structure of a business is more than just a critical element; it is what dictates nearly every aspect of the business. Sadly, too many business owners fail to give the decision of how to structure their business enough thought, which can place them and their partners and investors at risk for legal and financial consequences. Discover how even the smallest of differences in structure, such as those seen in limited liability partnerships (LLP) and limited liability companies (LLC), can make all the difference in the future stability of your company, and learn how an experienced Illinois business law attorney can assist you in making the right decision for your company’s needs.

Examining the Similarities Between LLPs and LLCs

For the most part, LLPs and LLCs are formed, structured, and treated the same. Each provides the partners with a “pass-through” option on their taxes, which allows them to avoid the “double taxation” that corporations are required to pay. LLCs and LLPs also handle partner buy-in and sell-out in a similar fashion, and neither has a limit on the number of partners that the business can have. Because of this, LLPs and LLCs have become quite popular among businesses that might have otherwise been forced to register as a corporation.

Understanding the Differences Between LLPs and LLCs

Although there are many similarities between LLPs and LLCs, there are also some distinct and important differences. First, an LLC does not offer partners the same level of liability protection as an LLP, should a lawsuit or some other legal action take place. Instead, all partners may be held equally accountable in an LLC. In contrast, an LLP is only required to have one managerial partner. All others can receive protection from the actions of managerial partners, provided they do not take on a managerial role themselves.

Business owners should also understand that they cannot always structure the company however they want. Some states have specific restrictions. For example, Illinois does not permit banking or insurance institutions to form LLCs. Instead, they must structure as either a corporation or an LLP.

Contact Our Wheaton Business Law Attorneys

At Stock, Carlson, Oldfield & McGrath, LLC, we understand the difficult decisions that start-up businesses must make, such as those that pertain to business structure. Dedicated and experienced, our Wheaton business law attorneys can assist you and your partners in making the most sensible choice for your company. Call 630-665-2500 and schedule your personalized consultation today.

Sources:

https://www.illinois.gov/dceo/SmallBizAssistance/BeginHere/Documents/Starting%20Your%20Business%20In%20Illinois%202016.pdf

http://smallbusiness.chron.com/difference-between-llc-llp-3760.html

 

 

 

Illinois Sues a Second Business Over Non-Compete Agreement – What Employers Need to Know

Illinois small business lawyerWhile most small businesses are only interested in making ends meet, there are large corporations and franchises out there, trying to take advantage of blue-collar workers. Sadly, when employees are paid low wages and asked to fill out a non-compete agreement, they may find themselves stuck, with no way out.

That is why Illinois now has a law on non-compete agreements; two companies have been sued in the past year for violating it. Learn more about this law and what it could mean for your company, and discover how an experienced business law attorney can help you avoid legal problems over improper use of non-compete agreements.

Understanding the Purpose of a Non-Compete Agreement

Non-compete agreements are not meant to keep wages low or violate an employee’s rights. Instead, they are supposed to ensure that a company’s reputation and trade secrets are protected from its competitors. That is not to say that low-wage paying companies are lacking in trade secrets or that their reputation should not be protected, yet by forcing low-wage employees to sign non-compete agreements, they are protecting their company in a way that is detrimental to the employee. In a country where wages have become stagnant, unfair treatment of low-wage employees is an offense that Illinois is no longer willing to overlook.

Protecting Your Company with a Non-Compete Agreement

If you pay your employees at least $13 per hour, the state will permit you to use a non-compete agreement to protect your company’s reputation and/or trade secrets. However, it is critical that you understand the risks associated with developing such an agreement without proper legal assistance. Verbiage, particularly when it comes to issues that might be considered a violation of the employee’s rights, must be carefully thought out and well-versed. There are also certain elements that cannot be added to a non-compete agreement. Ensure you do not make a costly mistake by hiring an experienced attorney to draft your non-compete agreement.

Contact Our DuPage County Small Business Attorneys

At Stock, Carlson, Oldfield & McGrath, LLC, we understand the challenges that small businesses face in today’s competitive market. Dedicated and experienced, our DuPage County small business attorneys can listen to the goals and concerns you have about trade secrets and potential market competitors. Provided it is warranted, we can also help you draft a non-compete agreement to protect your company’s financial future. Learn more by scheduling a personalized consultation. Call 630-665-2500 today.

Sources:

http://www.chicagotribune.com/business/ct-biz-illinois-payday-lender-noncompete-lawsuit-20171026-story.html

https://www.nytimes.com/2017/10/25/business/economy/illinois-noncompete.html

Examining the Advantages and Disadvantages of a Sole Proprietorship

Illinois small business attorneysIn a sole proprietorship, an individual proprietor (the owner), manages and runs their business. They receive all income for the company, but they are also responsible for its debts, liabilities, and tax obligations. Learn more about this widely used business structure, including its advantages and disadvantages, and how an attorney can assist with the setup.

Advantages of a Sole Proprietorship

Of all the business structures that one can choose, sole proprietorships tend to be the most affordable and easiest to start. Paperwork and other legal items are generally less extensive, and the sole proprietor is only required to comply with state and federal tax laws, zoning laws, and other local regulations, such as licensing laws.

There are also few formal business requirements (except those specific to the industry they operate in), and because the owner has full control over the decision-making power within their business, they may sell or transfer it to another owner or entity at any time they deem necessary. The owner may also change the structure of the business at any time, but it is important to recognize that obligations before the switch may still fall on the owner of the company.

Disadvantages of a Sole Proprietorship

Unlike other business structures, sole proprietorships are not protected from liabilities and bad debts incurred by their company. Instead, they may be held personally liable. In extreme situations, this can cause the business and the owner to simultaneously go bankrupt. Furthermore, the sole proprietor is required to pay all federal taxes on any income earned, and they may be penalized if they do not meet their obligation.

Another major disadvantage is that few investors are willing to put money or energy into a sole proprietorship; quite simply, there just is not enough protection for the investor. As such, sole proprietor business owners typically rely on personal loans and assets to finance the company. If the business fails, this can result in a serious financial loss for the owner of a sole proprietorship.

Contact Our DuPage County Business Law Attorneys

Although sole proprietorships are relatively simple and straightforward in terms of setup, there are some obstacles that business owners should be aware of before moving forward. Stock, Carlson, Oldfield & McGrath, LLC can help ensure that these matters are understood by business owners and that they receive personalized attention to fit their needs. Learn more about how we can assist with your business set-up by scheduling a personalized consultation with our DuPage County business law attorneys. Call our offices at 630-665-2500 today.

Source:

http://www.nytimes.com/allbusiness/AB4113314_primary.html