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

2017 Brings Three New Sick Leave Laws to Illinois

DuPage County business law attorneysChanges to business laws are not a new thing, but employers are facing three major updates. Failure to comply with any of these new laws can result in serious consequences for employers, not the least of which may include litigation. Learn what they mean for your company, and how you can get ahead of them to protect your business with help from the following information.

Chicago Paid Sick Leave Ordinance

Set to take effect July 1, 2017, the Chicago Paid Sick Leave Ordinance (SLO) is an amendment to the original Minimum Wage Order. It requires that employers provide all of their employees with 40 hours of sick paid leave for 12 months of employment, that at least 20 of those hours be carried over to the next 12 months of employment if they are not used, and that an additional 40 hours be carried over to cover any leave that qualified under the Family Medical Leave Act. It applies to all Chicago employers with one or more covered employees (worked at least 80 hours within a 120-day employment period). However, employers do not have to grant this leave until their employees have been employed for at least 180 days.

Cook County Earned Paid Sick Leave Ordinance

The Cook County Earned Paid Sick Leave Ordinance is quite similar to the Chicago SLO: Employees must be permitted to earn up to 40 hours of sick leave over a 12 month work period, and they must be permitted to carry over at least 20 hours for the next 12 months, and 40 hours for the purpose of any qualifying FMLA time off. However, there are some differences between the two ordinances. For one, the provision extends beyond the city of Chicago and extends to all of Cook County, including unincorporated areas. Secondly, some businesses may be exempt from this particular law. Before assuming an exemption, it is critical that Cook County businesses speak with an experienced attorney about their situation.

Illinois Employee Sick Leave Act

The Illinois Employee Sick Leave Act, which went into effect on January 1, 2017, covers the entire state of Illinois. It is different from the Cook County and Chicago SLOs in that it does not require employers to offer paid sick leave earnings. It does, however, expand the reasons that employees can take paid sick leave absences. They may take time off for the illness, injury, or medical treatment of a spouse, child, sibling, parent, grandparent, grandchild, stepparent, father-in-law, or mother-in-law.

Prepare and Protect Your Company from Litigation

To avoid litigation, employers should ensure their policies and implementation of those policies are in compliance with the law. Stock, Carlson, Oldfield & McGrath, LLC can work with you and your business work through the changes and transition. To learn more about our comprehensive services, call 630-665-2500 and schedule a consultation with our DuPage County business law attorneys today.

Sources:

https://www.cityofchicago.org/city/en/depts/mayor/press_room/press_releases/2016/june/Allow-Workers-to-Earn-Sick-Days-to-Strengthen-Protections-for-Working-Chicagoans.html

http://www.chicagotribune.com/business/ct-cook-county-paid-sick-leave-1006-biz-20161005-story.html

http://www.ilga.gov/legislation/publicacts/fulltext.asp?Name=099-0841

 

Choosing the Right Structure for Your New Business

DuPage County business law attorneysYou have the idea, the business plan, and may even have an estimate of just how successful your business will be. Still, you are not quite sure which business structure you should choose. Believe it or not, this is actually a very common issue among new business owners. Often, this is due to the legal and financial complexities of each structure. Get information on the basics with the following information, and then learn how an attorney can assist you with finding the right structure for your new business.

Sole Proprietorship

This is the most basic of all business structures, and it is often the simplest in regard to taxation.  However, there are some serious limitations. You may have a hard time obtaining a business loan if you do not have good credit, and you are responsible for all of your debts, assets, and liabilities. So, if you run into financial troubles, you run the risk of losing your business. Also, in Illinois, you have to file your business with the county clerk’s office if the business is not the same as your full legal name, and you must file for a Federal Employer Identification Number if you plan to hire employees.

Partnerships

Partnerships, though a little more complex, are still relatively straightforward as far as taxation. Losses and profits are “passed through” the personal taxes of the partners. However, they are not personally held liable if there is an issue with debt later on down the road. Unfortunately, there is a major drawback with this particular business model: partners are taxed for profits, even if they do not directly receive them. So, if profits are used to expand the business, you still have to pay taxes on them. You also have to have at least one “general partner” who is responsible for managing the project.

Corporations

Of all the business structures, corporations are often the most complex. They require extensive record-keeping, often have higher taxation, and are generally more expensive to start up. Still, they do offer the most protection when it comes to taxes and liability, should the business have financial troubles later on. An attorney can help you understand whether or not this structure is right for your business.

Limited Liability Companies

Limited Liability Companies (LLCs) mix the benefits of a corporation and a partnership. Taxation is personal, so it does not include the higher taxes of a business. However, business owners are still protected from the liability, should the business run into financial trouble later on down the road. For this reason, it is becoming one of the most popular business models among businesses with two or more partners/owners.

Deciding Which Structure is Right for Your Business

Even with all of this information, it can be difficult to determine which business structure might be most appropriate for your business. There are complex rules, regulations, and limitations for each structure, and the taxation and liability for each could be crippling, depending on the structure you choose or the nature of your business. An attorney can help you examine all of these various factors and help you understand how each one may impact your future, and the future of your business.

At Stock, Carlson, Oldfield and McGrath LLC, we work directly with business owners, partners, sole proprietors, and entrepreneurs to help them find the road to success. Committed, dedicated, and highly skilled, we can assist you with your business, right from the very start, and can even continue to protect your interests throughout the entire life of your business. To learn more about the benefits of hiring a DuPage County business law attorney, call us at 630-665-2500 today.

Sources:

http://www.illinois.gov/dceo/SmallBizAssistance/BeginHere/Pages/StepByStepGuide.aspx

https://www.irs.gov/businesses/small-businesses-self-employed/business-structures