Guiding Your Business’ Future

Whether you are looking to start a new business, or need to manage and maintain an existing company, it is important to consult an attorney to ensure you are operating under the most beneficial legal arrangement. Additionally, signing a contract may seem routine and familiar, but the legal ramifications of making promises to other people or companies using written contracts can have long-lasting effects on your life and finances.

It is key to have a competent lawyer assist in your business expansion actions and review any important contract you are creating or being asked to sign. From business or real estate purchase agreements to purchasing your own commercial building or merging with another company, we can help. Knuteson, Hinkston, & Rosenberg, S.C. is based in Racine, WI and works with clients across Southeast Wisconsin.

Choosing a Legal Entity: Partnerships

Partners are usually jointly and severally liable for the business debts too, meaning that creditors can freely pursue any and all of the partners to satisfy claims. Certain specialized partnerships, such as Limited Liability Partnerships (“LLP’s”), can provide some of the same liability protections of LLCs and corporations, but there are some unique rules and requirements that must be met to create a valid LLP.

It is important to consult an attorney if you are contemplating using a partnership for your business arrangement. An attorney can help draft partnership agreements that modify and alter some of the disadvantageous default rules discussed here, as well as assist with properly forming a specialized limited liability partnership.

Choosing a Legal Entity: Corporation vs. LLC

One of the main differences between corporations and LLCs is the way in which they are taxed. By default, corporations are generally taxed twice, meaning they pay tax on the profits of the corporation itself, and then shareholders also pay a second wave of personal taxes on dividends disbursed to the shareholders individually. A sole-member LLC only pays one tax because LLC profits pass through to the personal income of the LLC’s owner—like the second wave of taxes that shareholders pay in corporations. LLCs with two or more members are often taxed as partnerships by the IRS (Internal Revenue Service).

However, smaller LLCs can make an election to avoid the default rules and be taxed as a corporation instead. This flexibility makes LLCs an attractive option for small or new businesses. The election allows the LLC to designate itself as a “C-Corp” or “S-Corp.”

Contract Drafting, Review, & Negotiation

Contracts boil down to promises being made between multiple parties, whether that involves business partners, customers, or spouses. Contracts can be enforced by filing lawsuits against an offending party for breach of contract. Absent special circumstances where a party has been legitimately defrauded and fooled into signing a contract, contracts are usually enforced by courts of law.

However, enforcing or defending against an allegation of contract breach can be expensive for both parties in terms of litigation costs and attorney fees. Therefore, creating a fair contract that can be reasonably complied with by parties is essential to maintaining a prosperous contractual relationship.