Welcome to Paula Schaefer Law

Congratulations on starting your business! My suggestion is to create a plan that addresses both your short term and long term goals. When you have these ideas pulled together, then it is advisable to meet with an attorney to discuss what the appropriate business entity is to help you meet your immediate goals. Doing it this way allows you to plan for the growth of your business.

There is no one best entity type for a business; it depends on your short term and long term goals. The appropriate entity for your business will also depend on the nature of the business or industry. Here are some general differences among the entities:

• An LLC provides for protection against liability with a relatively modest amount of business administration requirements.
• An S corporation provides its owner with more protection against liability with minimal business administration requirements.
• Comparing that to a C corporation is crucial, however. If your goal is to start a business to take it public, a C corporation may be the best entity.
• All of these contrast with running your business as a sole proprietorship, which means that your business is not a separate entity from you.
• Partnerships may be based on an oral agreement; however, it is advisable to have a written partnership agreement. General partners are personally involved in the management and control of the business.

There are many variables to consider and advance planning with an attorney could avoid significant problems. Much depends on the manner in which you are exiting the business. If it is a partnership, in which your partner is buying you out of the business, you will want to dissolve the partnership. If you are the sole owner selling the business, you should consider a sales agreement to ensure that you are protected if the buyer is purchasing assets and assuming liabilities. You should also review all existing leases and licenses in your business to be sure that you can assign them to the new owner. Finally, if you have employees, you may be subject to notice requirements if exiting the business will result in the loss of employment.

There are important liability and tax considerations for every business. If your long term goal is to grow your business to a certain size and then sell it, an entity, may result in an easier sale than a sole proprietorship. As your business grows and you hire employees, it may be advisable to review your business entity’s risk of liability.

Working in tandem with your lawyer will ensure that the business arrangement that you are entering into meets your business expectations. As a team member, an attorney can protect your business interests.

Attorneys are trained to ask the questions – what if… happens, or doesn’t happen? Your answers to these questions will make you contemplate business transactions in a proactive manner and plan for contingencies.

Not every transaction needs to be in writing, but it is best practice to do so. In addition, it is more efficient for you to use standardized contracts, uniform terms and conditions, as well as standardized employment agreements.

Contracts or agreements are legal documents that will always contain some amount of legal terms. However, you should always feel comfortable asking your attorney what the terms mean and ensuring that you understand his or her explanation. Most importantly, the business terms should be those discussed with your attorney.

A thorough evaluation of your business agreement takes into account any new changes to the laws that are relevant to your business, any client complaints, and rejections or failure to pay arising from confusion about the contract. The evaluation should also include discussion about any threatened or actual litigation that arose from use of the contract. When your attorney concludes this analysis, the extent of the revisions, if any, can be determined. Perhaps you do not need significant revisions but only a review for current legal compliance with minor rewriting.

Estate planning determines what documents you want to create to plan for your later years. People who want to prepare for their life changes as they age or to ensure the ideal distribution of their assets upon their death can choose among these documents to suit their specific needs. Estate planning could combine a will, one or more revocable trusts, a durable power of attorney, an advance health care directive, and a Health Insurance Portability and Accountability Act (HIPAA) release.

A revocable living trust is a document that allows you to control your assets until you become incapacitated or die. “Control” means that your ownership of assets does not change. As the creator of a revocable living trust, you can amend it, can add assets to it or remove them from it, and can revoke it during your life as long as these transactions are done in accordance with the terms of the trust agreement.

The revocable living trust has many purposes—primarily to avoid probate. Probate is the procedure in which the court oversees the transfer of assets in a person’s estate after death. Probate is required if you die without a will or if you have a will but do not have a revocable living trust. Having a revocable living trust spares your beneficiaries the considerable time, expense and perhaps unwanted publicity of having the probate court administer your assets. You can also name a “successor” to manage your financial and other affairs in case you become incapacitated and thereby avoid a court-appointed “conservator” over your affairs.

Estate planning is not only for those with many or high-value assets. A key component of estate planning is deciding what will happen to your children if you die when they are young. Your decisions can be included in a will in which you appoint a guardian for your child as well as appoint an executor of your estate. You can include instructions for your funeral and burial in a will and/or in an advance health care directive.

The best way to determine your estate planning needs is to assess what your assets are, what your wishes are for your care and the care of your children should you become incapacitated or die. After you have gathered information about your assets and thought about any guardianship issues, it is best to contact an attorney and obtain a questionnaire tailored to fit your unique situation. The answers to the questionnaire will provide the attorney with valuable information to help you complete your estate plan.

If you own real estate in more than one state, each state where the real estate is located may require probate procedures. Alternatively, each property could have been placed in a revocable living trust and avoid probate.

If you would like to avoid the later legal expenses of probate, which may include attorney’s fees as well as executor’s fees, then a will is insufficient estate planning. If you would prefer to distribute your assets as privately as possible, then having a will without a revocable living trust results in probate, which is done in a public setting.

You should revise your will and trust when you have had a significant personal event in your life. If you have married, divorced, or had a child, you will probably wish to change how your existing will and trust are structured. It is advisable to review your will and trust every few years to make certain that they are current with the events in your life.