Many small business owners have chosen to form a limited liability company as an alternative to forming a corporation in order to limit their personal liability. If you operate a business as a sole proprietor or under a partnership agreement, you are entirely responsible for any debts your business have accumulated or lawsuits against your business. This means that everything you worked for, including your home, savings, and other property and possessions can be at risk. That is why many business owners contact a corporation attorney to start an LLC. LLC stands for Limited Liability Company which gives business owners protection from personal liability.

Benefits that business owners receive when they form an LLC include:
  • Limited Liability
  • Pass Through Taxation
  • Less Administrative Paperwork and Record keeping
  • National Recognition
  • Deductible Expenses
  • Flexible Profit and Loss Allocation

By hiring a corporation attorney when setting up an LLC, you will create a legal barrier between your business and your personal life. As a result, you can protect your personal finances and property from being taken away. But besides limiting your personal losses, there are many other limited liability company advantages one can benefit from if one decided to form an LLC. An additional benefit includes the tax LLC savings business owners receive when they form an LLC. Similar to a sole proprietorship or partnership, a Limited Liability Company receives pass through taxation. Pass through taxation means that the company itself does not have to pay taxes to the IRS, unlike a corporation which receives a double taxation. Instead, each owner of the company will report their own profits or losses in the company on their tax returns. There are many other financial and legal rules which govern a Limited Liability Company that can seem very complex to the average person. That is why it is important to talk to a corporation attorney to discuss your business options and a business plan that will lead you in the right direction. Our corporation attorneys are experienced in all matters relating to business law and can help you form an LLC.

Generally, chapter 13 is preferred by debtors who have a valuable asset, such as a home, that is not completely covered by exemptions and that they wish to keep. This is possible because under Chapter 13 a debtor proposes a plan to repay creditors over a three to five year period during which the debtor can make up overdue payments on any assets and pay into the plan the equivalent value of any assets not covered by exemptions. Since the debtors plan will require regular monthly or biweekly payments, Chapter 13 is usually only appropriate for an individual debtor who has a regular source of income.

At a confirmation hearing, the court either approves or disapproves the plan, depending on whether the plan meets the Bankruptcy Code’s requirements for confirmation. Chapter 13 is very different from chapter 7, since the chapter 13 debtor usually remains in possession of the property of the estate and makes payments to creditors, through the trustee, based on the debtor’s anticipated income over the life of the plan. Unlike chapter 7, the debtor does not receive an immediate discharge of debts. The debtor must complete the payments required under the plan before the discharge is received. The debtor is protected from lawsuits, garnishments, and other creditor action while the plan is in effect. The discharge is also considerably broader (i.e., more debts are eliminated) under chapter 13 than the discharge under chapter 7.

Link to more information:

Bankruptcy Basic, US Bankruptcy Court

Chapter 11 Bankruptcy is a reorganization procedure used by businesses, including sole proprietors, partnerships, and corporations. The debtor in chapter 11 files a petition which includes a list of assets and liabilities, and a detailed statement of financial affairs. The debtor will typically act as his own trustee, called a "debtor in possession", and will remain in possession of all estate property. The court can appoint a trustee for cause shown, including mismanagement.

The Debtor

About one month after the filing, the debtor and his attorney attend a meeting of creditors. The debtor files monthly operating reports, showing income and disbursements, profit and loss, and a balance sheet, and pays quarterly fees to the U.S. Trustee based on the amount of money disbursed.

The debtor has the exclusive right to file a plan during the first 4 months. Thereafter, creditors are permitted to file plans. The Chapter 11 plan is accompanied by a disclosure statement, which describes the debtor’s financial circumstances, including:

  • Prior History and cause of the Filing
  • Assets and liabilities
  • Income and expenses
  • Treatment of creditors
  • Liquidation analysis
  • Projections of earnings
  • Tax consequences
  • Discussion of options
Link to more information:

Bankruptcy Basice, US Bankruptcy Court 

Chapter 7 is designed as an orderly, court-supervised procedure by which a trustee collects the assets of the debtor’s estate, reduces them to cash, and makes distributions to creditors, subject to the debtor’s right to retain certain exempt property and the rights of secured creditors. Because there is usually little or no nonexempt property in most chapter 7 cases, there may not be an actual liquidation of the debtor’s assets. These cases are called “no-asset cases.” Usually a debtors with assets that they wish to keep and that are not covered by exemptions file chapter 13 bankruptcy.

A creditor holding an unsecured claim will get a distribution from the bankruptcy estate only if the case is an asset case and the creditor files a proof of claim with the bankruptcy court. In most chapter 7 cases, the debtor receives a discharge that releases the debtor from personal liability for certain dischargeable debts. The debtor normally receives a discharge three to four months after the petition is filed.

Link to more information:

Bankruptcy Basics, US Bankruptcy Court

Estate planning is the process by which an individual or family arranges the transfer of assets in anticipation of death. An estate plan aims to preserve the maximum amount of wealth possible for the intended beneficiaries and flexibility for the individual prior to death. A major concern for drafters of estate plans is federal and state tax law.

An estate is the total property, real and personal, owned by an individual prior to distribution through a trust or will. Real property is real estate and personal property includes everything else, for example cars, household items, and bank accounts. Estate planning distributes the real and personal property to an individual's heirs.