With all of the business entity choices available to new and existing businesses, a Limited Liability Company (LLC) can be a great entity choice for many types of businesses. They are easy to form, and they help protect your personal assets from the debts and liabilities of the business and its employees. An LLC doesn’t require the strict record keeping, paperwork, or operating formalities that a corporation requires. LLCs also provide flexible income tax options, and they don’t have the strict ownership restrictions of a corporation. Because of these positive qualities, LLCs are often the entity of choice for many businesses. However, most people who create an LLC fail to plan for the disposition of their LLC interest upon their death. Continue reading
Category Archives: Business Law
LOANING MONEY TO FAMILY – BEWARE OF THE APPLICABLE FEDERAL RATE (AFR)
At Kosa Law Office we frequently work with clients who wish to make loans to their children or other family members, often at a reduced interest rate. These loans sometimes involve a verbal arrangement, other times a land contract or a simple promissory note. But when making such loans, most clients are unaware of something called the Applicable Federal Rate (AFR).
What is the AFR?
The Applicable Federal Rate (AFR) is the minimum interest rate prescribed by the Internal Revenue Service for private loans. Loans made with an interest rate lower than the AFR can result in an unintended taxable event for the maker of the loan. The legal authority for the AFR is found in Section 1274(d) of the Internal Revenue Code (26 U.S.C. §1274(d)). Continue reading
DIY Business Formation: Are You Sure It’s Right for You?
More Wisconsin-based entrepreneurs are taking the initiative to create their own business entities than ever before. And why shouldn’t they? Starting a business seems as easy as filing a form with Wisconsin’s Department of Financial Institutions (DFI).
The DFI is the filing office for creating Wisconsin corporations, limited liability companies, limited partnerships and other business types. And it’s true: Creating a business entity starts with filing a form there. There are many additional legal matters to consider when forming a business, however. Overlooking these matters can expose you to the risk of litigation, even putting your personal finances at risk.
Items to Consider When Starting a New Business
In addition to filing a form with the DFI, it’s a good idea to:
Properly prepare your operating documents. Depending on the type of business you create, you may be expected to prepare certain operating documents. These can include bylaws, operating agreements, partnership agreements or other important documents. The documents are critical. They define your organization’s operating terms and help protect your legal rights and responsibilities. Continue reading
9 Ways to Make Social Media Work for Your Business
As a business law attorney, I enjoy assisting my Wisconsin and Minnesota clients with their business startups. I help them choose the proper business entity, draft their operating documents, ensure their compliance with applicable laws and regulations, etc. But once the business is up and running, I find they often lack experience on how to market their business for continued success.
For instance, it is impossible to run a business these days without having some presence on social media channels. All of your customers are out there, many of whom are speaking about your company. Are you meeting those customers where they are? Are you on the right social media channels? If you are, are you sure you are marketing yourself correctly? Are you ensuring that you are protecting your business while building brand engagement and customer loyalty?
One of my colleagues, a content marketing consultant, recommends that business owners check their efforts against these 9 tips to make sure their social media efforts are benefitting their businesses. Continue reading
Business Law: S Corporation or C Corporation – Which is best for our company?
As a Business Law Attorney my business clients often ask me if their corporation should be an S Corporation or a C Corporation. When a corporation is formed it is generally referred to as a “C Corporation” because the tax rules affecting corporations and shareholders are found within Subchapter C of Chapter 1 of the Internal Revenue Code. Becoming an “S Corporation” is actually an election that is made by filing the proper form with the Internal Revenue Service (Form 2553 Election by a Small Business Corporation). The corporation’s attorney and accountant should first be consulted before making an S Corp election. In a previous post I addressed the various types of entities to consider when starting a business. If you have already chosen a corporation as your type of business entity, or if you are considering forming a corporation, consider the following advantages and disadvantages of making an election to be treated as an S Corporation. Continue reading
Starting a Business: Business Law in Wisconsin and Minnesota
Starting a Business? Consult with a Business Lawyer to be Sure you Consider all of your Options.
As a Business Law Attorney I’ve had the pleasure of helping many clients start their first business venture. The first step a client is usually faced with is choosing which type of legal organization to choose. The most common organizations or entities are: sole proprietorship, partnership, limited liability company (LLC), and corporations. Business Law is a complex topic, and a comprehensive comparison between these various types of business organizations is beyond the scope of this blog post. That being said, I will attempt to address some of the basic characteristics of each type of entity. Continue reading
Is a Limited Liability Company (LLC) Right for me?
Creating a Limited Liability Company (LLC)? Use Caution…Starting a Business is not always a simple venture
So you’re starting a new business? It can’t be that difficult…can it? You do the research and decide that a Limited Liability Company (LLC) is the best entity for your new venture. You may event go online and register your new entity with proper state agency. But use caution. Before you open the doors of your new business be sure you consult with a qualified Business Law Attorney to ensure that you’ve covered all the bases. Continue reading