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
Tag 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
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