1. Entity Selection and Company Formation
Cortex SQ1
by Brian Rogers
Blue Maven Law, LLC

2. Sneak Peek Choosing the Right Entity Avoiding Personal Liability
How to Sign a Contract

3. Sneak Peek Choosing the Right Entity Avoiding Personal Liability
How to Sign a Contract

4. Type of Legal Entities Sole Proprietorship General Partnership
Limited Partnership
C Corporation
S Corporation
Limited Liability Company

5. Principal Considerations
Limited liability
Tax treatment
Equity for services

6. Limited Liability

7. Tax Treatment
Pass-through
Double Taxation

8. Tax Treatment (Pass-Through)
Gross Sales
120,000
Expenses
(30,000)
Net Income
90,000
Individual Taxes
(14,081)
After-Tax Income
$ ,919

9. Tax Treatment (Double-Taxation)
Gross Sales
120,000
Expenses
(30,000)
Net Income
90,000
Corporate Taxes
(18,850)
Income Available for Distribution
71,150
Tax on Dividends
(3,173)
After-Tax Income
67,978

10. Pass-Through Taxation
Tax Treatment Comparison
Pass-Through Taxation
Double-Taxation
Net Income
90,000
After-Tax Income
75,919
67,978

11. Equity for Services
When will tax be triggered on the issuance or award?
How will the income be characterized?

12. Sole Proprietorship Single owner No separate legal entity
No filing required to create the entity
Pass-through taxation
Reports income and expenses on Schedule C of the owner’s IRS Form 1040
No limited liability
No equity possible

13. General Partnership Multiple owners No separate legal entity
No filing required to create entity
Pass-through taxation
Reports income and expenses on IRS Form 1065
Partners receive K-1 and report income and expenses on Schedule E of IRS Form 1040
No limited liability
Equity for services might trigger taxes

14. Limited Partnership Multiple owners
Must file Certificate of Limited Partnership
Pass-through taxation
Reports income and expenses on IRS Form 1065
Partners receive K-1 and report income and expenses on Schedule E of IRS Form 1040
No limited liability for general partners/limited liability for limited partners
Equity for services might trigger taxes

15. C Corporation Single owner or multiple owners
Must file Articles of Incorporation
Must adopt bylaws
Double taxation
Company reports income and expenses on IRS Form 1120
Shareholders report dividends IRS Form 1040
Limited liability

16. Equity for Services Stock grant Stock options
Taxable upon grant as ordinary income unless subject to vesting
Taxable when vesting restrictions lapse (FMV of shares at time of vesting as ordinary income)
Stock options
Incentive stock options (only available to employees; FMV of stock less strike price taxed as capital gains upon sale of stock)
Nonqualified stock options (FMV less strike price taxed as ordinary income upon exercise)

17. S Corporation Single owner or multiple owners
Can only have one class of stock
Restrictions on type of shareholder
Must file Articles of Incorporation
Pass-through taxation
Company reports income and expenses on IRS Form 1120S
Shareholders receive K-1 and report dividends on Schedule E of IRS Form 1040
Limited liability

18. Limited Liability Company
Single owner or multiple owners
Must file Articles of Organization
Need to adopt an Operating Agreement
Limited liability
Can elect how to be taxed
The best choice under most circumstances
Equity for services
Similar rules as issuance of corporate stock for capital interests
No tax for profits interests

19. Sneak Peek Choosing the Right Entity Avoiding Personal Liability
How to Sign a Contract

20. Personal Liability Piercing the company veil Personal guarantees
Personal liability for torts

21. Personal Liability Piercing the company veil Personal guarantees
Personal liability for torts

22. Piercing the Company Veil
Using the company for fraud
Inadequate capitalization
Failure to follow corporate formalities
Co-mingling company and personal funds

23. Tips to Avoid Veil-Piercing
Keep separate company bank accounts
Keep good accounting records
Don’t pay personal bills from company accounts
Follow corporate formalities
Buy appropriate liability insurance
Sign contracts correctly

24. Personal Liability Piercing the company veil Personal guarantees
Personal liability for torts

25. Personal Guarantees Bank loans Real estate leases Other leases
Other contracts

26. Personal Liability Piercing the company veil Personal guarantees
Personal liability for torts

27. Sneak Peek Choosing the Right Entity Avoiding Personal Liability
How to Sign a Contract

28. How to Sign a Contract
The correct legal persons should sign the contract

29. How to Sign a Contract
The correct legal persons should sign the contract
The introductory paragraph and the signature blocks should match completely

30. This agreement is entered into on March 12, 2016, and is between THE CONTRACTS GUY, LLC, a Missouri limited liability company, and Brian Rogers, an individual.

31. THE CONTRACTS GUY, LLC
By: __________________________   Brian Rogers Manager
Brian Rogers

32. How to Sign a Contract
The correct legal persons should sign the contract
The introductory paragraph and the signature blocks should match completely
Make sure you know the correct legal entity

33. How to Sign a Contract
The correct legal persons should sign the contract
The introductory paragraph and the signature blocks should match completely
Make sure you know the correct legal entity
Make sure the correct people are signing the contract

34. Examples of Contract Signatures
Corporation:
THE CONTRACTS GUY, INC.
By: __________________________   Brian Rogers
President

35. Examples of Contract Signatures
Limited liability company:
THE CONTRACTS GUY, LLC
By: __________________________   Brian Rogers Manager

36. Examples of Contract Signatures
Limited liability company:
THE CONTRACTS GUY, LLC
By: __________________________   Brian Rogers Member

37. Examples of Contract Signatures
Individual:
__________________________ Brian Rogers

38. Questions?

39. Contact Information
Brian Rogers, Attorney
Blue Maven Law, LLC
3636 S. Geyer Road, Suite 100
St. Louis, MO 63127
(office)
(cell)
@theContractsGuy