1. Welcome to the 2008 Small Business Development Workshops
Burton A. Brown, a HACIA member
The Law Offices of Burton A. Brown
205 W. Wacker Dr., Suite 922
Chicago, IL 60606
(312)

2. Business Formation & Incorporation

3. Business Formation & Incorporation
THE ANATOMY OF AN ENTITY
Different Types of Entities
Structure
Pros & Cons
Registration

4. Business Formation & Incorporation
Different Types of Entities
Sole Proprietorship
Partnership
Corporation
Limited Liability Company (LLC)
Limited Liability Partnership (LLP)

5. SOLE PROPRIETORSHIP
A business in which one person owns all the assets, owes all the liabilities and operates in his or her personal capacity.

6. SOLE PROPRIETORSHIP PROS CONS
Full Management Authority “You are your own Boss.”
Limited legal expense
Minimal Formalities and Regulatory and Reporting Requirements
Unlimited Liability: Owner is solely responsible for all debts and obligations
No diversity in management
Limited ability to Raise Capital

7. PARTNERSHIP
A voluntary association of two or more persons who jointly owns and carry on a business for profit. Under the Uniform Partnership Act, a partnership is presumed to exist if the persons agree to share proportionally the business’s profits or losses.

8. PARTNERSHIP
PROS
CONS
All partners are entitled to manage the partnership equally
Minimal formalities and regulatory and reporting requirements
Low cost of Organization
Unlimited Liability
Partnership can cause problems when partners disagree on fundamental issues
Limited ability to raise capital

9. CORPORATION
An entity having authority under law to act as a single person distinct from the shareholders who own it and having rights to issue stock and exit indefinitely.

10. CORPORATION PROS CONS Limited Liability for Shareholders
Business continuity
Ability to raise capital
Centralized management
- Shareholders
- Board of Directors
- Officers/ Managers
Increased legal expenses
Corporate Formalities and Reporting Requirements:
- Annual Report
- Annual Corporate Minutes
Double Taxation
- Corporate income
- Shareholders: Pay taxes on income & dividends
Double Taxation: Corporation is responsible for tax on corporate income. Shareholders responsible for income tax on income and dividends received.

11. LIMITED LIABILITY COMPANY (LLC)
A company – statutorily authorized in certain states – that is characterized by limited liability, management by members or managers, and limitations on ownership transfer.

12. LIMITED LIABILITY COMPANY (LLC)
PROS
CONS
Limited Liability for all owners
Unrestrictive ownership
Ability to raise capital for business
Beneficial tax treatment
Flexibility of management
Higher Legal Expenses
Limited Transferability of Ownership
Possibility of Piercing the LLC Veil
Strict Formalities and Reporting Requirements
- Articles of Organization
- Annual Reports

13. LIMITED LIABILITY PARTNERSHIP (LLP)
A partnership in which a partner is not liable for a negligent act committed by another partner or by an employee not under the partner’s supervision.

14. LIMITED LIABILITY PARTNERSHIP (LLP)
PROS
CONS
Limited Liability
Business Continuity
Diversified Capital Resources
Operating Agreement
General Partner
Higher Legal and Organizational Expenses
Strict Formalities and Regulatory and Reporting Requirements

15. Registration & Recording
Secretary of State
- Forms
- Fees
Recorder of Deed Office

16. How to Decide Which Entity is Best for You
Conference with your Accountant & Attorney
Discuss:
- Present
- Near Future
- Future
Cost Effective

17. Thank You for Joining Us.
To Be Continued…
Thank You for Joining Us.
Law Offices of Burton A. Brown
Burton A. Brow, a HACIA member
Stephen Spiegel
Patty Rodriguez
Maria Hernandez