Organizing Your Business for Investment and Growth .


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Structuring Your Business for Investment and Growth. Presented by Teri G. Rasmussen Capital Crash Course 2008 December 2007. Teri G. Rasmussen Partner and Vice Chair, Business Law Practice Group Lane, Alton & Horst, LLC trasmussen@lanealton.com (614) 233-4753. Lane, Alton & Horst, LLC
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Organizing Your Business for Investment and Growth Presented by Teri G. Rasmussen Capital Crash Course 2008 December 2007

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Teri G. Rasmussen Partner and Vice Chair, Business Law Practice Group Lane, Alton & Horst, LLC trasmussen@lanealton.com (614) 233-4753 Lane, Alton & Horst, LLC Two Miranova Place, Suite 500 Columbus, Ohio 43215 www.lanealton.com Lane, Alton & Horst, LLC

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Teri G. Rasmussen B.A., with distinction, 1981, University of Iowa J.D., cum laude , 1984, University of Michigan Bar Admissions: Supreme Court of Ohio, 1984 U.S. Region Court, Southern District of Ohio, 1984 U.S. Area Court, Northern District of Ohio, 1993 U. S. 6th Circuit Court of Appeals, 1997 Professional Associations: Columbus Bar affiliation (Former Chair, Financial Institutions Committee), Ohio State Bar Association (Former Chair, Banking, Commercial and Bankruptcy Committee) American Bar Association American Bankruptcy Institute National Association of Women Business Owners (NAWBO) Lane, Alton & Horst, LLC

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Teri G. Rasmussen Business Acquisitions and Sales General Corporate and Business Law Joint Ventures and Strategic Alliances Corporate Governance and Shareholder Disputes Contracts and Loan/Lease Documentation Business Formation and Financing Business Planning Creditors\' Rights and Debt Collection Business Bankruptcy and Insolvency UCC and Secured Transactions Commercial Finance Litigation Real Estate Lane, Alton & Horst, LLC

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Visit my legitimate blog: O HIO P RACTICAL B USINESS L AW C OUNSEL http://ohiopracticalbuslaw.wordpress.com Lane, Alton & Horst, LLC

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I. Organizing Your Business THE BASIC SETUP Lane, Alton & Horst, LLC

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EVERY Business Has a Legal Form If you don\'t settle on a Decision, the Law will make one for you. A one-individual business will consequently be a sole proprietorship . A business with at least two Owners will consequently be dealt with as a general organization Lane, Alton & Horst, LLC

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The TYPE of LEGAL ENTITY Matters Level of Formality Required for Recordkeeping Level of Formality Required in Decisionmaking Effect of Death or Disability of Anyone Actively "Required" in the "Administration" of the Business Taxes – Who Pays and How Much Ability of Business Creditors, Disgruntled Employees, and Others to Reach Personal Assets of Owner(s) Who Has "Say" in, or Control of Business and its Operations Lane, Alton & Horst, LLC

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Factors to Consider in Choosing a Legal Structure How much record-keeping would you say you are capable and willing to do on a proceeding with occasional premise? What is YOUR resilience for hazard? What kind of dangers would you say you are most happy with having? What kind of dangers do you MOST need/need to stay away from? In what capacity will the business be financed? Outside Investors and Creditors Personal and Family Funds Lane, Alton & Horst, LLC

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Factors to Consider in Choosing a Legal Structure What kind of business dangers are there in your industry or sort of business? What amount of government direction is your business by and large subject to? Where will your business offer or give great and additionally benefits? Locally or inside one state? Territorially? Broadly? Around the world? Path, Alton & Horst, LLC

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Factors to Consider When You Are Not the Only Owner How well do you know your kindred owner(s) and would you be able to truly believe them? Similarity of Owners in Temperament, Work Habits, Spending, Risk Tolerance, Etc. Qualities and Weaknesses of Fellow Owner(s) Could a Weakness Cause a Problem for the Business? How Might That be Guarded Against? Path, Alton & Horst, LLC

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Factors to Consider When You Are Not the Only Owner How Many Owners Will There Be? Proprietors people or business elements? What Role, Responsibilities and additionally Duties Will Each Owner Have? By what method will these be Shared or Allocated? Will any owner(s) or gathering of proprietors have veto control concerning certain particular issues? Path, Alton & Horst, LLC

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Factors to Consider When You Are Not the Only Owner Are you the "cash" individual or the "sweat value" individual? What happens if a proprietor needs out of the business? Getting Investment Out of the Business Transfer, and Restrictions on Transfer, of Ownership What happens to proprietorship enthusiasm upon death or handicap of proprietor? Will a few proprietors get their "venture" back sooner than different proprietors? Path, Alton & Horst, LLC

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THE CHOICES Lane, Alton & Horst, LLC

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Choices in Basic Legal Structure Sole Proprietorship Partnership Limited General Corporation C-Corp S-Corp Limited Liability Company (LLC) Lane, Alton & Horst, LLC

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Basic Types of Ownership Interests Partnership Partnership Interest Corporation Shares of Capital Stock LLC Membership Interest Lane, Alton & Horst, LLC

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Sole Proprietorship Basic Characteristics No different presence from proprietor. Business resources in proprietor\'s close to home name Owner signs contract in individual limit If proprietor bites the dust or gets to be impaired, so does the business Profits and misfortunes from, and also costs of, business included on individual wage government form Difficult to exchange Lane, Alton & Horst, LLC

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Advantages Maximum power and control Simplest and slightest costly to begin – simply discover an area and open the entryways Appropriate for little administration business not prone to get much cash and not liable to be sued Business misfortunes can counterbalance salary from different sources Disadvantages Death or Illness jeopardizes business Growth constrained by individual energies Obtaining financing and speculation might be troublesome Personal and business issues effortlessly blended Weighing the Sole Proprietorship Alternative Lane, Alton & Horst, LLC

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General Partnership Definition Ohio law characterizes a general organization as "a relationship of at least two people to bear on as co-proprietors, a business revenue driven" Ohio Rev. Code 1775.05(A) Lane, Alton & Horst, LLC

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Purpose of Forming Partnership Nothing more than a customary law contract between proprietors To work expansive based business To partake in the obligations of administration To partition the benefits acknowledged from the venture Lane, Alton & Horst, LLC

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Partnership Characteristics Almost any administration and benefit sharing game plan can be settled upon among the accomplices. Must have no less than two accomplices at all times. Joint Venture or Strategic Alliance contrast from genuine organization since they are for the most part constrained to a disconnected and specific exchange. Path, Alton & Horst, LLC

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Creation of General Partnership Can be "coincidentally" made – arrangement happens at whatever point parties explicitly or certainly begin sharing benefits and misfortunes and the administration of the business Can be made orally – no composed understanding required, however suggested Lane, Alton & Horst, LLC

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Limited Partnership Only legitimate if composed and framed in consistence with statutory necessities One General Partner – same obligations as when all is said in done organization. Other Limited Partners – Have restricted rights in return for constrained risk for association obligations. Path, Alton & Horst, LLC

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General Partnership All Partners Participate in Management Dissolves upon death or withdrawal of any accomplice Limited Partnership Limited Partners Must Not Be Involved in Day-to-Day Operations Dissolves just upon death or withdrawal of General Partner More Complex than General Partnership General and Limited Partnerships Comparison Lane, Alton & Horst, LLC

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Advantages (at least two) heads are superior to anything one Income goes through to Partners Management Structure Flexibility No capability prerequisites for working together in different states Disadvantages Difficult to dispose of terrible accomplices More Expensive to frame than sole proprietorship, particularly if there should be an occurrence of restricted organizations Difficult to exchange possession intrigue Hazy line of power by and large association Cannot have both administration obligations and constrained risk Weighing the Partnership Alternative Lane, Alton & Horst, LLC

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Usefulness of Partnership Alternative General Partnership is out of date aside from in exceptionally extraordinary conditions Owner is especially worried about deductibility and capital additions treatment of proceeding with installments to resigning accomplices (IRC 736(a)) Important that business not be dealt with as substance for assessment purposes (e.g. oil and gas speculations) Limited Partnership copied and supplemented by LLC elective Lane, Alton & Horst, LLC

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Distinguishing Characteristics of Corporations Ownership premiums are known as "shares" or "stock" and are unreservedly transferable to any other individual unless shareholders generally concur Shareholders are not at risk for organization commitments aside from under exceptionally irregular conditions, yet the organization itself will be held obligated Existence proceeds even after flight of unique proprietors or key people Lane, Alton & Horst, LLC

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Corporate Governance Shareholders have no power to control everyday administration or business operations Shareholders choose Directors Board of Directors set general arrangement Board of Directors name Officers, for example, President, Vice President, Treasurer, and Secretary Officers oversee everyday operations of organization Officers are liable to Board for their activities Lane, Alton & Horst, LLC

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Formation of Corporation has NO proprietors until stock shares have really been issued to proprietors by the Incorporator. Partnership IS NOT legitimately framed until Shareholders choose Directors AND Directors delegate Officers. Path, Alton & Horst, LLC

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Corporation Formation Procedure Articles of Incorporation are marked by "Incorporator", who may or m

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