Business Law – Beloit & Janesville WI

Business Law

iStock_000007150692XSmallAt Monahan & Johnson, S.C. our attorneys are ready to put their experience to work for you! Our attorneys know there is more to running a business than meets the eye. For example, Attorney Tom Johnson, operates a marina, giving him a unique perspective into the everyday concerns a business owner has. We understand your business is more than just a job for you. We urge you to contact us for all your legal needs for your business.

YOU ARE READY TO START YOUR BUSINESS IN BELOIT OR JANESVILLE WI – NOW WHAT?
In Wisconsin, there are, essentially, four types of businesses under which you can organize. They are sole proprietorship, partnership, a limited liability company and a corporation. In addition, each type of business entity has different subparts. (For example, there are different types of corporations).

There are many factors to take into account when deciding what type of business entity is best for you and our experienced business law attorneys are prepared to help you understand the positives and negatives of each option as it relates to your situation.

In deciding how to organize your business, some key factors to consider are the tax treatment and the entity’s ability to protect you from liability. Some businesses, such as a C-corporation, are taxed separately from the shareholders. On the other hand, in an S-Corporation the income and expenses flow through the corporation directly to the owners. Our business law attorneys can help you decide what type of business is right for you!

SOLE PROPRIETORSHIP

A sole proprietorship is a business with one owner who makes all the business decisions. In creating a sole proprietorship, there are very few legal steps that must be taken to create a sole proprietorship. If the sole proprietorship has employees, a Federal Tax ID Number will need to be applied for. A sole proprietor will also have to pay self-employment tax, and may have to make estimated tax payments on the income from the business. In addition, a sole proprietorship does not provide any liability protection for the sole proprietor.

PARTNERSHIPS

There are different types of partnerships that you can organize a business under in Wisconsin. These include a General Partnership, a limited partnership and a Limited Liability Partnership. Each one of these has unique characteristics that you should discuss with an attorney to help decide which is best for you.The income and expenses of a partnership typically pass through the business to the partners. Each partner then reports his/her share of the income or loss on his/her taxes. The partnership itself does not pay a tax. Next, under a General Partnership, each partner is liable for the liabilities of the partnership regardless of which partner incurred the liability. Conversely, in a Limited Liability Partnership (LLP), each partner is not responsible for the liabilities created by the other partners. For this reason, LLPs are normally used by professionals, such as attorneys or accountants. Last, in a Limited Partnership, there are two types of partners: general partners and limited partners. A general partner is responsible for the liabilities of the business. On the other hand, the limited partners, who do not participate in the management of the business, their liability is capped at the amount that was invested in the business.

CORPORATIONS

A Corporation is created by filing documents with the State of Wisconsin. A Corporation has stockholders who own the Corporation. The stockholders determine who the Board of Directors will be that will manage the Corporation. The Board of Directors can then make a determination as to who will be the corporate officers. The corporate officers are then responsible for the day to day operations of the Corporation. The same individuals can be the stockholders, directors and officers. There are two common types of Corporations. They are S-Corporations and C-Corporations. The shareholders of a C-Corporation generally have limited liability. Officers and directors may have personal liability, if this is provided in the Articles of Incorporation. An S-Corporation usually limits the owner’s liability to the amount of their investment, much like an LLC. A corporation is taxed in different ways depending on whether it is a C-Corporation or an S-Corporation. A C-Corporation will pay its own taxes and the shareholders also pay income tax on dividends. In an S-Corporation, the income and losses flow through the corporation and are passed on to the shareholders. There are certain steps that must be taken to create an S-Corporation.

LIMITED LIABILITY COMPANY (LLC)

A Limited Liability Company is created by filing documents with the State of Wisconsin. The Limited Liability Company has owners, which are called members. The Limited Liability Company can be run either by members or by managers. Often times, a document called an Operating Agreement is created that sets forth how the business will be run and by whom.Typically an LLC is taxed as a Sole Proprietorship if there is only one owner or it could be taxed as a Partnership if there is more than one owner. The income or losses flow through the LLC to the members to be included in their personal income.Generally, a Limited Liability Company provides protection for the owners from the debts and obligations of the business. Typically, liability to a member is limited to the value of the contributions that member made to the LLC.

Starting a business is an exciting time for most people. However, determining how to organize your business and what type of ownership for your business is not a step that should be taken lightly. Liability and tax issues are just two factors that you need to consider when deciding on the type of business. Making a wrong choice could have severe financial consequences for you and your business. Our attorneys at Monahan & Johnson, S.C. are able to work with you in navigating the pitfalls of creating a business.

Monahan & Johnson, S.C.
400 East Grand Avenue, Suite 101
Beloit, Wisconsin 53511 Phone (608) 362-8086 Fax (608) 362-7880