Whether you are starting a small business or running an established company, it is vital to understand business laws and regulations. But that is easier said than done. My goal is to provide business-related legal services so that you can spend more time dealing with the actual business and less time with legal intricacies of operating your business. My services include:

Business formation

You have a new and innovative product or service and you are interested in forming a new business. You may have concerns about liability, taxes, investors and other considerations. As your small business lawyers, we will assist you in deciding whether your startup business should organize as a limited liability company (LLC), partnership, S corporation or C corporation. We will form the most appropriate business organization for your new business and register the business in all jurisdictions in which it will conduct business.

Mergers and acquisitions

If your business is fortunate to thrive and become a merger or acquisition target, we can represent you as the seller; or if you are on the other side and looking to acquire a business, we can assist with the due diligence in purchasing a business. We will review various approaches in purchasing a business through merger or acquisition. We will discuss with you various structures in purchasing the stock or purchasing the assets of an acquisition target. In either case, your business will need thoughtful and comprehensive representation in all aspects of a merger or acquisition.

Government contracting

Government contractors face numerous issues when contracting with the government. And with a hands-on approach and substantial experience, we will help you navigate those legal issues. We prepare teaming agreements, subcontracts and joint venture agreements and can handle a variety of other government contract matters. As government contract lawyers for your small business, we can assist you in applying for programs for HUBZones, service-disabled veteran-owned small businesses or women-owned businesses. If your company is facing debarment or suspension because of allegations of corruption or bribery, we can assist in your defense before the U.S. government or the World Bank.

Business transactions

Once you have an ongoing business, however organized, you will have a host of various commercial transactions. We prepare agreements with lenders, lessors, partners, customers, employees, and consultants. We provide business legal services for your company, preparing confidentiality agreements, nondisclosure agreements, licensing agreements, distribution, employment agreements, independent contractor agreements, lease agreements, and many others. We will help you understand what each part of these agreements require and make sure that these agreements provide protection to you and your business.

Corporate law

Once your startup business has been created, your company will have ongoing requirements to maintain its separate status. We will assist in guiding you on how to prepare corporate minutes or resolutions of the company to maintain the corporate form and other steps to protect the limited liability of your company. You will also have to make sure that your bylaws or operating agreement continues to reflect the needs of the business organization. We are available to assist you in addressing these issues. And once your company is ready to raise additional capital from investors, we can work with you to determine whether you are subject to securities laws or fall within one of the exemptions.

Business disputes

Few businesses are immune to business disputes. If your small business was well-advised, you have an agreement that will provide guideposts on how to resolve your business dispute. If you are unable to settle your dispute, you may have a dispute resolution mechanism such as mediation or arbitration in the agreement. An alternative dispute resolution mechanism such as arbitration or mediation generally can provide a relatively quick resolution of your business dispute. If not, then you may have to consider litigation. We handle business disputes, including pre-litigation matters, mediation, arbitration and litigation.

Anti-corruption compliance

Every company should have procedures and policies to minimize its exposure to allegations of corruption or bribery. An integrity compliance program (ICP) is essential for businesses doing work internationally for the United States government or work financed through one of the development banks. We can assist in reviewing or preparing an ICP to assure that is consistent with the anti-bribery and anti-corruption guidelines from the World Bank. If your company is facing debarment or suspension because of allegations of corruption or bribery, we can assist in your defense before the U.S. government or the World Bank.

Non-profit law

We work with organizations to obtain their tax exempt status under Section 501(c)(3) of the Internal Revenue Code. There have been recent changes to obtaining 501(c)(3) status and we have worked with organizations in submitting successful applications on the simplified track by filing a 1023-EZ and the more rigorous 1023 application for larger organizations. Nonprofits also face similar legal challenges to assure that they comply with business requirements and additional requirements to assure that they do not jeopardize their tax exempt status. As a law firm for nonprofits, we work with nonprofit organizations to guide them through these issues.

FAQ Small Business Attorney in DC

What is considered a small business?

Almost all our clients fall within the definition of small business/startup as determined by the Office of Advocacy of the U.S. Small Business Administration. Under this definition, a small business has fewer than 500 employees. Small businesses encompass about 99.9% of all business organizations in the United States.

Which industries do you serve as a small business attorney?

Most of our clients are service providers such as consulting companies, law firms, accounting and bookkeeping services, cybersecurity consultants, video production companies, and lobbyists, just to name a few. We also represent foreign and domestic manufacturers and software developers.

As a small business lawyer in DC, we represent some retail operations, such as bookstores and restaurants. We also represent numerous nonprofits with varying missions. Our government contractors clients hold various IDIQs (Indefinite Delivery, Indefinite quantity Contracts) and GSA schedules.

In which areas of the law does a small business or startup need legal assistance?

Most times, small businesses/startups need the services of outside general counsel. As outside general counsel for small businesses, we can handle most matters as a small business attorney that small businesses generally encounter. Usually, anything with the word agreement or contract is within our practice areas. This includes operating and shareholder agreements, which are used for small businesses and startups that are formalizing their relationships with their owners. Once a business is formed, then we prepare and review a host of other agreements, such as service agreements (which may be referred to as client agreements or consulting agreements), independent contractor agreements (which may be referred to as subcontracting agreements), employment agreements, teaming agreements, purchase and sale agreements, merger agreements, option agreements, license agreements, lease agreements, and the list goes on.

What factors should a small business and startup look for in retaining the services of a lawyer for small businesses?

With our extensive experience of working as a small business attorney in DC for decades now, background and experience should come right at the top of the list when looking for a small business lawyer. We think that accessibility and communication are essential for a successful relationship between an attorney and a client. Hourly rate is important but not as important as quality of service.

What kind of experience do you have in advising small businesses as an attorney?

Keith Rosten has not only legal experience but also business and practical experience that allows him to relate to the trials and tribulations of a small business owner. Keith has BigLaw experience before working for small and medium-sized businesses, first at his own law firm focused on small businesses and then with Berliner Corcoran & Rowe LLP.

Keith has substantial business experience. He received an MBA from the Tuck School at Dartmouth College. During his business studies, he worked on several group projects with small businesses, including a furniture manufacturer, a manufacturer of leak location precision equipment, real estate developer. After business school, Keith operated a successful real estate business in California and overcame numerous issues, such as asbestos abatement and underground storage tank remediation.

Keith worked as a legal adviser to a government contractor and was a legal adviser to a major initiative in Russia. Keith ran another small business, selling and marketing solar energy equipment. The business had an e-tailer component, hosted the largest solar energy forum online, and sold solar energy equipment to the government. Keith negotiated two GSA schedules for the business and obtained HUBZone certification for the business. Keith was also president of the Dartmouth Entrepreneurial Network – Washington, a networking organization for small businesses in the greater Washington, DC community.

Keith has also volunteered for Compass Pro Bono, working with local business professionals to conduct long-term consulting engagements for local nonprofits in fundraising, governance, and strategy.

With this breadth of legal and business experience, Keith is attuned to some of the challenges facing small businesses, which allows him to provide effective advice and guidance.

As a small business lawyer, do you take in-person meetings only?

Yes. We are located in downtown Washington DC and host many of our clients. For those clients who cannot come into our offices, we usually meet over Zoom or by telephone.

How do you charge for your services as a small business attorney?

We charge our clients based on hourly fees. We usually provide a budget of how much certain matters cost so that startups and small businesses know in advance the ballpark cost of the matter.

What if a client does not like our services?

Clients can terminate our services anytime if they don’t find it satisfactory.

Should my small business lawyer or startup lawyer be in the same state as me?

No, not always necessary and may depend on multiple factors. For example, though we are an expert small business lawyer in DC, we have also provided consultation to other cities’ clients.

Nonprofit Organization as Business Owner

Nonprofits May Own For-Profit Businesses

A tax exempt organization may own a for-profit subsidiary. That structure can make practical and legal sense in some circumstances. Nonprofits sometimes place commercial activities into a separate taxable entity to generate revenue, contain liability, and reduce the risk that unrelated business activity will create tax or operational concerns for the nonprofit itself.

Although this article focuses on organizations described in section 501(c)(3), other exempt entities, including 501(c)(4) social welfare organizations, 501(c)(6) trade associations, and 501(c)(8) fraternal beneficiary societies, may also use for-profit subsidiaries. The legal analysis can differ by exempt category, so this discussion is limited to 501(c)(3) organizations.

Why nonprofits use for-profit subsidiaries

One reason is tax protection. If a nonprofit operates a substantial trade or business that is not sufficiently related to its exempt purpose, the income may be subject to unrelated business income tax, and the activity may create broader questions about whether the organization is being operated primarily for exempt purposes. By housing those commercial operations in a separate taxable entity, the nonprofit may preserve a cleaner separation between its charitable mission and its business activities.

A subsidiary may also provide a liability shield. If the business venture takes on contracts, employees, or operational risks that are distinct from the nonprofit’s charitable work, a separate entity can help isolate those risks.

In addition, the for-profit entity may offer greater flexibility in attracting outside capital, compensating personnel at market rates, or expanding a product or service in a more commercial environment.

Related article: Nonprofit Management: Legal Challenges Galore

Separate entities must remain genuinely separate

The structure is permissible, but it is not something an organization should treat casually. The nonprofit and the subsidiary should maintain separate books and records, separate bank accounts, separate governing documents, and separate decision-making processes.

Transactions between the two entities should be documented and conducted on fair market terms. If they share office space, personnel, intellectual property, or administrative support, those arrangements should be memorialized and priced appropriately.

That same principle applies at the governance level. Some overlap in directors is common and may be permissible, but if the boards are entirely overlapping and do not function independently on intercompany matters, the claimed separateness of the entities may be harder to sustain. Regulators may then question whether the subsidiary is truly separate or merely an extension of the nonprofit.

As a practical matter, organizations should pay close attention to conflicts of interest, recusals, and the independence of board decisions whenever the two entities transact with one another.

Ownership percentages and control issues

A public charity does not necessarily need to own all, or even a majority, of a for-profit subsidiary. Depending on the circumstances, the nonprofit may hold a controlling interest, a minority stake, or full ownership. The appropriate structure often depends on the organization’s goals, the need for outside investors, and the extent to which the nonprofit wants to control operations.

Private foundations present a different set of issues. Unlike public charities, private foundations are subject to the excess business holdings rules, which can sharply limit ownership of a business enterprise when holdings are attributed to the foundation together with certain substantial contributors and related persons. For that reason, the analysis is significantly more restrictive for private foundations than for public charities.

Even where a nonprofit owns only a minority interest, the investment should be consistent with the board’s fiduciary duties and should not create private benefit, excess benefit, or mission-drift concerns. The board should be able to explain why the investment is prudent, how the terms were evaluated, and why the arrangement does not confer an improper private benefit on investors, insiders, or related parties.

When donors or insiders are also involved

The structure becomes more sensitive when a major donor, director, officer, or other insider also has an ownership interest in the for-profit entity. In that setting, nonprofit law concerns shift quickly toward private inurement, excess benefit transactions, and conflicts of interest. The core question is whether charitable assets are being used, directly or indirectly, to enrich someone with substantial influence over the organization.

That does not mean every shared ownership arrangement is prohibited. It does mean, however, that the nonprofit must proceed with care. Any lease, loan, management arrangement, dividend distribution, compensation arrangement, or other transaction involving an insider should be reviewed closely, documented carefully, and tested against fair market value standards. If the arrangement gives the insider more than fair value, the organization may face excise taxes, regulatory scrutiny, and in more serious cases potential threats to exempt status.

Particular care is needed when intellectual property, staff time, or other assets are transferred to the subsidiary, because charitable assets generally should not be moved on below-market or insider-favorable terms. In addition to federal tax rules, boards should also consider state nonprofit corporation law, fiduciary-duty principles, donor restrictions, and any limits in the organization’s governing documents.

For private foundations, the rules can be even more rigid. Certain direct or indirect financial dealings with disqualified persons may trigger self-dealing rules regardless of whether the arrangement appears economically fair. That is one reason these structures require careful planning at the outset rather than an informal approach after the fact.

Related articles:

Nonprofit Law Developments in Private Inurement

Nonprofit Law Developments in Excess Benefit Transactions

Examples in practice

You may be familiar with Mozilla, which is made up of the Mozilla Foundation, a 501(c)(3), and the Mozilla Corporation, its wholly owned taxable subsidiary. The Foundation is a nonprofit dedicated to keeping the internet open, accessible, and aligned with the public interest. The corporation develops products such as Firefox and handles commercial activity, while the foundation remains focused on mission and governance.

Research universities offer a looser version of the same idea. Harvard and Stanford, for example, typically commercialize inventions through licensing, startups, and related technology-transfer vehicles rather than through the university itself. The point is the same: keep the exempt educational mission separate from more overtly commercial activity.

In practice, the nonprofit’s board usually votes to form the subsidiary, approves its basic structure, and appoints the initial directors or managers. From there, the subsidiary should operate as a real separate entity, with its own board, officers, bank account, books, and contracts, even if the nonprofit remains the sole owner. Depending on how the subsidiary is organized, it may file its own tax return; for example, a corporation is generally taxed as a separate entity, while a wholly owned LLC may in some cases be disregarded for federal tax purposes and reported through the parent.

The key point is not simply that money flows back to the nonprofit, but that the arrangement is properly documented, fairly run, and used to support the nonprofit’s charitable mission without blurring the line between charitable and commercial activity.

Practical takeaway

A 501(c)(3) can own a for-profit subsidiary, but the arrangement needs to be structured and maintained with care. The nonprofit should be clear about why the subsidiary exists, how the arrangement advances or supports the organization’s mission, and what safeguards are in place to preserve the separateness of the entities. Boards should pay particular attention to governance, documentation, valuation, and insider relationships.

In the right circumstances, a for-profit subsidiary can be a useful tool. But it is not a shortcut around nonprofit restrictions, and it should not be used to move value to insiders or to blur the line between charitable and commercial operations. Organizations considering this structure should evaluate the tax, governance, and regulatory implications before moving forward.

If you are considering forming or acquiring a for-profit subsidiary (or restructuring an existing activity), your nonprofit lawyer can help you design the entity structure, intercompany agreements, governance processes, and compliance roadmap so the business objectives are met without compromising the nonprofit’s exempt-purpose operations.