Articles posted by rosten
Justice Antonin Scalia: Foreign Law and Pizza Diplomacy
Justice Scalia’s unexpected death leaves a huge void on the Supreme Court and he will be missed by liberals and conservatives alike for his brilliant mind and uncommon humor. Others may not miss him as much for his biting dissents and personal invective against some of his colleagues on the court. Regardless of whether you agreed or not with his opinions--and I confess that I did not subscribe to his conservative judicial views--the Court and the country lost a judicial icon. This blog post recalls a special lunch I had many years ago with Justice Scalia....
Read moreNegotiating LLC Operating Agreements
This blog post highlights some of the critical issues in negotiating operating agreements for a new business. The operating agreement for a limited liability company (LLC) is the critical document that governs formation, governance, distributions and dissolution of your business, among other issues. You will want to give special attention to negotiating the operating agreement, especially when your business has several partners or investors. The LLC is a creature of state law and the operating agreement is an agreement. You have great latitude in negotiating the terms of the operating agreement as most states have few mandatory provisions. The operating agreement for your LLC is the most important agreement that will govern your business for the life of the business. These terms may be difficult to...
Read moreInvestors for Startups: Terms of Engagement
If you ask entrepreneurs what are their major challenges in getting a new business off the ground, the three most common responses are money, money, money. There are indeed other major challenges but the primary concern of most new businesses is how to attract startup funding. Whether the entrepreneur is opening a small service business or introducing a new product onto the market, the challenge of funding looms large. When these small business owners face a major hurdle in attracting funding to support their new businesses, either as they are starting out or as they try to grow the business, they have at least three options: funding their business with their personal reserves; taking out a loan; attracting investors. This Rosten Law blog briefly discusses each of these options. ...
Read moreTraps for the Unwary: LLC Taxed as S Corp
Careful when electing LLC taxed as S Corp. Your startup business is organized as a LLC and you have consulted with your small business lawyer and tax adviser about whether you should elect to be taxed as a S corporation. Your startup lawyer has filed the papers to organize your LLC in Washington DC or elsewhere. You decided to make the S corp election to save self-employment taxes—a good reason for many small business owners. All is good and well, except that there are looming traps for the unwary. When you talk with your tax adviser or your startup attorney, you want to come prepared and understand that the S corp election may pose some financial risks for you. This article describes some of the looming risks for those business owners who have elected for their LLC to be taxed as a S corp. This a...
Read moreStarting a LLC: Tax as a Corporation or Partnership
We have reviewed the considerations for choosing your business formation type between a limited liability company (LLC) or corporation. You have discussed the choices with your startup lawyer. The threshold question you want to ask is whether your small business would qualify for S corporation tax treatment. For many clients, that is the end of the story because their startup has something that would make it ineligible for S corporation tax treatment such as one of the partners is a corporation. If the business meets the S corporation criteria, then the next question is whether it is advantageous to the new business to elect to be treated as a S corporation. As we have discussed in this blog, the clear answer is “it depends.” There are advantages and disadvantages to both S corporation tax statu...
Read moreForming a New Business: Corporations vs LLCs
Your startup attorney may suggest that you look at the S corporation and LLC as the two most attractive options for forming your new business. There are a number of considerations for you to keep in mind for your startup business and for you to decided on a LLC or S corporation. They generally fall into four major categories: Protecting personal assets: the business owner wants to assure that the new business’ creditors can only get at the assets of the business, not those of the individual owners; Transferring interests in the business: whatever form you have, you want to be able to transfer stock, or ownership interests in your business; Admitting new investors: you want to make sure that you have a mechanism to admit or restrict new investors in the business; Taxes: which corporate form allow...
Read moreChecklist for Starting a Business: So Many Things to Do So Little Time
You have designed an innovative product or developed a groundbreaking service that will change the face of your industry. You have written a business plan and just maybe you have gotten some of your friends or family to agree to invest in your new venture. You are exuding confidence that you are going to start reeling in the customers just as soon as you can open your doors for business. You are ready to start your business, but you are faced with numerous implementation challenges. This blog post provides a checklist for starting a business. You will need to address each of these issues for your startup. At first, this checklist for starting a business may seem daunting, but if you take each issue in hand and work through your contacts and business associates, you may be able to resolve these issu...
Read moreChanging the Name of Your Small Business
After reading the Rosten Law blog on choosing a name for your small business, a reader asked what a small business owner should do if he or she is no longer satisfied with the name already chosen and registered. From a legal standpoint, you have some options. From a business perspective, changing the name of your small business can be a hassle. The real challenge is going around and informing vendors, customers, banks, and business associates that you have changed the name of your business and that you want them to switch over the name of the business on their internal records to a new name. If you thought that it was an issue getting your vendors and clients to change your address after a move, wait until you send around a request for them to start calling your business something different! Nonethe...
Read moreFinding a Name for Your New Business
This blog post is devoted to the topic of choosing a name for your new company or organization. I have been in business myself and chosen names or helped to choose names for startup companies and new nonprofits. Naming a company is always the first challenge or dilemma for a new business or nonprofit. Some organizations can afford to pay the big bucks to come up with a name by employing focus groups or pollsters. If you are a startup, it is not likely that you will have the money to retain the services of a consultant just to come up with a name for your company. Take your time in choosing a name for your company. The name that you choose for your organization is going to follow you for a long time. Of course, you can change the name for your startup. But why not prevent the hassle or confusion and ...
Read moreWelcome to Rosten Law’s Blog
Welcome to our blog at Rosten Law. We will use this blog to discuss various topics that may be of interest to entrepreneurs thinking of starting their own company, small business owners, managers of emerging businesses and others. Since I have run my own businesses and advised startups and small businesses, these blog posts will be infused with both business and legal information. We hope that you will find the information in these blog posts interesting and engaging, and don’t hesitate to contact us if you have any questions or comments....
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