The only book devoted to the most important business decision you'll make.
Your company has grown-- now it's time to upgrade your legal structure to something that will protect you and your assets, as well as provide other benefits. In other words, your business is ready to become either a corporation or a limited liability company.
The question is, "Which one?" The answer isn't always clear -- but because your choice will affect the legal and tax status of your business, it's the most important question you'll answer.
LLC or Corporation? will help you make the right choice with plain-English explanations of:
the basics of business entities
how each business entity protects you from personal liability
profits, losses and tax treatment
converting from one type of business entity to another
what to do if you conduct business out of state
Making the right choice will affect your bottom line in many ways -- from what you pay for taxes, to your ability to seek money from investors. The book also provides conversion and formation scenarios that provide a real-world look at all the options available to you.
The 2nd edition is completely updated with the latest laws regarding business structures and taxes.
If you are starting a business (by yourself or with others) and trying to figure out whether a limited liability company (LLC) or corporation will best meet your needs, this book will help you make the right choice. If you have already organized your business but want to explore the possibility of converting to a business entity with more favorable legal and tax characteristics this book will help you make an informed decision.
Although the focus of this book is on choosing whether to form an LLC or a corporation, you cannot make an informed decision without learning about all the types of business entities -- including sole proprietorships, partnerships, LLCs, and corporations. this book explains the legal and tax characteristics of each of these business entities and the basic rules for converting one type of business to another. This book also provides information about some of the less well known entity ways of structuring a business. For example, two legal spin-offs of the basic partnership form -- the limited partnership and the registered limited liability partnership -- are discussed in this chapter. This book also covers S corporations, which have some characteristics of the more well known C corporation (including limited liability) but are taxed like a partnership.
The book is divided into two parts. Part One, Understanding Business Entities, discusses basic information about each type of business entity. It includes the following chapters:
Chapter 1 discusses each type of business entity, including the relative advantages and disadvantages of each.
Chapter 2 explains how your choice of entities affects your personal liability for debts against your business.
Chapter 3 examines the relative ease with which each of the entities can be formed and managed.
Chapter 4 covers how each entity deals with profits, losses, investments, and taxes.
Chapter 5 explains how doing business out of state may affect your choice of entity.
Part Two, Converting or Modifying Your Business Entity, includes the following chapters:
Chapter 6 discusses converting a sole proprietorship to another entity.
Chapter 7 discusses converting a partnership to another entity.
Chapter 8 discusses converting a limited liability company to another entity.
Chapter 9 discusses converting a corporation to another entity, and reorganizing or dissolving a corporation.
Chapter 10 provides examples of various conversion scenarios discussed in previous chapters.
This book also includes each state's corporate and LLC website information (in the appendix).
Although business law and tax rules can get a bit complicated, don't worry: they're presented here in real-life contexts, without off-putting legal or tax jargon, and without the technicalities best left to legal and tax professionals. You'll also find an array of resources, including books and websites that will help you figure out the ideal entity type for your business. By the time you finish this book, you'll understand what each type of entity has to offer, and you'll be ready to choose the right structure for your company.
Why Your Choice of Entity Matters
Do you really have time to read this book? Shouldn't you be devoting more time to your accounting, your competition, your overhead, or your business plan? After all, as calvin coolidge once said, "The chief business of the American people is business" -- so why not hire a lawyer to advise you about your legal form, put down this book, and get back to work?
Synopsis
The only book devoted to the most important business decision you'll make.
Table of Contents
Part I
1. Business Entity Basics
Why Your Choice of Entity Matters
Sole Proprietorships
General Partnerships
Limited Liability Companies (LLCs)
Corporations
... And the Runners-Up: Limited Partnerships, S Corporations, and RLLPs
2. Personal Liability Concerns
How Your Choice of Business Entity Affects Personal Liability
Using Insurance to Limit Liability
3. Forming and Running Your Business
Forming and Running a Sole Proprietorship
Forming and Running a Partnership
Forming and Running a Limited Liability Company
Forming and Running a Corporation
Resources for Forming an LLC or Corporation
4. Money Issues: Taxes, Profits, Losses, and Investments
Taxes
Paying Out Profits
Startup Losses
Institutional and Venture Capital
Planning for a Public Offering
5. Doing Business Out of State
Doing Business Out of State
Qualifying to Do Business
Paying and Collecting Taxes in Other States
Lawsuits in Other States
Internet Issues
Part II
6. Converting a Sole Proprietorship to Another Entity
Converting a Sole Proprietorship to a Partnership
Converting a Sole Proprietorship to an LLC
Converting a Sole Proprietorship to a Corporation
7. Converting a Partnership to Another Entity
Converting a Partnership to a Sole Proprietorship
Converting a Partnership to an LLC
Converting a Partnership to a Corporation
8. Converting an LLC to Another Entity
Converting an LLC to a Corporation
Converting an LLC to a Sole Proprietorship
Converting an LLC to a Partnership
9. Converting, Dissolving, and Selling a Corporation
Converting a C Corporation to an S Corporation
Liquidating and Dissolving a Corporation
Selling a Corporation
10. Business Choice and Conversion Scenarios
Fast Food Fusion: A Startup Business Chooses a Business Form
Bill and Barbara Seek Investment From a Relative
Soaring Duck Designs Seeks Lower Taxes and a Structured Hierarchy
Silikonics Creates an Entity to Attract Outside Investors
The Surf Side: From Lunch Counter to LLC to Corporate Franchise
Appendix: State Website Information
Index
Reviews
Small Business Opportunities ...
"Outstanding. Crystal clear, rock-solid, no-nonsense, accessible information. Great 'real life' examples without any fluff."
The Midwest Book Review ...
"An in-depth guide…[which] covers all aspects of this decision."
About the Author
Anthony Mancuso is a corporations and limited liability company expert. He graduated from Hastings College of Law in San Francisco, is a member of the California State Bar, writes books and software in the fields of corporate and LLC law, and studies advanced business taxation at Golden Gate University in San Francisco. He has also been a consultant for Silicon Valley EDA (Electronic Design Automation) companies, most recently working on a C++ open-source integrated circuit database project team. He is the author of several Nolo books on forming and operating corporations (both profit and nonprofit) and limited liability companies. His titles include Incorporate Your Business, How to Form a Nonprofit Corporation (national and California editions), Form Your Own Limited Liability Company, The Corporate Records Handbook, and LLC or Corporation?. He wrote and programmed Nolo’s LLC Maker and Incorporator Pro software programs, which generate state-by-state articles and other forms for organizing corporations and LLCs. His books and software have shown over a quarter of a million businesses and organizations how to form a corporation or LLC. He also is a licensed helicopter pilot and has performed for years as a guitarist in many musical idioms.
