Best Practices for Busy Attorneys:Business Formation

BRADLEY MILLERMiller Law LLC ∙ @bradleymiller

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$100,000,000

1. Simplicity.2. Security.

Lawyers give legal advice.LegalZoom can’t. (yet)

1. Business structure. 2. Entity selection. 3. Operations &

management.

1. Business structure.

Complexity

Single entity.

Complexity

Fictitious & trade names.

Complexity

Parent-subsidiary.

Complexity

Multiple entities with common ownership.

Complexity

Multiple entities with disparate ownership.

Complexity

As complexity increases, costs increase.

2. Entity selection.

Sole ProprietorshipOwner 100% liable.

PartnershipGeneral partnership. Limited partnership. Limited liability partnership.

CorporationOutside venture capital. Go public.

Limited liability companyHybrid partnership & corporation.

Disregarded EntitySingle owner.

Pass-through.

PartnershipMultiple owners.

Pass-through.

No taxes.

Informational return.

Isn’t the default good enough?

SELF-EMPLOYMENT TAX

NO.

S-CorporationNo SE tax on salaries.

Pass-through.

No taxes.

Informational return.

Less than 100 owners.

Natural persons.

Only 1 class.

C-CorporationCompany pays tax on income.

Owners pay tax on dividends.

DOUBLE TAXATION.

1. Register with the Ohio Secretary of State.

2. Apply for an EIN from the IRS.

Passive investors.

All LLC interests.

3. Operations & management.

Management.Member-managed. Manager-managed.

Why manager-managed?Limit power.

Passive investors.

Non-members.

Employee equity.

Future.

Percentage vs. units.

Voting.

Meetings.

Capital contributions.

Dissolution.

Withdrawal rights.

Right of first refusal.

Push-pull provision.

Redemption & interest-purchase rights.

Anti-dilution rights.

Tag-along & drag-along rights.

Involuntary transfers.

Valuation.Predetermined valuation. Formula valuation. Appraisal valuation.

Payment terms.

1. Business structure. 2. Entity selection. 3. Operations &

management.

Thank you.

www.bradleymillerlaw.com www.newmodernlawyer.com