Business Registration: Choosing the Right Structure for Your Business
Business registration is not necessary to start a business. In fact, you can wake up tomorrow, say you want to start a business, and then as soon as you start rendering services for someone, you are officially in business as a sole proprietor. There are no registration requirements to be a sole proprietor. However, there are a lot of risks that come with it, so why not register your business? We can assist you in choosing the right type of entity for your business that will not only protect you from liability but also safeguard your personal assets and allow you to grow your business. Proper registration can provide other benefits such as tax advantages, access to funding, and credibility in the marketplace.
Our Expertise in Business Registration for State and Tribal Jurisdictions
The Law Office of Joseph Austin, Esq. has a legal team with extensive experience in business and corporate law. We are well-equipped to guide you through the intricacies of business registration, and we are perhaps one of the few firms that has knowledge and experience in tribal business law, particularly in the Navajo Nation. Whether you’re forming a sole proprietorship, partnership, limited liability company (LLC), corporation, cooperative, or non-profit organization, we offer comprehensive legal assistance tailored to your specific needs. You would be hard pressed to find an attorney who is familiar with business law on Indian reservations. Our office prides itself on being the go-to firm for advising entrepreneurs looking to start a business on an Indian reservation and helping existing businesses expand their operations into tribal territories.
Limited Liability Companies
The limited liability company, or LLC, is the most popular business structure because it is easy to establish and maintain. More importantly, it provides a good amount of protection to business owners. We often recommend that existing sole proprietors and entrepreneurs looking to start their business begin with an LLC. There are usually two types: member-managed and manager-managed. Regardless of the type, an LLC will shield the owner’s assets from the company’s liabilities and protect the owner from being held personally liable for the operation’s of the business.
Furthermore, LLC’s offer considerable flexibility in terms of management and taxation. Owners of LLC’s can structure their company in various ways using their articles of organization and operating agreement. Our office can assist in drafting these documents to ensure your business is operating efficiently and within the confines of the law. Unlike corporations, which are subject to double taxation, LLC’s have pass-through taxation, meaning the profits and losses of the business pass through to the LLC’s owner(s). However, an owner of an LLC may be able to take advantage of certain tax deductions and write-offs. Many LLC’s seek our advice on how they can navigate taxation and possibly reduce their tax burden using s-corp status. Whatever your situation, we can assist with managing your LLC and advising you on difficult matters affecting your business.
Corporations
Starting a corporation can seem like a daunting task and for good reason. The internal documents of a corporation–articles of incorporation, bylaws, and policies–not only establish the foundation of a corporation but they also govern the corporation’s internal affairs and external operations. Therefore, it is crucial that the internal corporate documents are drafted so that the corporation operates smoothly and efficiently, internally and externally. Our legal team has the knowledge and expertise to guide you through every stage of establishing your corporation. We understand that each corporation is unique, and we take the time to develop personalized strategies and draft personalized corporate documents that align with the corporation’s goals and values.
Corporations have the potential to become large enough where there are multiple layers of management and employees. In fact, there is a whole field dedicated to corporate governance and our firm is experienced in that field. Over the years, we have served as in-house counsel to a number of corporations and advised on a wide range of legal matters from international transactions, joint ventures, government contracting (via federal acquisition regulations), establishing subsidiaries, employment issues, legality of board decisions, statutory compliance, taxation, foreign registration, and corporate finance. Our goal is to help you navigate these complex transactions with confidence, ensuring that your corporation’s interests are protected every step of the way.
Cooperatives
Many people, including attorneys, are not familiar with cooperatives or even that they exist. A cooperative is a business entity that can look and operate very much like a corporation or LLC, depending on its articles of formation and the local laws where it operates. However, rather than seeking to maximize profits, cooperatives strive to maximize the benefits to its members who not only own the cooperative but also use its products/services. Moreover, cooperatives are democratically-controlled enterprises consisting of persons and/or entities who come together to meet common economic, social, and cultural needs. By pooling their resources, members of cooperatives are better off working together rather than alone, and each member gets what they put into the cooperative.
Forming a cooperative can be a bit tedious and will depend on the law of the jurisdiction where the cooperative operates. Most jurisdictions will require at the very least articles of incorporation or association to establish the cooperative. However, operating a cooperative requires other documents that outline the cooperative’s purpose, membership eligibility, governance structure, and operational procedures. In cooperatives members typically have equal voting rights regardless of their level of investment because of the democratic nature. Decisions are made collectively, reflecting the cooperative’s commitment to member participation and control.
Additionally, cooperatives can engage in various business activities, ranging from agricultural production to retail services. Operational considerations for cooperatives include financial management, member participation, risk mitigation, and compliance with regulatory requirements. Cooperatives are in a constant act of balancing their social objectives with the need for financial sustainability. It is imperative that cooperatives remain viable enterprises while serving the interests of their members and the community. Our firm has advised cooperatives and other interested groups on matters related to cooperative formation, governance, taxation, patronage refunds/dividends, business transactions, and taxation. We can do the same for you.
Non-Profits
The formation of a non-profit organization entails meticulous attention to legal details, including drafting articles of incorporation, establishing bylaws, implementing policies, and obtaining tax-exempt status from the Internal Revenue Service (IRS). Our experienced attorneys work closely with clients to navigate these initial steps, advising on the most suitable legal structure and corporate governance models to align with their mission and objectives.
Once established, non-profit organizations must comply with annual filings requirements and adhere to strict governance practices to maintain transparency and accountability. Our firm offers guidance on corporate governance, internal policies, and regulatory compliance, empowering non-profits to operate ethically and effectively. Whether you’re looking for regular assistance with internal matters or need advice on a specific issue, we have experience serving as in-house legal counsel for a number of non-profit organizations and our clients have nothing but good things to say about us!
Tax Exemption and Compliance for Non-Profits
One of the biggest misconceptions is that non-profit organizations are automatically exempt from taxation. Don’t be fooled by the terminology because it could cause legal trouble down the road. The term “non-profit” simply means the organization does not operate for the purpose of making a profit, but rather, it operates in pursuit of charitable purposes. You will typically hear non-profits claim that they are a 501(c)(3) organization. This means that the organization is exempt from federal income taxation under section 501(c)(3) of the Internal Revenue Code and any donations to the organization are generally tax deductible.
To obtain tax-exempt status under section 501(c)(3), IRS Form 1023 must be completed and filed with the IRS. There are different 1023 forms available depending on the organization’s previous and projected revenues. The IRS recently made the application process electronic via its website. However, many of the requirements remain the same, and organizations must be cognizant of what they need to have in place before applying. Given the time and cost of the application, organizations should be sure that the application they are submitting meets all the requirements to avoid a rejection. Many applications are rejected for simple mistakes and omissions. This is why it is crucial for organizations to consult an attorney before applying.
Once an organization obtains tax-exempt status, then it is also responsible for maintaining it. Our legal team provides expert assistance in obtaining and preserving tax-exempt status, advising on IRS regulations, filing annual information returns, complying with local charity/solicitation statutes, regaining tax-exempt status once it has been lost, and navigating potential tax implications of business activities.
Did you know there are other tax-exempt statuses available? Section 501(c)(3) is the most common status that non-profits seek. However, depending on the nature of your organization, it may be able to obtain tax exempt status under other subsections of 501(c). For instance, chambers of commerce, football leagues, social and recreational clubs, labor organizations, and fraternities, to name a few, may qualify for tax-exempt status. Contact us to find out!