Business Law: Frequently Asked Questions

What business entity should I choose — LLC, corporation, or something else?

The right entity depends on your goals, including liability protection, tax treatment, ownership structure, and plans for growth. An LLC offers flexibility and pass-through taxation, while a corporation may make sense if you plan to seek outside investors or offer equity compensation. The choice also carries significant tax consequences — an area where working with an attorney who is also a CPA can be particularly valuable. We help clients weigh these factors and select the structure that best fits their situation.

​Do I really need an operating agreement if I'm the only owner of my LLC?

Yes. Even single-member LLCs benefit from an operating agreement. It reinforces the separation between you and your business — which is critical to preserving liability protection — and provides clarity for banks, lenders, and potential future partners. Not to mention that single-member LLCs may not stay that way forever. For multi-member LLCs, an operating agreement is essential to define ownership percentages, management rights, profit distributions, and what happens if a member wants to exit, becomes incapacitated, or passes away.

What is the difference between an asset purchase and a stock purchase when buying or selling a business?

In an asset purchase, the buyer acquires specific assets and liabilities of the business; in a stock (or membership interest) purchase, the buyer acquires the ownership of the entity itself, including its history and obligations. Buyers often prefer asset purchases to limit exposure to unknown liabilities and obtain favorable tax treatment, while sellers often prefer stock sales. The structure of the deal has major tax and legal consequences for both sides, and it should be negotiated early in the process.

How do I protect my personal assets from business liabilities?

Forming an LLC or corporation is the first step, but it isn't the last. You must also maintain the entity properly — keeping business and personal finances separate, maintaining adequate records, signing contracts in the entity's name, and keeping the company adequately capitalized and insured. Failing to observe these formalities can allow creditors to "pierce the corporate veil" and reach your personal assets.

What should be included in a contract with my customers or vendors?

Key provisions include a clear description of the goods or services, payment terms, deadlines, limitations of liability, termination rights, and how disputes will be resolved. A well-drafted contract prevents misunderstandings and protects you if the relationship goes wrong. Relying on handshake deals or generic templates found online often costs far more to fix later than proper drafting would have cost up front.

What is a buy-sell agreement, and does my business need one?

A buy-sell agreement governs what happens to an owner's interest in the business upon certain triggering events — death, disability, divorce, retirement, or a desire to sell. Without one, a business can face uncertainty, disputes among remaining owners, or unwanted co-owners. Buy-sell agreements are often funded with life insurance and coordinate closely with each owner's estate plan, which is why it helps to work with counsel experienced in both business and estate planning.

How does my business fit into my estate plan?

For many owners, the business is their most valuable asset — and often the most difficult to transfer. Succession planning addresses who will own and who will run the business after your retirement, incapacity, or death, and how to do so tax-efficiently. Strategies may include gifting interests, trusts, buy-sell agreements, and valuation planning. Starting early creates far more options than waiting until a transition is forced.

What ongoing legal requirements does my business have?

Most entities must file annual reports with the state, maintain a registered agent, keep internal records up to date, and comply with tax filing obligations at the federal, state, and local levels. Businesses with employees have additional payroll, withholding, and employment law obligations. Falling behind on these requirements can result in penalties or administrative dissolution of your entity.

When should I involve a business attorney?

Ideally, before problems arise. The most cost-effective time to consult an attorney is when forming your business, signing significant contracts, bringing on partners or investors, hiring employees, or buying or selling a business — not after a dispute has begun. Early planning is almost always less expensive than litigation.