THE ENTREPRENEUR AND CHOICE OF ENTITY

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THE ENTREPRENEUR AND CHOICE OF ENTITY

• The Proper Form for Your Business
• Business Law Workshop for Educators
• 2008 CTE Summer Conference
• July 23, 2008

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MOST IMPORTANT INFORMATION

• http//www.secretary.state.nc.us/corporations/

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TYPES OF ENTITIES

• SOLE PROPRIETORSHIP
• PARTNERSHIP
• LIMITED PARTNERSHIP
• CORPORATION C or S
• LIMITED LIABILITY COMPANY LLC
• OTHERS

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SOLE PROPRIETORSHIP

• ONE OWNER CARRYING ON A BUSINESS FOR PROFIT
• INFORMAL
• UNLIMITED LIABILITY
• ONE TAX
• LIMITED DURATION
• TOTAL CONTROL

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PARTNERSHIP

• TWO OR MORE PARTIES CARRYING ON A BUSINESS FOR
  PROFIT
• INFORMAL
• UNLIMITED LIABILITY
• ONE TAX
• LIMITED DURATION
• SHARED CONTROL

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CORPORATION

• A SEPARATE LEGAL ENTITY RECOGNIZED BY THE STATE
  FOR THE PURPOSE OF CARRYING ON A BUSINESS
• FORMAL
• LIMITED LIABILITY
• DOUBLE TAXATION
• UNLIMITED DURATION
• HIERARCHAL CONTROL

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LIMITED LIABILITY COMPANY

• A SEPARATE LEGAL ENTITY HAVING PARTNERSHIP AND
  CORPORATE CHARACTERISTICS
• FORMAL BUT FLEXIBLE
• LIMITED LIABILITY
• PARTNERSHIP TAXATION
• UNLIMITED DURATION
• VARIABLE CONTROL

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OTHER ENTITIES

• PROFESSIONAL CORPORATIONS
• NONPROFIT CORPORATIONS
• LIMITED LIABILITY PARTNERSHIPS
• FOREIGN ENTITIES GmbH, AG, PLCs

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FACTORS INFLUENCING CHOICE OF ENTITY

• MARKETING
• MANAGEMENT CONTROL
• LIABILITY
• TAXES

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MARKETING

• PRESUMPTIONS
• NAME
• TITLES
• EGOS

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BIGHUGELARGE
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MANAGEMENT CONTROL

• Partnership Management
• Limited Partnership Management
• Corporate Management

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LIABILITYACT OR OMISSION

• DEBT
• CONTRACT
• TORT

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LITIGANTS

• CUSTOMERS
• SUPPLIERS
• LENDERS
• PARTNERS
• EMPLOYEES
• LITTLE OLD PEOPLE

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LIMITING LIABILITY

• ENTITY
• INSURANCE
• INDEMNIFICATION

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LIMITED LIABILITYEXCEPTIONS

• NEGLIGENCE
• AFFIRMATIVE ACT
• PAYROLL TAX
• STUPIDITY

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PIERCE CORPORATE VEIL

• ALTER EGO
• SEPARATE BOOKS
• CORPORATE FORMALITIES

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TAXES

• SINGLE TAX
• VS.
• DOUBLE TAX

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BEST OF BOTH WORLDS

• CHAPTER S CORPORATION
• LIMITED LIABILITY
• PARTNERSHIP TAXATION

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S CORPORATION LIMITATIONS

• 100 SHAREHOLDERS
• ONE CLASS OF STOCK
• INDIVIDUAL SHAREHOLDERS
• NO NONRESIDENT ALIENS
• CALENDAR YEAR TAX YEAR
• OTHER LIMITS

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LIMITED LIABILITY COMPANY

• NEW KID ON THE BLOCK
• BIG BOYS TOY
• CHAPTER S WITHOUT LIMITS
• SINGLE TAX LIMITED LIABILITY
• FLEXIBILITY

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CORPORATE STRUCTURE Corporation LLC

• SHAREHOLDERS MEMBERS
• DIRECTORS MANAGERS
• OFFICERS OFFICERS

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Corporations Organizational Documents

• ARTICLES OF INCORPORATION
• BYLAWS
• ORGANIZATIONAL MINUTES
• CORPORATE CERTIFICATES
• CORPORATE SEAL
• EIN AND STATE APPLICATIONS
• S ELECTION

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LLCs Organizational Documents

• ARTICLES OF ORGANIZATION
• OPERATING AGREEMENT
• ORGANIZATIONAL MINUTES
• UNIT CERTIFICATES
• CORPORATE SEAL
• EIN AND STATE APPLICATIONS

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ARTICLES OF INCORPORATION

• NAME
• INCORPORATOR
• REGISTERED AGENT
• SHARES
• CORPORATE PURPOSE
• PREEMPTIVE RIGHTS
• CUMULATIVE RIGHTS
• DIRECTORS

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SHAREHOLDERS AGREEMENT

• TRIGGERS
• PURCHASE PRICE
• PAYOUT
• MANAGEMENT
• NONCOMPETITION

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NONCOMPETITION

• PART OF AGREEMENT
• SIGNED AND IN WRITING
• CONSIDERATION
• LEGITIMATE INTEREST
• REASONABLE AS TO TIME AND GEOGRAPHY

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THE END

• William D. Harazin
• William D. Harazin, PLLC
• Two Hannover Square,Suite 2404
• Raleigh, NC 27601
• 919-821-3700
• www.harazinlaw.com