Business Lawyers for Providence, Rhode Island

Advantages of Forming an S-Corporation Tax Benefits: Pass-Through Taxation: An S-Corp does not pay federal income taxes at the corporate level. Instead, the income, deductions, and credits "pass through" to the shareholders, who report them on their personal tax returns. This avoids the "double taxation" that occurs with a C-Corporation. Self-Employment Tax Savings: As an S-Corp owner, you can divide income between salary and distributions. Only the salary portion is subject to payroll taxes (Medicare and Social Security), while distributions are not. This can reduce self-employment taxes. Tax Deductibility: Expenses such as health insurance premiums for shareholders may be deductible, along with business expenses. Liability Protection: Like other corporations, an S-Corp provides personal liability protection. Your personal assets (e.g., house, personal bank accounts) are generally shielded from business debts and legal actions against the company, provided you follow corporate formalities. Credibility: Forming an S-Corp can give your business greater credibility with customers, vendors, and lenders. It shows you are a legitimate business entity, which may help when seeking financing or contracts. Potential State Tax Benefits: Some states provide additional tax benefits for S-Corps, although this varies by state. Disadvantages of Forming an S-Corporation Ownership Restrictions: An S-Corp can have no more than 100 shareholders, and all shareholders must be U.S. citizens or residents. This can limit the growth potential if you plan to bring in additional investors. S-Corps can only issue one class of stock, which may restrict your ability to attract certain types of investors or structure equity creatively. Administrative and Legal Requirements: Corporate Formalities: S-Corps must adhere to certain formalities, such as holding annual shareholder meetings, maintaining a board of directors, keeping detailed records, and filing required documents with the state. Failure to follow these rules can result in losing your liability protection. Payroll Requirements: If you work in the business, you must pay yourself a reasonable salary, which adds payroll administrative costs. You’ll also have to withhold and pay employment taxes on that salary. Tax Complexity: While S-Corps offer tax advantages, they also bring complexity, especially when it comes to classifying distributions versus salary. Misclassification can trigger IRS audits or penalties. Some states do not recognize S-Corporation status, meaning your business may still be subject to state-level corporate taxes. Limited Flexibility in Income Allocation: S-Corps require that profits and losses be allocated strictly based on ownership percentage. This limits flexibility if you want to allocate profits disproportionately among shareholders.

Every website that offers services and lets users create accounts needs Terms of Service - it's like having a contract with your users. It's crucial, especially in Texas. Recent Texas court cases have made it clear: you need to make sure users actually see and agree to your terms. The StubHub case is a perfect example. The court looked at whether users had fair notice of the terms and actively showed they agreed to them. The best way to do this is with what we call a "clickwrap" agreement - that's where users have to click "I agree" during sign-up. Your Terms of Service should include: ACCEPTANCE: Clear instructions on how users accept the terms - that "I agree" button. Then, spell out exactly what services you're providing and what users can and can't do on your site. PRIVACY POLICY: You'll also need a privacy policy section that explains how you handle user data. Depending upon your services and the nature of the data you are collecting and from where your users are arriving, you may need separate detailed privacy policy and a cookie policy. ADDITIONAL: You'll want sections on how disputes get resolved (like arbitration), limits on your liability, and your right to update the terms later. Getting this right protects you legally and sets clear expectations with your users.

Hi Paul, It’s great to hear that we were recommended. I would be happy to help with your business matter. I am a business attorney with over 20 years of legal and business experience. I generally serve as General Counsel to small business clients end work with them on resolving their issues. When can you get on a call? We can schedule a free 15 min consultation to discuss. You can contact me on Contracts Counsel. I have some time today, Friday February 18th and also Monday or Tuesday next week. I look forward to hearing from and working with you. Donya Gordon

Texas Secretary of State has a ton of helpful resources, including what documents to be filed, what taxes to be paid, and others. With regards to applicable law or which regulators your business will be subject to, you may want to discuss the nature of your business with your preferred counsel. You should also look into the duties/responsibilities of owning or holding a certain position in your company. There are also post-obligations or tasks that the company has to undertake after being registered, like adopting your Bylaws and naming your officers/directors/c-level executives.

The nature and scope of escrow agreements vary widely...but they all have one thing in common...to wit, they create a trust/beneficiary relationship founded on a very strong fiduciary relationship. The agreements can be as short as 1-2 pages or can be voluminous in scope...all dependent on the complexities of the understandings between the parties.