Small biz how to Probe legal, tax structure of partnership agreement
San Francisco Business Times - by Robin Xander
Friday, August 17, 2007
http://sanfrancisco.bizjournals.com/sanfrancisco/stories/2007/08/20/smal...
It's not unusual for a client to walk into the San Francisco office of attorney Joshua Ridless wanting to formalize a partnership agreement.
But, Ridless said, sometimes a partnership is not the best way to structure the nascent business.
He said people talk about having partners, but don't understand the legal distinctions and tax implications of their options. Besides a partnership, other common joint business entities are an LLC (limited liability company) or a C- or S-type corporation.
The differences revolve primarily around taxation and liability. In a general partnership, there's more risk and exposure, Ridless said, since each partner is liable for the business' debts. Each partner also reports any profit or loss on his or her personal tax returns.
"That means creditors can come after you personally," Ridless said. If you have a corporate entity, liability generally extends only to the company.
An LLC combines a corporation's protection from personal liability for business debts and the pass-through tax structure of a partnership. Regular C-corporation and S-corporation owners have limited personal liability for business debts, but differ in how income is handled and reported.
"A partnership entity is different from a corporation, where there are shareholders and directors," Ridless said. "But they may refer to themselves as partners." In an LLC, they're called members. So, even though partnership and incorporation papers are available online, figuring out what's best often requires talking to an attorney.
To find an attorney, ask your accountant for a referral, or call the local bar association's lawyer referral service.
"The first thing I want to hear is the business plan," Ridless said. "How do they plan to get from A to B, from start to exit?"
A person with a new business is probably not thinking about how to get out of the business, but it's something an attorney will want them to consider. An agreement will provide exit strategies: What happens if someone want to leave? What happens if the business is sold?
Todd Moreno, a San Francisco attorney with 17 years experience, said one type of agreement does not fit all.
What is the activity? Real estate presents different issues than manufacturing widgets.
What type of investors or partners? "If they are foreign investors, that changes things," Moreno said.
Is there a sole proprietor who has a number of employees? "An S-corporation would allow him to pay himself a salary," he said.
How many people are involved?
What kind of management structure is there?
Does it involve third-party financing? Ridless said it's important to bring the accountant into the discussion.
Both Moreno and Ridless said clients sometimes do the forms themselves, and then come to the office.
"People can save thousands of dollars," Ridless added, "by spending a grand perfecting a corporation or LLC."
For more information contact:
Joshua Ridless
(415) 614-2600
http://www.ridlesslaw.com
Law Offices of Joshua A. Ridless, in the news:
Small Law Firms Stay Under the M&A Radar, The Recorder, May 5, 2008:
http://www.law.com/jsp/law/sfb/lawArticleSFB.jsp?id=900005561727
http://www.digmypage.com/san-francisco-business-commercial-attorneys
Josh Ridless Achieves Copyright Precedent in Federal Court, Pike & Fischer Internet Law and Regulation Reports, September 12, 2007:
http://www.ridlesslaw.com/RidlessLaw_BriefSept.2007.pdf
http://www.digmypage.com/SF-Business-Attorney
http://www.digmypage.com/san-francisco-ip-attorneys
Small biz how to Probe legal, tax structure of partnership agreement, San Francisco Business Times, August 17, 2007:
http://sanfrancisco.bizjournals.com/sanfrancisco/stories/2007/08/20/smal...
http://www.digmypage.com/san-francisco-business-lawyers
Who Says Being a Lawyer Has to Suck?, San Francsico Magazine, January 2007:
http://www.ridlesslaw.com/San_Francisco_Magazine_Who_Says_Being_a_Lawyer...
http://www.digmypage.com/sf-business-attorneys
Profile of a President, San Francisco Attorney Magazine, Summer 2006:
http://www.digmypage.com/san-francisco-commercial-business-lawyers
http://www.ridlesslaw.com/2006%20SF%20Atty%20Mag%20-%20Summer%20-%20Ridl...
Laywer Athletes Work Out for Charity, San Francisco Attorney Magazine, Fall 2004:
http://www.ridlesslaw.com/lifestyle.pdf
Busy S.F. corporate lawyer prizes his volunteer work, San Francisco Chronicle, May 27, 2003:
http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2003/0...
http://www.digmypage.com/san-francisco-business-commercial-law
VLSP Cycling Challenge:
http://www.sfbar.org/vlsp_bike_challenge/
http://sfbay.craigslist.org/nby/eve/658388219.html
References:
http://www.digmypage.com/Joshua-ridless
Other Links:
http://www.digmypage.com/josh-ridless http://newtech.meetup.com/14/members/7089554/
http://www.avvo.com/attorneys/94111-ca-joshua-ridless-212425.html
http://www.linkedin.com/in/joshridless
http://www.gobignetwork.com/profiles/Joshua-Ridless.aspx
http://artmam.net/Josh_Ridless.htm
http://www.sfbar.org/foundation/supporters.aspx
http://ezinearticles.com/?A16-Restaurant-Review&id=1072878
http://www.lawyersguide.com/index.php?option=com_mtree&Itemid=132&task=v...
http://www.nawlist.com/details.php?num=100510
http://newtech.meetup.com/14/members/7089554/
http://www.goodreads.com/user/show/1129729
http://www.livesimon.com/index/listings/page24370.htm
http://joshridless.blogspot.com/2008/03/josh-ridless-cost-effective-busi...
http://ezinearticles.com/?expert=Joshua_Ridless
http://www.law.berkeley.edu/news/mediacoverage/may2003a.html
http://www.sfbar.org/foundation/supporters.aspx
http://ezinearticles.com/?expert=Joshua_Ridless
http://artmam.net/Relationship__Other_People-10.htm
http://www.attorneysdir.com/business-and-corporate-law/california/the-la...
http://artcharm.com/Attorney_Joshua___Ridless.htm
http://www.seekyourbusiness.com/business/350/paul-moore-joins-joshua-rid...
http://sf.ohsohandy.com/a/132496-cost-effective-business-attorneys-law-o...
http://www.lawyersguide.info/detail/3263/the-law-office-of-joshua-a-ridl...
http://artcharm.com/Attorney_Joshua___Ridless.htm
http://artmam.net/Relationship__Other_People-10.htm
http://classifieds.enterto.com/76/6/62/30016/
http://www.zoominfo.com/Search/PersonDetail.aspx?PersonID=-583076
http://classifieds.enterto.com/76/6/62/31157/
http://classifieds.enterto.com/76/6/62/31159/
Triathlon Events:
http://www.onyourmarkevents.com/results.asp?id=1370
http://www.onyourmarkevents.com/results.asp?id=1499
http://www.capitalroadrace.com/results/07_AIT_HIRON_AG.HTM
http://www.tricalifornia.com/timing/results05/bk/bkov1-500.cfm