Business Law

Operating a business as a sole proprietor

Operating as a Proprietor

Operating as a proprietor you own your business assets and personally operate your business. You are treated as one with the business for tax purposes. A sole proprietor is personally liable for the contracts and activities of the business. Your personal and your business assets are exposed to all personal and business liabilities. If you are married, you and all personal and business assets are responsible for all claims arising upon dissolution of your marriage.

Proprietorship Formalities

You do not have to observe any formalities other than licensure, if any, imposed by governmental entities, and registration 
for the use of a fictitious name. There are no reporting requirements except for tax returns.

Proprietorship Ownership

Ownership is not separated from control. You have no limitation from liability for both contracts and your actions. The result of all of this is that if you transfer all or a portion of your business the buyer will inherit your liabilities. This will raise concerns as to the continued operation of the business by the buyer.

Selling your proprietorship business

Often the buyer will want to continue the business in the same location and under the same name. Therefore, the concern for all of this liability will be reflected in the price and in the advisability of purchasing the business. If you sell this form of business the buyer will get business assets that are subject to the claims of your spouse or a former spouse for equitable distribution the sale of This is particularly true where the business is continued in the samename at the same location and where the name of the business includes the name of the proprietor. The business assets sold may be subject to the claims of a spouse or former spouse upon a claim for equitable distribution of marital property which may survive the dissolution of a marriage

Financing your proprietorship business

If you finance this form of business, you will have to use all of the your personal as well 
as your business assets. This includes your home, your hunting cabin, your Harley and your condo.
if the business fails you loose all of these assets.

Taxation of your business

All profits are taxed whether they are held for use in the business or used for its operations. 

Bringing another person into your business

If you bring another person into the business the business becomes a partnership. 
This occurs even if no formal partnership agreement is ever spoken or written. 
All of the consequences of partnership then apply. This applies whether the person
 is a member of the family or a complete stranger.

For all of these reasons, frequently a business is started as a sole proprietorship, and later morphs into another form.
If you are operating a business, the assistance of a skilled professional can help you protect what you have while maximizing your success. Call me at 570-826-0481 or at 800-221-0618(in Pennsylvania only).
I can help!

Phantom Stock: benefiting a hard working employee

Phantom Stock: benefiting a hard working employee
• Many small business owners wish to provide an incentive to a particularly hard working employee or several employees but prefer to keep actuall ownership of their business in the family. Formal employee stock option plans or 401(k) plans may be too expensive and involve complex rules. Phantom stock can supply a way of accomplishing this. The employer promises the employee a bonus based on some percentage of increase in the value of the company payable at a predetermined time. The calculation can be as simple as the value of a fixed number of shares or the equity value of the company multiplied by some other factor which can be easily verified. If properly drawn, such a plan does not trigger the complex rules required for formal employee stock option plans or 401(k) plans and does not involve a transfer of ownership. Such a plan can be combined with other incentive plans to provide even greater incentive, such as a note evidencing a loan by the employee to the company, which can be converted into shares. The shares may be either voting or non-voting. The right to convert may be triggered by a specific event, or the passage of time. Setting up such plans can be affordable and yet provide substantial incentive to an employee, or several employees, to take a substantial interest in the success of the company.

Best practices suggest that a close working relationship with qualified and experienced legal counsel will enable you to maximize your success and minimize the potential pitfalls which so often plague small business. Good employees are one of your most valuable assets. Keeping good employees is vital to the success of any business.
Call business lawyer C. Stephen Gurdin Jr. at his Wilkes-Barre office today at 570.826.0481, toll free at 800-221-0618, fax 570-822-7780, email Stephen@gurdinlaw.com to schedule a free consultation.
Regular Office hours 2:30 and 7 p.m. Monday through Friday by appointment. Earlier appointments available upon request.

Shareholder may be liable for wages of corporate employee

limitation of liability is not absolute
Controling Shareholder liabile for employee wages
A sole or controlling stockholder may be held liable for the wages of employees, even though the corporation is the actual employer, due to the Pennsylvania Wage Payment and Collection Law. 43 P.S. §§ 260.2a, 260.9a(b

Best practices suggest that a close working relationship with qualified and experienced legal counsel will minimize the risk of losing the statutory protections offered for these forms of business and professional practice.
Call business lawyer C. Stephen Gurdin Jr. at his Wilkes-Barre office today at 570.826.0481, toll free at 800-221-0618, fax 570-822-7780, email Stephen@gurdinlaw.com to schedule a free consultation.
Regular Office hours 2:30 and 7 p.m. Monday through Friday by appointment. Earlier appointments available upon request

Statutory limitation of liability is not absolute

Statutory limitation of liability is not absolute

The limitation of liability of business owners and professional practitioners created by statute for corporations, limited liability companies, professional partnerships, and limited partnerships, differs from state to state and can be pierced under a variety of circumstances. The choice of a state usually constitutes a choice of the laws that will apply to that entity and its owners. A professional is responsible for his or her own acts as well as the acts of others under their supervision. The owner or owners of an entity such as a corporation or limited liability company may be held responsible for the obligations of the entity, or vice versa, under a totality or circumstances analysis. The courts look at such factors as accuracy of record keeping, segregation of assets, maintaining distinct and separate relationships, holding out, appearances, as well as observing the formalities attendant to that form as required by statute, the entity’s own operating agreement, and/or by laws. Forming a limited partnership, professional partnership, corporation, limited liability company, or other entity is a beginning.

Best practices suggest that a close working relationship with qualified and experienced legal counsel will minimize the risk of losing the statutory protections offered for these forms of business and professional practice.

Call business lawyer C. Stephen Gurdin Jr. at his Wilkes-Barre office today at 570.826.0481, toll free at 800-221-0618, fax 570-822-7780, email Stephen@gurdinlaw.com to schedule a free consultation
Regular Office hours 2:30 and 7 p.m. Monday through Friday by appointment. Earlier appointments available upon request

Professional corporation

Professional corporation
A professional corporation can be formed to allow licensed professionals to render services in the corporate form. The articles of incorporation are required to contain a heading stating the name of the corporation and that it is a professional corporation. Generally a professional corporation may be incorporated only for the purpose of rendering one specific kind of professional service. However, it may be incorporated to render two or more specific kinds of professional services to the extent that:
(i) the several shareholders of the professional corporation, if organized as a partnership, could conduct a combined practice of such specific kinds of professional services; or
(ii) the court, department, board, commission or other government unit regulating each profession involved in the professional corporation has by rule or regulation applicable to professional corporations expressly authorized the combined practice of the profession with each other profession involved in the corporation. An appropriate governmental unit may promulgate regulations authorizing combined practice to the extent consistent with the public interest or required by the public health or welfare. However, these laws do not create any vested rights to such corporations to combined practice. If by reason of a change in law, rule or regulation, the right to practice professions in any particular combination is terminated, all existing professional corporations rendering a combination of professional services are required to promptly reduce the specific kinds of professional services rendered by the corporations or to otherwise reconstitute themselves so as to comply with the then currently applicable restrictions applicable to all professions involved.

Profession.” Includes the performance of any type of personal service to the public that requires as a condition precedent to the performance of the service the obtaining of a license or admission to practice or other legal authorization from the Supreme Court of Pennsylvania or a licensing board or commission under the Bureau of Professional and Occupational Affairs in the Department of State. Except as otherwise expressly provided by law, this definition shall be applicable to this title only and shall not affect the interpretation of any other statute or any local zoning ordinance or other official document heretofore or hereafter enacted or promulgated
15 Pa. Cons. Stat. Ann. § 102

Call business lawyer C. Stephen Gurdin Jr. at his Wilkes-Barre office today at 570.826.0481, toll free at 800-221-0618, fax 570-822-7780, email Stephen@gurdinlaw.com to schedule a free consultation
Regular Office hours 2:30 and 7 p.m. Monday through Friday by appointment. Earlier appointments available upon request