by eclewis | Sep 30, 2010 | Business News
Unlike a sole proprietorship and general partnership, an individual must file Articles of Organization with the Colorado Secretary of State to set up a Limited Liability Company, commonly called an LLC. The filing of the Articles of Organization establishes the LLC.
An LLC can have one or more owners who are called members. The relationship between the members and the LLC is governed by the Operating Agreement. This document explains the rights and responsibilities of members and how votes are taken.
An LLC must have the appropriate licenses to do business in its local city and county and the state. This includes filing for sales tax if applicable, unemployment insurance if applicable, and for specialized business licenses (i.e. for construction, professional services, liquor licenses, etc) in addition to other filings.
An LLC may have additional documents depending on the situation. For instance, employment agreements, intellectual property agreements, and investor agreements may be necessary.
If you are starting an LLC and need help with the required documents or are unsure what documents you need, please feel free to call me, your Denver small business lawyer, at 720-258-6647, email me at elizabeth.lewis@eclewis.com or contact me through my contact form.
by eclewis | Sep 29, 2010 | Business News
Like a sole proprietorship, a basic partnership is formed by default if two or more individuals begin operating a business together. In some cases, a partnership may even be formed when that is not the intent of the individuals. Therefore, as a word of caution if you are doing any work with another individual it is important to talk to your attorney to make sure you are not entering into a partnership when you do not want to.
Because a partnership is formed by default, no formal documents are need to form a partnership. The same rules that applied to a sole proprietorship, i.e. you need to make sure you have the proper licenses and tax forms filed, also apply to partnerships. However, in addition to these documents there are two more documents that partnerships will want.
The first document is, if the individuals determine they do not want a basic partnership, the filing of a document creating a Limited Liability Partnership (LLP), Limited Partnership (LP), or a Limited Liability Limited Partnership (LLLP) with the Colorado Secretary of State. These entities may offer some protection for various owners. To determine if one of these entities is right for your partnership, a discussion with your attorney would be in order.
The second document is the partnership agreement. Although it is not absolutely required in all situations, all partnerships should have a partnership agreement regardless of whether they are a general partnership or have chosen to file with the Secretary of State to create another partnership type. A partnership agreement helps ensure that any disagreements can be settled, or if they cannot be settled, what happens to the assets of the partnership.
If you have formed a partnership or are working with another individual and wonder about whether you have formed a partnership, please feel free to call me, your Denver business lawyer, at 720-258-6647, email me at elizabeth.lewis@eclewis.com or contact me through my contact form.
by eclewis | Sep 28, 2010 | Business News
If you start a business by yourself and do not have any partners, in Colorado by default you have formed a sole proprietorship. In many cases there are no specific documents needed to start the business. However, depending on your situation there may be documents that are required.
- If you are operating under any name other than your own, you will need to register the trade name with the Colorado Secretary of State.
- Depending on what you are doing, you may be required to have special licenses through either the state, your local county, or your city. For instance, if you are a plumber, you may be required to have a license in your city.
- If you have employees, you will be required to have unemployment insurance documents.
- If sell items, you will be required to have a sales tax license.
- Depending on the type of business, you may be required to have insurance.
If you have started a business, it is best to talk both your attorney and your accountant to make sure your business has the required documents, licenses, and tax forms completed to comply with all federal, state, county, and city laws governing your business. If you have questions and need legal help, please feel free to call me, your Denver business attorney, at 720-258-6647, email me at elizabeth.lewis@eclewis.com or contact me through my contact form.
by eclewis | Sep 27, 2010 | Business News
Many small businesses start out as sole proprietorships or partnerships. A sole proprietorship is formed by default when a person starts a business if another form is not chosen (i.e. a corporation or LLC). A partnership is formed by default when two or more individuals start a business if another form is not chosen. However, as the business becomes more successful, the owner or owners are faced with the choice of whether it is appropriate to change into a corporation or LLC.
The biggest reasons, although not the only reasons, to change entity types are:
- the company is becoming larger and the owners want limited liability for the company’s actions,
- the company is making more money and the owners want to take advantage of certain tax breaks offered to corporations and LLCs, or
- the company is becoming more successful and the owners either want to offer ownership in the company to its employees or other individuals.
In addition to these reasons, there are many other reasons that an owner may want to stop being a sole proprietorship and pick a company structure. One may be that the owner is going to bring on a co-owner and wants the protection of corporate law for the company as opposed to partnership law.
If you are wondering whether it is time to switch from being a sole proprietorship or partnership to a company structure, please feel free to call me, your Denver business attorney, at 720-258-6647, email me at elizabeth.lewis@eclewis.com or contact me through my contact form.
by eclewis | Sep 26, 2010 | Business News
As a compliment to my appearance at the Start Up Basics class taught by John Green of the Denver Small Business Development Center, the next week’s posts, I will focus on the documents that a company needs. Whether you are a sole proprietorship, a non-profit, or an LLC, these posts are meant to help you learn about setting up a company so that prior to meeting with your attorney and accountant you can have some basic knowledge to be able to ask the right questions.
Please note, this information is only information. It is important to discuss your specific situation with your legal and accounting professionals. In addition, the information is specific to Colorado – if you are in another state, laws in your state may be substantially different.
by eclewis | Aug 25, 2010 | Business News
In preparation for my participation on the Flourishing Financially panel at the South Metro Chamber of Commerce’s Women in Leadership Annual Conference, I thought I would discuss a question that many small business owners fail to consider when starting their businesses: How do you plan to leave your business?
For some, the answer is that the owner wants to eventually sell the company to someone else. For others, the answer is that the owner wants to pass it down to his or her children. For others, the answer is that the owner wants to go public. Each of these answers, and even the answer that an owner just really doesn’t know right now, has an affect of what type of business entity to use for the business.
Although each instance can’t be discussed in the space that will actually keep my readers’ attention, an example of how this really affects businesses is the instance of going public. In most cases (although a business owner must consult with his or her business attorney to determine the type of entity that is best) if an IPO is eminent, then a corporation will be the entity choice. However, if the business owner never wants to go public, then other entities may also be considered. This is just one example of how the exit strategy of the business owner affects how the business attorney may counsel him or her.
For more information about what type of entity is best for your business, please contact me, your Denver business attorney, at 720-258-6647 or Elizabeth.Lewis@eclewis.com.
