CORPORATE FORMATION AND STRUCTURING
Entrepreneurs need to first determine what corporate structure best suits their business before forming a company. They should consider their type of business and industry, who owns the company, and who makes the decisions for the company. Entrepreneurs who have already formed a company then need to how to grow and expand their company, and how to add or remove company owners, managers or executives if they so choose.
- Limited Liability Companies (LLCs)
- A limited liability company, commonly called an LLC, is a business entity that offers the owners of the company a limitation of their personal liabilities. An LLC is not required to hold regular meetings and there are no requirements to comply with other corporate formalities. The rights and duties of the owners and managers of an LLC are usually stated in the company's Operating Agreement.
- A Corporation, sometimes abbreviated as Corp. or Inc., is a separate and distinct legal business entity from the owners and managers of the company. A Corporation offers the owners of the company a limitation on their personal liabilities. Because it is a separate legal business entity, a corporation is allowed to enter into contracts, own assets and property, and pay taxes as a company. The rights, duties and limitations of the owners, directors and executives of a corporation are usually stated in the company's By-Laws.
- Non-Profit Corporations
- A non-profit corporation is one that is formed for a specific purpose and qualifies as a 501(c)(3) by the Internal Revue Service (IRS). This means that the corporation was formed for a religious, charitable, scientific, literary, or educational purpose which allows the corporation eligibility for certain federal and state tax exemptions. The rights, duties and limitations of the owners, directors and executive of a non-profit corporation are usually stated in the company's By-Laws.
- Partnerships (General and Limited)
- A Partnership exists when two or more persons carry on a business and decide to share in the profit and losses of that business. Each of the partners divides the rights and responsibilities among themselves, and each partner contributes to the business. Where the rights and responsibilities are divided equally, the partners are referred to as general partners in a General Partnership. Where there are general and limited partners and some partners limit their personal liability, there is a Limited Partnership. The rights, duties and limitations of the partners are usually stated in the company's Partnership Agreement.
- International Business Companies (Offshore Companies)
- An international Business Company, commonly known as IBCs, is a business entity incorporated in a jurisdiction outside of the United States and subject to the laws of the country where they are formed. A Belize IBC, for example, is governed by the International Business Companies Act (Chapter 270) of the Laws of Belize and is a private limited company whose activities must be conducted outside of Belize. Belize IBCs protects the confidentiality of its owners and are tax free.
Entrepreneurs engage in business transactions which often times require that the terms and conditions of the transaction be stated in a contract so as to be used in the event of a dispute.
- Corporate Governance Contracts
- Entrepreneurs should have corporate governance contracts that clearly define the rights, responsibilities and limitations of owners, managers, directors and executives of a company.
Operating Agreements An Operating Agreement is the corporate governance contract for a Limited Liability Company (LLC) that defines the rights, responsibilities, and limitations of owners, managers, and executives within the LLC. An Operating Agreement addresses important issues such as contributions to the company, ownership and transfer of membership interest(s) and assets, distributions of profits and losses, voting rights, removal of owners and managers, and dissolution of the company.
By-Laws By-Laws is the corporate governance contract for Profit and Non-Profit Corporations that define the rights, responsibilities, and limitations of owners, managers, directors and executives within the corporation. By- Laws address important issues such as contributions to the corporation, ownership and transfer of member share(s) and assets, dividends, voting rights, removal of owners or directors, and dissolution of the corporation.
A Partnership Agreement is the corporate governance contract for Partnerships that define the rights, responsibilities, and limitations of partners within the partnership. A Partnership Agreement addresses important issues such as contributions, ownership transfers, profits and losses, voting rights, removal of partners and dissolution of the partnership.
- Business Closings
- Entrepreneurs who are buying or selling assets of a business should engage in a business closing. Much like in a real estate closing, in a business closing, the buyers and sellers sign documents on a specified date to make sure that all aspects of the assets transfer are done completely, correctly and legally so as to avoid subsequent disputes.
- Purchase and Sale Agreements (Asset Purchases)
- Entrepreneurs who are buying and selling assets of a business should have a Purchase and Sale Agreement, commonly called a PSA, which defines the terms and conditions of the sale. PSA's are usually signed and a due diligence period commences for the buyer. A business closing is usually done after the due diligence period to finalize the sale.
- Transfer Agreements (Membership Interests and Shares)
- Entrepreneurs who are buying or selling membership interests of a Limited Liability Company (LLC), or shares in a Corporation (Corp. or Inc.), should have a Transfer Agreement. A transfer agreement defines the terms and conditions in which the interests or shares are transferred, such as the compensation, voting rights, and limitations on the transfer.
- Sale of Goods and Service Agreements
- Entrepreneurs who are engaged in selling goods should have a detailed Sale of Goods Agreement, and those who are engaged in selling services should have a detailed Service Agreement. These agreements should clearly define important aspects of the sale such as the payment, quantity and description of goods or description of service provided, termination, breaches, and enforcement mechanisms in the event of a dispute.
Entrepreneurs may protect their company's intellectual property by registering the company's name and logo as trademarks. Trademarks protect the brand of the company. They identify the source of the goods and services and prevent unfair competition. Company's usually trademark both their company's name and their company's logo.
Entrepreneurs may protect their company's intellectual property by registering a copyright. Copyrights protect original works of authorship including literary, dramatic, musical and artistic works. They establish a public record for the ownership of the original works, and if there is an infringement of that work, the copyright owner is entitled to damages.
Foreign entrepreneurs and investors may expand their businesses in the United States and/or invest in new businesses by utilizing different visa options depending on their country of origin, type of business and industry, and amount of investment.
- Treaty Traders and Treaty Investor Visas (E-1 and E-2)
- Foreign entrepreneurs who are treaty trades may be eligible for an E-1 visa if they carry on substantial trade in goods between their native county and principally the United States. Foreign entrepreneurs who are treaty investors may be eligible for an E-2 visa if that person directs the operations of the business in which they have invested or have invested and continue to invest a substantial amount of money.
- Immigrant Investor Visas (EB-5)
- Foreign entrepreneurs may be eligible for an EB-5 visa if they make a minimum capital investment into a new commercial enterprise that creates or preserves permanent full time employment for a minimum of ten (10) qualified United States workers. The required minimum investment amount is USD $1,000,000.00 generally and USD $500,000.00 for rural areas and areas of high unemployment.
- Intracompany Transferee Visas (L-1A and L-1B)
- Foreign entrepreneurs may be able to transfer their managers and executives to the United States as a temporary worker through an intracompany transferee visa. These visas are issued when the employer files a petition to authorize qualified employees to be able to work and live in the United States. The L-1A visa is for employees who work in managerial or executive positions. The L-1B is for employees who work in positions that require specialized knowledge.
COMMERCIAL AND CIVIL LITIGATION
In the event of a dispute, entrepreneurs may have to go to court to enforce their rights against members, managers, directors, customers and/or competing businesses or individuals. Generally these procedures in court result in money damages against the wrongdoing party. It is important that entrepreneurs and companies have the ability to initiate a lawsuit to enforce their rights, or defend themselves and their companies if sued to protect their rights.
- Breach of Contract
- Entrepreneurs have a right to initiate, enforce and/or defend themselves in a breach of contract action. In such an action, one party asserts that the other did not adhere to an obligation that was agreed upon. The most common breach of contract matter is for non-payment of goods or services. The prevailing party in such an action may be entitled to money damages.
- Member and Shareholder Disputes
- Entrepreneurs have a right to initiate, enforce and/or defend themselves in a member or shareholder dispute. In such an action, a member of a Limited Liability Company (LLC) or shareholders in a Corporation asserts that another member or shareholder has not adhered to their rights, responsibilities and obligations in the Operating Agreement, By-Laws, or Florida Statutes. The prevailing member or shareholder in such an action may be entitled to money damages.
- Business Torts
- Entrepreneurs have a right to initiate, enforce and/or defend themselves in a business tort action. A business tort, also known as an economic tort, is an intentional or negligent wrongful act committed against the company that causes some type of financial loss. Common business torts include tortuous interference and negligent misrepresentation. The prevailing party in such an action may be entitled to money damages.
- Catastrophic Personal Injury
- Individuals have a right to initiate and enforce their legal rights through civil litigation if they suffer a catastrophic personal injury. This type of injury is a severe injury to the body, spine, brain or skull which results in significant impairment to the individual. The prevailing party may be entitled to a settlement or judgment for money damages.