dec seminar session 1 forming an enitity
TRANSCRIPT
Forming a Legal Entity for a Business in Ohio
What You Should Know…Basic Legal Considerations
Caroline Z. Worley Worley Law, LLC
28 Westerview Dr.Westerville, Ohio 43081www.WorleyLawllc.com
email:[email protected]
Practice areas include: Small business Commercial transactions Real estate Business litigation
Who I represent: Owners Investors Entrepreneurs
Primary Legal Objectives When Representing an
Entrepreneur
Protect business assets Protect business owner from personal liability
See Documents provided in Handout
Basic Types of Legal Entities in Ohio
Sole Proprietorship Default classification Taxed as an individual Personal assets are NOT protected Thus, subject to personal liability
Basic Types of Entities, cont’d
Corporation Protection from personal liability Shareholders, directors and officers Issue Shares Good when have high number of individuals involved
or investors Limited Liability Company
Protection from personal liability Members Issue Units Better for small number of individuals involved
Why do you form a Limited Liability Entity?
Keeping personal assets separate from business assets will: Ensure safety from personal liability Permit the business to build credit history Assist in keeping accurate information for tax
purposes.
Forming an LLC: 3 Basic Requirements
Complete Articles of Organization at Secretary of State website
Obtain Employer Identification Number or Tax ID (EIN)
Execute an Operating Agreement
Ohio Secretary of State
Choose a name for your business Conduct a name search on the Secretary of State website to
ensure that your business name is not already in use. Complete Articles of Organization Submit with $125.00 fee Ohio Secretary of State website:
http://www.sos.state.oh.us/ http://www.sos.state.oh.us/SOS/Upload/business/forms/533
a.pdf See Handouts
Obtain a Tax Id Number
IRS website: http://www.irs.gov/Consult your accountantAfter steps are completed, a Tax ID
will be issued immediately
Handout
LLC Operating Agreement
Document which defines rights and responsibilities of Member(s) of an LLC
Multi member LLC’s should include management responsibilities, exit strategies and valuation of the business if one member wants out of the business at any given time
Sample Operating Agreement for Single Member LLC – Handout
Forming an Ohio Corporation
Complete Articles of Incorporation at Secretary of State website
Obtain Employer Identification Number or Tax ID (EIN)
Execute Corporate Organizational docs, i.e., Bylaws, Subscription for shares with capital contributions, & Initial Resolutions, Issue Shares
What next?
After complying with the formalities required by Ohio law to form your LLC or Corporation, you should: Issue units/shares Open bank accounts, credit cards, vendor accounts, and
customer accounts in the name of the business. Keep Corporate/LLC books –Sample Books Document minutes of business meetings and execute
consent resolutions. Make sure to execute all contracts in the name of the
business. Sign all contracts in your capacity as a member and not
personally, if possible. Exception, i.e. Personal Guaranty, Fraud, Certain Industries
Choosing the Right Entity for Your Business
How many individuals will be involved in the business either actively or silently?
Do you need to raise capital from more than a few investors?
Choosing a particular entity may relate to a the best tax election for your business?
Questions?
Contact Info:
Caroline Z. Worley, Esq.Worley Law, LLC
28 Westerview DriveWesterville, Ohio 43081
www.OhioWomenInBusiness.com