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Tag Archive | "LLC"

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By Bob Cooper, SCORE Counselor

 

Do I Need a  Corporation, a Partnership or an LLC for my business? 

Prior to starting a new business it is important to select the proper legal structure.

It is possible to start a business by yourself without creating any separate structure; this type of structure is commonly called a “Sole Proprietorship.” In a Sole Proprietorship, all income and expenses are recognized by you on your income tax return, and the business tax ID number would be your social security number. The Sole Proprietorship is the simplest form of business structure, and would work well if the business had little likelihood of incurring liability, or costs, as the result of something going awry. The owner is liable for all debts and obligations of the business, and therefore the owner’s property is subject to claims of business creditors.

A husband and wife filing jointly can be a Sole Proprietorship. A name for the business can be adopted by the sole proprietor and an assumed name certificate is filed with the County Clerk’s office.

Every form of business structure other than the Sole Proprietorship is formed by making application to the State of Michigan, because every other form of business must receive approval from the State before operating. Also, every other form must receive a tax ID number from the Federal Internal Revenue Service in order to file documents with the IRS.

A second form of business structure is a general “Partnership” which is formed by two or more people who will own and operate the business together. The Partnership is controlled by a formal partnership agreement stating a partner’s contribution, control, management and the sharing of losses and profits. The agreement should also attempt to spell out what happens when a conflict arises, such as death of a partner or disagreement between the partners. A Partnership continues by agreement of the partners, unless it is ended by certain acts, such as the death of a partner, as provided by State law. All partners in a general Partnership are liable and responsible for all obligations of the Partnership. A name for the business can be filed as an assumed name with the County Clerk’s office.

A third form of business structure is a Limited Partnership which simply means that one or more of the partners operate the business while others are strictly investors.

Another form is the “Limited Liability Company,” commonly called an LLC. The benefit of the LLC is to limit the liability of the owners. When someone has a claim, the claim must be made against the company and not against the owners, as long as the company is operated correctly. The management of the LLC is defined by a management agreement and filed with the State at the time the LLC documents are filed. An LLC files an information return with the IRS. This return tells the IRS the names of the owners and the percentage amount of the income received by the business upon which each owner must pay the taxes.

A “General Corporation” is another type of business structure. The Corporation is the most widely used but the most complex form of structure from the standpoint of paperwork and administration. However the Corporation allows for easy investment by the use of stock or shares in the company. The Corporation has an identity and existence separate from its owners or shareholders. The Corporation gives the most protection to the owners, or stockholders, from claims, which can only be filed against the Corporation. The corporate structure shields the owners and/or stockholders from liability for wrongful actions of the corporation. The Corporation can have a perpetual existence, unlike the other types of business structure. A Corporation is required to file a tax return separate from the tax returns of the stockholders, and is subject to taxation on its income. The Corporation must request permission from the State to do business under a different name.

In the business structures that provide a shield from liability for the owners, the owners must operate the business separately and distinguish it from themselves, as a separate entity.

Get free and confidential counseling with SCORE, 111 Pearl Street NW, Grand Rapids, MI 49503. Call (616) 771-0305. Visit our website at www.scoregr.org or email us at score@grandrapids.org.

 

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Consumer Advisory 


 

Certain antifreeze/coolant brands may damage your vehicles

The Michigan Department of Agriculture and Rural Development (MDARD) issued a Stop-Use and Stop-Removal Order for antifreeze/coolant manufactured, packaged, and/or distributed prior to September 11, 2014, by the following Detroit, Michigan, companies after finding the products may cause damage to vehicle engines:

  • State Petroleum 1 Inc.
  • Petro-Zone and Dual-Temp, LLC
  • Omni PPG, Inc.

These products are sold under the Petro Zone Smart, Petro Zone and Ice Shield XXX brands.

As part of a several-month investigation, MDARD discovered the antifreeze/coolants being sold by these companies do not meet the labeled freeze points stated on the labels.

“When products don’t meet their labeled freeze points, they can cause lasting damage to vehicles. So, it’s vital consumers and businesses stop using or selling these products immediately,” said Jamie Clover Adams, MDARD Director. “This company is selling a sub-standard product. MDARD’s Stop-Use and Stop-Removal Order not only ensures that Michigan’s consumers and businesses are getting what they pay for, but helps prevent long-term damage to their vehicles.”

The Stop-Use and Stop-Removal Orders prohibit the sale, offering for sale, or use of these antifreeze/coolants manufactured, packaged, and/or distributed by these companies.

These products should:

  • No longer be used.
  • Immediately be removed from store shelves or other product displays.
  • No longer be offered for sale.

The products may be properly disposed of in accordance with local ordinances, taken to a facility that recycles antifreeze/coolant, or consumers may contact the company directly.

Complaints can be made to:

Michigan Department of Agriculture and Rural Development

Consumer Protection Section

940 Venture Lane

Williamston, MI 48895

Toll-free: 800-632-3835

Fax: 517-655-8303

 

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ASK SCORE


Do I need a corporation, a partnership or an LLC for my business?

Submitted by Bob Cooper, SCORE Counselor

Prior to starting anew business it is important to select the proper legal structure.
It is possible to start a business by yourself without creating any separate structure; this type of structure is commonly called a “Sole Proprietorship”. Ina Sole Proprietorship all income and expenses are recognized by you on your income tax return, and the business tax ID number would be your social security number. The Sole Proprietorship is the simplest form of business structure, and would work well if the business had little likelihood of incurring liability,or costs, as the result of something going awry. The owner is liable for all debts and obligations of the business, and therefore the owner’s property is subject to claims of business creditors.
A husband and wife filing jointly can be a Sole Proprietorship. A name for the business can be adopted by the sole proprietor and an assumed name certificate is filed with the County Clerk ‘s office.
Every form of business structure other than the Sole Proprietorship is formed by making application to the State of Michigan ,because every other form of business must receive approval from the State before operating. Also, every other form must receive a tax ID number from the Federal Internal Revenue Service in order to file documents with the IRS.
A second form of business structure is a general “Partnership” which is formed by two or more people who will own and operate the business together. The Partnership is controlled by a formal partnership agreement stating a partner’s contribution,control, management and the sharing of losses and profits. The agreement should also attempt to spell out what happens when a conflict arises, such as death of a partner or disagreement between the partners. A Partnership continues by agreement of the partners, unless it is ended by certain acts, such as the death of a partner, as provided by State law. All partners in a general Partnership are liable and responsible for all obligations of the Partnership. A name for the business can be filed as an assumed name with the County Clerk’s office.
A third form of business structure is a Limited Partnership which simply means that one or more of the partners operate the business while others are strictlyinvestors.
Another form is the “Limited Liability Company”, commonly called an “LLC”. The benefit of the LLC is to limit the liability of the owners. When someone has a claim,the claim must be made against the company and not against the owners, as long as the company is operated correctly. The management of the LLC is defined by a management agreement and filed with the State at the time the LLC documents are filed. An LLC files an information return with the IRS. This return tells the IRS the names of the owners and the percentage amount of the income received by the business upon which each owner must pay the taxes.
A “General Corporation” is another type of business structure. The Corporation is the most widely used but the most complex form of structure from the standpoint of paperwork and administration. However the Corporation allows for easy investment by the use of stock or shares in the company. The Corporation has an identity and existence separate from its owners or shareholders. The Corporation gives the most protection to the owners, or stockholders, from claims,which can only be filed against the Corporation. The corporate structure shields the owners and/or stockholders from liability for wrongful actions of the corporation. The Corporation can have a perpetual existence, unlike the other types of business structure. A Corporation is required to file a tax return separate form the tax returns of the stockholders, and is subject to taxation on its income. The Corporation must request permission from the State to do business under a different name.
In the business structures that provide a shield from liability for the owners, the owners must operate the business separately and distinguish it from themselves, as a separate entity.
For free business counseling, contact SCORE at (616) 771-0305 or email score@grandrapids.org. Visit their website at www.scoregr.org

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