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Corporate Transactions

The art of the deal is what you, as an entrepreneur pride yourself on. At Pineiro Byrd PLLC, we make it happen by assisting in key negotiations and most importantly drafting the contracts or agreements memorializing the terms of the transaction. Whether the transaction involves distribution rights, licensing of intellectual property rights, or the purchase of the assets of a business, we prepare the documents comprehensively with the goal of protecting your interests and closing the transaction.

The Benefits of Incorporation

Incorporation can limit your personal liability as a business owner. In general, creditors of your corporation must satisfy their claims by seizing the assets of the corporation rather than your personal assets. In contrast, as a sole proprietor or partner in a partnership, you are financially responsible for all liabilities of the business, and your personal assets are subject to attack by creditors. Other benefits of incorporation can include greater tax deductions for health insurance and medical expenses, lower payments for social security tax and medicare tax, and greater opportunity to raise capital for the business through the issuance of stock.

What is an S Corporation

The term S corporation refers to the way in which the corporation is taxed. An S corporation is a pass through entity. There is no corporate level income tax. Instead, a pro-rata portion of the annual profit or loss of the S Corporation is included on the personal tax return of each shareholder. If IRS form 2553 is filed within 75 days after incorporation, the corporation will be treated as an S Corporation for tax purposes. Many start-up businesses benefit by making the election to be taxed as an S Corporation.

How does an S Corporation differ from a limited liability company

A limited liability company (LLC) is like an S Corporation. Generally, business owners form an LLC rather than S Corporation if one or more of the following situations apply:

1. Any owner of the company is another business entity or a nonresident alien.
2. The company will be owned by more than 75 persons.
3. The company plans to issue more than one class of stock (for example, special allocations of profits and losses will be made that are not proportionate to the equity percentage of each owner).
4. The owners desire to use business debt (money borrowed by the company) to increase their tax basis.
5. The state where your business is located imposes an entity level income tax on the profits of an S Corporation and does not impose such a tax on the profits of an LLC.