A corporation is a legal entity that is separate and
distinct from its shareholders. Corporations came over from
England with the Pilgrims (Remember the East India
Company?), so are very familiar to courts as an asset
protection vehicle. Corporations require ongoing maintenance
such as annual meetings and separate financial activity.
Corporations work very well to protect shareholders from
inside liabilities. However, if you own stock in a
corporation, and you are responsible for an outside
liability-for example, if you get in a bar fight, punch
someone, and that person falls and hits his head on the curb
and suffers a traumatic brain injury-if you are sued and a
judgment is filed against you, your creditor can take your
stock. This is different from a partnership or an LLC, where
the creditor only gets a charging order.
We are suggesting to many of our clients that they consider
converting their corporations under state law into LLCs
under state law. This may be done without affecting the
federal income tax status that the corporation enjoys,
whether it is C-corporation taxation or S-corporation
taxation.
Our attorneys can review your situation to determine if a
corporate legal structure matches your needs and
accomplishes your goals to ensure the protection of your
assets and your family's ongoing financial and legal
security. We establish the business entity for you and
ensure its validity by preparing annual updates and keeping
you in compliance with the law. |
