Archives for March 2016

The first steps in establishing your business are often the most critical. According to a recent Maker’s Row article, these three tasks are the most essential when launching your business:

  1. Establish your name. Write down a list of 10 possible names you would like to call your business and check to see if the website domain name and social media usernames are available. Your company’s name is the most important asset, and some free sites like namechecklist.com or knowem.com can help you determine name availability quickly.
  2. Secure your attorney and accountant to minimize any risk that could jeopardize your business.
  3. Set up your corporate entity. (Castaybert PLLC has more information on this available here.)

To learn more about what Castaybert PLLC can do for you in terms of Business Formation, click here.

About 375,000 visual artists in the United States operate their businesses without a corporate structure, which not only leaves them vulnerable to personal liability but also prevents them from enjoying certain tax benefits. Art Law Journal recently wrote a piece on the advantages and disadvantages of the several types of business entities are available in the United States. (Read the full article here.) To summarize:

  • Sole Proprietorship
    • A sole proprietorship is a type of business entity that is owned and run by one natural person.
    • No action needs to be taken to become a sole proprietor. If an individual opens a business and does not incorporate, then he or she automatically becomes a sole proprietor.
    • The sole proprietorship must pay Medicare and Social Security taxes at the end of the year. However, the sole proprietorship does not pay any payroll taxes on income, withhold income tax, file employment tax returns, or pay state or federal unemployment taxes. In addition, the sole proprietorship does not need to be covered by workers’ compensation insurance.
    • However, there is no legal distinction between the owner and the company. Since the company is not a separate business entity, there is unlimited exposure to personal liability. If the business is sued, then an owner’s personal assets may be at risk.
  • Partnership
    • A partnership is a type of business organization in which two or more individuals combine resources, share profits and losses, and share joint administration and control of the business.
    • Members of a partnership often enter into a partnership agreement, which is a contract between partners that states the terms under which the business operates.
    • Partnerships are governed by state law. However, the default rules for partnerships in most states can be problematic, especially when conflicts arise between partners.
    • In addition, partnerships face unlimited liability. An individual may be personally liable for his or her partner’s actions.
  • Corporation (C-Corp)
    • A corporation is a separate entity from its corporate principals. Because the corporation is a distinct entity, corporate principals have no personal liability for corporate debts, breaches of contract or personal injuries to third parties caused by the corporation, employees or agents. Moreover, creditors can only target corporate assets so cannot make any claims or seizure for personal assets.
    • C-Corps can also issue stock.
    • However, double-taxation is a major disadvantage for C-Corps.
  • Subchapter S (S-Corp)
    • An S-Corp provides many of the same benefits as a C-Corp without the double taxation.
    • An S-Corp also provides liability protection for the shareholders.
    • Although S-Corps may enjoy reduced Social Security and Medicare taxes, there are additional expenses associated with an S-Corp, depending upon the state, such as workers’ compensation and unemployment insurance coverage.
  • Limited Liability Company (LLC)
    • An LLC combines the personal liability protections of a C-Corp or S-Corp with the simplified tax structure and filing requirements of a partnership or sole proprietorship.
    • In addition, a company’s profits and losses flow through to the shareholders’ personal tax returns.
    • However, an LLC does not issue stock. Members of an LLC participate in the management of the company, making choices and offering guidance on the company’s direction, through majority decisions.

To learn more about what Castaybert PLLC can do for you in terms of Art Law, click here.

CASTAYBERT PLLC is pleased to welcome Karen E. Clarke as Of Counsel to the firm, specializing in business and commercial litigation. Ms. Clarke has over 25 years of experience as a commercial litigator, previously practicing in the New York office of Proskauer Rose LLP. Ms. Clarke has represented large and small corporations, financial institutions, officers and directors, and high-net-worth individuals in a variety of commercial disputes in state and federal courts and arbitral forums in New York, New Jersey, and elsewhere. Her practice has included securities litigation, consumer class actions, contract and real estate disputes, employee disputes, business torts, trust and estate litigation, and appellate work.

Ms. Clarke brings additional strength to the firm’s growing commercial litigation practice. She joins litigators André Castaybert, the firm’s Principal Attorney, and Richard Friedman, Of Counsel to the firm. The firm’s litigation practice is enhanced by the specialized practice areas of the firm’s other Of Counsel attorneys, who focus on employment law, intellectual property, corporate law, commercial leasing, and immigration law.

To learn more about Ms. Clarke’s practice, click here.

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