What Type of Legal Exposure Do I Have as an S-Corporation or an LLC?

Show Notes

Attorney at Law Wes Carter answers the question, “What type of legal exposure do I have as an S-Corporation or an LLC?

Winters and King:

2448 E. 81st Tulsa Oklahoma

918-494-6868

WintersKing.com

DEFINITION – S-CORP – An S corporation, for United States federal income tax purposes, is a closely held corporation (or, in some cases, a limited liability company (LLC) or a partnership) that makes a valid election to be taxed under Subchapter S of Chapter 1 of the Internal Revenue Code.

1. A corporation is a corporation. Whether it is a S-CORP or a C-CORP you still have to keep track of minutes in meetings, annual meetings and board of directors. It all comes down to how you would like to tax.
2. S-CORP – You can save on taxes. You are able to declare a salary that is fair and reasonable. That salary is considered an expense. You can then take your distributions.
3. S-CORP can offer tax free benefits and employee benefits

DEFINITION – LLC (Limited Liability Company) – A limited liability company (LLC) is the US-specific form of a private limited company. It is a business structure that can combine the pass-through taxation of a partnership or sole proprietorship with the limited liability of a corporation.

1. This is a separate entity from you as an individual
2. You don’t have to put “LLC” on your logo but it is good to show clients that you have an LLC
3. Winters and King Charges $800 plus filing fees to file for an LLC
4. The test they use to see if the name you would like is available is asking if the business you have under that specific name is confusing to customers.
5. In an LLC you have members and managers. It is very simple.
6. The income of the LLC passes through to your personal taxes

With an LLC you have more of a chance for a Judge to “Pierce the corporate veil”

Procedure matters.

1. The details like, minutes, matters.
2. If you don’t file, the state will dissolve your LLC

Know your states laws – 

1. There are some states where an LLC with only one owner can lose some of your personal asset protection.

Treat the business with respect

1. Treat it like a separate entity because it is
2. Don’t fund your personal expenses with your business account
3. You are still liable for what you do

How do I protect my logo?

1. You can file for copyright federally which trumps filing with the state
2. Winters and King charges $750 depending on the class

How do you protect your business idea?

1. If you put your product or service into action, you have some rights but you should trademark.
2. S-Corp owning the business versus the LLC
   1. What type of liability exposure comes with an S-Corp

(CNN) Robert Kraft, the owner of the New England Patriots, has been charged as part of a monthslong investigation into sex trafficking that focused on several central Florida day spas and massage parlors suspected of being used for prostitution. Kraft faces two counts of soliciting someone to commit prostitution — including one count for an alleged offense on January 20, the day his Patriots played in the AFC Championship Game. He denies the accusations. Here’s what we know so far about the case:

Article – https://www.cnn.com/2019/02/25/us/robert-kraft-solicitation/index.html

https://operations.nfl.com/football-ops/nfl-rules-enforcement/fines-appeals/ 

NFL League minimum salary 2018

1. Rookie – $480,000
2. Average – $705,000
   1. If you hit someone with your helmet (Spearing another player) you can lose 6% of you income

How much should the NFL fine Robert Kraft?

1. Are you trying to keep it from happening again or are you trying to punish Robert Kraft?
   1. To deter – Higher than $50,000,000
   2. Kick him out of the league for a year
      1. He is going to be dealing with PR, the criminal case and the league.
2. $50,000,000 to a charity that aids in stopping sex trafficking, go on an apology tour and not allow him to go to any games in person for a year.

The players union

1. Want better benefits

The owners

1. Want more profit

NOTABLE QUOTABLE – “Discourage litigation. Persuade your neighbors to compromise whenever you can. As a peacemaker the lawyer has superior opportunity of being a good man. There will still be business enough.” – President Abraham Lincoln (The 16th President of the United States)

1. You want to avoid litigation because it is painful, takes much time, takes a lot of money and it even takes a toll on your health.
2. You are leaving the final decision up to another party 
3. It becomes whoever has the best lawyer and all of the “moves”
4. Being a lawyer is an art because you can not just present facts. You have to present facts and make the jury like you.

NOTABLE QUOTABLE – “A jury consists of twelve persons chosen to decide who has the better lawyer.” – Robert Frost