wh Law | We Help helps small business owners and startups with forming their companies. We serve as outside general counsel so you can focus on successfully running your business. We also assist in buying and selling businesses. We develop an extensive knowledge of your businesses and legal needs to become an integral part of your team.
We help our clients protect their hard-earned assets from lawyers, creditors, foreclosure deficiencies, former or current spouses, children, relatives, and lawsuits in general. Over 19 million new lawsuits are filed in the United States every year, many of which are frivolous or settled for sums greater than the actual liability. While plenty of people are concerned with making money, few are thinking about how to protect it. You must think and act defensively to protect your wealth. wh Law | We Help, is here to help you utilize proven strategies to protect your assets. We use tools and tactics as asset protection attorneys to help shield the wealth of individuals, families, and companies.
Business owners, professionals, and property owners in particular should be aware of the risk accompanying conducting business and practicing in their professions. It is important to protect yourself before you get sued; advanced planning is important. It is helpful to think of asset protection as a form of insurance — you have to have it before you need it. Protecting your assets is a worthwhile investment.
Asset Protection is about empowering yourself in the face of the fear of litigation. wh Law | We Help, will work with clients to implement proven, legally-sound strategies that will help preserve their wealth and safeguard their assets. We help professionals, small business owners, property owners, and other clients protect their assets against judgments, liens, potential litigation, and fraud.
Our firm has assisted clients to arrange their finances, real property and other assets in a manner that minimizes their exposure to potential creditors. We have experience in establishing trusts, quantifying insurance needs, creating estate plans, and business entities that allow are clients to enjoy the confidence of more security in their assets.
A creditor who initiates litigation against a person that has planned for asset protection find there are very few collectible assets actually owned by the person they wish to sue. Assets that are owned by a trust or other entity are generally not liable for claims against their beneficiaries. Moreover, giving assets to another entity may add the additional benefit of lowering the person’s taxable estate.
Our firm has experience with the following:
The specific strategy employed by us will vary depending on the client, the type of assets, and the tax regulations that apply to those assets.
Family businesses face unique challenges. This leads to a large portion of them failing to survive into the third generation. This is due to a variety of factors. The business might have to be sold to generate the funds to pay estate taxes. Or surviving family members might have contrasting desires for what to do in the future: some may want to continue the business; others may want to “cash out” and walk away. Whatever the situation, implementing a Business Succession Plan before a triggering event arises can help make any transition go more smoothly.
Too many owners see a business succession plan as changing of ownership and giving up control and reducing income. It’s advisable to create a succession plan that transfers ownership to a successor and maintains control and/or income. An owner may still manage his or her business and be paid for that role. However, the earlier a business owner begins transferring ownership to a successor, the likelier it is for a succession plan to be a success, both emotionally and financially.
Creating and implementing a business succession plan will provide several benefits to owners and partners:
Family business law is not a specific area of law like mergers and acquisitions, trusts and estates or federal tax. Family business law is also not a body of law built around a specific industry the same way bodies of law have developed around fisheries, restaurants, telecommunications and other specialized industries – although family businesses are a large section of the participates in nearly every industry.
Family business law is the practice of business law, whether through corporate, securities, regulatory, estate planning or other substantive areas, with a unique sensitivity to the challenges, goals and values common to most or all family businesses, and absent in most other businesses. A family business has different constituents than just shareholders – it has mothers, fathers, brothers, sisters, children and, hopefully, grandchildren and great-grandchildren. Even when profitable, it is not successful unless it is transmitting the values of the family behind it and preserving its legacy for the generations to come.
At wh Law | We Help, we understand that family business lawyers must understand the family dynamics behind the businesses they are representing. They must appreciate the core values that the first generation wanted to preserve and that the current generation wants to maintain. They must understand the importance of community in any family enterprise, appreciating that family businesses are the bedrock of community and local philanthropy. Finally, just as their clients, they must always be thinking about the future of the business.
In an ordinary businesses, people retire, new people are hired, existing shareholders sell and new owners take over. This is the natural cycle we can rely on if a company is financially successful. In a family business, though, this is not what success looks like. The older generations work hard, not just for financial achievements, but also to see the business they’ve built carry on in the hands of their children and grandchildren. wh Law | We Help, works to ensure our clients family businesses can achieve those goals.
The S-Corp is the most common form of business entity used in small business. Most entrepreneurs consult with their CPA about tax issues and an S-Corp is recommended. However, entrepreneurs can form a LLC and file IRS Form 2553 for a S-Election and their LLC will be taxed as an S Corporation. So why is an LLC better? Asset Protection. An ownership interest in an LLC has considerably greater creditor-protection than shares in an S corporation, which can be easily seized by a stockholder’s personal creditors. A member’s interest in an LLC is creditor protected in the same way a partner’s interest in a limited partnership is protected. A member’s personal creditor is limited only to a charging order against the LLC interest. This gives the creditor only the right to receive distributed profits due the debtor partners. As you will read under Income Distributions, LLCs have the ability to distribute the income as the members agree. This is one reason it is incredibly important to have a robust Operating Agreement in place before a creditor sues your LLC.
S Corporations were based off of the C Corporation, therefore, the S Corporation involves structure, formalities and compliance obligations. These obligations can be too burdensome for the solo entrepreneur, in other words, a “payroll of one.” If you incorporate as an S Corporation, you need to set up a board of directors, file annual reports and other business filings, hold shareholder’s meetings, keep records of your meeting minutes, and generally operate at a higher level of regulatory compliance than your business might need or want to deal with. With the LLC, this isn’t the case. LLCs just use an informal operating agreement. Why does this matter? Most small business owners start up a S Corp and then fail to comply with the corporate formalities. If they get sued the corporate veil can be pierced and their personal assets can be at risk. To help our clients deal with this issue we off the Corporate Shield™ Service.
The Takeaway: If you want less red tape and formality, the LLC can provide greater simplicity.
In an LLC, income and loss can be allocated disproportionately among the owners. By contrast, in the S Corp, income and loss are assigned to each shareholder strictly based on their pro-rata shares of ownership. This is an important distinction to understand. For example, let’s say two friends, Stefan & Brandon, open a law firm, each owning 50%. As the year progresses, Stefan needs to focus his time elsewhere, while Brandon does all the work. Their business becomes more profitable than they ever imagined, and they want to divide up the profits. Because Brandon has put in the bulk of the work, the two decide he should keep 75% of the profits, and Stefan should get 25%.
With an LLC, this type of agreement is fine. The two owners simply agree to the arrangement and they will be taxed accordingly to their “operating agreement.” But this type of flexible arrangement won’t work with an S Corporation. Because Stefan and Brandon are each 50% owners, each will be allocated 50% of the corporation’s income, at least when it comes to computing income tax.
The Takeaway: If you need flexibility when it comes to splitting up profits among owners, the LLC is the preferred structure.
S Corporations can be taxed as a S Corporation.
LLCs can be taxed in the following ways: C-Corp, S-Corp, Sole Proprietor, Disregarded Entity, or Partnership.
The Takeaway: If you need flexibility when it comes to tax elections, the LLC is the preferred structure.
Arkansas Law provides an organization other than a limited liability company may convert to a limited liability company if the provisions of the Arkansas Small Business Entity Tax Pass Through Act are complied with. Many people will tell you that converting your S-Corp to an LLC is a taxable transaction. It can be a taxable transaction, however, it can also fall under § 368(a)(1)(F) of the Internal Revenue Code. The business will be taxed the same, but it will have less corporate formalities and greater asset protection.
A key reason that business owners choose to form a separate business entity is so they won’t be held personally liable for business liabilities. However, courts will sometimes hold a business’s owners, members, and shareholders personally liable. When this happens it’s called “piercing the corporate veil.”
Generally, when evaluating if a corporation is legitimate – if the corporate veil should be pierced – courts look at the following factors:
Corporate Formalities: Did the corporation follow proper procedure, for example in its formation and appointment of directors, issuance of stock, the holding of its annual meetings, the filing of annual reports with the state, and the maintenance of its own property, and financial books and accounts? Or were the procedures not followed, was the corporation dependent on property or assets of a shareholder which it did not technically own or control, or were the corporate finances commingled with those of its shareholders?
Individual Control: What amount of financial interest, ownership and control did the principals maintain over the corporation?
Personal Use: Did the principals use the corporation to advance personal purposes?
Our Corporate Shield™ Service is a powerful and affordable business maintenance and updating program for our clients who own their own businesses. Our Corporate Shield™ Service provides a systematic review of your business’s activities, and includes properly documenting those activities. By increasing the contact between us throughout the year and by encouraging proactive maintenance of your business’s operating documents, our Service increases your business’s chance of meeting its goals in the face of the ever-changing legal and tax environment
We help our clients protect their assets and plan for the tax consequences of owning a business. There are four broad categories of legal need that startups will typically encounter in the early stages:
In addition, we offer a number of post-formation services including, but not limited to: