One of the first and most important decisions you now face is deciding what form of business entity to own and operate your business venture. There are several options, including-
• a sole proprietorship or general partnership;
• a limited partnership;
• a limited liability company;
• a limited liability partnership;
• an S-corporation; or
• a regular corporation- a C-corporation.

For nearly every business owner reading this article, the choice is fairly simple. Most Indiana businesses should operate either as an S-corporation, regular corporation, or limited liability company. These three entities offer business owners limited asset protection and relative ease of operation. In deciding the best business structure to utilize, each business owner should consider a variety of general factors and also the circumstances unique to the business, its owners, and its opportunities and challenges.

Before forming a new business entity, a good business attorney will spend time with a business owner to discuss and consider factors such as these-

• Will the business consist of an operating entity or a holding company?
• What are the likely tax liabilities arising from the business?
• If an operating entity is chosen, can FICA taxes be minimized?
• How will the business be financed?
• What is the exit strategy?
• What business risks are being avoided?
• Do the owners and managers have the requisite training and vigilance to maintain a more complicated structure?
• What are the costs, benefits and burdens of creating a particular business structure?

As explained above, a business should be operated as a limited liability entity to protect the assets of the owners. That is the central reason to form a business entity.
One of the first and most important decisions you now face is deciding what form of business entity to own and operate your business venture. There are several options, including-
• a sole proprietorship or general partnership;
• a limited partnership;
• a limited liability company;
• a limited liability partnership;
• an S-corporation; or
• a regular corporation- a C-corporation.

For nearly every business owner reading this article, the choice is fairly simple. Most Indiana businesses should operate either as an S-corporation, regular corporation, or limited liability company. These three entities offer business owners limited asset protection and relative ease of operation. In deciding the best business structure to utilize, each business owner should consider a variety of general factors and also the circumstances unique to the business, its owners, and its opportunities and challenges.

Before forming a new business entity, a good business attorney will spend time with a business owner to discuss and consider factors such as these-

• Will the business consist of an operating entity or a holding company?
• What are the likely tax liabilities arising from the business?
• If an operating entity is chosen, can FICA taxes be minimized?
• How will the business be financed?
• What is the exit strategy?
• What business risks are being avoided?
• Do the owners and managers have the requisite training and vigilance to maintain a more complicated structure?
• What are the costs, benefits and burdens of creating a particular business structure?

As explained above, a business should be operated as a limited liability entity to protect the assets of the owners. That is the central reason to form a business entity.

One of the first and most important decisions you now face is deciding what form of business entity to own and operate your business venture.  There are several options, including-

•    a sole proprietorship or general partnership;
•    a limited partnership;
•    a limited liability company;
•    a limited liability partnership;
•    an S-corporation; or
•    a regular corporation-  a C-corporation.

For nearly every business owner reading this article, the choice is fairly simple.  Most Indiana businesses should operate either as an S-corporation, regular corporation, or limited liability company.  These three entities offer business owners limited asset protection and relative ease of operation.  In deciding the best business structure to utilize, each business owner should consider a variety of general factors and also the circumstances unique to the business, its owners, and its opportunities and challenges.

Before forming a new business entity, a good business attorney will spend time with a business owner to discuss and consider factors such as these-

•    Will the business consist of an operating entity or a holding company?
•    What are the likely tax liabilities arising from the business?
•    If an operating entity is chosen, can FICA taxes be minimized?
•    How will the business be financed?
•    What is the exit strategy?
•    What business risks are being avoided?
•    Do the owners and managers have the requisite training and vigilance to maintain a more complicated structure?
•    What are the costs, benefits and burdens of creating a particular business structure?

As explained above, a business should be operated as a limited liability entity to protect the assets of the owners.  That is the central reason to form a business entity.

Sole proprietorships and general partnerships offer no protection to their owners or to the entity itself.  By contrast, limited liability companies, limited partnerships and corporations are limited liability entities which provide significant but limited protection from liabilities arising from the business’ operations.  Generally, what is at risk for an owner is the value of the investment made by the owner in the entity.  Business lawyers refer to this as “inside out protection,” because the liabilities arising inside the entity will not reach the assets of the owner held outside of the entity.

Of course, selecting the right entity is just the first step in this process.  Careful drafting of documents, the proper filing of documents with governmental offices and establishing processes and procedures to follow the so-called “corporate formalities” are equally important steps in limiting the liability risks to the business’ owners.  These topics are addressed in other articles, but the entire process starts with the list of factors relevant to selecting the right entity.

If you are starting a new business or are unsure whether your current entity is properly structured, contact your business attorney to review the issues raised in this article.

Posted on | May 1, 2010 | No Comments

I started the Griffith Law Group to serve the needs of solopreneurs, entrepreneurs, small to medium sized business, and business owners.  We also help real estate investors, builders, building trades, property managers and other real estate professionals.   

We encourage you to sign up for our electronic newsletter, through which we share important business news and information about changes in the law that might impact your business or real estate interests.  Learn more at www.IndyBizLaw.com.

Matthew A. Griffith, Attorney

Matt@IndyBizLaw.com

Announcing the formation of my new law firm. . .

Posted on | April 9, 2010 | 1 Comment

After 18 years of practice with a downtown Indianapolis law firm, I am pleased to announce that I am launching the Griffith Law Group- my own law firm dedicated to serving the needs of solopreneurs, entrepreneurs, small to medium sized business, and business owners.  I will also continue my work representing real estate investors, builders, building trades, property managers and other real estate professionals.  Initially, our new offices will be located in the first Small Business Development Center developed by Rainmakers Marketing Group, Inc.

Starting on May 1, 2010, my new contact information will be:

Griffith Law Group

7208 N. Dobson Street

Indianapolis, IN  46268

317-663-0650

Matt@IndyBizLaw.com

The Griffith Law Group will offer legal services in a very different, results-oriented style.  Our emphasis is on educating clients and empowering them to make good business decisions that are cost-effective and consistent with their personal, financial and professional goals.  To learn more about how our approach to the practice of business and real estate law is different, please visit our website:

  www.IndyBizLaw.com

We also encourage you to sign up for our electronic newsletter, through which we share important business news and information about changes in the law that might impact your business or real estate interests.

As always, please feel free to contact us with any questions or concerns about your business, real estate or other legal needs.  We look forward to serving you.  

Matthew A. Griffith, Esq.

Businesses Must Protect Confidential Data

Posted on | March 17, 2010 | No Comments

In an effort to protect the privacy of consumer information and reduce the risk of fraud and identity theft, a federal rule requires businesses and landlords to take certain protective measures to dispose of sensitive information derived from consumer reports.  Any business or individual who uses a “consumer report” for a business purpose is subject to the requirements of this Disposal Rule.  The Rule requires the “proper” disposal of information in consumer reports and records to protect against unauthorized access to or use of the information. The Federal Trade Commission (FTC) has the responsibility to enforce the Disposal Rule.

In a property management context, a consumer report includes tenant credit and other such reports generated by consumer credit reporting agencies (CRA’s), such as tent screening agency.   A consumer report does not include information gathered directly by  business for use by the business.  Below, I have included more information about what constitutes a consumer report.
The FTC has indicated that the standard for the proper disposal of information derived from a consumer report is flexible, and allows organizations and individuals covered by the Rule to determine what measures are reasonable based on the sensitivity of the information, the costs and benefits of different disposal methods, and changes in technology.  Although the Disposal Rule applies to consumer reports and the information derived from consumer reports, the FTC and this author both encourage those who dispose of any records containing a consumer’s personal or financial information to take similar protective measures.  In other words, treat all customer and client information as if they are subject to the Disposal Rule.

Who must comply?

The Disposal Rule applies to individuals, as well as large and small organizations, that use consumer reports.  Among those who must comply with the Rule are:
• Consumer reporting companies
• Lenders
• Insurers
• Employers
• Landlords
• Government agencies
• Mortgage brokers
• Automobile dealers
• Attorneys or private investigators
• Debt collectors
• Individuals who obtain a credit report on prospective nannies, contractors, or tenants
• Entities that maintain information in consumer reports as part of their role as service providers to other organizations covered by the Rule.

What information does the Disposal Rule cover?

The Disposal Rule applies to consumer reports or information derived from consumer reports.  The Fair Credit Reporting Act defines the term consumer report to include information obtained from a consumer reporting company that is used – or expected to be used – in establishing a consumer’s eligibility for credit, employment, or insurance, among other purposes.  Credit reports and credit scores are consumer reports.  So are reports that businesses or individuals receive with information relating to employment background, check writing history, insurance claims, residential or tenant history, or medical history.
What is ‘proper’ disposal?

The Disposal Rule requires disposal practices that are reasonable and appropriate to prevent the unauthorized access to – or use of – information in a consumer report.  For example, reasonable measures for disposing of consumer report information could include establishing and complying with policies to:

• burn, pulverize, or shred papers containing consumer report information so that the information cannot be read or reconstructed;
• destroy or erase electronic files or media containing consumer report information so that the information cannot be read or reconstructed;
• conduct due diligence and hire a document destruction contractor to dispose of material specifically identified as consumer report information consistent with the Rule. Due diligence could include:
o reviewing an independent audit of a disposal company’s operations and/or its compliance with the Rule;
o obtaining information about the disposal company from several references;
o requiring that the disposal company be certified by a recognized trade association;
o reviewing and evaluating the disposal company’s information security policies or procedures.

The FTC says that financial institutions that are subject to both the Disposal Rule and the Gramm-Leach-Bliley (GLB) Safeguards Rule should incorporate practices dealing with the proper disposal of consumer information into the information security program that the Safeguards Rule requires (ftc.gov/privacy/privacyinitiatives/safeguards.html).

The Fair and Accurate Credit Transactions Act, which was enacted in 2003, directed the FTC, the Federal Reserve Board, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Office of Thrift Supervision, the National Credit Union Administration, and the Securities and Exchange Commission to adopt comparable and consistent rules regarding the disposal of sensitive consumer report information.  The FTC’s Disposal Rule became effective June 1, 2005.