Law Offices of Steven M. Adler, PLLC
Scales of Justice
Adler Law E-Letter
March 2011

Steven M. Adler, Esq.
Steven M. Adler, Esq.

Law Offices of Steven M. Adler, PLLC
666 Old Country Road, Suite 605
Garden City, New York 11530

 

Phone: (516) 876-1105
Fax: (516) 794-0463

Greetings!

St. Patrick's Day
Happy Saint Patrick's Day

 

Welcome to March's edition of the Adler Law E-Letter

  
This month, we included an article which can help you in choosing the right ownership structure for your business.  
  
We are also including an article on Long Term Care Insurance and another addition of Strange But True! 

If you have a question or concern with respect to any particular legal subject, please contact me or Dolores Jannuzzi, Esq. and we would be happy to discuss your topic in a future issue of Adler Law. In addition, if you know of someone who may be interested to read this newsletter, please forward it to them by clicking the "Forward Email" link at the bottom of this page.

Thanks and have a great day.

Sincerely,                                                                      
Steven M. Adler
 

Choosing the Best Ownership Structure for your Business

 

When you start your own  business, you must first decide whether it will be a sole proprietorship, a partnership, a limited  liability company (LLC) or a corporation.

Which of these forms is right for your business depends on the type of business you run, how many owners it has, and its financial situation. No one choice suits every business: Business owners have to pick the structure that best meets their needs. This article introduces several of the most important factors to consider, including:

  • the potential risks and liabilities of your business
  • the formalities and expenses involved in establishing and maintaining the various business structures
  • your income tax situation, and
  • your investment needs.

Risks and Liabilities

In large part, the best ownership structure for your business depends on the type of services or products it will provide. For example, if your business is small and you will not be engaged in activities which will create liability risks, you may only need to establish a sole proprietorship.  On the other hand, if your business will engage in risky activities, such as construction, trading stocks or professional services,  you will almost surely want to form a business entity that provides personal liability protection ("limited liability"), which shields your personal assets from any business debts and claims. A corporation or a limited liability company ("LLC") will probably the best choice for you.  

Formalities and Expenses

Sole proprietorships and partnerships are easy to set up -- you don't have to file any special forms or pay any fees to start your business. Plus, you don't have to follow any special operating rules.

LLCs and corporations, on the other hand, are almost always more expensive to create and more difficult to maintain. To form an LLC or a corporation, you must file formation documents with the secretary of state and pay a fee, which can be several hundred dollars.  In New York, LLCs are also required to publish their formation in two (2) newspapers which can add several more hundreds of dollars in formation expenses.  Furthermore, owners of corporations must elect officers (usually, a president, vice president, and secretary) to run the company while LLCs choose managing members to run the company.  These limited liability entities must also keep records of important business decisions and follow other formalities.

If you're starting your business on a shoestring, it might make the sense to form the simplest type of business -- a sole proprietorship (for a single owner businesses) or a partnership (for businesses with more than one owner).  The limited personal liability provided by an LLC or a corporation may not be worth the additional cost and paperwork required to create and run one.  However, the additional cost of forming a limited liability entity, such as an LLC or a corporation is well worth the additional cost and paperwork if you will be engaged in a particularly risky business.

Income Taxes

Owners of sole proprietorships, partnerships, and LLCs all pay taxes on business profits in the same way. These three business types are "pass-through" tax entities, which means that all of the profits and losses pass through the business to the owners, who report their share of the profits (or deduct their share of the losses) on their personal income tax returns. Therefore, sole proprietors, partners, and LLC owners can count on about the same amount of tax complexity, paperwork, and costs.

Owners of these unincorporated businesses must also pay income taxes on all net profits of the business, regardless of how much they actually take out of the business each year. Even if all of the profits are kept in the business checking account to meet upcoming business expenses, the owners must report their share of these profits as income on their tax returns.

In contrast, the owners of a corporation do not report their shares of corporate profits on their personal tax returns. The owners pay taxes only on profits they actually receive in the form of salaries, bonuses, and dividends.

The corporation itself pays taxes, at special corporate tax rates, on any profits that are left in the company from year to year (called "retained earnings"). Corporations also have to pay profits on dividends paid out to shareholders, but this rarely affects small corporations, which seldom pay dividends.

This separate level of taxation adds a layer of complexity to filing and paying taxes, but it can be a benefit to some businesses. Owners of a corporation don't have to pay personal income taxes on profits they don't receive. And, because corporations enjoy a lower tax rate than most individuals for the first $50,000 to $75,000 of corporate income, a corporation and its owners may actual have a lower combined tax bill than the owners of an unincorporated business that earns the same amount of profit.

 Investment Needs

Unlike other business forms, the corporate structure allows a business to sell ownership shares in the company through its stock offerings. This makes it easier to attract investment capital and to hire and retain key employees by issuing employee stock options.

But for businesses that don't need to issue stock options and will never "go public," forming a corporation probably isn't worth the added expense. If its limited liability that you want, an LLC provides the same protection as a corporation, but the simplicity and flexibility of LLCs offer a clear advantage over corporations.

Finally, your initial choice of a business structure isn't set in stone. You can start out as sole proprietorship or partnership and later, if your business grows or the risk of personal liability increases, you can convert your business to an LLC or a corporation.

After learning the basics of each business structure and considering the factors discussed above, you may still find that you need help deciding which structure is best for your business. Call the attorneys at the Law Offices of Steven M. Adler, PLLC for your free consultation.

Legal Services
We Provide:
 
Estate Planning
Asset Protection
Elder Law
Estate Administration
Real Estate Law
Corporate Law
Guardianship
Litigation
Moving Violations
Personal Injury
Family Law
 
 

Long-Term Care Insurance

 

Long-term care provides the help you or a loved one needs to perform activities of daily living because of dementia or another form of cognitive impairment. In addition to custodial care, some people also need skilled nursing services. You can receive long-term care in a nursing home, assisted living facility, or in your own home.


The need for long-term care can arise at any time, regardless of your age. Older people generally use the most long-term care, but younger and middle-aged people sometimes need long-term care as well. Long-term care can be very expensive. $15,000 per month for a nursing home is not uncommon in the New York metropolitan area.  While home care may be less expensive than nursing home care, it is still very costly. Home care can include part-time skilled nursing care, speech therapy, physical or occupational therapy and home health aides.

 

Long-term care insurance can help protect you from the high costs associated with this type of care. Most long-term care policies pay a fixed dollar amount, which can range from $100 a day to $400 a day. In order to get the lowest rates, you should apply sooner rather than later. Your age and any medical conditions you have will affect your eligibility for coverage and how much it will cost. Under Federal law, you may also take certain income tax deductions for long-term care insurance premiums. In addition, some States may give a deduction or credit toward State income taxes for these costs.  
  
Traditionally, the annual rate of increase in the cost of long-term care services has risen more quickly than it has for other consumer services. This means the benefit you buy today may not be enough to cover higher costs in the future. Therefore, you should consider choosing a long-term care insurance plan with an inflation adjustment feature so that you can be protected against the rise in long-term care costs over time until services are needed.
   
Finally, it is important to note that if you have long-term care insurance, you may not need to liquidate all of your assets to fund care costs. Moreover, you may not need to transfer all of your assets to your children or to a trust in an attempt to qualify for Medicaid. With long-term care insurance, you can keep control over your assets and protect them for your heirs.

 

For more information regarding long-term care insurance or to receive a no cost estimate from a top notch insurance agent, please contact Steven M. Adler.

Strange but True! 

Till Krautkraemer's New York City beverage company MeatWater creates dozens of flavors of water for the upscale market of hearty gourmets who would like their daily salads, or shellfish, or goulash from a bottle instead of from a plate. Among his new flavors introduced in January, according to an AOL News report, were poached salmon salad water and a Caribbean shrimp salad water that can double as a vodka mixer. Old standbys include Peking duck water, tandoori chicken water, bangers 'n' mash water, and Krautkraemer's favorite, German sauerbraten water. [AOL News, 1-25-2011]

 

Lawyer Terry Watkins admitted to a judge in Faribault, Minn., in February that his client William Melchert-Dinkel did things that were "abhorrent," "sick" and "creepy," but that doesn't make him a criminal. Melchert-Dinkel has been charged with two felonies for counseling depressed people online on the techniques and virtues of suicide (for example, recommending positioning for a noose to a Briton who hanged himself three days later). (A judge's decision was pending at press time.) [St. Paul Pioneer Press, 2-25-2011]  

 

Another "negative cash-flow" robbery occurred in February, in Kansas City, Mo., as an unidentified man tried to distract the clerk at a gun store by laying $40 on the counter to buy a box of bullets, then pulling a gun and demanding all the store's money. The clerk thwarted the robbery by pulling his own gun (not surprisingly, since it was a gun store) and scaring the robber off -- while the $40 remained on the counter. [KMBC-TV (Kansas City), 2-19-2011]

 

Jose Demartinez, 35, was hospitalized in Manchester, N.H., in January. With police in pursuit, he had climbed out a hotel window using tied-together bed sheets, but they came undone, and he fell four stories. [WMUR-TV (Manchester), 1-10-2011]

 

Detected burglarizing a house in Summerfield, Fla., in January, Laird Butler fled through a window but not from police. The homeowner's dog had frightened Butler, who crashed through the glass, cut himself badly, and bled to death in a neighbor's yard. [WESH- TV (Orlando), 1-5-2011]

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The Law Offices of Steven M. Adler, PLLC are committed to providing their clients with the highest level of professional legal services at reasonable prices. Steven M. Adler, Esq., along with the rest of his law firm's highly competent support staff, gives all of his clients the personal attention and the legal expertise which they are entitled to receive. The Law Offices of Steven M. Adler, PLLC takes pride in the quality, effectiveness and efficiency of their legal services.
 
Law Offices of Steven M. Adler, PLLC
666 Old Country Road, Suite 605
Garden City, New York 11530
Phone: (516) 876-1105
Fax: (516) 794-0463
 
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