Small Business / TaxTestimonialMorris E. Fischer, LLC, did an excellent and professional job in handling my partnership dissolution. Mr. Fischer showed a mastery of the issues involved in a partnership break up, both professional and personal, and helped me move my life forward. He provided the right advice, negotiated a deal for more than I expected and completed these services in an efficient and affordable manner. I would highly recommend his office for your professional needs. Abee Sidique, Owner, Seska Lounge, Bethesda, MD Frequently Asked QuestionsWhy Should I Hire A Lawyer to Incorporate in Maryland or Washington, D.C. ? Aren't there incorporation kits that I can order right over the internet? This question really underscores why someone should incorporate his or her business in the first place. One of the primary reasons many people choose to incorporate their business in Maryland, Washington, D.C. or anywhere is that they are looking to shield themselves as much as possible from becoming personally liable for corporation debts or other liability. For example, a car mechanic who owns a garage will not want to be personally responsible for personal injuries that occur on his or her premises. A jury could potentially award such an injured person millions of dollars. If the business owner did not set up his or her business in a way that legally shielded him or herself from personal liability, that owner may have to pay the judgment out of his or her own property, which in many people's situations, would force that person into filing bankruptcy. Other reasons for incorporation are simpler. It may be the most profitable entity in which to run a particular business. Maryland has an entire body of law pertaining to corporations, the Corporations and Associations Article. Washington, D.C. has Title 29 of the District of Columbia Code which governs corporate law. Each of these articles and titles contains numerous rules that corporations have to follow to retain their corporate status. It's quite possible that if the corporation failed to follow certain laws, then that corporation would lose its corporate status. Obviously then, the great advantage a business owner who utilized the services of an attorney to incorporate over a business owner who simply used a kit are immense. To list a few, first, the attorney would be able to describe to the business owner all of the necessary procedures for the corporation to retain its status. Included, is that the corporation owner can lose his or her corporate status through certain kinds of actions involving negligence and/or undercapitalization. An attorney will be able to advise the client forming the corporation how to avoid this occurring. Second, the attorney would be able to draft documents the corporation would need with respect to shareholder agreements and voting issues. Third, issues will surface involving things like declaring dividends, amending the corporation's by laws and issuing stock. All of these events trigger legal issues that the business should be positioned to deal with. Forming a corporation is much more than filling out some forms. There are strategies in accomplishing tasks such as: (a) minimizing tax liability; (b) management of shareholder control; (c) insuring that the corporation will generally act in accordance with the business' original vision or purpose; and (d) establishing the amount of and the kind or kinds of stock the corporation will issue as well as the amount of par value for the stock that makes most sense for a particular business. What is a corporation anyway? A corporation is an organization of either one individual or multiple individuals created under authority of law, with a continuous existence independent of the existences of its members, and powers and liabilities distinct from those of its members. Another way of explaining is that it is a business entity which is separate and distinct from the persons who either run or own it. The major parts of a corporation are: (a) the Board of Directors; (b) the Corporation's Officers; and (c) the Shareholders. Each part has a distinct role in the corporation. The Board of Directors are primarily the corporation's managers who approve the company's major business decisions. It is Directors who approve dividend declaration, amendments to the corporation's By Laws and Aritcles of Incorporation and any other highly significant transaction affecting the corporation's very essence. Corporation Officers are the people who run the Corporation's day to day operations. They are appointed by the board of directors. These are people like the corporation's President, Treasurer and Chief Financial Officer. Aside of the decisions for which Directors are responsible, Corporation officers generally run all other company business. Stockholders are the persons who own the corporation. They have the right to elect directors, vote on major corporate actions (such as mergers) and share in the profits of the corporation. However, stockholders who are not Officers do not have management rights in the corporation. Shareholders must hold at least one annual meeting to elect directors in which notes or “minutes” must be maintained. The voting power of individual shareholders can depend upon not only the number of shares a given shareholder possesses, but also by the kind of stock owned by such shareholder. A corporation can set up different classes of stock, with different kinds of voting rights. Also in the absence of any agreement to the contrary, a shareholder can sell or gift his or her shares to anyone and that new person inherits the rights of the previous shareholder. Therefore when setting up a corporation, it's important to have a blue print of all the people of involved and their relative degree of management control. Is the structure and rules affecting corporations within a given state pretty much the same? The short answer is no. There are many different kinds of corporations. For example Maryland provides for a professional corporation and a close corporation. For tax purposes, the Internal Revenue Service recognizes a Subchapter “S” corporation which provides certain tax advantages for business owners. There are also Not for Profit Corporations. Each kind of corporation may have certain laws that are unique to that kind of entity. As such, it's important to have a fundamental understanding of the relevant laws before incorporating. Is incorporating my business the best thing for me? Not necessarily. There are other business entities, such as sole proprietorships, partnerships and Limited Liability Companies that each business owner should consider. Each of these entities may serve the business owner's needs more practically than a corporation. For example a Limited Liability Company, like a corporation, is a separate and distinct legal entity. One of it's primary advantages is that its owners are not personally liable for the debts and liabilities of the LLC. A Limited Liability Company can be taxed either as a "pass-through" entity, like a partnership or sole proprietorship, or as a regular corporation. Generally speaking because a Limited Liability Company can be set up as a pass-through entity, its owners can avoid double taxation, distinct from most kinds of corporations in which the entity is taxed on its profits and then individual shareholders are taxed again when dividends are distributed. What types of issues should be covered in a partnership agreement? There are numerous issues that partners should cover in the business planning stage. These include: (a) how profits will be divided; (b) how losses will be divided; (c) management control by each partner; (d) defined duties and responsibilities by each partner; (e) the length of the agreement; (f) how the agreement gets amended; (g) the scope of that which the business will do; (h) who retains the business' client base in the event the partnership fails; (i) ownership of trade secrets; and many, many more issues. It's always easier for partners, incorporators or shareholders of a Limited Liability Company to meet with a third party to be made responsible for drafting an agreement that covers all major potential issues that a business organization will face. This will also provide some insurance against certain professional and personal “fallings out” partners may endure upon the business' dissolution. It's far easier to prepare an agreement at the outset when the partners are getting along than during periods of conflict, particularly when the partnership dissolves. What are some major legal issues an entrepreneur should be aware of before starting a business? In addition to the selection of a corporate entity, there are many legal issues that entrepeneurs should consider in starting a business. These include:
Small businesses face many challenges. The selection of a business entity is of the most important decisions a small business can make. In addition to the many legal issues involving contract and business law, numerous tax issues arise. Our office assists small businesses with a range of issues including, contract review, commercial litigation and tax planning. We are a proud member of the Bethesda Chamber of Commerce. Attorney, Ralph E. Winnie, Jr., who is instrumental in our office's small business department, has served as tax counsel for Washington Mutual Government Relations where he analyzed tax and appropriations law and participating as the company representative in various coalition and industry groups. As the former of Director of Government Relations at Hume & Associates, Mr. Winnie advised clients on a wide range of international tax issues involving regulatory agencies. Our office understands that many small businesses face legal issues involving business finance, access to capital and relationships with lenders which may be integral to the success of any small business. Avoiding disputes with customers and suppliers is a key concern among owners, as they divert attention away from the focus of doing that which that business does best. We have serviced small business clients including an international import export company, a pharmaceutical research company, and wholesale sales companies. We provide the look and feel of a big office, while providing the individualized attention of a small law firm. One of our small business clients put it best. He explained that his previous law firm had three partners, several associates and paralegals working on his contract issues. That looked very impressive to him, until he got the bill for all of those people’s time. Corporate Clients Our Law Firm Has Represented North American Recruiting, Inc. Lookinglass, Inc., Nostalgia, Inc. Apass Security, Inc. Oxford Outcomes, Ltd. Lightbars, Inc. Zinder Anesthesia Associates, Inc. Ingenious Medical Solutions, LLC. Advanced Defense Technologies, Inc |
Morris E. Fischer
Attorney at Law
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Morris E. Fischer, Attorney at Law confidently represents clients throughout Washington, D.C. and Maryland, including the communities of Bethesda, Baltimore, Silver Spring, Laurel, Chevy Chase, Gaithersburg, Vienna, Bowie, Frederick, Barnesville, Leesburg, Sykesville, Brookeville, Glen Echo, Montgomery County, Prince George's County, Anne Arundel County, Howard County, Carroll County, Baltimore County, and all of the surrounding areas.