Ohio Business Law Attorneys
Your attorney is a very special part of your business planning team. We can assist you in organizing your company as a limited liability company, corporation, partnership or any other business entity. We can handle your business litigation, merger, acquisition or any of your shareholder agreements, including the very important buy-sell agreement. The business entity you choose will impact the protection that you receive for your other personal assets. Let us help you with your decision.
To arrange a consultation, please call Dungan & LeFevre at 937-770-6225 or complete our contact form. Someone from our office will reach out to you as soon as possible. With offices in Troy, we represent clients throughout Ohio. Our business law attorneys William McGraw, Steven Justice, Sarah Worley, Michael Scarpelli and Michael Rieman are ready to help you.
Choosing A Business Structure: Corporation Or LLC?
Many confused clients have approached our law firm regarding the proper choice of entity for his or her new business. They are perplexed because they have received conflicting advice from numerous acquaintances. One person told them that a limited liability company was the way to go. Another person told them that any new venture should be a Sub-S corporation.
Generally, it is safe to say that our hypothetical client is being steered in the right direction when they are told to form a business entity that provides a full liability shield for their personal assets. However, in choosing an entity, the client should consider the significant differences between corporations and limited liability companies under Ohio business organization laws.
Limited liability companies are easier to operate and maintain. Corporation law requires that the shareholders hold an annual meeting, but the laws concerning limited liability companies do not.
Compared with corporations, LLCs may provide greater asset protection. The collection remedies of an LLC member’s judgment creditor, as the remedies relate to the member’s ownership interest, may be limited to the so-called “charging order.” To the extent the membership interest is charged, the judgment creditor has the rights of an assignee of the membership interest. Therefore, a judgment creditor would only have the right to receive distributions of cash and other property and allocations of profit, losses, income, gains, deductions, credits or similar items to which the member would have been entitled. Thus, the creditor obtains no voting, agency or other noneconomic rights of the member.
On the other hand, corporations have distinct advantages over limited liability companies. Corporations have an established history of familiarity with Ohio law. Ohio’s corporate law has been in effect for many decades, while Ohio’s limited liability statute was enacted in 1993.
Corporations also provide greater protection for minority owners. Unless the corporation’s Articles of Incorporation are amended to eliminate cumulative voting rights, the shareholder has the right to accumulate its voting power for the election of directors. In other words, each shareholder may give a directorial candidate as many votes as the number of directors to be elected multiplied by the number of his or her votes, or the shareholder may distribute his or her votes on the same principle among two or more candidates. This provision is not within the Ohio limited liability company statute. Also, the statutes provide that during insolvency there are limitations on any distribution or dividend, and there is a statutory liability of directors and shareholders for unlawful loans, dividends or distributions.
The choice of entity for an Ohio operating business generally boils down to the well-established corporation versus the relatively new limited liability company. The attorneys at Dungan & LeFevre can assist you in your decision and the structuring of your business entity.