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Ask an Attorney!

This is a forum for entrepreneurs to ask an attorney any question they might have about their business.

The attorney, Sam Wayne of Madison Business Law, LLC, Madison, Wisconsin, will answer generally every question asked on this forum, in public if appropriate, and privately if not.

Please note that Sam's answers will not consist of legal advice, but only information, and that any exchange- your question and Sam's answer- (or series of exchanges) does not establish an attorney-client relationship with Sam Wayne or with Madison Business Law, LLC. Of course, further off-site exchanges may create such a relationship.

Lastly, there are many situations where hiring an attorney is advisable, and some where doing so is absolutely necessary. This network is not intended to replace attorney representation.

Network Leader: Sam Wayne

Networks > Ask an Attorney!

Lindsey M. Donner Hi Sam! I have a similar question to Rachel's. I too incorporated in DE and now work in CA. I plan to register with the Cali S.O.S as a foreign LLC. Do I need to file an Amendment with DE to ...MoreHi Sam! I have a similar question to Rachel's. I too incorporated in DE and now work in CA. I plan to register with the Cali S.O.S as a foreign LLC. Do I need to file an Amendment with DE to change my principal office address (in yet a 3rd state)? Mine is a web-based business so I have a home office but no clients visit me; I rent, so I do not want to spent hundreds of dollars on an Amendment until/unless necessary. I was hoping to wait until I have a more permanent address or an actual office.

2 weeks ago from Ask an Attorney!

Sam Wayne: Hi Lindsey! Sorry for the delayed response, I'd been traveling. If your principal office address is in DE then you don't have to (and shouldn't) ...MoreHi Lindsey! Sorry for the delayed response, I'd been traveling. If your principal office address is in DE then you don't have to (and shouldn't) change it. If it's in another state and you are no longer registered there and can no longer receive mail there, then it's probably worth it to file the amendment. The change would cost you $200 (paid to Delaware's Division of Corporations). However, if you want to remain organized as a Delaware LLC, I believe you need to keep your Delaware address- so a change would actually be problematic.

Hope that helped!

Sam
2 weeks ago

Ryan Healy Hey Sam, I was talking to a friend the other day and he asked what the difference between an LLC and an S Corp is. I have a vague idea, but what's the legal definition?

6 weeks ago from Ask an Attorney!

Sam Wayne: Hey Ryan- someone could probably write a book about the differences between LLC's and S-corp's, and I have to note that business entities like ...MoreHey Ryan- someone could probably write a book about the differences between LLC's and S-corp's, and I have to note that business entities like this are created by states, not the federal government, so the differences will vary across borders (except for IRS treatment).

Generally, both entities provide its owners with limited liability (which, depending on circumstances, is not always limited).

The basic decision is a trade off between simplicity (LLC) and scale-up-ability (S-corp).

6 weeks ago

Sam Wayne: S-corps also have a tax advantage if your earnings fall within a certain sweet spot in relation to self-employment taxes (similar to FICA). This ...MoreS-corps also have a tax advantage if your earnings fall within a certain sweet spot in relation to self-employment taxes (similar to FICA). This article I wrote for my newsletter and then posted on the firm blog sums it up pretty well. Let me know if you have any other questions.

http://madisonbusinesslaw.blogspot.com/2010/01/arranging-your-business-f...
6 weeks ago

Daniel Saynuk I hope you can help me. I want to start a business but want to trademark the name. Should I trademark the entire name such as ""Business Name LLC" or will I be protected if I just trademark ...MoreI hope you can help me. I want to start a business but want to trademark the name. Should I trademark the entire name such as ""Business Name LLC" or will I be protected if I just trademark "Business Name" and then add LLC after I've formed the entity & file the form to transfer the ownership of the trademark from myself to ownership by the LLC?

7 weeks ago from Ask an Attorney!

Sam Wayne: The first question I'd ask is "is it worth it to even file for trademark protection?" This costs at least $275, and probably much more because ...MoreThe first question I'd ask is "is it worth it to even file for trademark protection?" This costs at least $275, and probably much more because you'll want to hire an attorney to do it right. It makes sense to file for this protection if the name is the "perfect" name for the good or service or if you've built considerable goodwill into the brand (name) that you'd be protecting, but might not be worth the money otherwise.

Even if you don't file, there are still lesser common law protections.
7 weeks ago

Sam Wayne: In that case, the thing to do is to trademark the "Business Name," and you'd write "Business Name" is a trademark of "Business Name LLC." You can ...MoreIn that case, the thing to do is to trademark the "Business Name," and you'd write "Business Name" is a trademark of "Business Name LLC." You can see an example of this at the bottom of this website: www.chrysler.com. (I picked Chrysler because it's the biggest LLC I can think of off the top of my head).

Hope that helps!
7 weeks ago

erichfriedman Question: What are some great research sources for more info on trusts as business entities?

7 weeks ago from Ask an Attorney!

Sam Wayne: Your local small business attorney!

I haven't found much online about the use of trusts in lieu of incorporation or LLC ...MoreYour local small business attorney!

I haven't found much online about the use of trusts in lieu of incorporation or LLC organization. I can tell you, though, that the "trust" designation requires that the people or person in charge of the trust must not be identical to the beneficiaries of trust. Therefore, to use a trust to run a business, there must be some difference between those controlling the business and those benefitting from the business.

Sorry Erich, wish I had a better answer.
7 weeks ago

erichfriedman: Dear Sam: Thank you for your candor, if you come across any specialists in business trusts, please let me know.
7 weeks ago

Rachel Vincent Sam, you are awesome for doing this. I have a quick question. My company, Kikini, incorporated in Delaware, but filed for our offices in California (filed all the paperwork there as a foreign ...MoreSam, you are awesome for doing this. I have a quick question. My company, Kikini, incorporated in Delaware, but filed for our offices in California (filed all the paperwork there as a foreign corp). But now we have just moved our offices to Seatte, WA. Where can I go to change our address as far as the appropriate gov't entities are concerned? Thanks!

7 weeks ago from Ask an Attorney!

Sam Wayne: Thank you Rachel!

You want to notify the authorities in all three states. In each of those states you want to go to the Secretary ...MoreThank you Rachel!

You want to notify the authorities in all three states. In each of those states you want to go to the Secretary of State website where you should be able to: 1) DE: file an address change, 2) WA: register as a foreign corp. and (unless you're going to continue to do business in CA) 3) CA: dissolve your foreign corporation in CA (or just let it lapse).

Other states have different contacts. Here in WI, it's the Dept. of Financial Institutions.

Hope that helped!
7 weeks ago

Z. Kelly Queijo Great idea for a forum, Sam! At what point does a sole proprietor decide it's time to become a corporation?

7 weeks ago from Ask an Attorney!

View 3 older replies

Sam Wayne: I hope that helped!
7 weeks ago

Sam Wayne: Hi Kelly,

Following up, I think I should have mentioned that another option available to sole proprietors (and highly recommended) ...MoreHi Kelly,

Following up, I think I should have mentioned that another option available to sole proprietors (and highly recommended) is the LLC, or limited liability company. The LLC protects your personal assets, but does not require nearly the level of formality that the corporate form does. Generally, a separate bank account and ledger should do. The LLC does not have the tax advantage I mentioned, though. If you like, you can contact me privately to discuss what would work best for you.
7 weeks ago

Ryan Healy Great network, Sam. Looking forward to learning all kinds of great legal tips. Attorneys are too expensive!

7 weeks ago from Ask an Attorney!

Sam Wayne: Thanks Ryan! We're expensive because we're so freakin' important :).

I really hope I can help people out with what they need, but ...MoreThanks Ryan! We're expensive because we're so freakin' important :).

I really hope I can help people out with what they need, but I have to say that this network is NOT intended to replace actual legal representation.
7 weeks ago

Ryan Healy: Don't worry I won't be making any rash legal decisions based on your feedback!
7 weeks ago

Brad Holt Yeah Sam this is great! I'm a video producer (sole proprietor) in need of a million dollar liability insurance policy. Where do I start?? I've also got all my paperwork filled out to become an ...MoreYeah Sam this is great! I'm a video producer (sole proprietor) in need of a million dollar liability insurance policy. Where do I start?? I've also got all my paperwork filled out to become an LLC...but some people have been telling me it's not very important or useful for me...help?
Thanks!!

7 weeks ago from Ask an Attorney!

Sam Wayne: Thanks Brad! As far as insurance goes, there have got to be numerous insurance agents in Denton, and if not then in the greater DFW area. ...MoreThanks Brad! As far as insurance goes, there have got to be numerous insurance agents in Denton, and if not then in the greater DFW area. Obviously I can't give you a quote, but a million dollar policy shouldn't cost too much. Also, I'm not sure, but filing as an LLC might bring down your insurance costs.

Filing as an LLC in Texas costs $300. Generally, people organize as an LLC if they think there's a good chance that they'd get sued for more than or for things outside the scope of their
7 weeks ago

Sam Wayne: insurance coverage. I don't know your business well, and like I said, I'm only giving general information out to the network. Therefore, I'd ...Moreinsurance coverage. I don't know your business well, and like I said, I'm only giving general information out to the network. Therefore, I'd recommend either hiring an attorney to help, or, if you're strapped for cash, trying to think of situations in which your business might have liabilities over and above your insurance coverage and how likely those situations are to come to pass. That should give you a general idea. You can contact me off-list if you like.

I hope that helped!
7 weeks ago

Sam Wayne created the network Ask an Attorney!

7 weeks ago