Legal Question in Business Law in New Jersey

Re: Legal Protection

There have been Court cases in other states that suggest that at least in bankruptcy, a single member LLC doesn't offer as much protection as was previously thought. I generally suggest to clients that they have at least 2 members, even if one of them only has a small percentage of ownership. However, this is a developing area of the law and it's impossible to predict exactly how NJ Courts will rule in the future.

Even a single member LLC is still better than just owning the business in your own name. And under IRS Regulations you can be either an LLC or a corporation and choose sole proprietorship taxation if you are the only member or stockholder. If the are 2 or more, they can elect to be treated as a partnership or as a corporation under Subchapter C or S.

You should consult with a CPA or a Tax lawyer to determine which is the best way for you to go as far as taxes are concerned. As to forming the entity, there are lawyers who have considerable experience in that area of the law also.

Re: Legal Protection

While Dale may be correct about bankruptcy, I will be more general. A LLC will provide protection from most personal claims, but this is limited. If you were to give personal guarantees, the LLC would not protect you. If you were driving a car owned by a LLC, you could still be sued personally. In some instances, such as professional practices, you could still be sued personally if you were negligent. If suppliers of goods and services accepted the LLC, without personal guarantees, you would be protected. Following Dale's comments, if the business were to be highly profitable, I might suggest that other family members be included (like children, depending upon their ages). I frequently use a LLC for family tax planning. More information is needed, about what you specifically intend to do through the LLC, to provide more comprehensive answers and suggestions. If you have questions, you can contact me directly.

Re: Legal Protection

As you can see, attorneys like myself are VERY interested in talking to you and answering your question. I will add that you really need a decent accountant (should be a CPA) and an attorney to set up your business properly, and make best use of the law. This will give you the best protection from claims, the best tax planning for both income tax and estate/gift tax. You should chose an attorney who is near you, who also has a decent amount of experience setting up small businesses like yours.

I am at 973 890 0400.