1.  Q:  What is the advantage of an LLC or a Corporation either C-Corp or S-Corp?

        A:  The main advantage of incorporating or forming a LLC is to protect personal assets such as bank accounts, stocks and bonds, recreational vehicles, and real estate other than homestead.  General partnership do not shield personal assets.

2.  Q:  Can one person be a corporation or an LLC?

        A:  Yes. One person can be a corporation or an LLC.  That one person would be the shareholder, board of director, President, Vice-President, Secretary and Treasurer, or member and manager in case of an LLC.

3.  Q:  What are the disadvantages of an LLC or a Corporation?

        A:  The maintenance and formality of an LLC or corporation is somewhat inconvenient compared to a sole practitioner. Further, a separate tax return will have to be prepared for the LLC or corporation in addition to the personal tax return, therefore a CPA is usually necessary.

4.  Q:  Are profits split according to the percentage ownership in the LLC or corporation?

        A:  Not necessarily, this is a common misnomer.  Profits do not have to be split in the percentage of ownership.  The board of directors can decide to pay out profits in the form of bonuses to the officers rather than to the owners.  Further, the board of directors can pay investors a percentage of profits on a per project basis or other arbitrary agreed upon criteria.

5.  Q:  Should I be a minority shareholder in my friends company?

        A:  If you are, you should require that you also be a member of the board of directors or a manager in an LLC; otherwise, your investment can be at risk. As stated in number 4 above, an owner cannot demand any return on its investment because the majority shareholder or member who is also likely the President, can take the profits out of the company as bonuses.

6. Q:  What is the experience of the Law Firm of Joanne M. Badeaux, P.C.?

           A:  For over 25 years the law firm has been involved in structuring, negotiating and preparing documents for incorporating, forming LLC's, succession planning, empoyment contracts, buy/sell agreements, non-dislosure and non-compete agreements, franchise reviews, and NASA subcontracts for 1000's of transactions.

For further information or to schedule an appointment, contact this law firm, Joanne M. Badeaux, P.C. at

(281) 486-4737. jmb43@law-frim.cc