Doing nothing changes…….Nothing.Request Your Legal Consult Here.
Michigan attorneys who have both practical business experience as well as legal expertise are rare. David Soble is one of these exceptions. He is a business owner, former “big bank” insider, active real estate investor and of course, lawyer. He brings over 30 years of real life business and real estate experience to the table for his business clients.
Operating a business is not easy. Business owners have to regularly deal with issues as mundane or as complicated as: choice of business entity, business tax consequences, organizational documents, operating agreements, partnership agreements, employment contracts, consulting contracts, non-compete agreements, compliance with bank and consumer protection laws, commercial negotiations, resolution of stockholder/partner/LLC disputes. This is not an exhaustive list. Whether you own a business or are opening a business, you owe it to yourself to speak with David Soble and his “proven resource” of business colleagues who can effectively address your concerns.
Different Types of Entities:
1. Sole Proprietorship or Sole Proprietor DBA: A sole proprietorship is a business structure with one owner. A majority of small businesses in the United States are sole proprietorships because it is the easiest to set up and maintain. If you do nothing to choose a legal structure you will default to a sole proprietorship because there is no paperwork to file apart from additional schedules on your personal income tax returns. However, if you plan to operate the business under a name that is not your personal name, then you must file for an assumed name “DBA” (doing business as…) certificate with the county clerk of the county where your business is located.
There is no legal separation between the business and the owner in a sole proprietorship. This means that as a sole proprietor you will have unlimited responsibility for the liabilities and debts of the business. For instance, if the business cannot pay money owed to a vendor, that vendor may sue you individually. It also means that any income or losses of the business are accounted for on your personal tax return.
2. Partnerships: there are two types of partnerships: General and Limited. A general partnership is similar to a sole proprietorship except that it has two or more owners. Like a sole proprietorship, it is easy to set up and maintain. There is no paperwork to file unless you are operating the business under a name that is different from the personal names of the owners in which case you need to file a “DBA” (doing business as…) certificate with the county where the business is located. It is also highly recommended that the partners create a partnership agreement that addresses roles, responsibilities, and contingencies, in order to avoid disagreement and conflict between the partners. In a general partnership the owners have unlimited liability for the debts of the business. This means that even though the partners share the profits equally, each partner is 100% responsible for any debts of the business.
A limited partnership has one or more general partners and one or more limited partners. The general partner(s) control and operate the business and are 100% liable for any debts of the business. The limited partner(s) do not participate in the operation of the business and their personal liability is limited to their contribution to the partner- ship. Typically a limited partner is an investor.
In order to form a limited partnership in Michigan, you must file a certificate of limited partnership with the Michigan Department of Licensing and Regulatory Affairs (LARA). If a limited partnership does not follow statutory requirements it will be treated as a general partnership so you should consult with an attorney before creating a limited partnership.
3. Limited Liability Company (LLC): An LLC business entity was created to combine the advantages offered by both partnerships and corporations. An LLC provides the members (owners) of the business limited liability protection like shareholders in a corporation combined with the simpler operation and pass-through tax characteristics of a partnership. An LLC is created by filing Articles of Organization with Michigan Department of Licensing and Regulatory Affairs (LARA) along with the appropriate filing fee. Like a corporation, an LLC will be responsible for paying an annual fee with LARA to continue its existence.
In addition to the Articles of Organization, members of an LLC are encouraged to establish an Operating Agreement. Particularly in a multi-member LLC, this is the basis on which you establish consistency and understanding about how the company will be managed and decisions made, duties of members, what contributions are required from members, how profits and losses will be calculated, limitations of liability and protection of members, and how members might be added, terminated or exit. The State of Michigan does not require an Operating Agreement to be filed in order to form an LLC, but rather this is a private document which governs the relationship of the members and may be amended by the members from time to time.
By default, a single-member LLC is taxed as a sole proprietorship and a multi-member LLC is taxed as a partnership. But the member(s) may elect to have the LLC taxed as an S-Corporation or a C-Corporation. Tax election is separate from entity choice, and so members should consult a tax attorney or CPA with any questions and to maximize tax planning opportunities.
Do You Have A Business Law Concern?
Call Us For Your CONSULT
At 888.789.1715 or
Complete This Form.
Frequently Asked Business Law Questions
Top Business Law Questions.
Business is already complicated without having to endure legal headaches. Contact our business attorneys today!
How many Investment properties can I put in one Limited liability company?
As many as you’d like to put under one corporate “shield.” There are other considerations you should take before doing so, such as the locations of the properties, or the property types. Consult with a real estate and business attorney before you proceed.
What is an operating agreement?
An operating agreement is a contract that sets forth the responsibilities between members of a limited liability company. Having an operating agreement is required if you are doing business and want the legal protections afforded by the state in which you are incorporated.
Do I really need a written agreement when opening a business with a family member?
Yes. Setting out your business goals and expectations with your business partner in writing is a good idea to protect against disputes and problems at a later date. Written agreements memorialize the oral representations made between parties. Nothing is more disappointing (or expensive) than when family members or friends fight over a business arrangement and there is nothing but a verbal agreement for the parties to rely upon.
What is better to form, a limited liability company or a c-corporation?
Which corporate formation one should select is based in part, upon the number of business owners, their legal needs and their tax status. Consult with a business attorney beforehand.
Should I sign for a business loan as an individual?
If your business is taking out a business loan and you sign for the loan individually, you essentially become a ‘co-signor’ or ‘guarantor’ for your company’s loan obligation. Consult with a business attorney before you endorse any lending documents to avoid further and unnecessary legal and financial liability.
A Word About Small Business Legal Protections
Obtain Your Free Copy of Soble’s Newest Business Resource:
How To Protect Your Legal & Financial Interests When Doing Business With Family Or Friends
Now you can reference Soble’s straight forward approach to contracting and forming agreements between family or friends. Filled with case studies and legal commentary that is easy to comprehend, relatable, and instructive.
“I wish I had read this book before I got into business with my good friend and his sister. It all seems good until it isn’t. David hit the nail on the head. I read the book and found myself nodding my head the whole time. There are so many things that I could have done to protect myself. I’ll say it again. I wish I had read this book…..” B. Abrams, Brownstown, MI
Why Clients Choose Us
Know the Difference.
Former Big Bank "Insider"
HigHest Peer and Client Ratings
24 Hour Response
30 +Years of Legal & Business Experience
Affordable & Approachable
Innovative & Creative solutions
Other Legal Issues We Handle
We Reduce Legal Exposure & Financial Risks
Real Estate Law
Real estate and finance law are their own legal specialties. So how do you determine which attorney you should work with...
Contracts regulate expectations between parties. Working without a contract is comparable to walking a high wire without a net.
David Soble has decades of experience being a 'big bank insider." He and his team are uniquely situated when it comes to handling our clients stressful financial...
We regularly and successfully litigate real estate and contract issues. While we prefer to first resolve our client's issues amicably, we can and will escalate....
To most people, their home or other types of real estate is usually the most valuable asset that they own. We help our clients protect these assets and ensure that they are properly...
What Happy Clients Say...
Dpn't take our word for it! We;re one of the best reviewed law firms in the community.
See hundreds of our reviews on Google, Avvo, Social Survey and Linked In.
David, I anguished for months over my problem. Had I not called you, I don't think I would have gotten it resolved. In less than 2 weeks you negotiated a fair settlement for my business. I'm so happy and my employees are happy. Thank you!
Rhoda St. Luce
"Attorney David Soble lives up to his firm's namesake, "Proven Resource." I appreciate knowing that when my clients need a diligent and responsive real estate or contracts attorney, I can easily make the referral to David, David is well worth having on your side."
Financial Adviser, Brighton, MI
"David is a highly reliable resource for real estate and lending cases. As a real estate lawyer and successful investor, he not only "talks the talk," but also "walks the walk," providing his clients unparalleled insight on how the law directly affects their daily business success. When "the situation is critical" call David."
Environmental Attorney, OH
"David Soble is an unmatched resource for all things related to real estate finance and law. He's dealt with nearly every type of transaction, loan, property, lender, seller, and buyer. He's seen it all and knows the intricacies of creating a successful resolution for his clients. If you need creative and determined counsel, I highly recommend David."
Business Mgt. Consultant
"As a busy small business operator, I can tell you that David's legal efficiency and his sensitivity to our financial resources is very much appreciated. His real estate advice is spot on and I know that when working with him that I am getting a great return on my investment. When in doubt, call David. He's worth every penny!"
HVAC Owner / Operator
"If you have a legal problem with your bank loan or mortgage, you can't go wrong by calling David Soble. His legal experience in the real estate and lending community is exceptional. I have had only positive experiences. His approach to client service is an added bonus."
Our Latest Blog Posts
Is a Mortgage Modification Right for You? These are unusual economic times to say the least. Are you behind in mortgage payments? Is your lender threatening foreclosure actions against you? Waiting on your lender to reach out to you with help is not going to...
James from South Lyon wrote in last week. He and his wife are buying a new construction home in South Lyon, MI. They are having a major disagreement with the builder about the integrity of the foundation. They don't want to move forward and they want their $55,000...