Howard & Hardyman LLP

Rockford Illinois Business Law and Estate Planning Legal Blog

Business formation types that limit personal liability

Regardless of the nature of the type of business you are looking to establish in Illinois, you will find that there are areas involved in its operations that could potentially expose you to liability. For some types of businesses, such as those involving food service or transportation, the risks are relatively obvious, but virtually every type of business out there has at least a few areas where it might be at risk. At Howard & Hardyman LLP, we recognize that certain business structures can help protect you against personal liability, and we have helped many business owners create business structures well-suited to their needs.

Per QuickBooks, there are two main business structures that can protect you if someone sues or files a judgment against your business. The first is the limited liability company. As its name implies, a limited liability company helps protect your personal assets in the event that your business gets into trouble, and it is a relatively easy business structure to create and operate.

What is probate?

For those in Illinois taking the responsible step of writing a will, the term "probate" can be confusing. According to FindLaw, probate refers to the process of legally transferring your property after you die. However, the term can also refer to the court in which this process takes place. The purpose of probate is to ensure the validity of your will, settle any debts you leave behind and distribute your assets and property according to your wishes in accordance with the law. Because probate can be an expensive and time-consuming process, however, many people try to avoid it. 

The probate process includes several basic steps. First, the executor or court-appointed administrator of your estate collects your property, including any dividends or income. Then the executor or administrator pays any taxes, debts or claims your estate owes. In most cases, the executor or administrator of your estate will then transfer your property in the manner you have stipulated.

3 tips for writing good business contracts

Entering into contracts is a crucial aspect of running a business. Whether you enter into an agreement with another company or have an employee sign a contract, you must give each contractual relationship careful consideration. If you do not follow strict procedures, and the relationship goes south, you may get stuck in legal trouble. 

Each contract you sign should protect the interests of your organization. Here are some good strategies for creating contracts for your business.  

How can I equally distribute my assets to my children?

As an Illinois parent, you want to be fair to each of your children when, upon your death, your assets are distributed to them. But as you draft your will, you find problems with giving your children equal shares of what you have. For instance, you may own a sailing ship but two of your children enjoy boating activities. So how can you give your children an equal share of your boat when you possess just one boat? Sometimes it is not possible to equally distribute all of your assets to your children, which can put you in a troublesome situation.

An article run in U.S. News and World Report recommends that people in this position ask their children for their input. Make a number of things clear to your children when you talk to them. First, point out that a fully equitable distribution of your assets is not possible given what you own. Whether it is a piece of art, a television set, a car, or jewelry, you have to acknowledge that only one child could receive each of these assets.

What to consider when creating the name of your business

There are many important decisions that go into creating an Illinois business, from the structure of the company to the responsibilities of the people who run it. However, keep in mind that you should put just as much consideration into what you would actually call the business. In fact, the wrong name for your business might cause you some legal problems down the line. 

As Entruepeuner.com points out, the name of your company should sound pleasant to the human ear. You do not want a business name that sounds too grating or is hard for a person to speak. Consider your advertising plans. How well do you think your company's name will sound when spoken on the radio or television? Remember that your name has to hook the ears of media listeners or viewers. An abrasive name will likely turn off potential customers.

Buyout agreements control who you sell your business to

As an owner of an Illinois small business, one of your top concerns should be the survival of your company if a partner in your company decides to leave, or if the partner dies, or any number of events occur that make it impossible for the partner to retain ownership in the company. If there is no exit strategy in place, the value of your company could be disrupted or you may end up losing the company completely. This is where buyout agreements come in.

A buyout agreement, also known as a buy-sell agreement, is a document that business owners should draft early on to determine how a partner’s ownership interest will be sold when a partner wants to leave, is incapacitated, or dies. One of the important components of a buyout agreement is that you can control who is eligible to buy a partner’s ownership.

Defining the role of an executor

Illinois residents who are preparing their final will and testament should become acquainted with the role of an executor. An executor will be the person in charge of carrying out the will once the testor passes away. The duties of an executor are many and varied, and whoever is picked for the job should be trustworthy and able to carry out the duties of the position.

According to Illinois law, an executor does not need to be a financial or legal professional. The only requirements under Illinois law are that the executor be at least eighteen years old, is a United States resident, is of sound mind, has not been convicted of a felony, and is not disabled. Thus it is up to the person planning a will to evaluate the skills of an executor candidate to determine if that candidate is qualified.

Why you need an estate plan

It can be easy to put off estate planning until later. After all, considering what will happen after your death is not exactly pleasant. But while it may be somewhat uncomfortable, creating an estate plan is absolutely necessary for everyone, no matter your age or wealth. 

You should have a will at the very least. Depending on the scope of your estate and the complexities of your family, you may need a more robust plan. In any case, here are the top reasons you should start estate planning now.

Business succession planning - start today

It may seem counterintuitive to plan for business succession when a company is just getting off the ground, but experts recommend it. So when busy Illinois entrepreneurs start setting things in order for their opening days, thinking through who will take over the business some day is just as important as planning who will get it started.

The U.S. Small Business Administration has recommendations for this process, including the kinds of questions company founders should ask. Because, according to the SBA, profitable companies are easier to sell, it is imperative to set the business up for success from the start. Owners should question how they will maintain the financial strength of their organization through the years so that when it comes time to turn it over to others, it will continue to thrive. 

Starting a business off on the right foot

One of the first things our clients learn here at Howard & Hardyman LLP is that we are the type of firm that wants to see everyone who comes through our door succeed. The healthier our Illinois business partners are, the better we feel — it is as simple as that. 

We believe the best way to keep a business healthy is to start it off the right way. That means, among other things, choosing the right incorporation type, or ownership structure. This decision affects two critical issues central to the risk profile and profitability of any business:

  • Personal liability for you and your partners
  • Taxation, both on capital gains from any sale you plan and your annual profits
  • Illinois State Bar Association
  • WCBA | Winnebago County | Bar Association | Established 1996
  • United States Court Of Appeals | Seventh Circuit
  • State Bar of Wisconsin
  • United States District Court For The Northern District Of Illusions
Serving Northern Illinois For Decades
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