Understanding the Basics of Business Structures

September 29, 2011 by · Leave a Comment 

By Adil Daudi, Esq.

business-structure-basicsRecently, I was approached by a client who was interested in starting a business, however he was curious to learn about the different business structures available, and which would be most suitable for him. Considering this was not the first time I have addressed such an inquiry, I felt it prudent to elaborate on the various structures and explain the differences between each.

Please be aware that this is not a comprehensive description of the structures and it is always advised to speak to an attorney who would better be able to provide sound advice on which structure is most suitable for your particular needs, expectations and business.

One of the most common misconceptions when it comes to creating a business is that many feel that an incorporation is automatically the best structure to use; however, that is not always true. In order to fully understand why, or why not, an incorporation is most applicable, it is important to get a basic understanding of the other available business entities.  

In Michigan, there are three common business structures that owners can typically choose from: Partnership/Sole Proprietorship, Corporation, and Limited Liability Company.

1. Partnership/Sole Proprietorship: The major difference between a partnership and a sole proprietorship is in the number of owners. In a sole proprietorship, there is essentially only one owner; hence the word “sole.” On the other hand, in a partnership, it is comprised of two or more owners who come together with the intent of advancing their mutual interest.

Depending on the specific type of business you are operating, creating a sole proprietorship or a partnership is not always recommended. Under either of these structures, you, the business owner, are responsible for all taxes. However, the method in how you file your taxes does not differ from your current procedure, as the income received by your company would simply be inputted in your personal tax returns.

However, probably the biggest drawback with a sole proprietorship and partnership is that in the event your company is involved in any legal action, you are ultimately responsible for any and all judgments, whereby your business assets and your personal assets can be seized to satisfy any judgment. 

2. Corporation/Limited Liability Company (LLC): One of the biggest benefits of setting up a corporation or an LLC is that it reduces the exposure of the owners and their assets in the event of a legal action. Because corporations and LLC’s are considered separate entities, requiring a separate tax ID number, a separate tax return, the only assets that can be seized for judgment are the assets owned by the corporation/LLC; therefore, the owners are not held personally liable, and thus have their assets safeguarded from potential liability.

With respect to the taxes, the profit obtained by a corporation/LLC is taxed to the company when earned, and if the shareholder (under a corporation) decides to distribute dividends, the shareholder would also be taxed individually. Thus, this creates a double tax, which is not always appealing. This double taxation can be avoided through the use of an LLC, where there are no shareholders, but rather members to the company. Please speak to an expert for further information in how to reduce your taxes through the set-up on an LLC.

As indicated above, it is always best to rely on the expert opinion of an experienced attorney who would be able to discuss in more depth the differences between each respective structure and determine, based on your specific needs, which structure is most efficient for you. Although starting a partnership/sole proprietorship is the easier and cheaper selection, it may not always be the most optimum, as you could be opening yourself up to unnecessary liability.

Adil Daudi is an Attorney at Joseph, Kroll & Yagalla, P.C., focusing primarily on Asset Protection for Physicians, Physician Contracts, Estate Planning, Business Litigation, Corporate Formations, and Family Law. He can be contacted for any questions related to this article or other areas of law at adil@josephlaw.net or (517) 381-2663.

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Remarks by the President at the Presidential Summit on Entrepreneurship

May 6, 2010 by · Leave a Comment 

White House Supplied Transcript

Ronald Reagan Building and International Trade Center–Washington, D.C.–6:05 P.M. EDT

THE PRESIDENT:  Thank you very much.  Everybody, please have a seat.  Good evening, everyone, and welcome to Washington. 

In my life, and as President, I have had the great pleasure of visiting many of your countries, and I’ve always been grateful for the warmth and the hospitality that you and your fellow citizens have shown me.  And tonight, I appreciate the opportunity to return the hospitality.

For many of you, I know this is the first time visiting our country.  So let me say, on behalf of the American people, welcome to the United States of America.  (Applause.) 

It is an extraordinary privilege to welcome you to this Presidential Summit on Entrepreneurship.  This has been a coordinated effort across my administration, and I want to thank all the hardworking folks and leaders at all the departments and agencies who made it possible, and who are here tonight.

That includes our United States Trade Representative, Ambassador Ron Kirk.  Where’s Ron?  There he is.  (Applause.)    I especially want to thank the two departments and leaders who took the lead on this summit — Secretary of Commerce Gary Locke and Secretary of State Hillary Clinton.  Please give them a big round of applause.  (Applause.)   

We’re joined by members of Congress who work every day to help their constituents realize the American Dream, and whose life stories reflect the diversity and equal opportunity that we cherish as Americans:  Nydia Velazquez, who is also, by the way, the chairwoman of our Small Business Committee in the House of Representatives.  (Applause.)  Keith Ellison is here.  (Applause.)  And Andre Carson is here.  (Applause.) 

Most of all, I want to thank all of you for being part of this historic event.  You’ve traveled from across the United States and nearly 60 countries, from Latin America to Africa, Europe to Central Asia, from the Middle East to Southeast Asia. 

And you bring with you the rich tapestry of the world’s great traditions and great cultures.  You carry within you the beauty of different colors and creeds, races and religions.  You’re visionaries who pioneered new industries and young entrepreneurs looking to build a business or a community.

But we’ve come together today because of what we share — a belief that we are all bound together by certain common aspirations.  To live with dignity.  To get an education.  To live healthy lives.  Maybe to start a business, without having to pay a bribe to anybody.  To speak freely and have a say in how we are governed.  To live in peace and security and to give our children a better future.

But we’re also here because we know that over the years, despite all we have in common, the United States and Muslim communities around the world too often fell victim to mutual mistrust.

And that’s why I went to Cairo nearly one year ago and called for a new beginning between the United States and Muslim communities — a new beginning based on mutual interest and mutual respect.  I knew that this vision would not be fulfilled in a single year, or even several years.  But I knew we had to begin and that all of us have responsibilities to fulfill.

As President, I’ve worked to ensure that America once again meets its responsibilities, especially when it comes to the security and political issues that have often been a source of tension.  The United States is responsibly ending the war in Iraq, and we will partner with Iraqi people for their long-term prosperity and security.  In Afghanistan, in Pakistan and beyond, we’re forging new partnerships to isolate violent extremists, but also to combat corruption and foster the development that improves lives and communities.

I say it again tonight:  Despite the inevitable difficulties, so long as I am President, the United States will never waver in our pursuit of a two-state solution that ensures the rights and security of both Israelis and Palestinians.  (Applause.)  And around the world, the United States of America will continue to stand with those who seek justice and progress and the human rights and dignity of all people.

But even as I committed the United States to addressing these security and political concerns, I also made it clear in Cairo that we needed something else — a sustained effort to listen to each other and to learn from each other, to respect one another.  And I pledged to forge a new partnership, not simply between governments, but also between people on the issues that matter most in their daily lives — in your lives. 

Now, many questioned whether this was possible.  Yet over the past year, the United States has been reaching out and listening.  We’ve joined interfaith dialogues and held town halls, roundtables and listening sessions with thousands of people around the world, including many of you.  And like so many people, you’ve extended your hand in return, each in your own way, as entrepreneurs and educators, as leaders of faith and of science. 

I have to say, perhaps the most innovative response was from Dr. Naif al-Mutawa of Kuwait, who joins us here tonight.  Where is Dr. Mutawa?  (Applause.)  His comic books have captured the imagination of so many young people with superheroes who embody the teachings and tolerance of Islam.  After my speech in Cairo, he had a similar idea.  So in his comic books, Superman and Batman reached out to their Muslim counterparts.  (Laughter.)  And I hear they’re making progress, too.  (Laughter.)  Absolutely.  (Applause.)

By listening to each other we’ve been able to partner with each other.  We’ve expanded educational exchanges, because knowledge is the currency of the 21st century.  Our distinguished science envoys have been visiting several of your countries, exploring ways to increase collaboration on science and technology. 

We’re advancing global health, including our partnership with the Organization of the Islamic Conference, to eradicate polio.  This is just one part of our broader engagement with the OIC, led by my Special Envoy, Rashad Hussain, who joins us here tonight.  Where’s Rashad?  (Applause.)

And we’re partnering to expand economic prosperity.  At a government level, I’d note that putting the G20 in the lead on global economic decision-making has brought more voices to the table — including Turkey, Saudi Arabia, India and Indonesia.  And here today, we’re fulfilling my commitment in Cairo to deepen ties between business leaders, foundations and entrepreneurs in the United States and Muslim communities around the world.

Now, I know some have asked — given all the security and political and social challenges we face, why a summit on entrepreneurship?  The answer is simple. 

Entrepreneurship — because you told us that this was an area where we can learn from each other; where America can share our experience as a society that empowers the inventor and the innovator; where men and women can take a chance on a dream — taking an idea that starts around a kitchen table or in a garage, and turning it into a new business and even new industries that can change the world.

Entrepreneurship — because throughout history, the market has been the most powerful force the world has ever known for creating opportunity and lifting people out of poverty.

Entrepreneurship — because it’s in our mutual economic interest.  Trade between the United States and Muslim-majority countries has grown.  But all this trade, combined, is still only about the same as our trade with one country — Mexico.  So there’s so much more we can do together, in partnership, to foster opportunity and prosperity in all our countries.

And social entrepreneurship — because, as I learned as a community organizer in Chicago, real change comes from the bottom up, from the grassroots, starting with the dreams and passions of single individuals serving their communities.

And that’s why we’re here.  We have Jerry Yang, who transformed how we communicate, with Yahoo.  Is Jerry here?  Where is he?  He’ll be here tomorrow.  As well as entrepreneurs who have opened cybercafés and new forums on the Internet for discussion and development.  Together, you can unleash the technologies that will help shape the 21st century.

We have successes like Dr. Mohamed Ibrahim, who I met earlier, who built a telecommunications empire that empowered people across Africa.  And we have aspiring entrepreneurs who are looking to grow their businesses and hire new workers.  Together you can address the challenges of accessing capital.   We have trailblazers like Sheikha Hanadi of Qatar, along with Waed al Taweel, who I met earlier — a 20-year-old student from the West Bank who wants to build recreation centers for Palestinian youth. 

Please read continuation at www.muslimobserver.com.

So together, they represent the incredible talents of women entrepreneurs and remind us that countries that educate and empower women are countries that are far more likely to prosper.  I believe that.  (Applause.)

We have pioneers like Chris Hughes, who created Facebook, as well as an online community that brought so many young people into my campaign for President — MyBarackObama.com.  (Laughter.)  We have people like Soraya Salti of Jordan who are empowering the young men and women who will be leaders of tomorrow.  (Applause.)  Together, they represent the great potential and expectations of young people around the world.

And we’ve got social entrepreneurs like Tri Mumpuni, who has helped rural communities in Indonesia — (applause) — harness the electricity, and revenues, of hydro-power.  And Andeisha Farid, an extraordinary woman from Afghanistan, who’s taken great risks to educate the next generation, one girl at a time.  (Applause.)  Together, they point the way to a future where progress is shared and prosperity is sustainable.

And I also happened to notice Dr. Yunus — it’s wonderful to see you again.  I think so many people know the history of Grameen Bank and all the great work that’s been done to help finance entrepreneurship among the poorest of the poor, first throughout South Asia, and now around the world. 

So this is the incredible potential that you represent; the future we can seize together.  So tonight I’m proud to announce a series of new partnerships and initiatives that will do just that.

The United States is launching several new exchange programs.  We will bring business and social entrepreneurs from Muslim-majority countries to the United States and send their American counterparts to learn from your countries.  (Applause.)  So women in technology fields will have the opportunity to come to the United States for internships and professional development.  And since innovation is central to entrepreneurship, we’re creating new exchanges for science teachers.

We’re forging new partnerships in which high-tech leaders from Silicon Valley will share their expertise — in venture capital, mentorship, and technology incubators — with partners in the Middle East and in Turkey and in Southeast Asia.

And tonight, I can report that the Global Technology and Innovation Fund that I announced in Cairo will potentially mobilize more than $2 billion in investments.  This is private capital, and it will unlock new opportunities for people across our countries in sectors like telecommunications, health care, education, and infrastructure.

And finally, I’m proud that we’re creating here at this summit not only these programs that I’ve just mentioned, but it’s not going to stop here.  Together, we’ve sparked a new era of entrepreneurship — with events all over Washington this week, and upcoming regional conferences around the world. 

Tonight, I am pleased to announce that Prime Minister Erdogan has agreed to host the next Entrepreneurship Summit next year in Turkey.  (Applause.)  And so I thank the Prime Minister and the people and private sector leaders of Turkey for helping to sustain the momentum that we will unleash this week.   

So as I said, there are those who questioned whether we could forge these new beginnings.  And given the magnitude of the challenges we face in the world — and let’s face it, a lot of the bad news that comes through the television each and every day — sometimes it can be tempting to believe that the goodwill and good works of ordinary people are simply insufficient to the task at hand.  But to any who still doubt whether partnerships between people can remake our world, I say look at the men and women who are here today.

Look at the professor who came up with an idea — micro-finance — that empowered the rural poor across his country, especially women and children.  That’s the powerful example of Dr. Yunus.

Look what happened when Muhammad shared his idea with a woman from Pakistan, who has since lifted hundreds of thousands of families and children out of poverty through a foundation whose name literally means “miracle.”  That’s the example of Roshaneh Zafar.  (Applause.) 

Look what happened when that idea spread across the world  — including to people like my own mother, who worked with the rural poor from Pakistan to Indonesia.  That simple idea, began with a single person, has now transformed the lives of millions.  That’s the spirit of entrepreneurship.

So, yes, the new beginning we seek is not only possible, it has already begun.  It exists within each of you, and millions around the world who believe, like we do, that the future belongs not to those who would divide us, but to those who come together; not to those who would destroy, but those who would build; not those trapped in the past, but those who, like us, believe with confidence and conviction in a future of justice and progress and the dignity of all human beings regardless of their race, regardless of their religion. 

That’s the enormous potential that we’re hoping to unlock during this conference and hoping to continue not only this week but in the months and years ahead.  So I’m grateful that all of you are participating.  May God bless you all and may God’s peace be upon you.  Thank you very much.  Thank you.  (Applause.) 

END 6:22 P.M. EDT

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Korean President’s India Visit

January 28, 2010 by · Leave a Comment 

By Nilofar Suhrawardy, MMNS India Correspondent

NEW DELHI:  Taking India’s ties with Republic of Korea (ROK) to a new height, the Chief Guest at India’s Republic Day celebrations (January 26) was ROK President Lee Myung-bak. Lee’s India visit assumes significance as he is the first Korean President to be Chief Guest at India’s Republic Day function.  Besides, his is third Korean presidential visit to India in a period of less than 13 years. The discussions held and agreements reached during Lee’s visit clearly signal that both countries are optimistic about further strengthening India-ROK ties in several key areas.

Lee paid a state visit at the invitation of his Indian counterpart President Pratibha Devisingh Patil, from January 24 to 27. He was accorded a ceremonial welcome on January 25 at the Rashtrapati Bhawan. This was followed by his meeting with Patil. The highlight of Lee’s visit was his summit meeting with Prime Minister Manmohan Singh.

Welcoming Lee, in his opening remarks at the delegation level talks, Singh said: “We are delighted that a friend of India is at the helm of affairs in Korea and that together we will have the opportunity to realize your vision and our common vision of a strong and vibrant India-Korea partnership. Your State visit today reflects our mutual commitment to strengthen relations between our countries. This is a relationship that rests on our shared values of democracy, rule of law and respect for human freedoms.”

Ahead of his India visit, Lee projected it as a key part of Seoul’s “New Asia Diplomacy” campaign, to improve ties with Asian countries. In his message, Lee said: “I have tried to realize the vision of New Asia Diplomacy. This trip to India marks a key point of such efforts.” He described India as a key player in Asia taking center on the global stage in the 21st century. “Asia is developing as a new growth engine in the world. Asia is expected to account for 35 percent of the world’s GDP (gross domestic product) ten years from now,” he said. “I am paying attention to India because of its potential,” Lee asserted.

With both the countries eager to push forward bilateral ties, during the summit meeting, Singh and Lee discussed ways to develop them and also exchanged views on regional and international issues. The joint statement released after the summit meeting, stated that during the talks, the two leaders “expressed satisfaction on the strong development of India-ROK relations based on the ‘Long-term Cooperative Partnership for Peace and Prosperity,’ established in October 2004.” They “welcomed the steady growth in high level exchanges and contacts between the two countries, and the expansion in various areas of bilateral relations including defense, trade, science & technology, information & communication technology, education, and culture.”

Singh and Lee agreed that there was “immense scope for further enhancing bilateral relations in various areas.” They “welcomed entry into force of Comprehensive Economic Partnership Agreement (CEPA)” from January 1, 2010 as “bedrock of a new comprehensive partnership between India and ROK.” With both countries as major economies in the region, their “partnership has the capacity to promote regional growth, and to contribute to prosperity and economic development of Asia,” they stated.

To enhance bilateral relations to a “strategic partnership,” Singh and Lee identified key aspects of their future relationship. These include, political & security cooperation; enhancing trade & investment flows; strengthening cooperation in field of science & technology; increase in cultural exchanges & people to people contacts;  and cooperation in the international arena. Affirming “their commitment to ensure implementation of CEPA,” they agreed to set a target of $30 billion for bilateral trade to be achieved by 2014. The India-ROK bilateral trade stood at $13 billion in 2008-09. Bilateral trade, which was less than $3 billion in 2001, crossed the $10 billion mark in 2007.

Singh and Lee agreed to designate 2011 as “Year of Korea” in India and “Year of India” in ROK to strengthen cultural exchanges and people to people contacts. India welcomed ROK’s initiative to open a Korean Cultural Center in New Delhi in 2011, which according to the joint statement will go a long way in “promoting awareness about Korean life and culture in India.”

Lee’s India visit was also marked by inking of four pacts. These include: Agreement on transfer of sentenced persons; Memorandum of Understanding (MoU) on cooperation in information technology & services; Program of cooperation in science and technology for the period 2010-2012 and MoU for cooperation in peaceful uses of outer space.

Singh and Lee agreed “to facilitate development of a framework for bilateral civil nuclear cooperation.” They shared the view that “nuclear energy can play an important role as a safe, sustainable and non-polluting source of energy.” Lee is understood to have told Singh that he was “very optimistic” about progress in this area and that ROK nuclear companies were “very competitive” on this front.

Civil nuclear cooperation figured prominently in the summit meeting and the talks Lee held with Indian External Affairs Minister S.M. Krishna. After his meeting with Krishna, Lee said: “This is (civil nuclear) an area which will be very productive for both of us.” A member of Nuclear Suppliers Group (NSG), ROK had supported consensus for reopening global civil nuclear trade with India in September 2008. Lee recently succeeded in marching ahead of western contractors by securing a $20 billion contract to build four nuclear reactors in UAE. While from the Korean-angle, Lee’s India-visit is a part of his New Asia Diplomacy, from the Indian it is certainly suggestive of India looking towards East more seriously than before!

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