Convertible Promissory Note (Debt) Financing in Ohio

Elliott Stapleton Corporation

What is a convertible promissory note? A convertible promissory note is typically used in the early investment stage of a startup business.  It is a loan which will, upon a predetermined event, convert from debt into stock. Here is a visual summary of the process: How does a convertible promissory note work? The process is best explained by an example: …

Ohio S Corporation Taxation; How does it work?

Elliott Stapleton Corporation

Forming an Ohio S corporation allows the company to pass corporate income, losses, deductions and credits through to the shareholder’s tax return. The company’s shareholders then account for this income and losses on their personal tax returns. Income tax is then paid at the shareholder’s personal tax rate.   How is an S corp different from a C Corp? This …

Ohio Vendor’s License

Elliott Stapleton Government Compliance

An Ohio vendor’s license is required to pay sales tax on taxable transactions in the State of Ohio. There are different types of vendor licenses. The following is a summary each license: Regular vendor’s license The County Auditor issues these when vendors have a fixed place of business. When dealing with the sale of tangible personal property and certain services, …

Basic Taxation of an Ohio LLC and Corporation

Elliott Stapleton Limited Liability Company-LLC

An LLC  can be a pass-through entity for federal income tax purposes. A pass-through entity means that taxes are only paid once at the member level. There is no federal taxation at the LLC level; thus the “pass-through” tax effect. The members report the profits and losses on their individual tax returns. When there is more than one member this …

What is a Stock Vesting Schedule?

Elliott Stapleton Corporation

A vesting schedule dictates when a founder (or employee) has full ownership rights in the company. This schedule is typically based on duration with the company. For example, if we use a four year vesting schedule with a one year vesting cliff; if a founder leaves within the first year they receive no shares.  After the first year, the shares …

How is an Ohio Corporation created?

Elliott Stapleton Corporation

To create a corporation in Ohio, Articles of Incorporation must be filed with the Secretary of State.  But that filing alone does not create a business with limited liability. To be legally sound, the corporation must make all of the necessary tax elections, receiving any necessary federal, state, or local authorization, contributing assets to the corporation in exchange for stock, …

What is an Ohio Corporation?

Elliott Stapleton Corporation

A corporation may be formed for any profit business or a nonprofit/social organization. Individuals who own shares in a corporation are called shareholders. A corporation can take two forms, depending on your tax election: 1) C-corporation or 2) S-corporation. To qualify as an S corporation, the corporation’s shares must be limited in number and must be held by resident citizens …

Form an Ohio LLC, Corporation or Partnership; which is best?

Elliott Stapleton Common Questions

The first step in forming an Ohio business is deciding what legal entity to use. Generally, business entities include: corporations, limited liability companies, partnerships and sole proprietorships. Which entity is best? Sole proprietorships and partnerships are the easiest to form, but are almost never recommended. Except in isolated circumstances, these entities offer no personal liability protection. Without personal liability protections, …