As a business owner (corporation or LLC), you have put in countless hours and hard work to establish and grow your business. But have you considered what will happen to your business when you pass away? Without a proper plan in place, your business may be at risk of falling apart, causing chaos and financial hardship for your loved ones …
Convertible Promissory Note (Debt) Financing in Ohio
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. How does a convertible promissory note work? The process is best explained by an example: JT Smith likes your startup company and invests …
Ohio S Corporation Taxation; How does it work?
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 process …
What is a Stock Vesting Schedule?
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 …
What if a founder leaves the company? Stock Vesting Issues
What happens if a founder leaves (or dies) before putting in the hard work necessary for the company to be a success? If that founder has full ownership of his or her stock, then you, as the remaining owner(s), will be required to pay despite the lack of contribution to the success. When should a vesting schedule be considered? Without …
How is an Ohio Corporation created?
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?
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 …
Why is it important to incorporate your Ohio business?
The purpose of a limited liability company (also known as an LLC) or corporation (also known as an S-corp or C-corp) is to limit your personal risk. With a properly formed LLC or corporation, you can protect your personal assets from creditors of the business. Without a properly formed entity, your personal assets are at risk to every liability of …