Corporations and Limited Liability Companies

The reality is that if you are operating a small business, you may find yourself being sued in the future. There are steps that you can take to avoid placing all of your assets at risk, if you take them ahead of time. There are a number of different legal entities that are available to someone operating a business.

A legal entity can limit personal liability for the business owner for most debts of the business. There may also be both financial and tax advantages. This brochure addresses corporations and limited liability companies. Both corporations and limited liability companies are recognized as separate, legal entities from the owner, so that the owner's personal assets are protected from liability for business debts.

Types of Corporations

Corporations

Created by state law. A corporation organized under Maryland law may be suitable for your needs. However, most corporations are also taxed as separate taxpayers.

Close Corporations

Maryland law provides for close corporations. The advantage of a close corporation is reduced administrative requirements compared to general corporations. It is best for a one person operation.

General Corporation

A general corporation is more formal.

Tax Treatment of Corporations

Corporations may be taxed as either "C Corps" or "S Corps." Subchapter S treatment is only available under certain conditions. If available, a Subchapter S election can avoid double taxation.

Limited Liability Company

This a new entity that has been in Maryland since 1992. It provides limited liability to its owners, but does not pay a separate income tax. However, its availability is not as limited as a Subchapter S election. It is a form of entity that is increasingly being used due to its flexibility and other advantages.

The practicality, availability and ramifications of your choice of entity and tax treatment should be discussed with a lawyer.

Notices

FOR AN UPDATE ON THE LATEST ISSUES AND LAWS SEE OUR BLOG

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Scott Borison Testified in Support of Historic Changes to Maryland Foreclosure Laws

In the 2007-2008 legislative session before the Maryland General Assembly, Scott Borison testified in favor of three laws that were passed by the legislature and enacted as emergency legislation.

The first law relating to the foreclosure process is the first changes in the law in over 200 years to provide additional protections to homeowners. The law now mandates personal service on the homeowner of notice of foreclosure.

The second law updated the Protection of Homeowners in Foreclosure Act. This law was first enacted in 2005. Scott Borison testified in 2005 and again testified in support of the amendments to the law to eliminate loopholes in the law.

The third law enacted a law specifically directed at mortgage fraud.

See blog for more details


Mortgage Class Action Suits

Many people are lured in by claims of "no cost" refinances -- but think about it. Why would they do it? They do it because they are making money. When they say "no cost" all they mean is that they are not asking you to come up with cash at the settlement table. Instead they finance these charges costing you even more.

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Bankruptcy Law Changes

Scott Borison testified before the Maryland Senate in support of an increase to the amount of property that Marylanders are allowed to keep from their creditors. The new law, effective October 1, 2004, has doubled the amount that Marylanders may keep.

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Manor Apartment Complex Class Action

If you were a tenant at the Manor Apartment Complex after May 2, 2001, a class action lawsuit may affect your rights.

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IMPORTANT NOTICE

The attorneys associated with Legg Law Firm, LLC. only practice in Maryland or Washington D.C.. This is not an effort to practice law in any other state. The law discussed here is limited to one or more of these jurisdictions. This is not a substitute for a consultation with an attorney. The information being provided at this web site is general information. It is not intended to be legal advice to any visitor to the site, nor should it be relied on by you for legal decisions. Any advice for your factual situation can only be done after consultation with a lawyer. Since the web site only provides general information, without making any effort to apply it to the visitor’s situation, Legg Law Firm, LLC. and its attorneys are not acting as your attorney and information sent to the firm will not be held confidential under any type of attorney client privilege which would exist if you retained the services of Legg Law Firm, LLC.

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