CORPORATE/LLC CONSULTING: Interview with Jeff Diamant on the Corporate Formation, Dissolution, Restructure and Consulting.

Interview with Jeff Diamant on Corporate and LLC consulting.

This is a recent question and answer conducted with Attorney Jeff Diamant. It was a relatively in-depth interview. This is a section of it on the corporate consulting he does for small and large clients. . .

Q:  So if I understand right, you also consult with your business clients on corporate matters?

A:  Yes.  

Q:  I assume that’s your larger corporate clients?

A:  No. Well, yes and no. I do that for a lot of the larger clients. But I do it for smaller and even individual clients. For example, I have clients with small, personal business, whether it’s just them, or maybe them and a partner or two. They have small businesses also. So one example would be a client with a tree-cutting business that is him and one partner. They decided to dissolve their company and he wants to start a new one. His partner isn’t staying in. I prepare the stuff they need to schedule everything out, get a formal termination with the state, which is both required, and necessary for their protection, draft the final documents, and form the new company. But on the other hand, I have some multi-million dollar businesses that also do restructuring, stock transactions and even re-forming. So it’s both.

Q:  Is that really something small businesses need to do? I mean, can’t they just stop?

A:  Well they can, but that’s a terrible idea. [laughing].

Q:  [laughing] Why is that? Why can’t they just stop? Isn’t that the point of having a corporation or an LLC?

A:  Well, kind of. The problem is, if you don’t shut down the right way, you can lose your corporate protection and any left-over liabilities can pass to the owners if you do it wrong. That’s one reason that it’s important. As well, that can lead to later issue with the owners if one starts a new business, for example, and wants to use the name, or if more liabilities pop up, and they come looking to the owners to solve it.

Q:  Isn’t that expensive to do?

A:  Well not as expensive as the problems that can come after the fact! And no, not really. It can be done anywhere from $400 - $1500 depending on what all they need done. But think of it like a really great deal on insurance. [laughing]

Q:  Well, so for a small business, what all do they need or how can you actually help them?

A:  It can be as simple as just setting up an entity for them. Set up of a corporation or LLC can be done for as little as $635. There’s no need for these people charging more than that. Now, if it’s a more complicated structure, multiple partners, operating agreement and what not, it can go up from there, but most clients don’t really need that. But the termination of an entity is more important. Who is going to get the name? What are the assets and where do they go? How do you resolve the liabilities so they don’t come back on you? This stuff I handle inexpensively with a guide to scheduling assets and liabilities, shut down procedures, terminating the entity properly, etc. And that is often under $1000.

Q:  So it can be done cheaply?

A:  Yeah, for sure, provided the lawyer is not intentionally trying to over-complicate it to get more money. [laughing]. But I can’t stress enough that it’s really important to do to protect yourself.

Q:  Speaking of that, how do I protect myself in a small business and do I really need one if it’s just me?

A:  Yes, always. If you’re going to do business, you should have company protection. Period. If it’s just you, you can simply do it with a single member, LLC. Then you don’t even have to file a separate tax return. That’s really what LLC’s are for. And if you’re going to have partners, you have to plan for divorce before you start. Think of it like a pre-nup agreement for business. So should you do it, yes, in all circumstances.

Q:  And you do this for larger businesses also or just small?

A:  Both for sure. I have some multi-million dollar businesses I do a lot of this stuff for, but then all the way down to the smaller ones. Keep in mind, a lot of lawyers don’t really know business, so they may give good legal advice, but it’s not practical for doing business. I’ve started, owned and run several of my own business too so I get it from all angles. What’s that expression about an ounce of protection? That’s the deal here.