The Corporate Transparency Act (“CTA”) was enacted as part of the Anti-Money Laundering Act of 2020 in an effort to crack down on illicit financing and increase transparency as to who owns interests in various business entities. Read more about the act here.
To start the purchase or sale of a business, a buyer and seller will typically need to agree on the terms of the transaction and memorialize it in the form of a letter of intent, memorandum of understanding, or term sheet. Parties may also conduct due diligence to assess the value and risks of the business. through a letter of intent or term sheet, conduct due diligence to assess the value and risks of the business.
An LLC is a type of business entity that provides limited liability protection for its owners, more flexibility in governance through a private contract called an operating agreement, and choice of taxation may be taxed as a disregarded entity, as a partnership, or as a corporation under Subchapter S or Subchapter C. A corporation (Inc.) is a different type of legal entity that provides its owners with, liability protection, and files annual reports with the state and is taxed as a corporation under Subchapter S or Subchapter C. Legal entity from its owners, provides liability protection, and, in the case of a Subchapter C corporation, is taxed at the corporate level and the shareholder level when dividends are distributed. Corporations also require a board of directors and an annual meeting of shareholders.
The process for forming a limited liability company in South Carolina typically involves filing articles of organization with the Secretary of State, obtaining any necessary business licenses and permits, and creating an operating agreement to govern the management and ownership of the LLC. To form an LLC, you’ll need to choose a name, file Articles of Organization, appoint a registered agent, obtain necessary licenses and permits, create an Operating Agreement, and obtain an Employer Identification Number from the IRS with your accountant.
Corporate agreements and third-party contracts are important because they establish the rights and obligations of a business in its dealings with other parties. These agreements can help protect a company’s interests and ensure all parties understand their responsibilities.
The primary business entities are sole proprietorships, partnerships, limited liability companies (LLCs), corporations, and nonprofit corporations. If you plan on starting your own business, you should consider who will be responsible for liability protection, taxation, management, and operations. Forming an entity can offer limited liability protection, separation of personal and business assets, tax benefits, and credibility.
The term “governance document” is a catch-all phrase for certain binding agreements that owners of corporations and LLCs use to govern the rights and relationships among the business owners and the corporation or LLC. Governance documents are important because they outline and control how the organization will function.
They provide a roadmap, answering questions such as:
*Who can make decisions or bind the company in contract?
*What if I no longer want to be a part of the organization?
*What happens if an owner passes away?
The business attorneys at Buxton & Collie can help you work through these questions and many others, crafting the governance documents necessary for your business.
Most South Carolina counties, towns, cities and municipalities have licensure requirements imposed on businesses to own or operate a business within their governing jurisdiction. A business license must be renewed annually, usually by July 1 of each calendar year.
A business license should not be confused with a professional license required by the South Carolina Department of Labor Licensing and Regulation (for barbers, real estate agents and brokers, surveyors and many other) or by other governing bodies covering professionals such as dentists, doctors or lawyers.
Every corporation or LLC must have an in-state registered agent in its formation state and in every state where it is registered to do business. A registered agent is an individual or a company appointed by an LLC or corporation to receive service of process, legal documents, and other communications on behalf of the business, and then relay that information to the appropriate party.
In South Carolina, a business’s registered agent is listed on the South Carolina Secretary of State’s website. Our attorneys generally recommend that a third party serve as the registered agent for your South Carolina business, in order to protect your privacy and offer peace of mind. Palmetto Corporate Services is an affiliated entity with which we will be happy to connect you.
The due diligence process begins once you have decided to sell your business and found a buyer. The buyer will closely examine your company to determine its strengths, weaknesses, and value.
The buyer’s team, including their attorneys, accountants, and mergers and acquisitions advisors, will review all aspects of your business. They will analyze finances, tax returns, client lists, intellectual property, and contracts. Be prepared to provide several years of records. The more transparent you are, the smoother the process.
Before selling your business, it is crucial to evaluate various factors to ensure a successful transaction. Engaging Charleston business attorneys during this process can ensure you get invaluable guidance and support. Here are several considerations to take into account:
Additionally, consider the potential tax implications of the transaction, especially if you plan to retain any involvement in the business after the sale.
Hiring a mergers and acquisitions (M&A) attorney is crucial when considering a business merger, acquisition, or sale. Some instances when you should consider hiring a mergers and acquisition lawyer include the following:
Government-issued photo ID: You’ll need a valid government-issued ID, such as a driver’s license or passport, to prove your identity.
Certified funds: You’ll need to bring certified funds, such as a cashier’s check or wire transfer, to cover your closing costs and any down payment on the property.
Homeowner’s insurance policy: You’ll need to ensure that you have bound your homeowner’s insurance so that you are covered for all risks ordinarily associated with real estate ownership..
Any required documentation: Depending on your lender and the transaction specifics, you may need to bring additional documentation, such as a termite inspection report or proof of repairs.
It’s important to carefully review your closing documents before signing them and to ask any questions you may have during the closing process.
Yes, whether you are buying, selling or refinancing, you have the right to choose your closing attorney. Your agent or lender may have suggestions, but ultimately the choice is yours.
Yes, the South Carolina Supreme Court has ruled that real estate and mortgage closings in South Carolina must be conducted under the supervision of an attorney. At Buxton & Collie, our real estate attorneys will be present at closing to go through the documents with you and answer any questions you may have as the buyer or seller.
In South Carolina, the Supreme Court has determined that real estate closing is considered the practice of law, so it must be conducted and supervised by a licensed attorney. Real estate attorneys should also be licensed title insurance agents and can help buyers and sellers navigate the real estate transaction process and answer any questions or address any legal concerns.
At Buxton & Collie, we can also work with a buyer or seller to identify any potential issues that may arise during the closing process, such as title defects or property liens. Additionally, an attorney can advise you on the legal implications of any agreements or contracts you may sign during the closing. Ultimately, having an attorney can give you peace of mind and help ensure your real estate transaction goes as smoothly as possible.
