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Introduction

I previously wrote about the basics of how to start a business.  Limited Liability Company (LLCs) are very popular for businesses, especially smaller ones.  LLCs are a hybrid between partnerships and corporations in that the owners (called "members") are more like partners (versus shareholders) but still have the liability protections of larger corporations.  Previously, business owners who entered to partnerships did not have the same liability protections.

Basics of LLCs

LLCs are also popular because business owners can customize them almost anyway they please.  Although the default relationship between LLC members is a partnership, a skillfully crated operating agreement (the document that governs the LLC) can create a corporate like structure of "units" similar to shares in a corporation.  Membership units can have different rights and preferred statuses associated with them similar to shares.

Chicago Business Law AttorneyAnother advantage to an LLC is choosing profit-sharing models.  As a default, LLCs are pass-through entities that are not recognized by the IRS.  This means that members report their income on their personal income taxes.  However, LLCs can choose to be taxed as a corporation, specifically an S-Corp.  This is why business owners don't actually have to choose between an S-corp and an LLC because the LLC can be both.  Many people incorrectly believe that an S-Corp is a type of corporation.  In reality, it is actually just a tax designation can be used by both corporations and LLCs.  LLCs typically want an S-corp status if they are single member LLCs or LLCs with employees.  Otherwise, LLC members simply make their income by drawing on the profits of the company.

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Shakfeh Law LLC Blog

(This post is part of a series on starting a business. This page will continue to add links as we I add more content.)

COVID-19 is hitting businesses hard and wreaking havoc on the economy. As businesses and their employees are enduring mass layoffs, many are uncertain about what the economy's status will be after this is all over and how long a recession will last. That said, some of the most successful businesses started during or out of a recession. That makes sense as many people see their layoffs as an opportunity to start a new business. Recessions are also a good time for innovation as society has to adapt to new norms.

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Shakfeh Law LLC Blog

Covid-19 and the SARS-CoV-2 virus have not only wreaked havoc on people's health, but also on businesses. One common question during this difficult time is whether contracts are still enforceable, especially in light of travel restrictions and social distancing measures. Additionally, because many businesses are losing revenue, they are unable to otherwise honor contracts. So can parties break contracts during this time or in other difficult situations?

The first thing for parties to understand is that contracts are still enforceable, even during difficult times. Even if a paying party is no longer able to pay for its service, the party is still bound by the contract (unless they seek bankruptcy protections, which is a different issue). Courts will not look at whether it is difficult for a party to fulfill their obligations, but whether it is practically impossible. Parties must further understand that getting out of a contract is a defense to a breach and not an active reason to claim to leave the contract, unless the contract states otherwise. In other words, the breaching party needs to make the case that the situation meets the criteria of a practical impossibility.

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Shakfeh Law LLC Blog

Dear family, friends, colleagues, and anyone who reads this. I need your help.

The Covid-19 Crisis is a difficult time for all of us. We are either concerned about the health of our loved ones, our livelihood, our children's education, or all of the above. That all said, we should still be vigilant about how our government is going to use its powers to potentially strip the rights of some of our most vulnerable populations. It has happened in the past such as after 9/11 and can happen again.

Although I don't practice special education law, the topic is nevertheless near and dear to me for personal reasons. As a mother to a special needs child, any curbs on rights of our special needs children will impact my own child as well as many others' who I know personally. Further, it's not uncommon for governments to start stripping the rights of our most vulnerable then slowly moving on to other groups.

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Shakfeh Law LLC Blog

As a contract lawyer, many clients ask me if their contracts are legally binding. By definition, if an agreement meets the requirements of a contract, then the contract is legally binding. Further, contracts are legal documents by their nature. So what makes a contract binding and enforceable? And what are some factors that make a contract not binding? Below, I will explain that all for you.

 

Elements of a Contract

The basic elements of a contract are: 1) offer, 2) acceptance, and 3) consideration. 'Consideration' is that thing that the parties bargain for exchange and distinguishes a mere 'promise' (which is not legally binding) from a contract. For example, if a painter promises to paint your house but then never does, you probably have no legal claim (there are exceptions to this). However, if you pay the painter (the money is consideration) and the painter does not paint, then you have a contract with the painter and the painter breached the binding contract.

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