PowerSportsBusiness Insider » Legal Experts

Why Worry About Corporate Tax Structure

Jim Krendl - Krendl Sachnoff & Way, Specializes in Dealership Acquisitions — Mon, 28 Jun 2010 19:54:54 +0000

If you put only essential assets into the corporation to start with, then you will probably not have very many reasons to take them back out ... Nonetheless, there is one big issue about taking assets out of the corporation.

Mouse in a Barrel

Jim Krendl - Krendl Sachnoff & Way, Specializes in Dealership Acquisitions — Tue, 01 Jun 2010 20:10:34 +0000

If you incorporate and do not make a special election to be taxed as an S Corporation (where the shareholders pay the taxes on corporate profits) your corporation will be a separate taxpayer known as a C Corporation.

Thoughts on how to transfer a dealership to a family member

Jim Krendl - Krendl Sachnoff & Way, Specializes in Dealership Acquisitions — Fri, 05 Mar 2010 19:33:06 +0000

For the past several of months we have talked about creating different classes of equity for the purpose of granting different economic rights and different control rights to various owners of a company. The advantages of such a flexible equity structure are readily apparent when dealing, for example, with a key employee who becomes a minority shareholder or an outside investor who wants preferential treatment for the money he puts into the company. Read more >>

Ways to attract outside investors to a dealership

Jim Krendl - Krendl Sachnoff & Way, Specializes in Dealership Acquisitions — Fri, 05 Feb 2010 20:01:20 +0000

Recently my blogs have addressed the question of various types of equity ownership interests in motorsports dealerships. For example an incorporated dealership could issue common stock and preferred stock, with preferred stock representing a first claim on the earnings of a company and common stock representing future growth and appreciation in excess of the preferred return. Read more >>

Stock options for dealers to consider

Jim Krendl - Krendl Sachnoff & Way, Specializes in Dealership Acquisitions — Tue, 05 Jan 2010 19:50:58 +0000

Last month our blog addressed the issues of using different kinds of equity, for example issuing a preferred class of stock to one shareholder or a group of shareholders and a junior or common class to other shareholders. Comments about equity participation also apply to control. Many people tend to think of control as being a simple percentage of the stock and an equal percentage of the voting power of the company. However, I tell clients that control is like a pie, you can cut it into as many slices as you like. Read more >>

Understanding dealership minority ownership interests

Jim Krendl - Krendl Sachnoff & Way, Specializes in Dealership Acquisitions — Fri, 11 Dec 2009 16:18:06 +0000

For a variety of reasons, a dealership may find it advisable to sell minority ownership (equity) interests to one or more new owners: a junior partner, a key employee, an outside investor or a family member for example. When doing this, there is a tendency to think of all corporate stock as being the same. If you sell 10 percent of the company to someone that means you sell 10 percent of the stock. Read more >>

Separating operating assets from real property

Jim Krendl - Krendl Sachnoff & Way, Specializes in Dealership Acquisitions — Wed, 07 Oct 2009 19:09:13 +0000

Powersports dealers should understand the importance of separating dealership assets (inventory, accounts receivable, shop equipment, etc.) from real estate (the dealership building and surrounding land, including parking areas). Of course, many dealers own only the operating assets and lease the real estate from someone else. However, if you already own some of the real estate you use for your business, or if you are thinking about buying real estate, remember to keep the two assets separate. Read more >>

Protecting the Corporate Veil

Jim Krendl - Krendl Sachnoff & Way, Specializes in Dealership Acquisitions — Fri, 11 Sep 2009 14:54:55 +0000

In my experience, most dealerships are incorporated. The primary reason to incorporate is to have the protection of limited liability. That means the corporation, not its individual shareholders, is liable for the company’s debts and other actions (except when, on a bank loan for example, the shareholders sign personal guarantees). Plaintiffs constantly seek ways to hold the individual owners, rather than the corporation, liable for corporate debts and other liabilities, personal injury accident, for example. A popular way of doing this is to try to “pierce the corporate veil.” When a plaintiff is successful in doing this, the shareholders (or in some cases officers, directors and employees) are individually liable for the corporation’s acts. Read more >>

Estate planning in tough times

Jim Krendl - Krendl Sachnoff & Way, Specializes in Dealership Acquisitions — Mon, 10 Aug 2009 21:14:56 +0000

One of the few benefits of hard times is the opportunity to make large tax-free estate planning transfers. In any tax year you can transfer $13,000 of cash or property to each of any number of individuals. If you have five children, you can make five $13,000 transfers. If your spouse joins in the gift, you can give $26,000 each year to each donee. If you have a long-term concern about passing your estate to your children, grandchildren or others and if the value of your company is depressed as a result of economic conditions this year, this could be a good time to make a gift or series of gifts, usually in the form of minority stock interests in a corporation, to your potential heirs. Each gift is valued the year you make it, and if you think the value of the company is going to go up when times improve, you can effectively transfer not only the present value but all of the future growth free from gift or estate taxes. Read more >>

A Vital Element When Catastrophe Happens

Jim Krendl - Krendl Sachnoff & Way, Specializes in Dealership Acquisitions — Mon, 13 Jul 2009 19:07:16 +0000

Although many people never think about it, the biggest reason for forming a corporation is to protect the individual owner from personal liability for corporate acts. In the everyday business world, banks, landlords and other smart people get personal guarantees for corporate debts, leases and other obligations. Corporate limited liability doesn’t do you much good for the debts you personally guaranty. However, limited liability is vital when a catastrophe happens, like a horrible accident in which people are killed or badly injured. Read more >>