Congratulations, you have decided to start a new business. You are going to become an “entrepreneur”, a business owner. You have put together your business plan, located potential business premises, talked with your advisors, and are ready to get started.
You have talked with an attorney and an accountant and they have advised you to form a “business entity”. Now you have to decide which one is right for you. So, what are your choices? Following are just a few options:
Sole Proprietorship. You could own and operate the business and not form a separate entity. This is generally the “simplest” legal way of owning and operating a business. Other than obtaining the required business licenses, all you need to do is to put an “open for business” sign up and you are ready to go. The business is owned by only one individual and “dies” when the owner either stops doing business or dies. The individual owner has unlimited liability for all obligations of the business.
Partnership. If you have decided to go into business with other owners, you could form a partnership. There are two kinds of partnerships: general partnerships and limited partnerships.
In a general partnership, you and your partners will have unlimited liability for acts and obligations of the business, including those incurred by any of the partners in the business. If you have no agreement, the partnership will be governed solely by the laws regarding partnerships in your state. Without an agreement, if one partner dies or withdraws, the partnership terminates.
In a limited partnership, there must be at least one general partner who manages the affairs of the partnership and who will be liable for all the acts and obligations of the partnership. The “limited partners” may not participate in the management of the partnership and are treated as investors. They will not generally be liable for the acts and obligations of the partnership. The partnership must file a Certificate of Limited Partnership in the state in which it wishes to organize.
In proprietorships and general partnerships, there can be serious legal consequences to the individual(s) who operate the business. As pointed out, a sole proprietor, while “King” of the business, has unlimited liability for the obligations of the business. General partners are entitled to their share of the business income, but also have unlimited liability. Limited partners may not participate in management, but have limited liability.
So, what can a business owner do to limit his or her liability?
[To be continued, in Part 2, where we will discuss Corporations and LLCs, two of the more preferred ways of operating a business in order to minimize personal liability].
If you are starting a business and have any questions, please contact:
312-368-0100 or email@example.com.
Under the City of Chicago Residential Landlord Tenant Ordinance (“RLTO”), owners and landlords of residential property located in the City of Chicago must notify their tenants of a foreclosure action within seven (7) days of being served with the foreclosure complaint. If the foreclosure action is pending at the time the lease is executed, the owner or landlord must disclose in writing to the tenant that the foreclosure complaint is pending.
The notice must comply with the following requirements:
- Be in writing;
- Be sent to all tenants of the premises and to any other third party who has a consistent pattern and practice of paying rent on behalf of the tenant;
- Identify the court in which the foreclosure action is pending, the case name, and the case number; and
- Include the following language: “This is not a notice to vacate the premises. This notice does not mean ownership of the building has changed. All tenants are still responsible for payment of rent and other obligations under the rental agreement. The owner or landlord is still responsible for their obligations under the rental agreement. You shall receive additional notice if there is a change in owner.”
If an owner or landlord fails to provide the required notice, the tenant may terminate the rental agreement upon thirty days (30) written notice to the owner or landlord. Additionally, in a civil lawsuit, the tenant can recover $200 in statutory damages, plus any other actual damages incurred as a result of the owner or landlord’s failure to provide the requisite notice.
If you have any questions about your obligations under the RLTO, or would like assistance in issuing a foreclosure notice to your tenants, please contact:
(312) 368-0100 or firstname.lastname@example.org.