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CCSK Tips from the Bar Summary Blog

While the best thing to do is to have the assistance of an attorney, anyone can write a contract for themselves (but not for other people unless you're a licensed attorney). If you insist of writing the contract yourself, then we have some tips:

Tip 1. Contracts must have consideration, which means each person must give something and/or give something up. Otherwise, it is not a real contract.

Tip 2. Writing a contract is about clearly laying out expectations of the people signing the agreement and then outlying the accountability if anyone fails to meet those expectations.

Tip 3. Do not download contract that you do not understand. Signing a contract that has language you do not understand can do more harm than good.

Tip 4. Have an attorney review it anyway. Spending a few hundred dollars is a important preventative measure instead of spending thousands later in court.

Now for a couple tips on taxation of corporations. The most common taxation of Corporations are as a C-Corp, S-Corp, or tax exempt under 501(c)(3).

Tip 1. A C-Corp has double taxation (which is being lowered by the new tax bill), so the income is taxed both at the corporate level and then again when it is passed to the shareholders.

Tip 2. An S-Corp has pass-through taxation, so it is only taxed once, but there are certain requirements to be able to have S-Corp status:

  1. the corporation must have under 100 shareholders
  2. all shareholders must be people, and not entities or trusts
  3. all shareholders must be US citizens
  4. the corporation cannot have more than one class of stock (though it may have voting and non-voting stock)

Tip 3. The 501(c)(3) is a section of the tax code that allows a non-profit corporation to get its income to be tax exempt. However, a non-profit does not have shareholders, and must meet particular requirements for having a charitable purpose.

See you next week!

CCSK Law - Carr Chelovich Skadberg & Kazmierczak, LLC
103 Indiana Ave Ste. B Valparaiso, IN 46383
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