Skip to content
MS-Logo-UP
Client Reviews

1.800.481.2180

  • Contact Us
  • Home
  • Blog
  • What We Do
    • Business & Contracts
      • Choosing a Business Lawyer for NC Corporations and Other Small Business
      • The Number One Problem for Small Limited Liability Companies
      • How To Dissolve a Corporation in North Carolina?
      • 5 Considerations as to Your Business’ Negative Internet Review
      • (Part 2) 5 Considerations as to Your Business’ Negative Internet Review
      • (Part 3) 5 Considerations as to Your Business’ Negative Internet Review
      • (Part 4) 5 Considerations as to Your Business’ Negative Internet Review
      • (Part 5) 5 Considerations as to Your Business’ Negative Internet Review
      • Are Negative Reviews Really Bad for Business?
    • Limited Liability Company
      • Your New LLC – Part 1: The Basics
      • New LLC: Maintaining Limited Liability Protection
      • Your New LLC – Part 3: Federal, State and Local Registration, Licensing and Permitting
      • “Your New LLC” – Part 4: Transacting Business in Another State
      • “Your New LLC” – Part 5: Moving Your LLC to Another State
    • Mortgage & Foreclosure
      • Hearing Results
      • Mortgage Problems – Should You Trust Your Lender or Loan Servicer?
      • When to Hire an Attorney for Foreclosure and Mortgage Relief
      • Mortgage Loans: Recourse versus Non-Recourse and Foreclosure Related Deficiency Judgments
      • Negotiating with a Bank: Why do I have to Provide My Financials?
      • Can the HOA (Homeowners’ Association) Foreclose on my Home?
    • Real Estate Cases
      • Breach of NC Real Estate Purchase Contract – Buyer’s Damages in NorthCarolina
      • Private Mortgage Insurance (PMI) – What is the Borrower Really Paying for?
    • Real Estate Closings
    • Disputes & Lawsuits
      • Business Contracts: What Should Yours Say Regarding Recovering Attorneys’ Fees in Case of Dispute? (Part 1)
      • Business Contracts: What Should Yours Say Regarding Recovering Attorneys’ Fees in Case of Dispute? (Part 2)
      • Arbitration versus Mediation
      • Responding to a Lawsuit Complaint
    • Tax & IRS Matters
      • S-Corp Tax Election for LLC
      • Comparison of Subchapter K v. Subchapter S
      • Employment Tax Considerations in Starting a Business
      • Is your Worker an Independent Contractor? (The IRS Cares!)
    • Wills, Trusts & Estate Planning
      • Congrats, You’ve Inherited a Mess
      • When Should I Write a Will?
      • Top 5 Reasons to Change Your Will
    • Prenuptial Agreements
      • Recently Engaged? 5 Reasons Why You Should Consider A Prenup
    • Other Practice Areas
      • Indemnification in Contracts: What if Both Parties Are at Fault?
      • Indemnification in Contracts: Should You at Least Have to be Guilty as Charged?
      • Venue Clauses in Contracts – Beware Listing Only the County and State
    • Limited Scope Services
      • Arbitration Agreement: How to Get to Arbitration if A Lawsuit Was Filed First
      • Follow the Contract’s Arbitration Clause or File a Lawsuit?
      • Arbitration: setting the rules and identifying which arbitration organization will be used
      • Why does your Corporation or Company Need a Registered Agent?
  • Who We Are
    • Jason A. McGrath
    • James M. Spielberger
    • Kelly J. Brown
    • Todd E. Gonyer
    • Trent Grissom
  • Where We Practice
  • Client Services
    • Helpful Resources
    • News & Updates
  • Consultations
    • About McGrath & Spielberger’s Intake Form

Category: business law

How Do You Expand Your Company Into North Carolina From Another State?

Posted on April 22, 2022May 5, 2022 by g83js92js91
As a business law attorney, one of the most frequent questions I am asked is some variation of “How do I transfer or expand my out-of-state company to North Carolina?” I’ll address the most common scenarios and the reasonable options available. I’m using South Carolina as the “other” state for example purposes, since we also practice in SC. However, the same general process is true regardless of which state your company originated in.Scenario B: “I live in South Carolina, which is where my company is and will be based, but I want to expand my region of operations to include North Carolina. What should I do and how do I do it?”

Option 1: keep your South Carolina LLC open and register it with the State of North Carolina as a foreign business authorized to transact in North Carolina. You’d obtain a “Certificate of Good Standing” or similar from Florida. You then provide that to the Secretary of State for North Carolina as part of your North Carolina Application for Certificate of Authority (to conduct business in North Carolina). Assuming you are approved by NC, you’re now good to go to conduct business in both states, or either state, and you can have your principal place of business in either state. You will likely be required to pay annual fees to each state and file taxes in each state, which are important factors to consider.

Option 2: start an affiliated company or subsidiary in North Carolina. In certain specific instances, you may keep your South Carolina LLC open, and instead of registering it with North Carolina, you’d prefer to create and register a separate but related business entity in North Carolina. This is typically referred to as a “subsidiary” or an “affiliated company”. You will likely be required to pay annual fees to each state and file taxes in each state, which are important factors to consider.

Additional notes. Under any of the above options, you’ll have to have a registered agent with a “continuous presence” in NC. Many law firms (like mine) agree to provide that service for a small annual fee, but your company’s “RA” doesn’t have to be a business lawyer or law firm. Of course, we also provide the very services needed to transfer your business overall.

These actions can be accomplished without an attorney, but you should at least consider consulting with an attorney any time you make a significant change to your business entity. Good luck!

NC-State-Flag-XL-Size

Save

Posted in business law, Business Law & Contracts, Charlotte, Jason A McGrath, Jason McGrath News / Media, North Carolina, small business

Decision On An Arbitration Provision In A Contract

Posted on January 22, 2020April 20, 2022 by g83js92js91
Attorney Jason McGrath discusses some items to consider when deciding to include an arbitration provision in a contract matter in this short video.

Watch here > https://youtu.be/rOPNhRSSLVE

Here are some of the key points contained in the video:

⬤  Arbitration: do you prefer arbitration or a formal court case if there is a dispute?

⬤  The intent of an arbitration provision in a contract is to avoid a formal court case.

⬤  Arbitration provisions are, in general, enforceable and typically will be binding in the same way that a civil court judgment can be enforced.

⬤  There are ways to appeal an arbitration decision but they are limited.

⬤  Arbitration is usually less expensive than a formal court case.

⬤  You should talk to an attorney for advice when considering including an arbitration provision to your business contract.

If you need legal services in North Carolina, South Carolina, Georgia, Florida, Ohio, or Tennessee we invite you to fill out our confidential client form for possible legal assistance.

cropped logo2Bseal2Blarge 3

Posted in arbitration, business law, Business Law & Contracts, Business Law Disputes, Continuing Series, contract law, contracts, Jason A McGrath, lawsuit, Litigation, North Carolina, series, video

Arbitration Agreement: How to Get to Arbitration if A Lawsuit Was Filed First

Posted on November 19, 2019April 20, 2022 by g83js92js91
Attorney Jason McGrath shares some items to consider when your contract has an arbitration provision but the other party has already filed a formal lawsuit in the court system in this short video.

Click this link to view on YouTube https://youtu.be/J23FU7EDFB0, or watch below.

 

Here are some of the key points contained in the video:

What do you do if the other party has already filed a formal lawsuit in the court system?

  1. You go to the other side and point out that there is an arbitration clause in the contract and demand it be honored.
  2. If the other side refuses to halt the lawsuit and go to arbitration, you file a motion asking the court to dismiss or stay the lawsuit and order arbitration.
  3. This type of a motion needs to be filed before the case goes to far in the formal court system.
  4. If the court believes the arbitration clause to be valid, it will typically order arbitration and halt the lawsuit in the meantime.
  5. More often than not, arbitration clauses are enforced by courts.

You should get advice from an attorney to assist in handling litigation issues like arbitration.

If you need legal services in North Carolina, South Carolina, Georgia, Florida, Ohio, or Tennessee we invite you to fill out our confidential client form for possible legal assistance.

cropped logo2Bseal2Blarge 3
Posted in arbitration, business law, Business Law & Contracts, Business Law Disputes, contract law, contracts, Jason A McGrath, lawsuit, Litigation, North Carolina, video

Interrogatories – How They Generally Work

Posted on August 28, 2019April 20, 2022 by g83js92js91

Attorney Jason McGrath explains “Interrogatories” during litigation and how they generally work in a lawsuit in this short video.

Click here to watch on YouTube  – https://youtu.be/s923VxHdLyE

Here are some of the key points contained in the video:

  1. Interrogatories are a list of written questions.
  2. The receiving party is to respond, typically within 30 days, to the questions or file an objection or series of objections.
  3. There is a rule limiting the number of questions that may be asked.
  4. The responses should be evaluated by the party that initiated the Interrogatories for accuracy and completeness and these issues can be questioned within the court system.

If you need legal services in North Carolina, South Carolina, Georgia, Florida, Ohio, or Tennessee we invite you to fill out our confidential client contact form for possible legal assistance.

Save

cropped logo2Bseal2Blarge 3
Posted in attorney, business, business law, Business Law & Contracts, Business Law Disputes, interrogatories, Jason A McGrath, lawsuit, lawyer, Litigation, NC Rules of Civil Procedure, small business

Follow the Contract’s Arbitration Clause or File a Lawsuit?

Posted on February 4, 2019April 25, 2022 by g83js92js91

Attorney Jason McGrath explains some things to consider when deciding whether to follow a contract’s arbitration clause or file a lawsuit in this short video.

Click here to watch on YouTube or watch the video below.

Here are some of the key points contained in the video:

  • How do you end up in arbitration vs. in court?
  • Typically, someone has to decide – do we follow the arbitration clause or just file a lawsuit?
  • Parties usually just file a formal lawsuit as if there is no arbitration clause.
  • There can be some negatives to ignoring the arbitration clause.

You should have your attorney take a look at the contract and then make a careful decision on how to proceed based on a through legal analysis of your case and the contract.

If you need legal services in North Carolina, South Carolina, Georgia, Florida, Ohio, or Tennessee we invite you to fill out our confidential client form for possible legal assistance.

cropped logo2Bseal2Blarge 3

Save

Posted in arbitration, arbitration clause, business law, Business Law & Contracts, Business Law Disputes, contract law, contracts, Dispute, Jason A McGrath, lawsuit, North Carolina, series

What Factors Should You Consider When Starting a Business?

Posted on March 7, 2018April 20, 2022 by g83js92js91
Startup Business People Group 251096971When you decide to start a business venture, there are a myriad of things to consider.  You have possibly already chosen the purpose of your venture and what it is you are going to make, do, or sell.  You have probably also played around with what to name your business.  Now what?  Where do you go from here?

We regularly assist small business owners, especially start-up businesses, walking them through the steps that need to be taken in order to make the business official and legal.  There are many ways a business can be organized and there are non-tax factors, tax factors, and state statutory requirements that need to be taken into consideration when embarking on this exciting journey of starting a business.

This article focuses on a few of the non-tax factors that need to be considered.  A follow-up article will discuss the tax factors of organizing your business.  Much of the information in this article relates to the laws in a majority of jurisdictions along with examples of specific instances where North Carolina law is different from the majority of jurisdictions.  The statutory requirements of starting a business are state specific, therefore it is important to seek the assistance of a professional who knows the law in your jurisdiction.  There are also state and local licensing as well as registration requirements that will need to be met depending on the jurisdiction your business will be located in.

In the tables below the entities are listed from the broadest/most flexible to the most restrictive.

limited liability3 pt 1

Limited liability is probably the most sought after attribute of business owners forming a new business venture.  New business owners wish to protect their personal assets from the claims of business creditors.  This can usually be achieved by organizing the venture under a state law that limits the owners’ liability to the amount of capital the owner has invested in the entity.  Be very careful when capitalizing the business and applying for loans.  Some lenders may require that the owner(s) of the business provide a personal guarantee for the business obligations, thereby making the owner liable to those creditors of the business and defeating the purpose of the limitation of liability.

management and control1 pt 2
capital structure pt 3
transferability of interests pt 4
transferability of interests pt 4 1

The business lawyers McGrath & Spielberger, PLLC assists clients with all sorts of tax, business, and estate planning matters in North Carolina.  Click here to contact us about your tax, business, or estate planning matter today.

Posted in business law, corporation, forming business, Life and the Law, limited liability, llc, North Carolina, online legal services, partnership, s corporation, single member llc, start-up business

Arbitration Clause: One Arbitrator Or More?

Posted on December 1, 2016April 25, 2022 by g83js92js91

Attorney Jason McGrath explains some things to consider when when considering the arbitration clause in a contract in this short video.

https://youtu.be/VaxZHXUP3PY

Here are some of the key points contained in the video:

    • How many arbitrators would you prefer?

 

    • Are you comfortable with the decision being in the hands of just one person? Keep in mind that trial level legal cases in the regular judicial system are handled by one judge.

 

    • Keep in mind that the more arbitrators involved, the more expensive arbitration will be.

 

  • Does the arbitration clause in the contract address how many arbitrators there are going to be?

The arbitration provision in a contract doesn’t have to address the issue of how many arbitrators. You can leave the option open if you prefer.  You want to be mindful of this when crafting your contract and the arbitration provision.

If you need legal services in North Carolina, South Carolina, Georgia, Florida, Ohio, or Tennessee we invite you to fill out our confidential client form for possible legal assistance.

clause

Posted in arbitration, business law, Business Law & Contracts, Business Law Disputes, contract law, contracts, Jason A McGrath, lawsuit, McGrath amp; Spielberger, North Carolina, video

How Do You “Transfer” Your Company Into North Carolina From Another State?

Posted on November 3, 2016April 25, 2022 by g83js92js91
Transferring Your Company Into North Carolina From Another State, moving

As a business attorney, one of the most frequent questions I am asked is some variation of “How do I transfer my out-of-state company to North Carolina?” I’ll address the most common scenarios and the reasonable options available. I’m using Florida as the other state just for example purposes (I also practice in FL), but the same general process is true regardless of which state your company originated in or currently exists in.

Scenario A: “I live in Florida, where my company was formed, but I’m moving to North Carolina and going forward I will be doing business out of North Carolina instead of Florida. What should I do and how do I do it?”

Option 1: convert your Florida company into a North Carolina company.  NC allows a company formed in another state to convert to become a NC LLC. The company would need to follow the law of the state it is coming from as far as winding down any business and otherwise wrapping up affairs in that state, and would typically need to have passed a resolution or similar approving the conversion to a NC company. The LLC can then file its Articles of Organization/Conversion with the NC Secretary of State.

Option 2: shut your Florida company down and start a new one in North Carolina. You would “wind up” your Florida LLC and dissolve it, such that it no longer exists. While the timing of the steps in North Carolina may vary to some extent, you’d go ahead and create a North Carolina LLC. The name would not have to be the same, but there are advantages to using the same name, if possible (this article does not attempt to address those issues).

Option 3: keep your Florida company open and register it with the State of North Carolina as a foreign business authorized to transact in North Carolina. You’d obtain a “Certificate of Good Standing” or similar from Florida. You then provide that to the NC Secretary of State as part of your North Carolina Application for Certificate of Authority (to conduct business in North Carolina). Assuming you are approved by NC, you’re now good to go to conduct business in both states, or either state, and you can have your principal place of business in either state. You will likely be required to pay annual fees to each state and file taxes in each state, which are important factors to consider.

Option 4: start an affiliated company or subsidiary in North Carolina. In certain specific instances, you may keep your Florida LLC open, and instead of registering it with North Carolina, you’d prefer to create and register a separate but related business entity in North Carolina. This is typically referred to as a “subsidiary” or an “affiliated company”. You will likely be required to pay annual fees to each state and file taxes in each state, which are important factors to consider.

Additional notes. Under any of the above options, you’ll have to have a registered agent with a “continuous presence” in NC. Many law firms (like mine) agree to provide that service for a small annual fee, but your company’s “RA” doesn’t have to be a lawyer or law firm. Of course, we also provide the very services needed to transfer your business overall.

These actions can be accomplished without an attorney, but you should at least consider consulting with an attorney any time you make a significant change to your business entity. Good luck!

Save

Save

Posted in attorney, business, business law, Business Law & Contracts, contracts, florida, Jason A McGrath, llc, North Carolina, small business

Tax Rates on Ordinary Income for Businesses

Posted on August 19, 2015April 25, 2022 by g83js92js91

When you decide to start a business venture, there are a myriad of things to consider. We regularly assist small business owners, especially start-up businesses, walking them through the steps that need to be taken in order to make the business official and legal. There are many ways a business can be organized and there are both non-tax and tax factors as well as state and local statutory requirements that need to be taken into consideration when embarking on this exciting journey of starting a business.

I previously wrote an article regarding the non-tax factors that should be considered when starting a business. This article is one of a series of articles that focuses on the tax implications of certain business activities and things you should consider when choosing your business entity. The most prominent federal tax considerations in choosing a business entity include:

  • Capital Contributions

 

  • Ownership Restrictions

 

  • Business Income and Loss

 

  • Allocations of Income or Loss

 

  • Basis Limitations and the Deductibility of Losses

 

  • Distributions

 

  • Employment Tax Considerations

 

  • Tax Rates on Ordinary Income

This article discusses the tax rates for businesses and business owners.

Ordinary Income Tax Rates

For most C corporations that have significant taxable income, the corporate income tax rate is essentially a flat rate of 34-35%. Corporations with smaller amounts of income enjoy lower rates (15-25%) on their first $75,000 of taxable income. As you can see below, a very small number of small businesses will receive the lower tax rates of 15 and 25%.

corporate tax rates

Additionally, certain personal service corporations (i.e., lawyers, accountants, architects, and the like) are not entitled to graduated tax rates but receive a flat rate of 35%. Individuals pay tax at the graduated rates of 15%, 28%, 31%, 36%, and 39.6%.

With a presidential election fast approaching and presidential hopefuls throwing their hat in the ring, you can expect some campaign talk of tax reform. On the corporate side, Marco Rubio has talked about tax reform that would lower the tax rate for corporations and passthroughs to 25% (although many of the credits and deductions would be eliminated) and allow businesses to expense the cost of their investments 100% in the year of acquisition. On individual tax reform, Rubio proposes reducing the number of individual tax brackets from 7 to 2 (15% and 35%), eliminate the standard deduction and replace it with a refundable personal credit, and create a $2,500 child tax credit.

Depositphotos 6663610 sacks of money

The relationships among these tax rates can greatly influence the choice of entity. At one time the maximum individual tax rate on ordinary income peaked at 70% and the top corporate tax rate was 46%, making forming a C corporation an attractive option to avoid the higher individual tax rates. The difference in rates prompted most business owners to organize their entities as a corporation rather than a pass-through entity because corporate income was taxed at much lower rates. During these high individual tax rate times, shareholders that wished to withdraw earnings created tax efficient strategies to avoid the double tax (e.g., owner-employees of a C corporation would distribute profits in the form of salary or fringe benefits, which are tax-deductible by the corporation and the fringe benefits are excludable from income of the employee in most situations). Shareholders also loaned money or leased property to C corporations and withdrew earnings from the corporation in the form of rent or interest payments that were tax deductible as well. The IRS began to crack down on these strategies and attacked payments of salary or interest as unreasonable compensation or disguised dividends. Congress fought back by enacting penalties to patrol against excessive accumulations or avoidance of the individual progressive tax rates. It wasn’t hard for a corporation with good tax planning to justify the payment of reasonable compensation and accumulation of earnings on the basis of reasonable business judgment and thereby avoid constructive dividends and the corporate penalty tax.

Now, individuals and corporations are subject to the same top tax rate and dividends and long-term capital gains are both taxed at relatively low rates, the C corporation earnings accumulation strategy is much less compelling. The parity in the individual and corporate tax rates, in conjunction with the prospect of two levels of tax when a C corporation is sold, provides a greater incentive to use a pass-through entity instead of a C corporation, particularly if the business intends to distribute its earnings currently, does not have owners who work for the firm, or holds assets that are likely to appreciate in value over a relatively short time frame. It would not be beneficial to organize a venture that invests in passive assets such as real estate or financial assets to operate as a C corporation because the costs of doing so would be prohibitive in light of the double tax. In some cases, however, C corporations still offer tax savings, especially for businesses able to pay out most of their earnings as compensation to their high-income owners.

For a complete analysis of the tax implications of C Corporations, Partnerships, and S Corporations click here for the Joint Committee on Taxation’s publication entitled “Choice of Business Entity: Present Law and Data Relating to C Corporations, Partnerships, and S Corporations.”

McGrath and Spielberger, PLLC assists clients with all sorts of tax issues, both federal and state (including but not limited to North Carolina and South Carolina). Click here to contact us about your tax matter.

⬕

 McGrath & Spielberger, PLLC provides legal services in Florida, Georgia, North Carolina, Ohio, South Carolina, and Tennessee, as well as in some Federal courts. The Firm offers full scale representation, as well as limited scope services, as appropriate for the situation. Please be advised that the content on this website is not legal advice, but rather informational, and no attorney-client relationship is formed without the express agreement of this law firm. Thank you.

Posted in business law, Business Law & Contracts, business owners, income, Life and the Law, North Carolina, Tax Issues, tax rates

NC LLC Operating Agreements Even More Important Due to Changes in North Carolina Law

Posted on December 31, 2014April 25, 2022 by g83js92js91
In this video, business law attorney Jason McGrath answers the question of why the change in North Carolina law makes it even more crucial that limited liability companies – LLCs – have a written operating agreement.

https://youtu.be/TFZkqOQn-5c

Posted in business contracts, business law, Jason A McGrath, limited liability company, llc, McGrath amp; Spielberger, North Carolina, operating agreement

McGrath & Spielberger, PLLC

Tweets by JasonMcGrathLaw

Categories

Recent Posts

  • Lease or License: What’s the Difference and Why Does it Matter? – Part Three
  • Lease or License: What’s the Difference and Why Does it Matter? – Part Two
  • Lease or License: What’s the Difference and Why Does it Matter? – Part One
  • Comparison of Subchapter K v. Subchapter S
  • Registered Agent for your North Carolina Business – Can you be your own Registered Agent?

Sitemap

  • Contact Us
  • Home
  • Who We Are
  • Where We Practice
  • Consultations
  • Blog

What We Do

  • Business & Contract Law
  • Limited Liability Company
  • Mortgage & Foreclosure
  • Real Estate Cases
  • Disputes & Lawsuits
  • Tax & IRS Matters
  • Wills, Trusts & Estate Planning
  • Prenuptial Agreements
  • Other Practice Areas

Location

map

Directions

Contact Us

6201 FAIRVIEW RD, STE 330
CHARLOTTE NC 28210

info@mcgrathspielberger.com

1.800.481.2180


fb


tw


yt


ld

google

The attorneys responsible for this website are Jason McGrath and Jim Spielberger. At least some of the content of this website may be considered attorney advertising in some jurisdictions. For information about our website privacy policy and terms and conditions, please click here.

Attorney Website Design, Legal Search Engine Optimizations and Lawyer Online Advertising by Leads Online Marketing Services.