Legal Question in Business Law in Colorado

Re: What type of partnership is best for a family business?

Limited Family Partnerships and LLCs are very popular and effective means of availing yourself of the benefits and protection of a formal family business structure.

However, the true answer depends upon numerous factors and considerations unique to every family. In fact, the choice of entity is perhaps the most important and most intricate threshold issue you need to address. Do not be cavalier and simply toss a coin! Your choice of entity will have enormous consequences as to your liability and tax exposure. It also will directly dictate the very structure and management of your business, among other things.

Many do-it-yourself websites and software programs offer good but limited advice on this front, and are wholly unable to apply it to an individuals particular needs and circumstances. For that reason, I HIGHLY recommend you work in conjunction not only with an attorney but also your CPA. An ounce of prevention now, at a small cost, can save you enormous time, money and expense later.

We are busy and probably not able to take on another client matter at this time; I would, however, be more than happy to chat with you on the phone and, if unable to assist you ourselves, I certainly can refer you to several other excellent firms and attorneys.

Very truly, Peter W. Thomas, Jr., Esq.

Petersen, Thomas & Slade, PLLC

600 Seventeenth Street

Suite 950 South Tower

Denver, Colorado 80202

(303) 260-6424

Re: What type of partnership is best for a family business?

THIS EMAIL MAY BE PRIVILEGED AND CONFIDENTIAL AND IS INTENDED ONLY FOR THE PERSON TO WHOM IT IS ADDRESSED. IF THIS INFORMATION IS NOT INTENDED FOR YOU, THEN PLEASE DELIVER IT TO THE PERSON IT IS ADDRESSED TO WITHOUT READING OR COPYING IT. THANK YOU.

Louise Aron

Attorney at Law

Lakewood Office:

1536 South Ingalls

Lakewood, Colorado 80232 USA

(303) 922 7687

fax (303) 922-1370

Cherry Creek Office:

300 South Jackson #100

Denver, Colorado 80209 USA

(303) 780-7339

Satellite offices:

Boulder - 4450 Arapahoe Avenue, #100

DTC - 4610 South Ulster, #150

A TOLL FREE NUMBER is available to clients outside the Denver metro area.

web site http://www.bewellnet.com/louise/

[email protected]

September 14, 2000

Dear LawGuru User:

There are many considerations that go into the decision regarding what entity to use to shield business owners from personal liability for business obligations. The proportionate size and nature of each owner's interest are the most important factors.

Articles in the Colorado Lawyer (the journal of the state bar association) contain pages and pages of analysis on the question of which entity is best for which type of business, and I would be happy to mail one of these articles to you if you wish.

Limited Family Partnerships are useful when there is a need to discount each partner's ownership interest at the time of death of a general partner. I'm not sure if that is what you need in this case. LLLP's, as well, serve best when there is General Partner with a "greater" ownership interest or with more control over the company than the limited partners.

Lately, the law has struggled with disputes that arise among members of LLC's due to the paucity of law on the subject of partners' duties. This is because LLC's, LLP's and LLLP's are fairly new and few cases interpret them.

If your shareholders or owners or partners will each hold an equal interest, you should consider an S Corporation. This combines the best features of LLC's and C Corporations, and can often be an excellent solution.

Also, you need to select a CPA and discuss the entity choice with him or her.

Best wishes to you in this new endeavor. Please let me know if I can be of further assistance.

Sincerely,

Louise Aron

Attorney at Law

Main Lakewood Office:

1536 South Ingalls

Lakewood, Colorado 80232 USA

(303) 922 7687

fax (303) 922-1370

Cherry Creek Office:

300 South Jackson #100

Denver, Colorado 80209 USA

(303) 780-7339

Satellite offices:

Boulder - 4450 Arapahoe Avenue, #100

DTC - 4610 South Ulster, #150

A TOLL FREE NUMBER is available to clients outside the Denver metro area.

web site http://www.bewellnet.com/louise/

[email protected]

THIS EMAIL MAY BE PRIVILEGED AND CONFIDENTIAL AND IS INTENDED ONLY FOR THE PERSON TO WHOM IT IS ADDRESSED. IF THIS INFORMATION IS NOT INTENDED FOR YOU, THEN PLEASE DELIVER IT TO THE PERSON IT IS ADDRESSED TO WITHOUT READING OR COPYING IT. THANK YOU.