Partnerships

More Changes to Enforcement of the Corporate Transparency Act and BOIRs

February 21, 2025 | Morgan B. Brading

We have written previously about the effects that ongoing litigation in Texas Top Cop Shop, Inc. v. Garland, has had on the reporting requirements established by the Corporate Transparency Act. For more information on the CTA and Beneficial Ownership Information (BOI) reporting requirements check out this post. For other blogs related to Texas Top Cop look here.

As the situation changes, and rather than continue to post blog after blog on the current status of the BOI reporting requirements, all updates will live on this post for now. As we endeavor to provide updates as soon as possible in one central location, please be aware that there may be delays. If you would like our office to file the BOI on behalf of your business, please contact our office.

Current status of CTA Reporting Requirements: MANDATORY (Updated: 02/21/2025)

Companies Need Not File Beneficial Ownership Information Reports – at least for now

December 9, 2024 | Morgan B. Brading

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The Corporate Transparency Act (CTA) requires most small business corporations and limited liability companies to file Beneficial Ownership Information Reports (BOI reports or BOIRs) with the Financial Crimes Enforcement Network (FinCEN), a part of the United States Department of Treasury. The purpose of the reports is to give law enforcement information regarding the people who own or control companies that may not otherwise be available to them, primarily for the purpose of investigating money laundering and other financial crimes. For companies that were formed before January 1, 2024, BOIRs are due by January 1, 2025.

At least they were before this week. On December 3, the United States District Court for the Eastern District of Texas in Texas Top Cop Shop, Inc. v. Garland (civil action number 4:24-CV-478) ruled that the CTA is likely unconstitutional and issued a nationwide preliminary injunction prohibiting the enforcement of the BOIR requirement. In doing so, the court wrote, “[R]eporting companies need not comply with the CTA’s January 1, 2025, BOI reporting deadline pending further order of the Court.”

For several reasons, this is not the last word on the CTA. First, the Government has already appealed the decision to the U.S. Court of Appeals for the Fifth Circuit, which could set aside the preliminary injunction.

Basics of Business Valuation: A Guide for Business Owners in Indiana

October 1, 2024 | Michael R. Smith

iStock-1504303841_optimized-1-300x188 Determining the value of a small business is a critical step for various purposes, including selling the business, merging with another company, or resolving shareholder disputes. Business valuation involves assessing the economic value of a company, and several methods can be used to achieve this. Business valuation is both an art and a science. A proper valuation requires a trained expert, and they are not cheap. The valuation of a small business can run from a few thousand dollars to several tens of thousands of dollars.

Even though a proper appraisal is the wheelhouse of experts, small business owners should understand the fundamental principles. In this article, we’ll explore the basics to help you know what to expect from a valuation.

Why Business Valuation Matters

Indiana Business Entity Harmonization: Postscript

March 3, 2018 | Michael R. Smith

We previously discussed the Business Entity Harmonization Bill (Senate Enrolled Act 443 or P.L. 118-2017) passed last year by the General Assembly in the following posts:

Part I — an introduction.
Part II — a discussion of IC 23‑0.5, the Uniform Business Organizations Code.

Indiana Business Entity Harmonization: Part IV

January 3, 2018 | Michael R. Smith

[March 3, 2018. The General Assembly amended some of the provisions created the Business Entity Harmonization Bill, as discussed in a Postscript to this series.]

This is the last in four-part series. The first three parts are here: here, here, and here.

This Part IV describes some flaws of Senate Enrolled Act 443 that we ran across while writing the first three parts. We hope the General Assembly will address them, either in the 2018 session or another.

Indiana Business Entity Harmonization: Part III

January 2, 2018 | Michael R. Smith

[March 3, 2018. The General Assembly amended some of the provisions created the Business Entity Harmonization Bill, as discussed in a Postscript to this series.]

This is the third of a four-part series discussing the Business Entity Harmonization Bill passed by the Indiana General Assembly in 2017. The first two parts are here and here.

Senate Enrolled Act 443 creates, effective as of January 1, 2018, a new Article 0.6, the Uniform Business Organization Transactions Code, in Title 23 of the Indiana Code. In previous versions of the statute, provisions dealing with mergers, conversions, and domestications of business corporations, limited liability companies (LLCs), limited partnerships (LPs), limited liability partnerships (LLPs), and nonprofit corporations were scattered across several articles of Title 23. The Uniform Business Organization Transactions Code gathers most of them into one article that, in general, applies at least as broadly as each corresponding provision of the former statute, and in some cases more broadly. In addition, the new article provides for the acquisition of ownership interest (i.e., stock in a corporation or interest in a partnership or LLC) by another entity.

Indiana Business Entity Harmonization: Part II

January 1, 2018 | Michael R. Smith

[March 3, 2018. The General Assembly amended some of the provisions created the Business Entity Harmonization Bill, as discussed in a Postscript to this series.]

This is the second of a four-part series discussing the Business Entity Harmonization Bill passed by the Indiana General Assembly in 2017. An overview of the bill is provided in Part I.

Senate Enrolled Act 443 creates, effective as of January 1, 2018, a new Article 0.5 in Title 23 of the Indiana Code, the Uniform Business Organizations Code, that includes a number of provisions that apply to Indiana business corporations (including professional corporations and benefit corporations, but excluding insurance companies), limited liability companies (LLCs, including series LLCs), limited partnerships (LPs), limited liability partnerships (LLPs), and nonprofit corporations, eliminating a number of inconsistencies between similar provisions for different types of entities. The following discussion is a brief description of some of the more important provisions, drawing attention to new or substantially changed provisions.

Indiana Business Entity Harmonization: Part I

January 1, 2018 | Michael R. Smith

[March 3, 2018. The General Assembly amended some of the provisions created the Business Entity Harmonization Bill, as discussed in a Postscript to this series.]

Indiana law provides for several types of business and nonprofit entities, each of which is governed by one or more articles of Title 23 of the Indiana Code, all of which require similar filings with the Indiana Secretary of State, and all of which are capable of undergoing transactions such as mergers and conversions into other types of entities. The types of entities and the governing portions of Title 23 are:

Business Corporations, Article 1

Partnership Dissolved, but Partner Still Liable

June 30, 2014 | Michael R. Smith

Last year the Indiana Court of Appeals decided a case that illustrates some of the hazards of operating a business as a general partnership. The case is Curves for Women of Angola vs. Flying Cat, LLC.

In 2001, a married couple, Dan and Lori, purchased a fitness and health franchise known as Curves for Women that they intended to operate in Angola, Indiana. The franchise agreement, which Dan and Lori both signed, contained the following affirmation:

We the undersigned principals of the corporate or partnership franchisee, do as individuals jointly and severally, with the corporation or partnership and amongst ourselves, accept and agree to all of the provisions, covenants and conditions of this agreement[.]

At no time did Dan and Lori form a corporation or limited liability company to own the franchise – not before signing the franchise agreement and not after.

Just what IS a limited liability company? Part 4. It’s a separate legal entity.

February 17, 2011 | Michael R. Smith

[This is the fourth post in a seven-part series discussing the characteristics of limited liability companies and comparing them to the characteristics of corporations, general partnerships, and sole proprietorships. Here’s the entire list.

Part 1. Background on sole proprietorships.
Part 2. Background on partnerships.
Part 3. Background on corporations.
Part 4. LLCs are distinct legal entities, separate from their owners.
Part 5. A limited liability company’s owners are not liable for the LLC’s obligations.
Part 6. Options for an LLC’s management structure.
Part 7. Options for an LLC’s tax treatment.]

To set the background for a discussion of the basics of limited liability companies, we’ve discussed sole proprietorships, partnerships, and corporations. As we’ll see, a limited liability company shares some characteristics with corporations and other characteristics with sole proprietorships (if the LLC has one owner, called a member) or partnerships (if the LLC has more than one member).

The first thing to recognize about a limited liability company is that it is a separate legal entity, apart from its owners. How does that compare to the other structures? First, a sole proprietorship is NOT a separate legal entity apart from its owner. If you’re running a business as a sole proprietorship, you really ARE the business, and the business is you.

At the other end of the spectrum, a corporation is a distinct legal entity, completely separate from its shareholders. For example a corporation can sue and be sued in its own name, It can enter into contracts in its own name. And it can go into bankruptcy without dragging its owners with it.

In the middle of the spectrum is a partnership. Without getting into all the details, I’ll just say that for some purposes a partnership has the characteristics of a separate legal entity, and for other purposes a partnership is treated more like the aggregate of all the partners.

So in this sense, a limited liability company is just like a corporation. It is a separate legal entity, apart from its members. It can sue and be sued; it can enter into contracts; and it can go into bankruptcy, all apart from its members. And all that is true even if the LLC has only a single member.

Next we’ll discuss another way that a limited liability company is like a corporation — the liability shield.
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