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Kenneth Allyn Sprang

Kenneth Sprang’s Answers

762 total


  • We originally formed our LLC in Delaware and we had California registered as a foreign entity because we did business in Ca.

    The company who set us up as an LLC charged a lot of money and was not there for us when we originally spoke with them. We were lead to believe it was better to be a Delaware LLC and only after we paid the initial fee did they hit us with having t...

    Kenneth’s Answer

    First, let me underscore why I think companies that form LLC's for clients rather than business lawyers often end up costing the client more in the long run. I know that clients want to save money, but scrimping on accountants and attorneys is often a disaster. Of course it is too late for you on that issue, but hopefully others will listen to the advice.

    There are a lot of advantages of being organized in Delaware, depending on long term goals. Their organization is efficient, fast, reasonable in cost, and competent. In California it may take me a few days to get an answer to something while in DE it may only be a few minutes or a few hours. Converting LLC's to corporations is a snap in DE, but not so everywhere.

    If your business is concentrated in California and you have no plans to go public or seek investment from outside investors, organizing in CA alone might make sense. On the other hand, you are now organized in DE and the annual fee there is $250 for an LLC. You are on the hook for the $800 annually in CA no matter what you do. Unless money is really tight, I would suggest you remain organized in DE and register as a foreign LLC in CA and pay the annual fee. If you had not already organized in DE, I might say go with CA, depending on your plans. However, since you are in DE already, why not enjoy the benefits of organization there since your extra cost is only $250 annually and down the road you could well appreciate operating your company under DE rather than CA law. To clarify, corporate/LLC matters are governed by DE law, while tort, contract, etc. will be governed by CA law if the events are in CA.

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  • What is a good legal entity for a business that will have a subdivision in a different industry?

    I would like to form a company that will basically be in the trucking business, just regular dry freight. I would also like a subdivision or a part of that company to be in a different business, like brokerage for getting shipments or even offer ...

    Kenneth’s Answer

    You have three basic options. Either you create a single company which has two divisions, a trucking division and a brokerage division, or you create a trucking company which has a subsidiary in the brokerage business (or vice -versa). You could also have a single holding company which owns a trucking company and a brokerage company.

    Any of those structures will likely give you the insulation from liability you want. The threshhold question is a tax question. Which structure serves you best for tax purposes.

    Personally I favor S corporations as they provide tax advantages (I am assuming you are a citizen of the U.S., a prerequisite). You could have an S corp that owns an LLC or two LLC's but not the other way around.

    Our firm does a lot of this kind of work and I am happy to discuss with you. I would also urge you to speak to your accountant about tax ramifications. Sometimes attorneys and accountants disagree as we look at governance, liability and things other than tax, while their focus is tax. However, if you are the sole owner whatever structure your accountant favors will probably work.

    Best regards,

    Ken
    Kenneth A. Sprang
    Washington International Business Counsel
    ksprang@wibclaw.com

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  • I own a few FL rental condos, am I better off with an umbrella liability policy or moving the into an LLC?

    Does the cost of the LLC outweigh the liability protection of a $2m - $3m umbrella

    Kenneth’s Answer

    I generally recommend that a client hold each property in a separate LLC so that liability is limited to that property. Setting up and operating LLC's is relatively simple. However, you should definitely have insurance as well. If someone was injured in one of your condos, with just the LLC the condo as the asset is at risk. Having insurance, which is relatively inexpensive, is an inexpensive way to protect yourself. An umbrella for all of the condos would probably be the most economical option.

    In short, you are really mixing two issues. The first is whether to use one or more LLC's. There are various business reasons for the LLC, as well as liability insulation. Those business reasons are perhaps less important with real property LLC's but worth considering. The second issue goes to liability protection. You get some with the LLC but you should unequivocally have substantial insurance as well.

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  • Canadian with AZ LLC, no partners, holding IL rentals. How can I restructure for max tax + estate planning benefits?

    Considering restructure to LLLP with brother for estate planning purposes. No properties in AZ - just IL. Want to avoid liability + tax for bro and minimize my tax burden to US + CDN gov'ts. Bro lives in USA, I live in CAN. Bro is not investing...

    Kenneth’s Answer

    • Selected as best answer

    Your question has multiple issues. First, what business are you in that led you to use an LLP rather than an LLC? I am inferring real estate but I am not certain.

    Second, the best vehicle for estate planning is a trust. I would structure the trust under the law of the state where the trustee, e.g., your brother, lives. That is a much better way for estate planning given that any will you create will be probated in Canada in all likelihood.

    There are enough moving parts here that your question requires a conversation. Who gets your property in the event of your death? Have you other family to include. Will the business continue after death. Are there other goals to accomplish? The answer is likely rather straightforward, once one knows that totality of your goals and needs. Among other things you also need a partnership agreement in your current configuration or an operating agreement for an LLC.

    I am happy to discuss if you like. Our firm does a great deal of work with foreign nationals with businesses in the U.S.

    Ken Sprang
    Washington International Business Counsel
    ksprang@wibclaw.com

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  • What are the requirements and steps to carry a small business to the US.

    I am a resident if Jamaica and living in Jamaica. Looking to take a business preferably in Florida.

    Kenneth’s Answer

    I work a lot with foreign nationals seek to set up businesses in the U.S. Are you seeking to launch a new business or to buy an existing business? Are you intending to operate it from Jamaica or is your long term goal to emigrate to the U.S.

    It is relatively simple to launch a new LLC for you here if that is your goal. However, you cannot come to the U.S. and earn money working for the company without the proper visa.

    In short it depends on what your near and long term goals are. I am happy to discuss the matter with you if you like. Of course, you will need to have adequate funding to establish and capitalize a new business.

    Best regards,

    Ken Sprang
    Washington International Business Counsel
    ksprang@wibclaw.com

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  • Contracts for hiring interns

    I am the founder of a startup looking to hire my first intern. I have a contract that was drafted to hire contractors (this was done by lawyer). Can i use the same contract when hiring an intern

    Kenneth’s Answer

    When you say you are going to hire an intern, if you mean you are going to pay the intern at least minimum wage, then the intern is an independent contractor as well. I want to raise two caveats, however.

    First, unless an intern's work is a true part of his or her curriculum and it provides little or no value to your company, you must pay the intern. There has been a big crackdown on interns who are essentially free labor to a company.

    Second, there is a question whether your contractors or your interns are really "independent contractors." Whether one is a contractor or an employee is an issue of definition by the IRS or the Department of Labor. If you assert substantial dominion and control over these people they are employees. Failure to treat them as such opens you to potentially huge state and federal liability.

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  • Need an attorney specializing in contracts for partnering up, medical/ cosmetic field.

    I am a business owner in a beauty/medical/cosmetic spa. I am looking to expand and partner up with another individual and need an attorney specializing in contracts of that sort. What kind of an attorney should I go with?

    Kenneth’s Answer

    There are a couple of things to consider from the beginning. First, are you looking for an investor or are you looking to bring on a colleague to help run the business. If you are in a recognized profession, e.g., medicine, you may be able to explore a professional corporation in which all members belong to the same profession. However, you may be able to use a garden variety LLC or corporation as well to address your needs.

    My firm and I do a great deal of work with small businesses, including setting up new LLC's and corporations, advising in situations like yours, etc. We serve several clients in New York. I would be happy to speak with you about your needs without charge or obligation.

    Sincerely,

    Ken Sprang
    Washington International Business Counsel
    Washington, DC
    ksprang@wibclaw.com

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  • What is the best legal entity (e.g. C Corp., LLC, etc.) to share profits with a foreign partner?

    I sell tourist packages to other countries and I have a partner with whom I have to share profits. I'm sending American clients to do the trips and we are supposed to split the profits in half and be owners of our business in equal parts. How shou...

    Kenneth’s Answer

    I do a great deal of work with companies where one owner is an American and the other is a foreign national. Your foreign partner can only own an interest in an LLC or a C corporation. There is no problem with the two of you having interest in the same U.S. company. He will have to file a tax return in the U.S. for income earned through the company, but should get a write off in his home country. The decision to use an LLC or a corporation in this instance is primarily a tax question.

    I use an accountant with expertise in these matters to assure clients regarding the tax issues, I would be happy to discuss the options with you if you like. There is no charge for an initial consultation.

    Best regards,

    Ken Sprang
    Washington International Business Counsel
    ksprang@wibclaw.com

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  • We formed a Delaware LLC thinking there would not be a lot of extra fees and permits even though we live and do business in Cali

    when e first looked into LLC formed in Ca the fees were much higher than forming one in Delaware. We have fees and permits that we have to pay since we do business in Ca. We also have to pay for an agent in Delaware each year because of our format...

    Kenneth’s Answer

    I represent a number of private companies and Delaware is always my jurisdiction of choice when possible. There are numerous advantages to Delaware including simple procedures, extraordinary service, and reasonable fees. Annual fee for an LLC is $250.

    Unfortunately California charges a minimum $800 annual fee to every company, including those organized elsewhere as well as those organized in California. From a purely financial perspective the question is whether the $250 additional annual fee in Delaware is worth the advantages of Delaware.

    If a company intends to grow and go public or be sold, I think the cost is well worthwhile. I much prefer dealing with Delaware in these matters. However, if you intend to be California focused and not necessarily grow exponentially, you may be well served in California alone as the Delaware advantages may not be pertinent to your business.

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  • Import business attorney

    What type of attorney specializes in import laws and rules? Starting a small business and want to make sure all areas are covered

    Kenneth’s Answer

    I work with several clients who import goods from abroad. Many times a freight forwarder can meet your needs and will be less costly than an attorney. So long at you are not importing unusual goods or the like you should be fine.

    I am a business and transaction lawyer who specializes in working with foreign companies that want to do business in the U.S. and U.S. companies that want to do business abroad. In my experience often a freight forwarder can meet the needs of an importing or exporting business, absent unusual circumstances. Similarly a knowledgeable accountant can provide information on relevant tax issues at lower cost than a lawyer. Here again if there are unusual issues, a knowledgeable tax attorney is a necessity.

    Best regards,

    Ken Sprang
    Washington, DC

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