What is an Incorporator - Washington State

When Incorporating in the State of Washington, an incorporator will required to register with the state.

An incorporator is the person or entity in charge of setting up the corporation and filing the articles of incorporation with the state of Washington. When an attorney is hired to set up a corporation, they generally take on the role of incorporator. An incorporator may have to do some preliminary things such as gathering the initial investors and investments that are going to be used for setting up the corporation. In addition, the incorporator will definitely have to do things like prepare and file the articles of incorporation and select the initial board of directors.

The incorporator generally has broad powers up until the directors assume management of the corporation. Once the directors take over, the incorporator basically no longer has any power or management ability left.

For more information about Forming a Corporation in Washington State, please see a Washington Business Attorney.

Trademark Infringment Basics

The test for Trademark Infringement is the ‘likelihood of confusion’.

If you believe someone has infringed on your trademark, contact a Trademark or Business Attorney to file an injunction against the use.

There are eight factors the Court considers:

5 most important:
1. the similarity in the overall impression created by the two marks (including the marks' look, phonetic similarities, and underlying meanings);
2. the similarities of the goods and services involved (including an examination of the marketing channels for the goods);
3. the strength of the plaintiff's mark;
4. any evidence of actual confusion by consumers;
5. the intent of the defendant in adopting its mark;
________________

3 other factors considered:
6. the physical proximity of the goods in the retail marketplace;
7. the degree of care likely to be exercised by the consumer; and
8. the likelihood of expansion of the product lines.

* first two are arguably the most important. The similarity of the marks is clearly an important part in establishing likelihood of confusion, but it is far from determinative. It is possible for the same, identical mark to be used in the same geographic area without any trademark infringement occurring, as long as the goods or services of the parties are sufficiently dissimilar.

Legal Intent: The goal is to protect consumers, not to protect trademarks. Therefore, even if the marks in question are quite similar but there is no real likelihood that consumers will be confused → there would be no harm.

For more information on how to obtain a Trademark, consider contacting an experienced Kirkland Small Business Attorney.

Buy-Sell Agreements: A Primer

Washington Buy – Sell Agreement

For owners of small businesses, the buy-sell agreement is one of the most important pieces of the planning puzzle. The agreement defines the value of the owner’s equity interests in the business.

A Seattle Small Business Law Firm will help owners look at the entire life cycle of the business including the “big D’s”: death, disability, divorce.

A carefully designed Buy-Sell Agreement will accomplish many important objectives of the parties. The following are some of the key considerations:

1. Control

2. Fairness – fairly value and fund the equity interest of a departing owner
a. Valuation Methods:
i. Book value (does not include good will)
ii. P/E Ratio
iii. Appraisal at the time of the trigger event

3. Smooth transition- transitions will be smooth when issues arise

4. Market- insure that all owners have a fair ‘market’ for share at appropriate points of entry

5. Expulsion Rights – insure that owners have the right to expel an owner who is no longer wanted

6. Estate Tax Exposure – To be avoided via effective planning

7. Cash – cash and funding challenges are anticipated and covered

Buy-Sell Life Insurance Planning Options:

1. Redemption Options – Business owns the Policy

a. Down-side: no basis increase for shareholders
b. AMT considerations (Corp making over 5M must consider)

2. Cross Purchase – Owners purchase the policy

a. Shareholders get a basis increase
b. Too difficult if lots of shareholders
c. Not ideal if any of the owners has financial difficulties
d. Tax consequences are not an issue with S-Corps, and other pass-thru entities

3. Wait and See

4. In Trust

For more information on considerations for Buy-Sell Agreements for your business, visit an experienced Kirkland Business Attorney.

Choosing Your Washington Business: S-Corporations

Basic Considerations:

This series of article describes certain basic considerations and costs involved in forming a Washington business. Please note that choosing a business form should not be done in vacuum. Consideration as to how this decision may impact future alternatives is critical. For example, converting a LLC into a Corporation immediately before the business is acquired, rather than at an earlier time, may prevent the transaction from being tax-free. This article is only an overview, particularly as to tax issues and should not be substitute for a professional advisor’s analysis and recommendations based on your individual fact situations when establishing your business.

Selecting the Form of Business Organization:

No single factor is controlling in determining the form of business organization to select, but if the business is expected to expand rapidly, a corporation will typically be the best alternative because of the availability of employee incentive stock plans; ease of accommodating outside investment and greater long-term liquidity alternatives for shareholders. A corporation also minimizes potential personal liability if statutory formalities are followed.

The characteristics of a Business are described below, followed by an overview of other traditional forms of business organizations. Each of the following factors is described for comparison purposes: 1) statutory formalities of creation, 2) tax consequences, 3) personal liability of owners, 4) ease of additional investment, 5) liquidity, 6) control and 7) legal costs. Compare LLCs, or Corporations. This article will focus on S-Corporations.

S-Corporations:

One of the more mis-construed business forms available is the 'S-Corp'. Many people think the 'S' stands for 'Small'. The S actually stands for the subchapter within the Internal Revenue code that governs Corporations which elect to be taxed under the Sub-chapter S regime...thus the real name should be a 'Sub-Chapter S Corporation'.

Basics:

A corporation may be an 'S-Corporation' and not subject to federal corporate tax if shareholders UNANIMOUSLY elect S status for the corporation on a timely basis. A S-Corporation is a tax law label rather than a special type of corporation under state corporate law. Like a partnership, an S-Corporation is simply a conduit for profits and losses to shareholders. Income is passed through to shareholders and is generally taxed only once.

Qualifications:

In order to qualify as an S-Corporation, the corporation must meet certain eligibility requirements including: 1) it must have no more than 75 shareholder, 2) each shareholder must be an individual, certain trust, certain charitable organization, employee stock ownership plan or pension plan, 3) no shareholder may be non-resident alien, 4) it can have only one class of stock, and 5) it must be a U.S. Corporation.

Filing:

To timely file for S-Corporation status, the Corporation must file a Form 2553 form with the IRS by the 15th day of the 3rd month following Incorporation. Should a late filing be needed, one can look to Rev. Proc 2003-43 for guidance in filing a late S-Election.

For more information on forming a S-Corporation, please consider guidance from an experienced Washington Small Business Attorney.