1Is it necessary to form a legal entity to operate a business?
That depends upon the type of business you intend to conduct, whether you will have employees and the amount of risk you are willing to take. Generally, your personal assets receive much more protection from claims made against the business if you form a legal entity.
2Should I form a corporation or an LLC?
There are several considerations when making the determination as to whether to form a corporation or a limited liability company. If you make certain elections, both can act as pass-through entities, meaning the income (or loss) will flow down into your income tax statement. A corporation would need to file the paperwork to be treated as a Subchapter S corporation in order to be pass-thru entity. An LLC is a pass-thru entity by default, but it can elect to be taxed as a corporation and also elect to be treated as a Subchapter S corporation and receive the same tax treatment as a corporation that has elected to be treated as a Subchapter S corporation.

Generally, a limited liability company is less expensive to form and has less formal requirements to adhere to.
3Should I just use an online service to incorporate or form an LLC?
While you can use an online service, there will be things about your business or personal situation that they do not ask about that may have a large impact on what entity you should form to conduct business. Utilizing a business attorney gives personal, expedient service that is tailored to your specific needs. Using a business attorney provides you with the opportunity to form a relationship with someone who will learn about your business and be available for questions you have as your business grows.


1Can one person form a corporation?
Under Pennsylvania law, you can form a corporation with just one person.
2What is a corporation required to do in Pennsylvania?
In Pennsylvania, a corporation must have at least one Annual Meeting of the shareholders. Certain actions of the corporation must be approved by the Board of Directors of the corporation. Under Pennsylvania law, actions of shareholders and the Board of Directors can be done by a written consent, without the necessity of having an actual meeting.

The minutes of all shareholder and Board of Director meetings, and all written consent, should be kept in the corporate record book. In addition, a corporation must be careful not to comingle its funds with the funds of any shareholder or director. A corporation is a separate legal entity and in order to receive the protection against personal liability for obligations of the corporation, it is important to follow the corporate formalities, such as meetings and/or written consents and not commingling funds.
3What are Bylaws?
The Bylaws of a corporation set forth many of ways the corporation is to operate, such as when and where it will hold shareholder and Board of Director meetings, how many shareholders must be present at a meeting in order for the shareholders to legally take action, whether the officers and directors will be indemnified in connection with any litigation instituted against them as a result of their position in the corporation, and certain other matters.
4What is a Buy-Sell Agreement?
A buy-sell agreement restricts the transfer of shares of the corporation, so that any transfer must comply with the provisions in the buy-sell agreement.

It is usually a good idea to have a buy-sell agreement in a corporation with few shareholders, where one or more shareholders does not want to “partner up” with a person they may not know. The buy-sell will restrict the shareholders from selling their shares without certain consents from the other shareholders.

The buy-sell agreement often contains a provision giving the other shareholders the right to purchase the shares of the shareholder that wishes to sell at a price that is determined in accordance with the buy-sell agreement.

A buy-sell agreement is also useful if one of the shareholders passes away, so the shares can be purchased from the heirs at the predetermined price.

It is a good idea for the corporation to purchase insurance for a buy-sell, so that the remaining shareholders will have the funds to purchase the shares.
5What is a Shareholders Agreement?
A Shareholders Agreement governs how the corporation will conduct its activities and the rights of the shareholders with respect to each other. A Shareholders Agreement will contain provisions in addition to those contained in the Bylaws.
6What is an EIN Number?
An EIN, or Employer Identification Number if the tax identification number of the corporation, in much the same way as a Social Security number is the tax identification number of an individual. Every corporation must apply for an EIN number and your business lawyer will do this for you when forming your corporation.
7Can I do business using a different name than the name of the corporation?
Yes, you can. However, you should file a Fictitious Name Certificate for a couple of reasons. Although it does not give you trademark or service mark protection, it does give you the right to use the name as long as no one else has a trademark or service mark that was filed prior to you filing for a fictitious name. In the event someone files a trademark or service mark after you file for a fictitious name, you have the right to use the fictitious name in Pennsylvania.

Furthermore, if you do not file for a fictitious name, you may not sue in the courts of Pennsylvania to enforce a contract entered into while using the fictitious name.

Limited Liability Companies

1Can one person form an LLC?
Under Pennsylvania law, you can form an LLC with just one person.
2What is an LLC required to do in Pennsylvania?
An LLC is not required by Pennsylvania law to hold meetings and keep minutes. The LLC is more flexible in this respect that a corporation. If the LLC has an Operating Agreement, such agreement may require meetings be held and records be kept of actions taken. However, it is still important to ensure that the funds of the LLC and its members are not commingled.
3Are some LLCs member managed and others managed by a Manager?
Yes, an LLC can be operated by its members, who are the owners of the LLC.

If the founders of the LLC elect, they can have a manager run the operations of the LLC. This can be one individual, or it can be a legal entity. It is not necessary that the manager also be a member of the LLC.
4What is an Operating Agreement?
An Operating Agreement is similar to the shareholders agreement of a corporation, and may also contain provisions restricting the sale of any interest in the LLC. The Operating Agreement spells out the rights and responsibilities of the members and managers, if any, of the LLC.

Depending upon whether the LLC has elected to be treated as a pass-through entity, the Operating Agreement can provide great flexibility with respect to how profits and losses are allocated.


1Do you charge by the hour?
In most cases, we bill on a flat fee basis, as we want our clients to be able to budget for their legal expenses. Flat fee cases are paid upfront. For certain transactions, such as matters that require negotiation, it is difficult for us to determine ahead of time how much time will be required to “get the deal done’” In such cases, we will bill on an hourly basis, and we will ask for a retainer. We will keep you informed as the matter proceeds with respect to what amount of time is being spent. Your invoice for hourly based services will contain a detailed breakdown of how our time was spent.
2Subscription Based Packages
KHNETIC Legal offers three tiers of outside General Counsel packages. Clients may find that they are calling us frequently or in need of contract reviews on a consistent basis. The Subscription Based outside General Counsel packages permit the client to pay a set monthly fee in advance and get a certain level of services each month for such fee. If any of the packages offered do not fit a client’s needs, we can customize a package that works for the client.

In addition to the outside General Counsel subscription packages, we also offer a package called Strategy Sessions for Growth. This is a six month subscription package and is aimed at both a legal review of your business, as well as business concepts we will give you to be completed by you each month to help energize and grow your business.
3Paying your Legal Invoice or retainer
In an age where more and more people are paying their bills online, KHNETIC Legal believes it should offer its clients the same convenience. Once you have completed your Client Intake Form, you will be sent an email instructing you on how to set up access to the Client Portal. Through the Client Portal, you can view your invoices and pay them with Visa, Mastercard, American Express and Discover. Retainers can be paid and replenished in the same manner.

The Client Portal can also be used for transmitting secure messages between you and KHNETIC Legal. KHNETIC Legal can transmit your documents to you through the Client Portal and you can view the work in progress on your matter.

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