A closely held corporation has only a few shareholders, who are associated in some way, such as members of the same family. Like a traditional corporation, a closely held corporation is a legal entity, separate from its owners and created under Georgia law. At Mark A. Johnson, PC, I have the extensive business law knowledge required to help you form and maintain a closely held business in Atlanta, Marietta, Kennesaw, Acworth, or anywhere else in Georgia. The differences between a traditional corporation and a closely held corporation can be summarized as follows:
The death of a principal owner is a major challenge to family businesses that are not incorporated in Atlanta. Incorporating your family business into a separate legal entity ensures that it can continue to exist after the death of the principal owners.
A closely held corporation also benefits the family by shielding the owners from personal responsibility for the debts and liabilities of the business. In addition, this form of business entity gives the owner-shareholders the flexibility to participate in the day-to-day operations and control of the business.
However, there are some potential drawbacks to consider when operating your family business as a closely held corporation:
Because shares are privately traded, an owner wanting to sell his or her shares may have difficulty in finding a buyer. The shareholder agreement may place restrictions on the transfer of shares, such as requiring the approval of the other shareholders.
The income of the business is taxed twice, first as corporate income and then as individual income of each shareholder.
Forming the family business as a closely held corporation is more complex than setting up other forms of business entities.
For a free initial consultation to discuss your specific needs and to find out how I can transform your family business into a beneficial closely held corporation, please reach out to me. I proudly serve individuals and businesses in North Atlanta, as well as Marietta, Kennesaw, Acworth, Sandy Springs, and Cobb County, Georgia.