Discover how broker NDAs grant unlimited audit rights over buyer business records without limits or safeguards. NC attorney explains privacy violations and trade secret risks.

Acquiring an S-Corporation is a significant event for both buyers and sellers, and it’s not as simple as just signing on the dotted line. The process is filled with legal and tax considerations that can have long lasting effects on both parties; a process that is unique to S-Corporations. If you’re contemplating such a transaction, it’s crucial to understand not just the basics, but also the issues that can arise.

When structuring a business, asset protection is a critical consideration. Many entrepreneurs mistakenly assume that electing S-Corp status for their corporation provides the same liability safeguards as forming an LLC. However, a key distinction lies in charging orders - a legal remedy that determines whether creditors can seize ownership or control of your business.

A frequent misunderstanding is that “LLCs cannot own S corporations.” In reality, the rule is that entities taxed as partnerships or corporations cannot be S corporation shareholders. A single-member LLC, if disregarded for tax purposes and owned by an individual or other eligible person, is not treated as a separate entity and thus does not violate the rule.