July 11 2014

Dear Friends,

Snelling Law Office, LLC was established in 2003 and may be one of the world’s finest business, transactional and real estate law firms ever. Despite its long history, it was not until just recently that I was able to once again make the private practice of law my full time passion. I could not have made this transition without the support of my clients and friends and without the support of my wife Sue and son Jordan.

My background, notably inconsequential, began at St. John’s University in Collegeville, Minnesota, where I received a very well-rounded education, not to mention degrees in English and Economics. I received a Doctorate of Jurisprudence (yes I am technically a doctor, thank you very much) from William Mitchell College of Law in 1988, Magna Cum Laude (go ahead, check it out).

After law school, I practiced as an associate for seven years and then as a partner for eight years at a prestigious, medium size law firm in downtown St. Paul, Minnesota that no longer exists. I left in 2003 to form my own law firm but soon after also became a partner in a family of affiliated real estate companies that included title, mortgage and a real estate brokerage. In 2008 I joined a construction and property management company as general counsel, but left at the beginning of 2014 to focus solely on my law firm practice.

My family and I have lived in Inver Grove Heights, Minnesota since 1987 and I have been active at various times in Rotary International, the River Heights Chamber of Commerce, the St. Paul Area Chamber of Commerce, the St. Paul Winter Carnival, the Inver Hills Community College Foundation and Inver Grove Heights youth sports.

I have developed an expertise in business, transactional and real estate law. I advise clients in setting up and structuring their businesses, drafting owner and partner agreements such as member control agreements and shareholder buy-sell agreements, equity investments, mergers and acquisitions, business succession planning, confidentiality and non-disclosure agreements, employment and independent contractor matters, employment, non-compete and separation agreements, real estate purchase agreements, deeds, easements, title work and closings, lease agreements, construction, general contract drafting and review, powers of attorney and legal opinions.

In addition to the newsletter, you can find out more about Snelling Law Office, LLC at the company website, www.stevesnellinglaw.com. There are also some nice pictures of me there for you to see and mock if you are in the mood.

Clients establishing a new company often ask whether they should set up a Subchapter S Corporation or an LLC, short for Limited Liability Company. If set up properly, both provide pass-through tax treatment and both provide significant protection against personal liability for the owners. However, the LLC will provide additional flexibility with respect to the ownership and the allocation of income among the owners. For example, an S Corporation may have no more than 100 shareholders and the shareholders must be either U.S. Citizens or Resident Aliens-meaning, importantly, that the Subchapter S Corporation cannot be owned by another Corporation or LLC. In addition, distributions to the shareholders in an S Corporation must be allocated consistent with the shareholders’ respective percentages of ownership. However, distributions to the members of an LLC may be allocated by the members as they choose regardless of the actual percentages of ownership. The members in an LLC may also be entitled to recognize additional losses arising out of real estate investments.

One advantage of an S Corporation relates to the recognition of self-employment tax. In an LLC, all of the income allocated to a member is subject to ordinary income and self-employment tax. However, in a Subchapter S Corporation, the salary of an active owner can be set and profits distributed in excess of that salary are subject to only ordinary income tax rather than both. This practice however has been challenged by the IRS and the amount of tax that could be saved may not upon deeper analysis justify the decision to form the S Corporation over the more flexible LLC.

The Secretary of State publishes the filings of all entities including Corporations and LLC’s. Through the first two quarters of 2014, 15,992 LLC’s were filed compared with only 3,110 corporations.

My nicely decorated office is located in Suite 100 on the first floor of the Stonebridge Professional Building in Lilydale, Minnesota, near the northwest intersection of Highways 13 and 35E.

This edition’s Client Spotlight is on John Bennett, Sr. Vice President of Commercial Services and Non Profit Banking at Western Bank.

Founded in 1915, Western Bank is a Minneapolis/St. Paul community bank specializing in meeting the needs of businesses and offering a full range of services to all of their business, nonprofit, and personal banking customers. The bank has five geographically dispersed locations serving customers throughout the Twin Cities metropolitan area. The corporate office still serves the original St. Paul, Minnesota neighborhood in which it started, with other offices in Bloomington, Maplewood, Mounds View and Oakdale. Western Bank has assets of over $520 million and provides a full line of deposit and loan services to businesses, nonprofit organizations and individuals.

John Bennett joined Western Bank as Vice President of Commercial Banking on August 15, 2007. John offices at the bank’s St. Paul branch on University Avenue. He has more than 30 years of banking experience and community volunteering.

John and I have worked together on mutual clients many times over the past 25 years. John is not only a good friend, he is one of the best in his business. Congratulations to John Bennett, Sr. Vice President of Commercial Banking!