LLCs

Limited Liability Company

Is the liability protection for LLCs and corporations the same?

Yes. There are some very case-specific nuances, especially when you get down to single-member LLCs, but unlikely anything that is going to effect you generally. Don’t obsess over this one unless you have plans to not pay taxes, for example.

By | June 15th, 2015|0 Comments

I’m a professional. What’s right for me?

First things first: the question really is whether an entity is going to do you any good at all. From a liability perspective, keep in mind that anything you do is your personal problem; putting your medical practice into a corporation won’t shield you from your own malpractice. But it could, for example, shield you from your employee’s malpractice, or your file clerk’s sexual harassment claim against a fellow doctor. And it may also shield you from your partner’s malpractice. So there are upsides. Some states, like California (where I practice), restrict the use of certain entities by professionals. The term “professional” itself has some grey area. Typically, professionals required to have a certain education, training, and experience aren’t permitted to use an LLC for their business (in California). So lawyers, doctors, etc. will generally use a corporation, though certain professions, like lawyers, have other specific partnership entities available to them. Others, like real estate appraisers, are still permitted to use an LLC. There may also be tax reasons, as a professional, to put your business into an entity. There’s much to consider.

By | June 15th, 2015|0 Comments

What/who is an incorporator?

This is the person who signs and causes the filing of the Articles of Incorporation (or, in the case of an LLC the Articles of Organization) with the designated state authority. In a small business, this is usually the owner/shareholder/member. Some folks have their attorney sign the documents to help expedite the process, and that’s ok (but not necessary).

By | June 15th, 2015|0 Comments

What are Officers?

Officers, in a corporate (and even LLC) setting are the individuals who perform the tasks of managing and operating the entity. In California, every corporation is required to have at least three officers: CEO, CFO, and Secretary. There can be more, but no less. LLCs don’t typically have officers, but they may at the discretion of its members.

By | July 7th, 2015|0 Comments

What’s a director, and what’s the difference between a director and an officer?

Directors . . . direct! They set policy and guide the company with its business and direction. Directors are like the captains of ships; they know where the ship should go, and they tell the officers to make it happen.

By | July 7th, 2015|0 Comments

Can one person be all of the officers?

In a word, yes. Is that always advisable? No. Is it typical in a very small single-shareholder corporation? Yes.

By | July 7th, 2015|0 Comments

What’s an LLC manager?

The term "manager" has a specific meaning with respect to an LLC. The manager in an LLC is somewhat akin to the director in a corporation. The confusing part is that it can also be akin to the CEO or other officers of a corporation as well. Typically, the manager, well, manages the affairs of the LLC. The manager is authorized to bind the LLC, subject to restrictions that they may be bound to by law or in the operating agreement. The manager may or may not also be responsible for the operations of the LLC, though in larger LLCs, those roles are typically spread out between several individuals. In what are member-managed LLCs, each of the members may act as a manager, binding the LLC. So be careful about how you file your LLC, as you may not want every member eligible to sign contracts, and if you do, then the bank or the landlord will be looking for everyone's signatures.

By | August 11th, 2015|0 Comments

Can anyone own an interest in an LLC?

And therein lies a major difference between LLCs and S Corporations – because LLCs can be owned by practically anyone or anything, making them very useful for pass-through taxation, while being owned by other entities.

By | July 7th, 2015|0 Comments

If I’m the only member of my LLC, do I really have liability protection?

Yes. Well, you have the same liability protection as a multi-member LLC. There will be some specific exceptions. For example, if you are personally negligent or you are responsible for your company's payroll tax obligations, then you'll be exposed to personal liability. But being a single-member LLC won't change that. There may be instances where being in a partnership may change an outcome in an insolvency situation and certain specific other circumstances.

By | July 10th, 2016|0 Comments

When I form my corporation or LLC, is that a license?

No, but thanks for asking a weird question. You’re likely getting confused with some industries, like talent management, that may require you to obtain a license from a particular state agency. The formation of the entity doesn’t trigger automatic licensure, nor does it automatically require you to get a license for your business. Licensure for your business is separate and apart from forming an entity. And, in some instances, if you are required to obtain a license, that may dictate the kind of entity your form.

By | June 15th, 2015|0 Comments