Nolo's quick LLC : all you need to know about limited liability companies

241 Pages·2021·1.928 MB·English

by  Anthony Mancuso

“ [Nolo’s]…material is developed by experienced attorneys who
have a knack for making complicated material accessible.”
LIBRARY JOURNAL
11TH EDITION
Nolo’s
Quick LLC
All You Need to Know About
Limited Liability Companies
• Protect your personal assets
• Choose the best tax strategy
Attorney Anthony Mancuso • Understand LLCs vs. S Corps
Take Advantage of the Pass-Through Deduction
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LOS ANGELES TIMES
11th Edition
Nolo’s
Quick LLC
Attorney Anthony Mancuso
LAW for ALL
ELEVENTH EDITION FEBRUARY 2021
Editor CHRISTINE MATHIAS
Cover Design SUSAN PUTNEY
Book Design SUSAN PUTNEY
Proofreader JOCELYN TRUITT
Index VICTORIA BAKER
Printer BANG PRINTING
ISSN: 1932-1740 (print)
ISSN: 2375-2858 (online)
ISBN: 978-1-4133-2828-8 (pbk)
ISBN: 978-1-4133-2829-5 (ebook)
This book covers only United States law, unless it specifically states otherwise.
Copyright © 2000–2021 by Anthony Mancuso. All rights reserved. The NOLO
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advice from a knowledgeable lawyer. If you want the help of a trained professional
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consult an attorney licensed to practice in your state.
Acknowledgments
A special thanks to Beth Laurence, my editor, and to all the Noloids at Nolo
for their continued assistance in helping me produce another self-help law
business resource.
About the Author
Anthony Mancuso is a California attorney and a corporations and limited
liability company expert. He graduated from Hastings College of the Law
in San Francisco, is a member of the California State Bar, writes books and
software in the fields of corporate and LLC law, and has studied advanced
business taxation at Golden Gate University in San Francisco. He also works
as a technical writer and is currently employed by Google. He is the author
of many Nolo books on forming and operating corporations (both profit
and nonprofit) and limited liability companies. His titles include Incorporate
Your Business: A Legal Guide to Forming a Corporation in Your State, How to
Form a Nonprofit Corporation (national and California editions), Form Your
Own Limited Liability Company, The Corporate Records Handbook: Meetings,
Minutes & Resolutions, LLC or Corporation? How to Choose the Right Form
for Your Business, and Your Limited Liability Company: An Operating Manual.
His books have shown more than a quarter of a million businesses and
organizations how to form a corporation or LLC. He also is a guitarist and
licensed helicopter pilot.

Table of Contents
Introduction ...............................................................................................................................1
Should You Consider Forming an LLC? ..........................................................................3
How to Use This Book .............................................................................................................9
What This Book Doesn’t Do ...............................................................................................10
Legal and Tax Experts ............................................................................................................10
Other Nolo LLC Resources ..................................................................................................11
1 An Overview of LLCs ...........................................................................................................13
Basic LLC Features ....................................................................................................................14
Exceptions to Owners’ Limited Liability .....................................................................26
Basics of Forming an LLC ....................................................................................................36
2 The LLC Versus Other Business Structures .........................................................43
Other Business Structures ...................................................................................................45
What Is a Sole Proprietorship? ..........................................................................................45
What Is a General Partnership? ........................................................................................51
What Is a Limited Partnership? ........................................................................................56
What Is a C Corporation? ....................................................................................................59
What Is an S Corporation? .................................................................................................70
What Is an RLLP? ......................................................................................................................75
The Series LLC ...........................................................................................................................78
Do-Good LLCs and Corporations ..................................................................................80
Deciding Between an LLC and Another Business Type ......................................80
Business Structures Comparison Table .......................................................................83
3 Members’ Capital and Profits Interests .................................................................91
LLC Capital Interests ..............................................................................................................92
Tax Considerations of Start-Up Capital ......................................................................93
Converting an Existing Business to an LLC .............................................................101
Profit and Loss Interests ....................................................................................................102
Special Allocations of Profits and Losses ..................................................................104
4 Taxation of LLC Profits ...................................................................................................107
Pass-Through Tax Treatment ..........................................................................................108
How LLCs Report and Pay Federal Income Taxes ................................................113
Electing Corporate Tax Treatment ..............................................................................115
LLC Owners and Self-Employment Taxes.................................................................119
An LLC Can Elect to Be Treated as an S Corporation ........................................120
5 LLC Management ...............................................................................................................121
Member Versus Manager Management ...................................................................122
Legal Authority of LLC Members and Managers .................................................126
Member and Manager Meetings ..................................................................................127
Member and Manager Voting Rights .........................................................................130
6 Starting and Running Your LLC:
The Paperwork .....................................................................................................................133
Paperwork Required to Form an LLC .........................................................................134
Ongoing LLC Paperwork ..................................................................................................146
Securities Filings .....................................................................................................................155
7 Getting Legal and Tax Help for Your LLC ..........................................................165
Getting Legal Help for Your LLC ...................................................................................166
Getting Tax Help ...................................................................................................................174
Appendixes
A State Information ..............................................................................................................177
Business Entity Filing Office ............................................................................................178
Tax Office ..................................................................................................................................178
Securities Office .....................................................................................................................179
B Sample Operating Agreement ..................................................................................181
A. Preliminary Provisions ..................................................................................................182
B. Membership Provisions ...............................................................................................183
C. Tax and Financial Provisions .....................................................................................187
D. Capital Provisions ...........................................................................................................188
E. Membership Withdrawal and Transfer Provisions .......................................191
F. Dissolution Provisions ..................................................................................................192
G. General Provisions .........................................................................................................194
H. Signatures of Members and Spouses of Members .......................................197
C Checklist for Forming an LLC .....................................................................................199
Index
.................................................................................................................................................203