Ultimate Guide to Forming an LLC In Any State: Everything You Need to Know (Ultimate Series) PDF
Preview Ultimate Guide to Forming an LLC In Any State: Everything You Need to Know (Ultimate Series)
Table of Contents Title Page Introduction Acknowledgements About the Author CHAPTER 1 - An Overview of Business Organizations THE SOLE PROPRIETORSHIP THE PARTNERSHIP VARIETIES OF PARTNERSHIPS THE LIMITED LIABILITY COMPANY (LLC) CORPORATIONS BUSINESS FORM COMPARISON CHAPTER 2 - Information for All Businesses LOCAL TAXES, LOCAL LICENSES PARTNERSHIP/LLC TAXATION CORPORATE TAXATION BUSINESS ENTITY TERMINOLOGY FORBIDDEN BUSINESS PURPOSES CHAPTER 3 - The Features of LLCs HOW LLCS ARE GOVERNED PROFESSIONAL LIMITED LIABILITY COMPANIES CHAPTER 4 - The Ten Steps to Organizing an LLC DEFINING THE ESSENTIAL ROLES CHAPTER 5 - Operating Your LLC PROTECTING YOURSELF FROM LIABILITY LLC FORMALITIES MEETINGS OF MEMBERS MEETINGS OF MANAGERS HOLDING MEMBER AND MANAGER VOTES BY WRITTEN CONSENT ANNUAL REPORTING REQUIREMENTS QUALIFYING AS A FOREIGN LLC REPORTING AND PAYING TAXES AMENDING ARTICLES OF ORGANIZATION AND OPERATING AGREEMENT ENDING THE LIFE OF YOUR LLC: DISSOLUTION CHAPTER 6 - Suing and Being Sued as an LLC THE LLC SUES THE LLC IS SUED OWNER SUITS FINAL THOUGHTS ON LAWSUITS CHAPTER 7 - LLCs and Personal Liability DISREGARDING THE LLC ENTITY INSTRUMENTALITY/ALTER EGO CONTRACT AND TORT CLAIMS TAXICAB CASES PERSONAL INJURY CASES AND CLAIMS CONTRACT CREDITORS AND CONTRACT CLAIMS GOVERNMENT CLAIMS PARENT AS ALTER EGO OF SUBSIDIARY THE SEVEN MOST IMPORTANT LIABILITY PROTECTION RULES LIABILITY PROTECTION: CORPORATION VERSUS LLC FINAL THOUGHTS ON LIABILITY PROTECTION Appendix A: Limited Liability Company Forms Appendix B: State Reference Tables Glossary Index Subscribe to Entrepreneur Magazine Copyright Page Introduction This book is intended for everyone: businessperson, manager, lawyer, and accountant. Its goal is to give the business professional all the tools necessary to plan, organize, form, operate, and maintain a basic LLC. The book begins by providing a basic understanding of the law surrounding business organizations. It examines the fundamental differences and advantages of sole proprietorships, partnerships, limited liability companies, and corporations, and compares and contrasts the various business forms. It then takes you step by step through the organization of an LLC in any of the 50 states and the District of Columbia. Among the topics covered are how to do the following: • Select the proper state for organization of your business. • Select a name for your business without running afoul of the law or the rights of others. • Conduct a search for prior use of business names and trademarks. • Draft the foundational documents to organize your LLC: the articles of organization. Appendix A includes many helpful and relevant documents that would cost thousands of dollars if drafted by an attorney. • Choose and elect directors, officers, or managers for your company. • Select and appoint a registered agent. • File your organizational papers. • Maintain proper formalities and records for your entity. • Conduct your organization so that you can protect your personal assets and earnings from liability. In addition, this book will assist you with the ongoing responsibilities of running an LLC. Record keeping and internal governance are important topics in business law. You will learn about organizing annual and special meetings of executives and owners, taking business actions by written consent in lieu of a formal vote, drafting minutes, reporting and paying annual franchise and corporate income taxes, and meeting the periodic reporting requirements that most states impose on LLCs. One of this book’s most valuable features is the model documents it provides. These documents, included in Appendix A, are also available at www.entrepreneur.com/formnet. There, the documents are offered in Word, Excel, and PDF formats and can be customized to match your brand, processes, and culture. Appendix B includes LLC reference information for all 50 states and the District of Columbia. The reference section includes contact information for the secretary of state’s office, fee schedules and requirements for filing LLC papers, links to model organizational forms for LLCs, information on periodic reporting and tax requirements, taxation summaries, and much more. Understand, of course, that this volume cannot possibly serve as a substitute for the legal advice of a qualified attorney or accountant tailored to your specific needs. The information in this book is not intended as specific legal advice; it is intended as a broad educational overview. By using this book, you will step into the role of an attorney. If your goal is to form a small and simple LLC, then this book can serve your needs perfectly. But understand its limitations, and note that this volume occasionally warns about certain topics that present potential pitfalls and complex issues that warrant a visit to your local attorney’s office. Heed these warnings, because small legal errors have a way of becoming enormous legal problems over time. Business law has some simple topics and some complex ones, so if your needs are obviously complex, don’t try to do everything yourself. Sometimes the best advice an attorney can give is "get a qualified attorney." That said, let’s get started. Acknowledgments I’d like to thank Jere Calmes, editorial director of Entrepreneur Press, for giving me the opportunity to write this book. I am also grateful to: • Attorney, friend, and fellow golfer Dan Sweeney, who contributed to this volume by providing invaluable legal research. • My law professors at Quinnipiac University School of Law, who taught me the foundations of corporate and business law which I now offer to you. • My family and friends, who offered their support throughout the drafting of this volume. • All the clients who have sustained my law practice throughout the past ten years and whose support helped me grow to become an expert in my field, with special thanks to Don LeBuhn and his family’s business, Evolution Furniture of Berkeley, California (my first clients) for whom I organized my first corporation back in 1993. • Finally, and most importantly, my wife Mai, for enduring an admittedly imperfect man. About the Author Michael Spadaccini is a business law author and semi-retired attorney. He practiced business law for small businesses and startups in San Francisco and Silicon Valley since 1993, and more recently in Austin, Texas. He is the author of numerous business law books for Entrepreneur Press. From 1991 to 1992, he was the Editor in Chief of The Connecticut Probate Law Journal-an academic publication operated at his Alma Mater, Quinnipiac University School of Law. He has been sought for comment on business law and intellectual property issues in publications such at USA Today, The San Francisco Examiner, and Women’s Wear Daily. CHAPTER 1 An Overview of Business Organizations The most common forms of business enterprises in use in the United States are the sole proprietorship, the general partnership, the limited liability company (LLC), and the corporation. Each form has advantages and disadvantages in complexity, ease of setup, cost, liability protection, periodic reporting requirements, operating complexity, and taxation. Also, some business forms have subclasses, such as the C corporation, the S corporation, and the professional corporation. Choosing the right business form requires a delicate balancing of competing considerations. Each of these business forms is briefly discussed in this chapter. THE SOLE PROPRIETORSHIP The sole proprietorship is a popular business form due to its simplicity, ease of setup, and nominal cost. A sole proprietor need only register his or her name and secure local licenses and the sole proprietorship is ready for business. The sole proprietorship is not a legal entity; it simply refers to a natural person who owns the business and is personally responsible for its debts. A sole proprietorship can operate under the name of its owner or it can do business under a fictitious name, such as Nancy’s Nail Salon. The fictitious name is simply a trade name—it does not create a legal entity separate from the sole proprietor owner. Fictitious names are covered at length in later chapters. The owner of a sole proprietorship typically signs contracts in his or her own name, because the sole proprietorship has no separate identity under the law. The sole proprietor owner will typically have customers write checks in the owner’s name, even if the business uses a fictitious name. Sole proprietorships can bring lawsuits and can be sued using the name of the owner. Many businesses begin as sole proprietorships and graduate to more complex business forms as the business develops. DEFINITION A sole proprietorship is a business owned and managed by one person. The sole proprietorship is not a legal entity; it simply refers to a natural person who owns the business and is personally responsible for its debts.
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