Limited Liability Company Lawyer in California
Limited Liability Companies (LLCs) are an extremely popular business entity form that is closely related to the corporation. Just like corporations, LLCs can be one person businesses or enormous companies such as Price Waterhouse Coopers or Chrysler. An LLC if formed by filing the Articles of Organization with the secretary of state where it will be domiciled, and then the LLC must file additional qualification papers to function as a foreign LLC in any other states. In addition to the Articles of Organization, the LLC will also keep minutes of major decisions, issue evidence of ownership, and have an Operating Agreement which defines the rights and duties of the members.
The owners of an LLC are called members and it is run by managers. Each member of the LLC can be a manager, and this type of structure is the default in small LLCs. However, not every member needs to be a manager and the members can elect one or more managers who may or may not be members. Oftentimes, an LLC may hire one or more third-party managers to provide expertise or neutrality. Managers run the day to day operations of the LLC, jointly decide on important business matters, and typically ask for a vote of the members only on extraordinary matters such as admission of a new member, amendment to the Operating Agreement, or disposition of significant LLC assets. Large LLCs can have a more rigid management structure that resembles corporations whereas small LLCs have manager-members who fulfill the functions of partners in a partnership.
Like a corporation, an LLC has limited liability which means that generally a member who invests in an LLC can only lose the amount invested but creditors of the LLC cannot go after his or her personal assets absent special circumstances. The LLC may lose limited liability if a court determines that the company is really an “alter ego” of the members. The process is similar to “piercing the corporate veil” and the court may deem the LLC to be an alter ego of the members of the company fails to follow formalities, and the members comingle assets or undercapitalize the LLC. Although an LLC has fewer formalities than a corporation, the managers and members have to remain aware and in compliance with all LLC laws and at all times treat keep the company funded, insured, and separate from its members.
The LLC can be treated as a flow through entity or a corporation. Most LLCs are flow-through entities which means that they are taxed only once at the individual member level. Like the corporation, the LLC can exist indefinitely and generally do not dissolve if they lose managers or members. Transferring shares to another member or a third party whether by sale, exchange, or inheritance is somewhat easier to accomplish with an LLC. However, the Operating Agreement must permit or at least not prohibit the intended transfer, and for third party purchases there must be a market for the ownership interest of the company.
LLCs are one of the most popular entities in the United States because they are a hybrid that combines the flexibility, informality and tax treatment of a partnership with the limited liability of a corporation. LLCs are quite flexible and can be customized to meet client needs.
San Francisco LLC Lawyers
The Zurada Law Group is just a phone call away at 415-637-8483 . We are experienced LLC lawyers in California.
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