Articles Tagged with LLC

partnerships-vs-llcs-300x200When starting a new business, it is important to know what type of business entity will best protect you and your investors. The wrong entity selection could expose your business to unnecessary legal liability and tax liability. Let an experienced business formation attorney advise you on the best way to protect your new business. Call Structure Law Group at (408) 441-7500. Our experienced Silicon Valley business lawyers can help you mitigate your liability and risks to keep your new business profitable.

What to Consider When Deciding Between a Partnership and an LLC

There are many factors that can affect your choice of business entity. Here are just a few of the many important things to consider:

AdobeStock_279822215-1024x683LLCs are a popular business entity that can provide comprehensive legal protection. Unfortunately, business owners who do not properly form or operate their LLCs can still be personally liable for the debts and liabilities of the business. Call Structure Law Group at 408-441-7500 to schedule a consultation with one of our experienced lawyers. We have helped many business owners throughout California protect their assets and rights through solution-oriented counsel and representation.

What is an LLC?

A limited liability company (LLC) is a type of business entity. When formed and operated properly, an LLC can protect business owners from liability, and shield their assets from being used to satisfy the debts of the business. This is because the LLC is a separate legal being from the individuals who own it. As a result, creditors can only access assets in the LLC’s name to satisfy the debts of the LLC. The owner’s personal assets are not available to business creditors.

When starting a new business, one of the most important decisions that entrepreneurs must make is choosing the type of business entity under which they will operate. Many new businesses form as limited liability companies, or LLCs, as they combine the limited liability offered by corporations with the flexibility and favorable tax treatment of partnerships. The document that governs how an LLC operates is known as its “operating agreement.” While an LLC’s operating agreement does not need to be filed with the Secretary of State, it is still required that every LLC have one and that the document clearly lays out the rights and responsibilities of the company’s members.

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It is highly advisable for anyone in the process of forming an LLC to consult with an attorney to ensure their operating agreement accurately represents the intent of the parties it affects and it contains the necessary provisions. Below is some information about a few of the basic issues any LLC’s operating agreement should address.

The LLC’s Ownership Structure – One of the most important issues that should be addressed in an operating agreement is the ownership of the company. Ownership can be determined either by allocating percentages or by issuing “units,” which are similar to stocks issued by a corporation. In the absence of provisions to the contrary, California’s default LLC rules will apply, which may or may not reflect the intent of the people forming the LLC.