What is a Limited Liability Company (LLC)?
A limited liability company (LLC) is a corporate structure in the United States whereby the owners are not personally liable for the company's debts or liabilities. Limited liability companies are hybrid entities that combine the characteristics of a corporation with those of a partnership or sole proprietorship.
The 3 must have Documents for an LLC we can help you.
1) Articles of Organization
- Your Business Name: Make sure that your name doesn’t pose any potential conflicts with another business name already registered in the state where you’re filing your LLC.
- Business Purpose
- Principal Place of Business
- Registered Agent: This is the entity or individual who will receive official papers and legal documents on your behalf, including documents related to lawsuits. The registered agent has to be in the state where your LLC is registered, and must have a physical address.
- Management Structure: Meaning, does your LLC have a single manager, two or more managers, or are all members managers?
- Duration of LLC: Some states require you to specify how long your LLC will operate. A few states set a statutory limit on the duration (usually a few decades). But you can extend your LLC for longer if it’s still in business when you hit the end of this period.
2) Operating Agreement
An Operating Agreement specifies the rights and duties of the Limited Liability Company members. It also states the distribution of income of the LLC to its members.
While it’s not required by law that you file an operating agreement to form your Limited Liability Company, you need to have this LLC legal document prepared to be compliant with the company’s corporate formalities.
What you include in your operating agreement will vary depending on your business, but operating agreements commonly include:
- If there is more than one member, you need to describe the way key business decisions will be made
- Members’ Percentages of Ownership
- How Profits and Losses Will be Distributed
- Voting Rights
- What happens if an owner dies or wants to exit the business
- How the LLC Can be Dissolved
All members must sign the operating agreement in order for it to be valid.
3) Employee Identification Number
All businesses, regardless of the structure, need an EIN (Employee Identification Number). Instead of your social security number, you should use your EIN on all your business-related documentation. You’ll also need your EIN to open a business bank account. To get an EIN, you or your attorney need to fill out IRS Form SS-4.
In addition to the documents above, you also need to file an annual/biennial report with the state where your LLC is registered.
So what’s the most effective way to file an LLC? Let’s be real, there are a million online services you can use to do this, but they use generic descriptions and agreements. And they probably don’t cost much less than using an attorney. So is it worth gambling on whether you’re forming the foundation of your business the right way?
Since your legal needs are just as unique as the brand you work so hard to build, work with an attorney who understands your vision so you’re set up for success.
What is a Corporation?
A corporation is a legal entity that is separate and distinct from its owners. Corporations enjoy most of the rights and responsibilities that an individual possesses: enter contracts, loan and borrow money, sue and be sued, hire employees, own assets and pay taxes. Some refer to it as a "legal person."
Docuents we can help you to get a Corporation!
A) Business Name Reservation Form
- Articles of Incorporation
Articles of incorporation are the foundational document for C-corporations and S-corporations. You have to file these documents with the state for your corporation to exist. The information that goes into the articles of incorporation will vary based on what state you’re in, but it typically includes the following:
- Business’s name, address, and principal place of business
- Purpose of the corporation
- Number and type of shares (if the corp is issuing stock)
- Names and addresses of the initial board of directors
- Registered agent for the corporation (person or company who will accept official mail and legal papers on the company’s behalf)
- Name, address, and signature of the incorporator who is submitting the form (usually you, your attorney, or an incorporation service if you’re using one)
B) Corporate Bylaws
Corporate bylaws lay out how the shareholders, officers, and directors will split control within the organization and manage it on a day to day basis. Along with the articles of incorporation, corporate bylaws are the main organizational document for a corporation.
Corporate bylaws usually contain the following info:
- Basic business information, like name, address, and principal place of business
- Frequency and procedures for shareholder meetings, board meetings, and annual meetings
- How directors and officers will be elected and replaced when there are vacancies
- Types of officers (e.g. CEO, CFO, CMO, etc.) and their responsibilities.
- Procedure for the board of directors to adopt resolutions
- Procedure for corporate record keeping, including frequency of audits
- Procedure for amending the articles of incorporation and bylaws
- Number, type, and authority to issue shares of stock
- Dissolution process
Although many people confuse the articles of incorporation and bylaws, they serve different purposes. The first just sets up a skeletal outline for the corporation, while the latter includes all the details for managing and running the corporation on a daily basis.
C) Meeting Minutes
All states requires corporations to maintain and safely store corporate records, so there’s a paper trail for government audits and other legal purposes. Meeting minutes are one of the most important corporate records because they document important company decisions. You should keep minutes during all formal meetings—shareholder, board, and annual meetings.
These are some things you should memorialize in meeting minutes:
- Date, name of everyone present, and if there’s a sufficient quorum to make binding decisions on behalf of the corporation
- Election of a new director or appointment of a new officer
- Resignation of a director or officer
- Corporation takes out a business loan
- Corporation enters into an important contract
- Corporation purchases insurance
- Stock transactions
Under state laws, only corporations are generally required to keep meeting minutes. However, it’s a good idea for owners of both LLCs and corporations to keep extensive meeting minutes. It’s not pleasant to think about, but they will come in handy if the government audits your business or someone sues your business.
D) Board Resolutions
Board resolutions document and formalize board decisions and show how directors voted on different matters affecting the company. These records are important for compliance reasons if a board’s decision is, for example, ever called into question in a lawsuit or during an audit.
It’s a good idea to have a board resolution for each of the following types of business decisions:
- Hiring new officers
- Selling shares in the corporation
- Acquiring another company or a part of it
- Channeling corporate funds to an important project
- Approving a business loan
- Approving a contract
You should store resolutions along with other important corporate records, such as your articles of incorporation and meeting minutes. Board resolutions usually follow a specific format, with the date, number, and title of the resolution followed by a description of what exactly the board decided. Follow this description with a listing of all directors present, who voted yes and no, and their signatures.
While resolutions aren’t required for LLCs, it’s wise to keep a record of important decisions in case of a dispute in the future.
E) Stock Certificate
A stock certificate is a piece of paper which records the sale and purchase of shares in the corporation. Stock certificates were traditionally physical pieces of paper, but most companies now back them up with digital versions. The certificate will specify the business’s name, the shareholder’s name, the date of the sale, the signature of the board member who authorized the sale of stock, and the company’s seal.
F) Shareholder Agreement
Shareholder agreements touch on shareholder rights and responsibilities that aren’t mentioned in the corporate bylaws.
The shareholder agreement will typically specify a number of things:
- How owners can sell their shares should they choose to exit the corporation
- What happens to an owner’s shares when they pass away or if they become disabled
- How and when the corporation will issue dividends
- The number, type, and value of shares
- Which board measures require shareholder approval and what percentage of shareholders need to approve.
Not every small business will need a shareholder agreement, and no states require a business to have one. However, if your corporation has multiple owners, it’s a good idea to have a written shareholder agreement.
G) Annual Report
In most states, all registered business entities must have file an annual report by a certain date every year and pay an annual tax or processing fee. Without filing your annual report, you cannot maintain approval to do business in the state.
Every state requires different information in your annual report, and you can find out the requirements in your state by contacting your business’s secretary of state office. Usually, it’s just very basic info to keep the state up to date on your company, such as the business’s address, names and addresses of the owners, and registered agent information.
H) Form S-2553
To qualify your business as an S-corporation, you have to file Form S-2553-Election by a Small Business Corporation with the IRS. S-corporations differ from ordinary C-corporations in a few ways, but the main way is taxation. C-corps are subject to “double taxation.” Owners pay a corporate income tax, and shareholders have to pay taxes on dividends on their personal tax returns. In contrast, S-corps are pass through entities. Business income and profits flow through to the owners’ personal tax returns and are taxed at the owners’ personal income tax rates.
Without filing Form S-2553, your business cannot be an S-corporation and will continue to be taxed as a C-corp. The deadline for filing the form is in the first 75 days of the tax year you want the S-corp election to take effect or in the year preceding the year that you want your S-corp election to take effect.
What Is a Partnership?
A partnership is a formal arrangement by two or more parties to manage and operate a business and share its profits.
There are several types of partnership arrangements. In particular, in some partnerships, all partners share liabilities and profits equally, while in others, partners have limited liability. There also is the so-called "silent partner," in which one party is not involved in the day-to-day operations of the business.
Key Documents Needed for the Formation of a Partnership
- Partnership Authority
- Trade Name Application
- Form SS-4
- Partnership Agreement
So if you should need any service on starting up a business, give us a call. Come on in