Sacramento Businesses – Limited Liability Companies
A Limited Liability Company LLC is basically a hybrid of a partnership and a corporation, taking all of the good elements from each entity and leaving the bad ones. We have listed a few of the positive aspects related to forming an limited liability company LLC below; however, your particular situation may vary and you should contact our LLC attorney for a consultation to ensure you form the best entity for your needs.
Advantages of Limited Liability Companies
- Limited Liability. Members of limited liability companies may limit any personal liability to the amount of their investment. Hence, generally speaking, a member of an LLC is not personally liable for any debts or obligations of the limited liability company LLC; therefore, the individual member’s assets like their house and bank account are protected.
- There are exceptions however, like a court judgment, personally agreeing to be liable, the alter ego doctrine, personal tortious conduct, breach of a fiduciary duty by a manager or director, as well as a few other specific exceptions.
- Tax Benefits. A limited liability companies with two or more members may elect taxation as a partnership or a corporation. Taxation as a partnership on both the state and federal levels is generally very beneficial. The limited liability company LLC will avoid the double taxation related to a general corporation and will not have the restrictions associated with an S corporation, close corporation, or limited partnerships. A limited liability company LLC also allows for a flexible allocation of income, gains, and losses according to an agreement rather than standard capital interest.
- Management Participation. Corporations are heavily governed. Limited liability companies, on the other hand, has much more flexibility and may be managed by members or non-members. This provides an opportunity to expand the knowledge and specialization of management; thus, establishing a solid foundation for business judgments.
Disadvantages of Limited Liability Companies
- Corporate Formalities. In order to avoid what is coined “piercing the corporate veil,” the corporation must hold annual meetings, keep meeting minutes, maintain bank accounts, file taxes, maintain a board of directors, keep certain records, and ensure the proper compliance with all legal formalities. This can be tedious, burdensome, and scary for the uninitiated; however, Carson & Kyung can help walk you through all of these formalities.
- Costs and Expenses. It is more expensive to start limited liability companies than a sole proprietorship DBA. You must pay state, and possibly federal, filing fees. You must also pay withholding taxes and other expenses.
Services Provided for Limited Liability Companies by Sacramento Business Attorneys:
- Name Inquiry;
- Name Reservation (if requested);
- Articles of Organization;
- Operating Agreement;
- Minutes: First Meeting, Annual Meetings, and Operating;
- Statement of Information;
- Federal Employer Identification Number;
- Indemnification Agreements;
- Stock Purchase Agreements;
- Stock Certificates;
- Buy-Sell Agreements;
- S Election;
- Contract Drafting
- Advice on Day-to-Day Operations; and
Costs to Form Limited Liability Companies
At this time, the Secretary of State filing fees for a Sacramento LLC is as follows: Name Reservation Request $10.00, Articles of Organization $70.00 + $15.00 special handling fee, and Statement of Information $20.00.
Attorneys fees tend to vary depending on the complexity of the business entity; but, typically are about $1,100.00.
These are only some of the advantages and disadvantages with a limited liability company. Give us a call to schedule an initial consultation and let us help! Contact our Sacramento business attorneys to discuss Limited Liability Companies.