When it comes to corporations, LLCs, and other entities, people tend to focus on their birth rather than their death, with most available literature being on the pros and cons of different types of entities and how to go about creating one. But for reasons similar to why the birth of LLCs and corporations is a regular, ongoing need for many of our clients, so too is the death of these entities.
Of course, a classic example would be when a business ceases operations and is liquidated. There are plenty of more routine reasons why this might happen though. For example, an entity might be created for the specific purpose of holding one piece of real estate that is being developed or renovated. Once the work is done and the developer sells the real estate for a profit, what happens to the entity? Often, the entity, having served its purpose, is put through the dissolution process. (more…)
Often in my practice I’ll write documents that call upon a client who owns all or part of a limited liability company (“LLC”) or other entity to sign more than once on the same signature page. This may seem silly, but it serves an important purpose. Sometimes the dual signature is required because the client is both the manager and a member (owner) of the LLC, and sometimes it’s because the client’s signature is required both as a representative of the LLC and in his or her personal capacity. In any case, whether a person’s signature is meant to bind their company or just that person individually is an important distinction.
A key benefit of the LLC entity structure is that individuals who wish to start a business can do so with a great deal of flexibility and relatively little formality required. Providing a hybrid between the pass-through taxation of partnerships and the limited liability for owners provided by corporations, LLCs have become the dominant form of entity for most types of businesses, from mom-and-pop shops, to real estate holding companies, to subsidiaries of large corporations. LLCs are inherently simple; and yet, even simplicity has its complications. (more…)
So, you’ve decided to incorporate your business or operate your business as an LLC.
However, merely filing the “proper paperwork” with the Missouri Secretary of State’s Office to form a corporation or an LLC is not the end of your endeavor. This blog post explains necessary steps to ensure that you properly establish and maintain your business’ corporate or LLC status. (more…)
You are proud of yourself. You went on-line at the Secretary of State’s website and filed your Articles of Organization. This means that you have limited your personal liability right? Well … maybe.
People rarely understand that what they do AFTER filling Articles of Organization is as important as the filing itself.
You are living under a rock if you think that one of your creditor’s attorneys will say this:
“Oh, my, she has an LLC. I guess there’s no way to hold her personally liable.”
There will be a search to see if you have maintained the appropriate separation between you and your company. You formed an entity, and now the question is whether you acted like an entity. If not, you’ll be a target … personally.
What must you do to protect yourself? Keep these reminders handy: (more…)
Dinosaurs are extinct right? Well, not in the business world. There’s a dinosaur still in our midst known as the limited partnership. In reviewing loan documents for a local lender I uncovered what should have been a fossil, but alas, it was still living. Limited partnerships (LP’s) were originally created to allow for both limited liability and the benefit of partnership taxation. (Corporations provide limited liability, but could never be taxed as partnerships.) (more…)
You just formed a new LLC and your attorney says, “We recommend an annual retainer; and for this retainer we serve as your registered agent and assure that you meet the necessary ‘company formalities.'” Before you write that check allow us to give you a little education on this often misunderstood subject.
Why can’t you be the registered agent? Why would you pay an attorney to be your registered agent? Well, the law firm proposal often goes like this: “If you ever get sued, the sheriff will serve us [the law firm] and not you … which will save you from being embarrassed by a sheriff’s visit.”
So, your family business has been a corporation forever. All these years you’ve been dutifully filing your annual report with the Missouri Secretary of State’s office along with your annual fee; and filing the mandatory annual franchise tax return (even though you don’t owe any such tax). You know about “corporate formalities” and you’ve been putting some boilerplate shareholders and directors meeting minutes in your corporate minute book each year (even though you’ve rarely had a formal meeting). Or maybe you pay the big bucks annual retainers to your CPA and attorney for all of the above.