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Limited Liability Companies

Limited Liability Companies. Introduction. Limited liability companies LLC are relatively new creatures of state laws. An LLC combines the liability of a ______ and the tax advantages of a _______. What does that mean?. LLC’s.

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Limited Liability Companies

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  1. Limited Liability Companies

  2. Introduction • Limited liability companies LLC are relatively new creatures of state laws. • An LLC combines the liability of a ______ and the tax advantages of a _______. • What does that mean?

  3. LLC’s • IRS rules - any unincorporated business (including LLC’s) will automatically be taxed as a _________ unless otherwise indicated on the tax return. • Why LLC - they allow ________ investors to own interests.

  4. LLC The owners are called “_______” (not ______). Members can distribute profits as want

  5. Example: you and a partner own an LLC. Your partner contributed $40,000 for capital. You only contributed $10,000 but you perform 90% of the work. • Agree to share the profits 50/50

  6. Nature of the LLC - IMP • Can a LLC be • 1. member-managed – • 2. manager-managed -

  7. LLC Duration How long can a LLC last? • A LLC has to be dissolved upon the death or bankruptcy of a member, unlike a corporation, which can exist in perpetuity.

  8. LLC Formation - TN • Must file with ________________ • File: • Articles of Organization require: • Name of Business and principal address. • Name and Address of ________. – person or company who will accept all lawsuits • Names of the M_______

  9. Name - imp • To get protection of LLC must ________!! • Unless you register as an _______,

  10. TN LAW NAMES • TN Law - LLC, domestic or foreign, may elect to transact business under an ___________, Must meet the___________ the name requirements of TCA §48-249-106 . Costs We will go online to see.

  11. Jurisdictional Requirements • Is LLC separate or part of owners? • For federal d_____ j_______ purposes the citizenship of an LLC is the citizenship of its m_____, which may live in multiple jurisdictions.

  12. Jurisdiction • Can sue wherever ANY member lives • What about min contacts?

  13. Advantages andDisadvantages of the LLC

  14. LLC Operating Agreement • LLC Operating Agreement is similar to corporation’s bylaws = internal running of LLC • Operating agreements = relating to management, meetings and other significant issues.

  15. LLP

  16. LLP • Certain types of businesses that provide professional services requiring a state professional license • Examples:

  17. Liability in an LLP • The LLP allows professionals to avoid personal liability for the malpractice of other partners.

  18. FLLP

  19. Family Limited Liability Partnerships • FLLP is a limited liability partnership in which the majority of the partners are family or related to each other. • Used frequently for agriculture.

  20. LP

  21. Limited Partnerships/Silent Partners • For silent partners – where have one person just give $$ • What does this mean?

  22. Formation of an LP • An LP is a creature of state statute and must follow statutory requirements. • Must file with the a secretary of state who will issue a certificate of limited partnership.

  23. Limited Partnership • The General partner assumes all management and personal liability. • Limited Partner contributes cash but has no management rights so silent partner’s liability is limited to the amount of invest. Just can look money invested. • When can a limited partner/silent partner be held liable ????

  24. Question? Mark Hardie was the sole member of Technical Plastics of Oregon, LLC (TPO). TPO operated out of Hardie’s home, and Hardie used TPO’s accounts to pay such personal expenses as landscaping, housecleaning, personal credit card bills, his step-son’s tuition, family vacations, and K-Mart, and Mattress World. Hardie received cash advances from his personal credit cards and deposited them into the TPO account. Hardie did not take a salary from TPO. When TPO filed for bankruptcy, it owed BLD Products approximately $120,000 for goods that it had purchased. LIABILITY?

  25. QUESTION? Blum, an attorney, was negligent in his representation of Anthony. To settle the lawsuit, Blum signed a promissory note for $10,400 on behalf of his law firm, Gladstone, Schwartz, Blum & Woods, LLC. When the law firm did not pay, Anthony filed suit against Blum. In his suit, Anthony alleged that Blum, as a member of the LLC, was personally liable for the promissory note.

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