Index

A

  • accounting, 113, 154, 234
  • accredited investor, 190. See also investor
  • accrual-based accounting system, 113, 234
  • active income, 132. See also profit
  • active participant, 132, 133
  • adjusted gross income, 240. See also profit
  • administrative dissolution, 218, 254, 256. See also dissolution
  • advertising, 189, 191, 192–193
  • advisory board, 175
  • agent, registered
    • as Articles of Organization signer, 103
    • attorneys as, 96
    • benefits of, 93–94
    • choosing, 18–19
    • defined, 327
    • determination of, 71
    • evaluation of, 95–96
    • finding, 95
    • function of, 94
    • rejected Articles of Organization and, 106
    • for tracking filings, 248–249
    • working with, 93–96
  • agreement, buy-sell, 199, 205–207, 323
  • agreement, non-membership-related, 49
  • Alaska, 187, 282
  • Alaska Limited Liability Company Act, 282
  • allocation
    • defined, 21, 234, 323
    • flexible, 132
    • overview of, 13–14
    • partnership taxation and, 132
    • of profits and losses, 167–168
    • taxation and, 131
    • varying, 168
  • alter ego, 281, 318, 321, 323
  • amendment, 323
  • Amendments section (operating agreement), 211
  • angel capital, 308–309. See also capital
  • annual meeting, 319–320
  • annual report, 215, 318–319
  • antiquated duration provision, 100
  • Application for Employer Identification Number (Form SS-4), 232
  • apportionment formula, 250
  • arbitration and mediation, 157
  • Arizona, 217
  • articles of conversion, 120–121
  • articles of dissolution, 269
  • articles of formation, 19
  • Articles of Organization
    • antiquated duration provision of, 100
    • for conversion, 121
    • cover sheet for, 107
    • defined, 19, 323
    • document for, 102–103
    • expediting, 105
    • fees for, 104
    • filing, 104–107
    • overview of, 97
    • preparing, 98–103
    • provisions for, 98–100
    • questions regarding, 70–71, 104–105
    • rejected filing of, 106–107
    • sending, 105
    • signers of, 103
    • state requirements for, 98–102
  • asset
    • capital, 323
    • commingling, 321
    • corporate, 116
    • dissolution and, 258
    • dual-entity strategy for, 288–289
    • increased security strategies regarding, 285–289
    • leasing, 117–118, 311
    • liquidation of, 14
    • overview of, 275
    • ownership interest as, 27
    • personal, 279–280
    • protection for, 25–26, 64, 278–285, 313
    • of S corporation, 139
    • security for, 279–280
    • segregating, 311
    • in Series LLC, 38
    • transfer of, 58, 125, 237–238
  • assignee, 32
  • assumed name, 79
  • ATF (Bureau of Alcohol, Tobacco, and Firearms), 223
  • attorney general, 257
  • authority, certificate of, 246–248
  • authorized signer/party, 99

B

  • beneficiary, 295–296, 323
  • Benefit LLC, 42
  • Big Boss, 180
  • BIG (built-in gain) tax, 137
  • Blue Sky Filings, 193
  • blue sky laws, 195–196, 323
  • board, advisory, 175
  • board of directors, 323
  • boilerplate provision, 155–157
  • bookkeeping, 21, 153–155
  • building permit, 222
  • built-in gain (BIG) tax, 137
  • Bureau of Alcohol, Tobacco, and Firearms (ATF), 223
  • business insurance, 25–26, 56, 279
  • business liability protection, 24
  • business license, 123, 218–223, 249–250, 320
  • business license number, 221
  • business registration number, 221
  • buy-sell agreement, 199, 205–207, 323
  • bylaws, 323

C

  • C corporation, 323
  • California, 120–121, 288–289
  • cancellation, 269
  • cancellation, certificate of, 251
  • capital
    • defined, 323
    • overview of, 183
    • raising, 308–309
    • upstart, 184
    • venture, 59–61, 184
  • capital account, 14
  • capital asset, 323. See also asset
  • capital gains, 324
  • capitalizing the company, 318
  • case law, 324
  • cash distribution, 112. See also distribution
  • cash-based accounting system, 113, 234
  • catchphrase, 83–84
  • cell, 324
  • certificate, membership, 13, 160, 171, 185, 326
  • certificate of authority, 246–248
  • certificate of cancellation, 251
  • certificate of existence, 247
  • certificate of formation, 19
  • certificate of good standing, 247
  • certification mark, 82
  • chancery court, 90
  • charging order protection
    • benefits of, 184
    • defined, 10, 12, 57, 63, 177, 224, 276, 293, 324
    • failure of, 285
    • manager-managed LLC and, 284
    • membership transferring and, 200, 283–284
    • overview of, 26–28, 92, 280–282, 316–317
    • partnership rules regarding, 283
    • phantom income and, 238–239
    • records regarding, 284
    • rules regarding, 282–284
    • single-member LLC and, 43, 92, 282, 317
    • state requirements for, 277
    • website for, 92
  • check-the-box regulation, 129
  • claim, dealing with, 265–267
  • class, 11
  • class, membership
    • defined, 11
    • establishment of, 170–171
    • function of, 28
    • provision for, 171, 179
    • rules within, 179
    • voting and, 173
  • Class A membership, 171
  • Class B membership, 171
  • co-founder, 163
  • combination mark, 83
  • commingling, 284, 321
  • common law, 324
  • company charter, 105
  • company kit, 153, 226–227, 324
  • consolidation, 324
  • contingency basis, of lawsuits, 277
  • contract, 123, 124
  • contribution, 12–13, 164–167, 268
  • control, giving up, 322
  • conversion, to limited liability company (LLC)
    • aftermath of, 123–125
    • approval documentation for, 121–122
    • articles of, 120–121
    • Articles of Organization for, 121
    • asset transferring following, 125
    • business license and, 123
    • considerations regarding, 110–111
    • contract considerations and, 123, 124
    • corporate taxation and, 115–116
    • from corporation, 111, 115–118
    • execution of, 118–122
    • filing, 122
    • from general partnership, 113–115, 122
    • from limited partnership, 113–115
    • with manager, 117
    • non-statutory, 119
    • plan of, 121
    • from S corporation, 111, 116
    • from sole proprietorship, 112–113, 122
    • state requirements for, 120–122
    • statutory, 119–120
    • statutory merger for, 119–120
    • tax identification number (EIN) and, 123
    • tax implications regarding, 111–118
  • CorpAssure, 16, 33, 72, 108, 249
  • corporate taxation
    • benefits of, 136
    • conversion and, 115–116
    • disadvantages of, 136–137
    • double, 53–54, 135–136
    • easing, 116–117
    • federal return and, 235–236
    • function of, 28
    • investment property and, 137
    • overview of, 30, 135–137, 231
    • restrictions within, 55
    • single-member LLC and, 11
  • corporate veil, 224–225
  • corporation. See also S corporation
    • assets of, 116
    • case law and, 61
    • conversion from, 111, 115–118
    • defined, 324
    • fixed-management structure of, 18
    • foreign, 325
    • health insurance of, 118
    • intangible assets of, 116
    • as leasing company, 117–118
    • LLC management by, 134
    • management, 18, 134, 146
    • off-shore, 326
    • overview of, 52–54
    • real estate investment and, 62, 293–294
    • as separate entity, 115
    • shareholders within, 52
    • shares within, 60
    • for single-member LLC, 178
    • venture capital and, 59–61
    • vulnerability of, 281
  • Corporation Income Tax Return (Form 1120), 236
  • cover sheet, for Articles of Organization, 107
  • credit, within sole proprietorship, 47
  • creditor, 258, 265–267
  • criminal acts, 257
  • crowdfunding, 194–195

D

  • death, of member, 204–205
  • debt
    • dissolution and, 262
    • judgment, 325
    • nonrecourse, 112, 114
    • personal liability of, 167
    • of S corporation, 139
    • settling, 265–267
    • types of, 112
  • decision-making, membership, 172–174
  • deed, 324
  • deemed cash distribution, 112, 125, 237
  • Delaware, 90, 282
  • Delaware Limited Liability Company Act, 282
  • delegation of powers, 181–182
  • Department of Transportation (DOT), 223
  • digital records, 154
  • disclosure, 190, 216
  • dispute, resolution of, 156–157
  • disqualified professional dissolution, 255. See also dissolution
  • disregarded entity
    • defined, 11, 48
    • federal return and, 232
    • taxation, 134–135, 230
  • dissolution
    • articles of, 269
    • asset sale during, 258
    • causes of, 254–261
    • checklist for, 270–272
    • considerations regarding, 261–264
    • context of, 254
    • debt and, 262
    • defined, 324
    • filing, 269–270
    • finality of, 261
    • future planning regarding, 263–264
    • liability protection and, 262
    • membership paying during, 267–268
    • overview of, 253
    • process of, 264–272
    • of S corporation, 262
    • settling debts during, 265–267
    • of short-term projects, 310
    • statement for, 270
    • tax consequences regarding, 270
    • termination versus, 254
    • voluntary, 254, 255–256
    • voting regarding, 263
    • withdrawal process during, 269
    • wrapping up government affairs during, 268–269
  • dissolution event, 260
  • distribution
    • cash, 112
    • changing, 312–313
    • contingency plan for, 169
    • deemed cash, 112, 125, 237
    • defined, 13, 234–235, 324
    • flexibility within, 24, 31, 132
    • management control of, 169
    • mandatory tax, 168–169
    • overview of, 13–14, 168–170
    • partnership taxation and, 132
    • profit and loss, 14, 31, 167–170, 312–313
    • prorating, 209
    • special, 170
    • taxation and, 131, 168–169
  • divorce, 203–204
  • documentation, 21, 226, 321–322
  • doing business, 244–246, 324
  • doing business as (DBA), 79–80, 259
  • domestic LLC, 244
  • domestication, 251–252
  • domicile, 244, 324
  • DOT (Department of Transportation), 223
  • double taxation
    • defined, 324
    • overview of, 53–54, 135–136
    • real estate investment and, 293, 294
  • dual liability protection
    • benefits of, 184
    • defined, 10, 12, 57, 63, 177, 224, 276, 293, 324
    • failure of, 285
    • manager-managed LLC and, 284
    • membership transferring and, 200, 283–284
    • overview of, 26–28, 92, 280–282, 316–317
    • partnership rules regarding, 283
    • phantom income and, 238–239
    • records regarding, 284
    • rules regarding, 282–284
    • single-member LLC and, 43, 92, 282, 317
    • state requirements for, 277
    • website for, 92
  • dual-entity strategy, 117–118, 288–289
  • due-on-sale clause, 123

E

  • economic interest, 277
  • economic right, 27–28, 31, 199, 208, 280
  • education, for LLCs, 16
  • 83(b) election, 177
  • election, 177, 180–181, 233, 286–287
  • Election by a Small Business Corporation (Form 2553), 141
  • emblem, 83
  • employer identification number (EIN) (tax ID), 123, 139–140, 224, 232, 320, 324
  • entity, 325
  • Entity Classification Election (Form 8832), 30, 130, 140–141, 178, 236
  • estate planning, 63–64, 276, 299–300, 309–310
  • exemption, intrastate, 191–192
  • existence, certificate of, 247
  • expenditure, authority for, 182
  • Expulsion section (operating agreement), 203–204, 207

F

  • face value, 325
  • family LLC, 41–42
  • FDA (Food and Drug Administration), 223
  • Federal Communications Commission (FCC), 223
  • federal return, 231–237, 268. See also taxation
  • federal trademark, 77. See also trademark
  • federally issued license, 223
  • fees
    • for Articles of Organization, 104
    • defined, 325
    • for formation company, 107
    • franchise, 298, 325
    • for initial report, 216
    • name/naming, 79
    • probate, 64
    • trademark, 84
    • transfer, 301
  • fictional dissolution, 255, 260–261. See also dissolution
  • fictitious firm name, 79, 259
  • film financing, 65
  • financial record, 154–155
  • financial statement, 189, 193
  • financing, within sole proprietorship, 47
  • fire department permit, 222
  • fiscal year, 154
  • Florida, 282
  • Florida Revised Limited Liability Company Act (FLLCA), 282
  • Food and Drug Administration (FDA), 223
  • foreign corporation or LLC, 325
  • foreign filing, 39, 87, 244, 246–248
  • Form 1-A (offering statement), 193
  • Form 1-K, 193
  • Form 1-SA, 193
  • Form 1-U, 193
  • Form 1040 (personal income tax return), 232, 235
  • Form 1065 (information statement), 21, 50, 232, 233, 237
  • Form 1120 (Corporation Income Tax Return), 236
  • Form 1120S (Income Tax Return for an S Corporation), 236–237
  • Form 2553 (Election by a Small Business Corporation), 141
  • Form 8832 (Entity Classification Election), 30, 130, 140–141, 178, 236
  • Form D, 189, 192
  • Form K-1, 50
  • Form SS-4 (Application for Employer Identification Number), 232
  • formation, certificate of, 19
  • formation company, 107–108
  • formation date, 104
  • formula, apportionment, 250
  • founding member, 12
  • franchise fee, 298
  • franchise tax or fees, 325
  • fraudulent conveyance, 285, 325
  • frivolous lawsuit, 275
  • Frost, Robert, 253
  • fund, commingling, 284, 321

G

  • general advertising, 189, 191, 192–193
  • general partnership, 48–50, 113–115, 122, 325
  • Gesellschaft mit beschränkter Haftung (GmbH), 15
  • “Good Housekeeping Seal,” 82
  • good standing, 269
  • good standing, certificate of, 247
  • government affairs, wrapping up, during dissolution, 268–269
  • Great Depression, 186

H

  • health department permit, 222
  • health insurance, 118
  • holding company, 38, 325
  • home, protection for, 298
  • home occupation permit, 222
  • homestead exemption, 298

I

  • IC (International Classification) code, 78
  • imputing, 325
  • incentive, 176, 184
  • income. See also phantom income; profit
    • active, 132
    • adjusted gross, 240
    • Form 1040 (personal income tax return), 232, 235
    • Form 1120 (Corporation Income Tax Return), 236
    • Form 1120S (Income Tax Return for an S Corporation), 236–237
    • passive, 132
    • portfolio, 132
    • qualified business income (QBI), 137, 236
    • Schedule E (Supplemental Income and Loss), 232, 235
  • Income Tax Return for an S Corporation (Form 1120S), 236–237
  • incorporated entity, 110
  • incorporating, 325
  • indemnification, 101, 156
  • Indiegogo, 195
  • information statement, 216
  • information statement (Form 1065), 21, 50, 232, 233, 237
  • initial list of managers or members, 216
  • “Initial Members of the Company,” 164
  • initial report, 216–218, 249
  • insurance
    • business liability, 56, 279
    • function of, 25–26
    • health, 118
    • workers' compensation, 224
  • intangible assets, 116
  • intellectual property, 307–308
  • interest, membership
    • buy-back of, 205
    • calculating, 160
    • as contribution, 166
    • defined, 11, 71, 326
    • within operating agreement, 13
    • percentage determination of, 12
    • provision for, 202
    • services as, 268
    • value of, 198–199
  • interest, membership, calculating, 160
  • Internal Revenue Service (IRS). See taxation; specific forms
  • International Classification (IC) code, 78
  • Internet resources
    • Benefit LLC, 42
    • blue sky laws, 196
    • Bureau of Alcohol, Tobacco, and Firearms (ATF), 223
    • charging order protection, 92
    • conversion requirements, 120
    • CorpAssure, 16, 33, 72, 249
    • Department of Transportation (DOT), 223
    • dissolution, 257, 270
    • employer identification number (EIN) (tax ID), 320
    • Federal Communications Commission (FCC), 223
    • federal exemptions to small businesses, 188
    • Food and Drug Administration (FDA), 223
    • Form 8832 (Entity Classification Election), 30, 141
    • Form D, 189, 192
    • ID Master List (USPTO), 84
    • Internal Revenue Service (IRS), 320
    • IRS section 108, 270
    • liability protection, 277, 280
    • LLC Cheat Sheet, 4
    • LLC purpose, 313
    • membership, state laws regarding, 160
    • naming requirements, 76, 77
    • Professional Limited Liability Company (PLLC), 34
    • quit-claim deed, 300
    • redomiciling, 252
    • Secretary of State offices, 248
    • Section 704, 168
    • Securities and Exchange Commission (SEC), 223
    • Series LLC, 40
    • tax ID, 140
    • TogetherCFO, 240
    • Trademark Electronic Search System (TESS), 78
    • transacting business, 87, 245, 298
    • United States Patent and Trademark Office (USPTO), 78, 84
  • intrastate exemption, 191–192
  • investing, 12, 59–61, 186
  • investment property, 137
  • investor, 184, 187, 189–190
  • involuntary dissolution, 257. See also dissolution
  • IRS section 108, 270
  • IRS Section 1031, 297

J

  • JOBS (Jumpstart Our Business Startups) Act, 190
  • joint liability, 325
  • joint venture, 325
  • judgment creditor, 325
  • judgment debt, 325
  • judicial dissolution, 254–255, 257. See also dissolution
  • Jumpstart Our Business Startups (JOBS) Act, 190

K

  • Kickstarter, 195
  • known claim, 265–266

L

  • land trust, 295–297
  • lawsuit
    • challenges of, 275
    • contingency basis of, 277
    • frequency of, 276
    • frivolous, 275
    • IRS role regarding, 277
    • land trusts and, 295–296
    • liability protection and, 225
    • property logistics regarding, 298–299
    • scenario regarding, 95
  • leasing, 117–118, 311
  • liability, defined, 325–326
  • liability, joint, 325
  • liability protection
    • corporate, 52
    • dissolution and, 262
    • within general partnership, 49
    • keeping intact, 315–322
    • of Professional Limited Liability Company (PLLC), 34–35
    • recordkeeping of, 224–228
    • for single-member LLC, 177–178
    • within sole proprietorship, 46–47
  • license. See also permit
    • business, 123, 218–223, 249–250, 320
    • federally issued, 223
    • occupational/professional, 221
  • lien, 278, 326
  • life span, within sole proprietorship, 47
  • limited liability, 25, 279
  • limited liability company (LLC). See also specific types
    • approval for, 19
    • Benefit, 42
    • benefits of, 1, 10, 24–31, 57–58, 167, 184, 305–313
    • Cheat Sheet for, 4
    • conversion to, 110–111
    • corporation management of, 134
    • creating, 15–19
    • customizing, 100, 305, 306
    • duration of, 260, 261
    • education regarding, 16
    • family, 41–42
    • filing, 316
    • flexibility of, 9, 11, 24, 143, 170, 292, 305
    • function of, 10–15
    • goals through, 55–65
    • history of, 260
    • as incorporated entity, 85
    • inequality of, 88
    • keeping current, 217–218
    • life support of, 262
    • maintaining, in multiple states, 248–252
    • member-managed, 14, 17, 29, 70, 72, 73
    • multiple, 287–288
    • multi-state, 248–252
    • naming, 70
    • operating, 19–22
    • origin of, 15
    • out of state, 88–92
    • overview of, 9–10
    • privacy of, 216
    • Professional Limited Liability Company (PLLC), 25, 33–37, 101–102, 236, 280
    • purpose of, 70, 313
    • registering, in multiple states, 244–248
    • registering, with Securities and Exchange Commission (SEC), 191
    • securities LLC, 238
    • Series, 37–41
    • state oversight regarding, 16, 32–33, 70
    • structuring, to attract investors, 184
  • limited liability company interest, 11
  • limited liability limited partnership (LLLP), 50–51
  • limited liability partnership (LLP), 50–51
  • limited liability protection, defined, 326
  • limited lifespan, 260, 261
  • limited partnership, 50, 113–115, 326
  • liquidation, 14, 173, 258
  • living trust, 326
  • loan, 123, 131, 299–300, 320
  • locally issued permit, 222
  • logo, 83
  • loss, 132–133, 167–170
  • low-profit limited liability company (L3C), 42

M

  • malpractice insurance, 35, 56
  • management group, 17
  • manager-managed LLC
    • charging order protection and, 284
    • defined, 14, 29, 70
    • overview of, 17, 72, 74
    • profit distributions within, 170
  • manager/management. See also member/membership; owner/ownership
    • choosing, 180
    • clarity regarding, 18
    • compensation for, 182
    • for conversion, 117
    • corporate, 18, 134, 146
    • decisions regarding, 17–18
    • defined, 180
    • delegation of powers within, 181–182
    • determination of, 70
    • election of, 11, 180–181
    • flexibility for, 28–29, 57, 64
    • freedom for, 29
    • indemnification of, 156
    • initial list of, 216
    • overview of, 14–15
    • profit distribution by, 169
    • rules for, 179–182
    • titles and duties assigning within, 145–146
    • transition of, 204
  • mandatory tax distribution, 168–169
  • MBT (modified business tax), 91
  • mediation and arbitration, 157
  • Medicare, 138
  • meeting, annual, 319–320
  • member-managed LLC, 14, 17, 29, 70, 72, 73
  • member/membership. See also manager/management
    • as Articles of Organization signers, 103
    • assignee within, 32
    • challenges of, 31–32
    • choosing initial, 71–72
    • classes of, 145
    • contingency plan for, 169
    • contributions of, 164–167
    • death of, 204–205
    • decision-making by, 172–174
    • defined, 160, 326
    • disputes within, 257–258
    • dissolution and, 267–268
    • divorce and, 203–204
    • founding, 12
    • indemnification of, 156
    • information from, 165–166
    • initial list of, 216
    • issuance of, 71, 163–174
    • liability of, 155
    • making room for new, 208
    • naming, 164–166
    • opposite personalities within, 161
    • overview of, 159–160
    • questions and considerations regarding, 164
    • record maintenance of, 185
    • removing, 203–204
    • rights of, 199
    • role of, 159
    • services of, 268
    • shares within, 63–64, 165, 184
    • silent partner, 203
    • transfer of, 199–200, 283–284, 308
    • transition of, 201–207
    • voting requirements for, 172–174
  • membership certificate, 13, 160, 171, 185, 326
  • membership class
    • defined, 11
    • establishment of, 170–171
    • function of, 28
    • provision for, 171, 179
    • rules within, 179
    • voting and, 173
  • membership cliff, 175–176
  • membership interest
    • buy-back of, 205
    • calculating, 160
    • as contribution, 166
    • defined, 11, 71, 326
    • within operating agreement, 13
    • percentage determination of, 12
    • provision for, 202
    • services as, 268
    • value of, 198–199
  • membership mark, 82
  • membership percentage, 71
  • membership register (shareholder register), 326
  • membership roll, 185, 227
  • membership vesting, 17, 167, 174–177
  • merger, 326
  • milestone, membership vesting and, 175
  • minutes, 319–320, 326
  • modified business tax (MBT), 91
  • Montana, 86–87
  • multi-state LLC, maintaining, 248–252

N

  • name/naming, limited liability company (LLC). See also trademark
    • assumed, 79
    • availability of, 76–85
    • catchphrase for, 83–84
    • changing, 85
    • conflict regarding, 77
    • conversion and, 123
    • doing business as (DBA), 79–80
    • fees regarding, 79
    • fictitious firm, 79
    • identifiers within, 82
    • laws regarding, 75–76
    • logo for, 83
    • within operating agreement, 152
    • overview of, 75
    • rejected Articles of Organization and, 106
    • reserving, 78–79, 107
    • slogan for, 83–84
    • trade, 79
    • trademark search for, 77–78
  • Nevada, 91, 282, 298
  • Nevada Revised Statutes, 282
  • New Mexico, 187
  • New York, 217
  • nominee, 286–287, 296, 326
  • noncredited investor, 189–190
  • nonincorporated business structure, 110
  • non-membership-related agreement, 49
  • nonprofit corporation, 326
  • nonrecourse debt, 112, 114
  • non-statutory conversion, 119
  • nontaxable event, 113–114

O

  • occupational/professional license, 221
  • offering statement (Form 1-A), 193
  • off-shore corporation or LLC, 326
  • Ohio, 187
  • Olmstead v. Federal Trade Commission, 282
  • operating agreement
    • amending, 210–211
    • books and records within, 153–155
    • company purpose within, 153
    • contingency plan within, 169
    • creating, 20
    • debtor member provision within, 285
    • decision-making requirements within, 226
    • defined, 141, 327
    • dissolution and, 257–258
    • distribution specification within, 169
    • Expulsion section of, 203–204, 207
    • financial reports and, 227
    • formation and qualification within, 152
    • framework for, 148–150
    • governing by, 144–146
    • importance of, 146–147, 257
    • management titles and duties within, 145–146
    • membership issue within, 160
    • name within, 152
    • organizational matters within, 151–153
    • outline of, 149–150
    • overview of, 143–147, 317–318
    • ownership structure for, 145
    • provisions within, 150–157
    • ratifying of, 210
    • sharing copies of, 210
    • signing of, 210
    • for single-member LLC (SLLC), 178–179
    • storing original, 210
    • term within, 152–153
    • Transfer and Assignment of Interests section, 200–201
    • voting provision within, 173–174
    • wrapping up, 209–211
  • operating company, 288
  • operating partner, 179
  • opposites attract principle, 161
  • organizer, 99, 216, 316
  • other right, 280
  • owner/ownership. See also manager/management
    • as Articles of Organization signers, 103
    • business licenses and, 219
    • determination of, 70–71
    • divvying up, 16–17
    • flexibility for, 28–29, 57, 64
    • as founding member, 12
    • freedom of, 24, 28–29
    • individual, 28
    • interest, 11
    • overview of, 11–12
    • percentage determination of, 12, 71
    • as personal asset, 27
    • within Professional Limited Liability Company (PLLC), 35–36
    • purchase of, 12
    • restrictions on, 35–36
    • role of, 159
    • structure for, 145

P

  • partnership
    • compensation for, 163
    • features of, 10
    • federal return and, 232–235
    • finding, 316–317
    • general, 48–50, 113–115, 122, 325
    • interviewing for, 162
    • limited, 50
    • limited liability limited partnership (LLLP), 50–51
    • limited liability partnership (LLP), 50–51
    • LLC as, 10
    • locating, 161–163
    • non-membership-related agreement for, 49
    • personalities within, 161, 162
    • recruiting, 161–163
    • tax trap regarding, 114–115
    • workload within, 163
  • partnership taxation
    • allocation and, 132
    • function of, 13–14, 21, 49–50, 130–134, 230
    • single-member LLC (SLLC) and, 135
  • passive income, 132
  • passive loss limitation, 133
  • passive participant, 134
  • pass-through taxation
    • benefits of, 58
    • defined, 21, 30, 48, 327
    • function of, 87–88
    • partnership taxation as, 49–50, 230
    • passive loss limitation and, 133
    • S corporation and, 54
    • types of, 131
  • payroll factor, 250
  • permit, 219–220, 222, 320. See also business license; license
  • perpetual duration, 260
  • personal asset, protection for, 279–280. See also asset
  • personal income tax return (Form 1040), 232, 235
  • personal liability protection, 24, 25–26
  • personally-guaranteed loan, 131
  • phantom income. See also income
  • piercing the veil, 225, 327
  • PLLC (Professional Limited Liability Company)
    • defined, 25
    • overview of, 33–37, 280
    • owner/ownership within, 35–36
    • provisions for, 101–102
    • taxation and, 236
  • portfolio income, 132
  • post-judgment lien, 278
  • prejudgment lien, 278
  • principle office, 71
  • privacy, 216, 286–287
  • privacy haven, 89–92
  • private placement, 184, 190
  • private placement memorandum (PPM), 190–191, 193
  • probate fee, 64
  • Professional Limited Liability Company (PLLC)
    • defined, 25
    • overview of, 33–37, 280
    • owner/ownership within, 35–36
    • provisions for, 101–102
    • taxation and, 236
  • professional/occupational license, 221
  • profit. See also income
    • allocation of, 167–168
    • determination of, 167–170
    • distribution of, 14, 31, 209, 312–313
    • flexibility within, 24
    • as phantom income, 22
    • protection for, 64
    • from real estate investment, 62–63
  • Profit or Loss from Business (Schedule C), 48, 134, 232
  • promissory note, 184
  • property. See also real estate
    • factor, 250
    • intellectual, 307–308
    • investment, 137
    • rental, 298–299
    • title transfer of, 300–301
    • transfer of, into LLC, 237
  • property use permit, 222
  • prorating, distribution, 209
  • provision
    • Articles of Organization, 98–100
    • boilerplate, 155–157
    • death, 205
    • debtor member, 285
    • defined, 98, 327
    • delegation of powers, 181–182
    • digital records, 154
    • dispute resolution as, 156–157
    • Expulsion section, 203–204, 207
    • financial record, 154–155
    • formation and qualification as, 152
    • liability of members as, 155
    • management election, 180–181
    • management replacement, 204
    • membership class, 171, 179
    • membership interest, 198–199, 202
    • membership shares purchasing, 201
    • name as, 152
    • within operating agreement, 150–157
    • operating agreement amendment, 211
    • organizational matters as, 151–153
    • Professional Limited Liability Company (PLLC), 101–102
    • purpose of company as, 153
    • rejected Articles of Organization and, 106–107
    • reporting, 154–155
    • right of first refusal, 199
    • sample of, 101
    • term as, 152–153
    • Transfer and Assignment of Interests, 200–201
    • transition, 202
    • voting, 173–174
  • public announcement, 217

Q

  • qualified business income (QBI), 137, 236
  • qualifying filing, 87, 246
  • quit-claim deed, 300
  • quorum, 327

R

  • real estate
    • in corporations, 62, 293–294
    • disregarded entity taxation for, 230
    • estate planning and, 299–300
    • home as, 298
    • investment maximizing within, 61–63
    • land trusts and, 295–297
    • LLC property logistics regarding, 297–301
    • LLCs for, 62–63, 292–297, 306–307
    • overview of, 291
    • rental property, 298–299
    • S corporation for, 62, 294–295
    • sale and transfer challenges regarding, 293
    • Series LLC within, 38
    • title transfer of, 300–301
  • reasonable salary, 54
  • receiver, 258
  • record, financial, 154–155
  • recordkeeping
    • of business licenses, 218–223
    • of digital records, 154
    • filing initial report, 216–218
    • of financial information, 227
    • importance of, 21
    • initial report, 216–218
    • of liability protection, 224–228
    • of membership roll, 227
    • as operating agreement provision, 153–155
    • overview of, 215
    • public announcement filing, 217
    • requirements for, 223–224
    • resolutions and, 226
    • of tax filings, 227
  • recourse debt, 112, 114
  • recruiting, for partners, 161–163
  • redomiciling, 118, 251–252
  • registered agent
    • as Articles of Organization signer, 103
    • attorneys as, 96
    • benefits of, 93–94
    • choosing, 18–19
    • defined, 327
    • determination of, 71
    • evaluation of, 95–96
    • finding, 95
    • function of, 94
    • rejected Articles of Organization and, 106
    • for tracking filings, 248–249
    • working with, 93–96
  • registered office, 18–19
  • Regulation A, 188
  • Regulation A exemption, 192–193
  • Regulation Crowdfunding, 188, 194–195
  • Regulation D exemption, 188–195
  • regulatory law, 327
  • reinstatement, 256
  • rental property, 298–299
  • report, initial, 216–218, 249
  • reporting, 154–155
  • Repurchase Option strategy, 176
  • resolution, 199, 208, 226, 319, 327
  • resources
    • Benefit LLC, 42
    • blue sky laws, 196
    • Bureau of Alcohol, Tobacco, and Firearms (ATF), 223
    • charging order protection, 92
    • conversion requirements, 120
    • CorpAssure, 16, 33, 72, 249
    • Department of Transportation (DOT), 223
    • dissolution, 257, 270
    • employer identification number (EIN) (tax ID), 320
    • Federal Communications Commission (FCC), 223
    • federal exemptions to small businesses, 188
    • Food and Drug Administration (FDA), 223
    • Form 8832 (Entity Classification Election), 30, 141
    • Form D, 189, 192
    • ID Master List (USPTO), 84
    • Internal Revenue Service (IRS), 320
    • IRS section 108, 270
    • liability protection, 277, 280
    • LLC Cheat Sheet, 4
    • LLC purpose, 313
    • membership, state laws regarding, 160
    • naming requirements, 76, 77
    • Professional Limited Liability Company (PLLC), 34
    • quit-claim deed, 300
    • redomiciling, 252
    • Secretary of State offices, 248
    • Section 704, 168
    • Securities and Exchange Commission (SEC), 223
    • Series LLC, 40
    • tax ID, 140
    • TogetherCFO, 240
    • Trademark Electronic Search System (TESS), 78
    • transacting business, 87, 245, 298
    • United States Patent and Trademark Office (USPTO), 78, 84
  • return, federal, 231–237, 268. See also taxation
  • Revised Model Business Corporation Act (RMBCA), 245
  • revival, 256
  • right of first refusal provision, 199
  • Rule 504 exemption, 188–189
  • Rule 505 exemption, 188, 189–190
  • Rule 506 exemption, 190–191
  • Rule 506(b) exemption, 188, 190
  • Rule 506(c) exemption, 188, 190–191

S

  • S corporation
    • conversion from, 111, 116
    • defined, 28, 294, 327
    • dissolution of, 262
    • overview of, 54–55
    • for real estate investment, 62, 294–295
    • reasonable salary within, 54
    • restrictions of, 138–139
    • self-employment tax for, 138, 241
    • taxation for, 30, 131, 137–139, 231, 236–237, 308
  • sales and use tax permit, 219–220
  • sales factor, 250
  • sales tax, 220
  • Schedule C (Profit or Loss from Business), 48, 134, 232
  • Schedule E (Supplemental Income and Loss), 232, 235
  • Schedule K-1, 21, 232, 233–235, 237
  • Schedule SE (Self-Employment Tax), 232, 239
  • Section 704, 168
  • Section 721, 111, 114
  • securities, license for selling, 223
  • Securities and Exchange Act of 1934, 186
  • Securities and Exchange Commission (SEC), 183, 185–195, 223
  • securities law, 185, 186–187, 195–196
  • securities LLC, 238
  • securities registration, 187–188
  • seed capital, 308–309
  • seed round (Series A round), 60
  • self-employment tax
    • avoiding, 133–134
    • conditions of, 232
    • defined, 48
    • minimizing, 239–241
    • real estate investment and, 62
    • for S corporation, 138, 241
    • silent partner and, 240
    • within sole proprietorship, 232
  • Self-Employment Tax (Schedule SE), 232, 239
  • Series LLC, 37–41, 327
  • service of process, 327
  • several liability, 327
  • share
    • buy-back, 205
    • within corporation, 60
    • defined, 12
    • distribution of, 184
    • gifting, 63–64
    • membership, 63–64, 165, 184
    • provision for, 205
    • transferring, 187
  • shareholder, 52, 138–139
  • shareholder register (membership register), 326
  • short-term project, 255, 310
  • signing, documentation, 321–322
  • silent partner
    • defined, 179, 327
    • investors as, 187
    • membership removal and, 203
    • in membership transferring, 200
    • self-employment tax and, 240
  • simple majority voting, 173
  • single-factor apportionment, 250
  • single-member LLC (SLLC)
    • charging order protection within, 43, 92, 282, 317
    • corporation for, 178
    • defined, 11–12, 130, 327
    • disregarded entity taxation for, 230
    • federal return and, 232
    • Form 1065 (information statement) for, 233
    • liability protection for, 177–178
    • overview of, 43
    • partnership taxation and, 135
    • setting up, 177–179
    • as sole proprietorship, 11
  • slogan, 83–84
  • small business, 56–58, 276, 306
  • Social Security, 138
  • sole proprietorship
    • converting from, 112–113, 122
    • defined, 328
    • liability protection within, 46–47
    • life span within, 47
    • overview of, 46–48
    • self-employment tax within, 232
    • single-member LLC as, 11
    • taxation for, 30
    • transition from, 59
  • South Dakota, 91
  • special allocation, allowance for, 234
  • State Business Tax Climate Index, 91
  • statement, financial, 189, 193
  • states
    • Alaska, 187, 282
    • Arizona, 217
    • Articles of Organization requirements of, 98–102
    • blue sky laws within, 195–196
    • business license from, 218–223, 249–250
    • California, 120–121, 288–289
    • changing home, 251–252
    • choosing, for LLC, 85–88
    • conversion requirements of, 120–122
    • Delaware, 90, 282
    • dispute provision within, 157
    • Florida, 282
    • initial report requirements within, 216, 249
    • maintaining LLC in multiple, 248–252
    • membership laws within, 160
    • Montana, 86–87
    • name availability within, 76–77
    • Nevada, 91, 282, 298
    • New Mexico, 187
    • New York, 217
    • Ohio, 187
    • out of state limited liability company (LLC), 88–92
    • oversight from, 16, 32–33, 70
    • property logistics regarding, 298–299
    • registering LLC in multiple, 244–248
    • South Dakota, 91
    • taxation within, 250–251
    • trademark of, 81
    • withdrawing from, 251
    • Wyoming, 90, 288–289, 298
  • statute of limitations, 262, 267
  • statutory conversion, 119–120
  • statutory law, 328
  • statutory merger, 119–120
  • stock, 27
  • stock certificate, 328
  • stock market, 186
  • strength, in partners, 162
  • substantial economic effect, 132, 312
  • Sun Tzu, 28
  • Supplemental Income and Loss (Schedule E), 232, 235
  • symbol, 83

T

  • tangible good, 219
  • tax avoidance, 89
  • tax basis, 112
  • tax evasion, 89
  • tax ID (employer identification number (EIN)), 123, 139–140, 224, 232, 320, 324
  • tax registration number, 221
  • tax termination, 254, 255, 259. See also dissolution
  • taxation
    • allocation and, 131
    • apportionment formula for, 250
    • built-in gain (BIG), 137
    • classification of, 140–141
    • conversion considerations regarding, 111–118
    • disregarded entity, 11, 48, 134–135, 230, 232
    • distribution and, 131, 168–169
    • double, 53–54, 135–136, 293, 294, 324
    • dual-entity strategy and, 289
    • estate, 63–64
    • federal return for, 231–237, 268
    • flexibility of, 9, 24
    • following dissolution, 268, 270
    • Form 1040 (personal income tax return) for, 232, 235
    • Form 1065 (information statement) for, 21, 50, 232, 233, 237
    • Form 1120 (Corporation Income Tax Return) for, 236
    • Form 1120S (Income Tax Return for an S Corporation) for, 236–237
    • Form 2553 for, 141
    • Form 8832 (Entity Classification Election), 140–141
    • Form 8832 (Entity Classification Election) for, 30, 130, 236
    • Form K-1 for, 50
    • Form SS-4 (Application for Employer Identification Number) for, 232
    • function of, 21–22
    • havens for, 89–92
    • IRS notification of, 139–141
    • lawsuits and, 277
    • loss deduction and, 132–133
    • membership vesting and, 176–177
    • minimizing, 311–312
    • modified business tax (MBT), 91
    • in multiple states, 250–251
    • nontaxable event, 113–114
    • overview of, 129–130, 229–230
    • payroll factor for, 250
    • phantom income and, 238–239
    • for Professional Limited Liability Company (PLLC), 236
    • property factor for, 250
    • for real estate, 307
    • recordkeeping of, 227
    • reducing, 138
    • restrictions within, 55
    • S corporation, 30, 131, 137–139, 231, 236–237, 308
    • sales, 220
    • sales factor for, 250
    • Schedule C (Profit or Loss from Business) for, 48, 134, 232
    • Schedule E (Supplemental Income and Loss) for, 232, 235
    • Schedule K-1 for, 21, 232, 233–235, 237
    • Schedule SE (Self-Employment Tax) for, 232, 239
    • Section 704 for, 168
    • Section 721 for, 111, 114
    • Series LLC, 41
    • single-factor apportionment, 250
    • status selection regarding, 30
    • tax identification number (EIN) for, 123, 139–140, 224, 232, 320, 324
    • tax termination and, 259
    • trap, 114–115, 237–241, 259
    • tricky situations regarding, 167
    • use, 220
    • valuation and, 177
    • venture capital and, 60
    • writing off, 65
  • technical termination, 254
  • termination, 254
  • Tier 1 offerings (Regulation A exemption), 192
  • Tier 2 offerings (Regulation A exemption), 192
  • title, transfer of, 300–301
  • TogetherCFO, 240
  • trade name, 79, 81
  • trademark
    • for catchphrase, 83–84
    • characteristics of, 82
    • defined, 328
    • federal, 77
    • filing fee for, 84
    • logo for, 83
    • obtaining, 80–85
    • protection, 81
    • registering, 84–85
    • search for, 77–78
    • for slogan, 83–84
    • types of, 81
  • Trademark Electronic Search System (TESS), 78
  • transacting business, 87, 118, 243, 245, 298
  • Transfer and Assignment of Interests provision (operating agreement), 200–201
  • transferring, membership, 199–201
  • transition
    • buy-sell agreement for, 205–207
    • distribution during, 208–209
    • execution of, 207–209
    • new membership within, 208
    • peaceful terms for, 202
    • preparing for, 201–207
    • provision for, 202
  • trust, 63–64, 295–297, 310, 328
  • trustee, 295
  • trustor, 328

U

  • unanimous voting, 173
  • uncapped indemnity, 156
  • Uniform Limited Offering Exemption (ULOE), 195
  • United States Patent and Trademark Office (USPTO), 78, 84
  • United States Securities Act of 1933, 186
  • Universal Business Identifier (UBI), 221
  • unknown claim, 265, 266–267
  • use and occupancy permit, 222
  • use tax, 220

V

W

  • weakness, in partners, 162
  • websites
    • Benefit LLC, 42
    • blue sky laws, 196
    • Bureau of Alcohol, Tobacco, and Firearms (ATF), 223
    • charging order protection, 92
    • conversion requirements, 120
    • CorpAssure, 16, 33, 72, 249
    • Department of Transportation (DOT), 223
    • dissolution, 257, 270
    • employer identification number (EIN) (tax ID), 320
    • Federal Communications Commission (FCC), 223
    • federal exemptions to small businesses, 188
    • Food and Drug Administration (FDA), 223
    • Form 8832 (Entity Classification Election), 30, 141
    • Form D, 189, 192
    • ID Master List (USPTO), 84
    • Internal Revenue Service (IRS), 320
    • IRS section 108, 270
    • liability protection, 277, 280
    • LLC Cheat Sheet, 4
    • LLC purpose, 313
    • membership, state laws regarding, 160
    • naming requirements, 76, 77
    • Professional Limited Liability Company (PLLC), 34
    • quit-claim deed, 300
    • redomiciling, 252
    • Secretary of State offices, 248
    • Section 704, 168
    • Securities and Exchange Commission (SEC), 223
    • Series LLC, 40
    • tax ID, 140
    • TogetherCFO, 240
    • Trademark Electronic Search System (TESS), 78
    • transacting business, 87, 245, 298
    • United States Patent and Trademark Office (USPTO), 78, 84
  • winding up the affairs, 328
  • withdrawal, process of, 269
  • word mark, 83
  • workers' compensation insurance, 224
  • Wurzburg Bros. Inc versus James Coleman, 322
  • Wyoming, 90, 288–289, 298

Z

  • zoning permit, 222
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