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
- 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
- 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
- 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
- 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
- valuation, 177
- value, of membership interest, 198–199
- venture capital, 59–61, 184
- Vermont, 187
- vesting schedule, 175
- voluntary dissolution, 254, 255–256. See also dissolution
- voting, 11, 172–174, 199, 263
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
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