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Limited Liability Companies

Limited Liability Companies. Richard Bansee Jenson Paul. Objectives. Importance of Operating Agreements How LLC’s are taxed Forming LLC’s LLC’s Basics. Importance Of An Operating Agreement. Structure Financial and Work Relationship Owner’s Percentage Share of Profits (or Losses)

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Limited Liability Companies

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  1. Limited Liability Companies Richard Bansee Jenson Paul

  2. Objectives • Importance of Operating Agreements • How LLC’s are taxed • Forming LLC’s • LLC’s Basics

  3. Importance Of An Operating Agreement • Structure • Financial and Work Relationship • Owner’s Percentage • Share of Profits (or Losses) • Owners’ rights and responsibilities • Future of the business • Guard • Limited Liability Status • Business governed by own rules • Financial and management misunderstanding

  4. Single Owner LLC’s Multiple Owner LLC’s How LLC's are TaxedAll of the profits and losses of the LLC "pass through" the business to the LLC owners (called members), who report this information on their personal tax returns. State Taxes and Fees California, Delaware, Illinois, Massachusetts, New Hampshire, Pennsylvania and Wyoming

  5. How To Form An LLC • Choose an available business name that complies with state's LLC rules. • File formal paperwork, usually called articles of organization, and pay the filing fee (ranging from $40 to $800, depending on the state). • Create an LLC operating agreement, which sets out the rights and responsibilities of the LLC members. • Publish a notice of your intent to form an LLC (required in only a few states). • Obtain licenses and permits that may be required for your business.

  6. LLC Requirements • The name cannot be the same as the name of another LLC on file with the LLC office • The name must end with an LLC designator, such as "Limited Liability Company" or "Limited Company," or an abbreviation of one of these phrases ("LLC," "L.L.C." or "Ltd. Liability Co.") • The name cannot include certain words prohibited by the state, such as Bank, Insurance, Corporation or City (states differ widely on prohibited terms)

  7. LLC Basics • Number of members • One member (Exception of Massachusetts) • Limited Personal Liability • All members are protected from personal liability • Exceptions to Limited Liability • Personally and directly injures someone • Personally guarantees a bank loan which the LLC defaults • Fails to deposit taxes withheld from employees wages • Intentionally does fraudulent, illegal activities • Treats the LLC as an extension to personal affairs

  8. LLC Basics (continued) • Business Insurance • Protection on personal assets when LLC protection does not in court • Protection on corporate assets from lawsuits and claims • Ending an LLC • If one leaves, the company dissolves • Fulfill remaining business obligations • Pay off all debts • Divide assets and profits • Operating Agreement can include buy – sell provisions

  9. Questions ?

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