tag:blogger.com,1999:blog-74436484680116037692025-07-05T23:23:35.959-07:00LLC Operating Agreement Drafting blog. Lawyer answers questions and provides general information about limited liability companies and member operating agreements.jjrayhttp://www.blogger.com/profile/09951978285296375634noreply@blogger.comBlogger50125tag:blogger.com,1999:blog-7443648468011603769.post-48665674312154146592012-05-06T11:36:00.000-07:002012-08-17T10:09:48.511-07:00

Question: We have 3 equal members in an LLC formed in Georgia in 2005. Can one of the members sell or transfer his/her stake to an outside buyer (non-member) without consent from the remaining two buyers? There is no operating agreement established among members. Will the buyer automatically become member of the LLC? Does he have to get consent from the remaining two current members? May, Georgia

jjrayhttp://www.blogger.com/profile/09951978285296375634noreply@blogger.com3tag:blogger.com,1999:blog-7443648468011603769.post-46209366104756924192011-11-09T14:13:00.000-08:002011-11-09T14:54:23.683-08:00

Q. I own 65% of an LLC and want to sell. Other member agreed but is now making certain demands or he will block the sale. Can he do that even if I own the majority ownership interest in the LLC? Scott, OregonA. To my knowledge, one LLC member cannot block the sale of a limited liability company interest by another member unless such authority is granted in a buy-sell agreement between the members

jjrayhttp://www.blogger.com/profile/09951978285296375634noreply@blogger.com0tag:blogger.com,1999:blog-7443648468011603769.post-13137899399308387122011-09-07T15:19:00.000-07:002011-09-07T16:01:26.439-07:00

Question: We have an LLC in California with 4 equal members. Two members are going through Ch.13 bankruptcy. Our operating agreement states that the LLC shall be dissolved by bankruptcy of a member. It also states that if at least two members remain they can vote to continue the company within 90 days. If the two remaining members vote to continue the company does that mean the two members in

jjrayhttp://www.blogger.com/profile/09951978285296375634noreply@blogger.com2tag:blogger.com,1999:blog-7443648468011603769.post-40282797406189338412011-07-06T07:59:00.000-07:002011-07-06T16:18:34.464-07:00

Q. How can I show evidence of a sale or transfer of an LLC in MO? My son and I own 50% of a family LLC and my husband has either given or sold the LLC to his brother in KS who did own only 1%. Sandra, MoA. I am a little confused by the question; however, I read the situation as one where your husband has attempted to sell an LLC ownership interest to his brother that you believe you and your son

jjrayhttp://www.blogger.com/profile/09951978285296375634noreply@blogger.com3tag:blogger.com,1999:blog-7443648468011603769.post-16292837079954508742010-02-17T11:15:00.000-08:002010-02-17T11:29:40.855-08:00

Question: Is this document sold on your web site filed with the state of Florida? Is it what I use to start my LLC? Stan, Orlando.I often receive this question. No, the document you linked to is an LLC operating agreement. That is an agreement between the members setting forth such things as ownership percentages, method of allocation of profits and losses, voting procedures, et cetera. The

jjrayhttp://www.blogger.com/profile/09951978285296375634noreply@blogger.com0tag:blogger.com,1999:blog-7443648468011603769.post-55345030615994164992009-11-19T13:11:00.000-08:002011-12-13T12:31:15.374-08:00

LLC's taxed as partnerships must meet the "substantial economic effect" test of Treasury Reg. § 1.704-1(b)(2) for the allocation of income, losses and other items. This is an especially important point in regard to pass-through LLC losses as a deduction could be denied by the IRS if it finds the allocation lacks substantial economic effect. There are two alternative tests for providing

jjrayhttp://www.blogger.com/profile/09951978285296375634noreply@blogger.com0tag:blogger.com,1999:blog-7443648468011603769.post-85646027966702603782009-10-11T07:24:00.000-07:002009-11-06T07:51:32.685-08:00

Question: I'm a 1/3 partner in an LLC - we are having credit problems getting a loan because of my credit - not too bad, just not good enough. We need this $65,000 loan for biz improvements - the broker suggested taking me off the LLC paperwork just until the loan is approved then putting me back on. Your thoughts or suggestions would be greatly appreciated. thank you. Barry, CAAnswer: My

jjrayhttp://www.blogger.com/profile/09951978285296375634noreply@blogger.com0tag:blogger.com,1999:blog-7443648468011603769.post-42248167647104857012009-09-15T11:20:00.000-07:002009-09-15T11:49:58.041-07:00

Question: I co-own a Maryland LLC with three other people. We are looking to dissolve and do not know where to begin. Where can we find the best information, and where is the best place to start? Are the Articles of Cancellation the same as the Articles of Dissolution? Stephalauren, MarylandResponse: In responding, I'll assume all members wish to dissolve the LLC. Basically, here are the steps

jjrayhttp://www.blogger.com/profile/09951978285296375634noreply@blogger.com2tag:blogger.com,1999:blog-7443648468011603769.post-58579685456294436802009-09-04T07:27:00.000-07:002009-09-04T08:26:43.163-07:00

Question: We have come across some judges classifying an LLC as a type of corporation or an association which requires the use of an attorney for representation in court. Can an LLC represent itself through one of it's members (partnership) or through it's sole member (single member LLC) pro se without a lawyer in a court of law or other civil proceeding? Herman, New York.Response: "The general

jjrayhttp://www.blogger.com/profile/09951978285296375634noreply@blogger.com2tag:blogger.com,1999:blog-7443648468011603769.post-40795762581272693612009-09-03T07:25:00.000-07:002009-09-03T08:08:11.910-07:00

Question: Can the managing member of an LLC be another unrelated LLC? Michael, California.Answer: The nice thing about LLCs is their flexibility. The answer to your question is found in the definitions section of the California Limited Liability Company Act (Section 17001 of the California Corporations Code). Section 17001(w) defined "Manager" as "a person elected by the members of a limited

jjrayhttp://www.blogger.com/profile/09951978285296375634noreply@blogger.com0tag:blogger.com,1999:blog-7443648468011603769.post-47206225314912119422009-08-26T13:57:00.000-07:002009-08-26T14:21:50.553-07:00

Question: With a DE LLC, since LLC agreements are not required, how do you determine who are the authorized persons acting on behalf of the LLC if there is no LLC agreement? Is the person who executed the certificate of formation the only person responsible for the entity in the absence of any operating agreement? Kayla, DE.Response: A run on Delaware questions lately. I'm not sure what you

jjrayhttp://www.blogger.com/profile/09951978285296375634noreply@blogger.com0tag:blogger.com,1999:blog-7443648468011603769.post-54520318482191212472009-08-24T08:08:00.000-07:002009-08-24T10:51:22.536-07:00

Question: We formed a Delaware LLC in June 2006. We have no operating agreement, nor are our 3 members recorded. Two of us file our schedule K-1's listing us at 45% each and the 3rd at 10%. Can the (2) 45% members remove the 10% member for lack of participation and contribution? If so, how can this legally be accomplished? Tracy, CA.Response: This is a frequent question / complaint in LLCs. The

jjrayhttp://www.blogger.com/profile/09951978285296375634noreply@blogger.com1tag:blogger.com,1999:blog-7443648468011603769.post-25853873485203545292009-04-16T10:53:00.000-07:002009-04-16T11:05:25.226-07:00

Question : Do I have to pay taxes on my initial investment in an LLC if I want to now start receiving some of the money? Basically I paid in with taxed dollars so do I have to pay taxes again if I remove the intial investment? Brent, Missouri.Response: The taxation of a multi-member LLC is very similar to that of a partnership. Members are taxed on their distributive share of LLC income each

jjrayhttp://www.blogger.com/profile/09951978285296375634noreply@blogger.com0tag:blogger.com,1999:blog-7443648468011603769.post-60625945842128223752009-04-14T06:43:00.000-07:002009-04-14T06:58:55.587-07:00

Question: We have father and son LLC. The son started an independent practice and no longer wants to continue with LLC as member.What is the procedure for withdrawal from membership of the LLC? DOLAT, NEW YORKResponse: New York Consolidated Laws, LLC § 606 covers withdrawal of LLC members. It states, in pertinent part:§ 606. Withdrawal of a member. (a) A member may withdraw as a

jjrayhttp://www.blogger.com/profile/09951978285296375634noreply@blogger.com0tag:blogger.com,1999:blog-7443648468011603769.post-34594971354478108012009-03-31T15:21:00.000-07:002009-03-31T15:43:28.442-07:00

Question: Once I have completed the ORGANIZING AGREEMENT, do I need to send it to the Texas Dept. of State to have it legalized? If so, what is the proceedure for doing this? Jim.If I understand your question correctly, I think you have a misconception of the process. The document filed with the Texas Secretary of State's office that legally brings your LLC into being is called Certificate of

jjrayhttp://www.blogger.com/profile/09951978285296375634noreply@blogger.com2tag:blogger.com,1999:blog-7443648468011603769.post-8011819601217972052009-03-04T07:27:00.000-08:002009-03-31T16:49:56.820-07:00

Question: My wife and I are members in a LLC in New Jersey. We would like to remove her so tax filing will be easier. Is this possible and how would we go about it?Answer: I assume you are referring to the fact that a single member LLC can elect to be a disregarded entity for tax purposes and, thus, not file a separate federal tax return. In the case of an LLC that is a disregarded entity for

jjrayhttp://www.blogger.com/profile/09951978285296375634noreply@blogger.com0tag:blogger.com,1999:blog-7443648468011603769.post-51069110942195568682009-02-20T13:09:00.000-08:002009-03-31T16:50:21.761-07:00

Question: An LLC borrowed a sum of money from me for equipment for their new business in 06. The LLC still owes me $15,000 and is going to dissolve without having paid me in full. I do have a written contract. What is my recourse for collection of the funds still due? Anroln, Virginia.Two remedies come to mind. First, have an attorney review the contract to see if it forms the basis for a

jjrayhttp://www.blogger.com/profile/09951978285296375634noreply@blogger.com0tag:blogger.com,1999:blog-7443648468011603769.post-55146957956831603142009-02-09T10:37:00.001-08:002009-03-31T16:50:36.583-07:00

They are like putting the condom halfway on. Why in God's name would anyone do this? The reason oral operating agreements make no sense is that when they are violated it's very, very difficult for the wronged party to prevail. Remember that the plaintiff has the burden of proof in American civil cases. So when you sue the other LLC member for breach of an oral operating agreement, it is your

jjrayhttp://www.blogger.com/profile/09951978285296375634noreply@blogger.com2tag:blogger.com,1999:blog-7443648468011603769.post-47192939053902181092009-02-03T08:23:00.000-08:002009-02-03T19:58:08.565-08:00

I'm a member of an Arizona LLC. What happens if I file for bankruptcy?Unless otherwise provided for in the operating agreement, a person ceases to be a member of an Arizona LLC upon filing a voluntary petition in bankruptcy. See AZ stat §29-733(4)(b). In Chapter 13 bankruptcies, the debtor retains possession of his or her assets, therefore, there cannot be a collection action by your

jjrayhttp://www.blogger.com/profile/09951978285296375634noreply@blogger.com1tag:blogger.com,1999:blog-7443648468011603769.post-57541812223735858062009-01-24T12:03:00.000-08:002009-01-24T16:01:52.246-08:00

Question: I want to form an LLC in Missouri, what do I do?It's a fairly easy process (especially for a single-member LLC). Here are the steps. Check to ensure that your name is available. The name must include "Limited Liability Company", "Limited Company", "LC", or "LLC". You can either call the secretary of state’s office or search their web site here:www.sos.mo.gov I generally search

jjrayhttp://www.blogger.com/profile/09951978285296375634noreply@blogger.com0tag:blogger.com,1999:blog-7443648468011603769.post-39132756488241331622008-12-11T15:07:00.000-08:002008-12-11T15:25:15.093-08:00

Question: Can I sell my interest in a Missouri LLC that does not have a signed written operating agreement? I am an equal 1/3 member in the LLC. Do I need approval from the other members? Dan.Below are relevant provisions from the Missouri LLC Act.Mo. Stat. §347.115. Interest in company is personal property, assignability. 1. The interest of a member in a limited liability company is

jjrayhttp://www.blogger.com/profile/09951978285296375634noreply@blogger.com0tag:blogger.com,1999:blog-7443648468011603769.post-33683188633984185342008-12-08T17:43:00.000-08:002008-12-11T11:50:41.990-08:00

Question: I need to know how to go about taking a member off of the LLC Operating Agreement. The members name is Sandra who is no longer going to be with the company. Any information you could give me to help us go about dropping a member would be very much appreciated. Phil.I'll assume Sandra is voluntarily withdrawing from the LLC as a member or otherwise being bought out. The method by

jjrayhttp://www.blogger.com/profile/09951978285296375634noreply@blogger.com0tag:blogger.com,1999:blog-7443648468011603769.post-1546335785589171212008-12-03T12:26:00.000-08:002008-12-03T13:04:28.201-08:00

Q. Hello, I am a CPA in Colorado, thinking about forming a single member LLC that provides tax, bookkeeping, payroll, etc. services (no independent audits). Am I required to form a PLLC? What are the differences between an LLC and a PLLC? Could you please explain the extent of the limited liability protection? (I had heard that the protection does not cover personal assets in the event of a

jjrayhttp://www.blogger.com/profile/09951978285296375634noreply@blogger.com1tag:blogger.com,1999:blog-7443648468011603769.post-9034619860988548012008-11-14T06:26:00.001-08:002008-11-15T10:31:25.286-08:00

Q. I am the managing member of a 4 member Delaware LLC. The other three members apparently are in discussion to sell their interest in the LLC. Can they do that? What happens to the loan we took out to purchase the business in 2006?The place to start is your LLC operating agreement. Does it contain any restrictions upon the sale or transfer of LLC interests by members? If not (or you don't

jjrayhttp://www.blogger.com/profile/09951978285296375634noreply@blogger.com0tag:blogger.com,1999:blog-7443648468011603769.post-34832115050313413792008-11-13T16:49:00.000-08:002008-12-03T13:12:23.608-08:00

In all states except one, LLCs are divided into two categories--those managed by the members and those managed by managers appointed by the members (aka "manager-managed"). In a quest to offer LLCs the face of a corporation, Tennessee goes a different route. Their LLCs are either member managed or governor managed. Further, in a LLC with governors, the governors may appoint managers who serve

jjrayhttp://www.blogger.com/profile/09951978285296375634noreply@blogger.com4