The LLC Series: Documentation - Parts & Pieces

Описание: Howdy, this is David Groce, your Texas Tax and Law Man, back talking about the basic legal documentation that comprises a Limited Liability Company.

Remember last time, we discussed that an LLC is an entity created according to state law that pays taxes to a state and to the federal government. While these filings vary from state to state, each LLC generally has the same basic documents.

Think of this list like a general description of a pick-up: it has four wheels, a cab, a bed of some sort, a motor, a transmission, brakes, and steering controls. Some have more bells and whistles, while some are just super simple. LLCs are the same way. We have to look at their various parts and pieces to know how they are supposed to function.

Many clients come to me and tell me they created their own LLC or started one through an on-line company, only to discover that the way they “equipped” their LLC is not fit for their particular purpose. They said they wanted a diesel truck with four doors to carry a crew and haul a big load. They want one of these big Heavy Duty three quarter ton monsters.

But, they bring me their docs and all they have is a broken down Datsun and they just don’t understand why they’re paying too much tax or not getting the benefits they want.

Both of these are LLCs, but not all LLCs are created equally, just like all trucks are not created equally.

Let’s look at a list of the components of an LLC and understand how changing these components can give you very different results from one LLC to another, just like the difference between a monster truck and a mini-truck.

Certificate of Formation: In the old days, most states called this document your articles of organization or incorporation. This Certificate of Formation should define some critical items regarding your company:
Business Purpose - why the entity was created. Some states let us choose any and all business. Other states make us define a limited purpose.
Managed by members or managed by managers. You have to decide who is in charge and the process for making decisions. This may also impact your federal tax filings regarding the active or passive nature of the business and the participation of the members.
Life of the Business: Most states let you choose perpetual life, meaning the business exists until shut-down. Other states only let you create the company for a term of years.
Registered Agent: If you paid a service for your LLC, they probably listed themselves as registered agent and charge you a fee each year to perform this function for you. You need to decide if that has value or not.

Business Address: You have to list the address for your business and in most states this has to be a physical location and not a post-office box.

Certificate of Filing: This is usually a letter that comes with the certificate of formation acknowledging the creation and filing date of the LLC.

The first two documents are public documents placed on file with the state. The following documents are private documents executed between the various members and managers of the LLC and are generally kept in the company book...

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