Corporations & LLCs
Are you starting a new business? Creating a corporation or a limited liability company (LLC) may offer you several advantages. These include limiting your personal liability, separating business profits and losses from your own personal finances, managing relationships between investors, owners, officers and employees and planning for what happens when one owner cannot or chooses not to continue in their current role.
Don’t be fooled by low prices advertised by some websites offering to provide business entity formation services. Those companies do not offer some services that your local small business attorney does offer and they often tack on additional annual fees and annual renewals that add up to be much more than you expected. A small business attorney such as Jarvis Law Firm PC can make the process of creating a corporation or an LLC fast, easy, understandable for a reasonable fixed flat fee.What Are Legal Entities?
Corporations and LLCs are legal entities. Legal entities are persons created under the laws of your state that have many of the same rights as an individual citizen of a state. Legal entities can own property, file tax returns and pay taxes, and can sue and be sued in court.What Is the Difference Between a Corporation and an LLC?
A corporation was the original form of a legal entity. Ownership, management and governance of a corporation are separated, although, it is possible in the State of Alabama for a single person to fill all of these roles. Corporations are owned by shareholders. Shares of a corporation are an asset that can be bought and sold and transferred to heirs or beneficiaries in an estate similarly to other real or personal assets. Shareholders (Owners) of a corporation have the right to elect one or more board members. Board members of a corporation govern the corporation and elect officers to the corporation. The officers of a corporation are historically a President, Vice President, Secretary and Treasurer. These roles may be filled by separate individuals or held all at once by the same individual. The governing document of a corporation is called the corporation’s bylaws. Bylaws contain the rules by which shareholders and directors meet and vote, how directors and officers are elected and how profits of the corporation may be distributed among many other things.
Limited Liability Companies (LLCs) are a more modern and much simpler form of business entity. An LLC is the best option for most new businesses. LLCs are owned by Members. Members typically vote and distribute profits and losses according to their membership interest percentages although those distributions can be modified by agreement of the members. The governing document that controls voting and profit distribution for an LLC is called an Operating Agreement. An LLC may be member managed or manager managed. An LLC manager may be managed by its managing member but does not have to be. A manager managed LLC may be managed by a person hired to fill that role who is not a Member of the LLC.
If you would like to create a corporation or an LLC, Jarvis Law Firm PC can usually create that legal entity and obtain a federal tax ID for the company in a single day. If you think you are ready to create a legal entity, contact Adam Jarvis and we will be happy to assist you.Do I Need an Operating Agreement?
A single member LLC, that is an LLC with only one owner, does not always need an Operating Agreement unless required by a lender, landlord or other third party. An LLC with more than one member should always have an Operating Agreement. An Operating Agreement will set forth the rights and responsibilities of the members and/or managers of the LLC, how votes on major decisions take place, how profits and losses are distributed, what happens when one person cannot or does not want to be part of the Company anymore and what happens when the Members cannot reach an agreement. An Operating Agreement can also be drafted in such a way that it protects minority interest holders’ rights.
Jarvis Law Firm PC can provide you with an operating agreement for almost any circumstance and meet almost any budget. We have short form agreements that are suitable for most small LLCs and we can draft custom long-form agreements that describe the specific agreement between the parties and provide instructions for a wide range of potential situation. If you want to protect yourself, an Operating Agreement is a great place to start.
Let Jarvis Law Firm PC assist you with creating or updating your legal entity today.