HOW DOES A LIMITED LIABIITY COMPANY REALLY WORK?
Limited Liability Companys are created, not born, with the legal status of a person. They are, in effect, created of legal age, in any state that the owners choose, have the ability to contract, make loans, make sales, pay expenses, etc. Although they obtain their own social security number (known as an electronic identification number), they have no social security taxes to pay for themselves because they are not physical persons. They do have the need to file tax returns, open checking accounts, have a headquarters, and the list goes on and on. The common difference between Limited Liability Companys and people, is that Limited Liability Companys have only one function, namely, to turn a profit for the Members. They are created by operation of law by their state of organization.
The process goes like this. One or more person(s) become(s) the Organizor(s). The Organizer’s job is to get the necessary paperwork to the state to startup a Limited Liability Company. When the state accepts the paperwork, the state files it and usually returns stamped copies of the paperwork, along with some type of Articles of Organization, back to the Organizor(s). The Organizor(s) then appoint a temporary Voting Member or Voting Members, usually one or more Members, to be managing Voting Members until the first meeting of Members. Then the Organizer(s) resign(s).
The appointed managing Voting Member(s) then hold an initial Member(s) meeting, and then the managing Voting Member(s) resign. At the initial Member meeting, the Member(s) then elect the Voting Member(s) of the Limited Liability Company until the next annual Member(s) meeting where the next set of Voting Members will be elected, and so on. A short time after the Member(s) initial meeting, then the newly appointed Voting Members have an initial Voting Member(s) meeting to elect the Managers who will actually run the Limited Liability Company until the next annual meeting, and so on.
At the initial Voting Member(s) meeting, many decisions about how the Limited Liability Company will be run are passed, the Operating Agreement is approved, perhaps a medical plan, education plan, legal plan, cafeteria plan or employee benefit plan, (not eating plan), are set up. Who will act as depositories, accountants, attorneys, resident agents, distribution expectations, etc. are also decided. The Voting Member(s) also decide when the fiscal year end will be, whether the Limited Liability Company will be taxed as a partnership or corporation, and many other decisions about the direction the company will take.
This meeting is then adjourned until the next meeting, which at the very least should be once a year.
The benefits of being a Member of a Limited Liability Company revolve around the advantages of owning a company with limited liability of the owners, unlimited life, centralized management, and transferability of members and voting powers of members. The ongoing benefits and limitations of Member(s) are rights to distributions of income, a share of the assets at dissolution and usually a vote in the election of the Voting Members who represent the Member(s) interests in the Limited Liability Company.
A Limited Liability Company lives by the decisions of the Voting Member(s) and the management of the Managers made at duly authorized and convened Member and Voting Member meetings. The Record Keeper’s job is to record and keep the records of these meetings and decisions to show that the Managers were authorized by the Voting Members for the actions they took, and that the Voting Members and Managers are carrying out the wishes of the Members.
Typically we find that the average small Corporation, Not-For-Profit Corporation, or Limited Liability Company owner is not aware of the need for or has not attended to proper initial Corporation, Not-For-Profit Corporation, or Limited Liability Company ("Entity") record keeping or other necessary annual documentary evidence of doing business as an entity. Many of these individuals are unaware that they are wide open to assaults on their personal assets from the IRS and from lawsuits. Past history has shown that Corporations, Not-For-Profit Corporations, or Limited Liability Companies that are improperly documented or undocumented as to by-laws or operating agreements, meeting minutes, employee agreements, meeting notices, medical plans, etc. are treated as no Entity at all by both the courts and the IRS. This means that both the liabilities of the Entity and its status become that of a partnership or sole proprietorship. Then both the liability protection and the taxes are recast to Entity owners' personal assets and tax returns. You can imagine the impact this would have on an Entity 's management's' and owners' personal estates. The Entity 's tax return would be recast to a schedule "C" or a Partnership Form 1065 filtering down to form Schedule E on their personal tax return with the resulting increase in tax liabilities which would be seized from their personal assets.
If you are personally involved in an Entity, then you have a very real need for protection from the above scenario. Growth And Development Services Corporation has addressed this need for 'bullet-proof' Entity record keeping by developing state-of-the-art computer systems that create a wealth of Entity record keeping tailored to the individual Corporation, Not-For-Profit Corporation, or Limited Liability Company. The quality of our record keeping is unsurpassed and the sheer volume of record keeping which we provide is frequently adequate to discourage detailed audits or lawsuits. Growth And Development Services Corporation Corporation will provide over 200 pages of specific Corporation, Not-For-Profit Corporation, or Limited Liability Company record keeping for each of your Corporations, Not-For-Profit Corporations, or Limited Liability Companies who need the Growth And Development Services Corporation Corporation, Not-For-Profit Corporation, or Limited Liability Company Shield . The Growth And Development Services Corporation Corporation Annual Solution nicely provides for complete, thorough, specific record keeping for each year your Entity has been in business and for every year that your Entity remains in business (one per year). By obtaining the Growth And Development Services Corporation Corporation record keeping for your Entity , you can protect your growing business' bottom line from such assaults.
CHECK WITH YOUR ATTORNEY IF YOU FEEL THAT YOU WILL BE UNAFFECTED. We hear of case after case when the fire escape should have been built before the fire. The important thing is that you protect your Corporation, Not-For-Profit Corporation, or Limited Liability Company now.
Please Tell Me More Now - I'm ready to learn a lot more about these problems and what I can do for my Corporation, Not-For-Profit Corporation, or Limited Liability Company to protect the business and its' owners !!!!!