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Dallas Business Law Blog

Lack of proper licensure can create a legal mess

New business owners have many legal actions and decisions to make. Unfortunately, during the early days of running a company, many business owners forget the importance of licensure.

Most owners know about the general business license, but the government also regulates a variety of industries. As such, the government uses licensure to make sure that businesses practice legitimately. License and permit requirements also protect consumers from harm.

As an LLC member, signatures matter

Each limited liability company (LLC) has its own structure, comprised of one, a few or many investors and decision makers. Like any other enterprise, different members have different roles while representing the larger body together.

When representing the company, it’s essential to make it clear that actions are for the LLC. Signing a business contract with just a member’s name is a legal risk because it opens a possibility to conflating the individual with the business. One of the primary reasons why people form an LLC is to separate personal and business assets.

Creating a viable succession plan for your family business

Ensuring business continuity should be given just as much thought as other business strategies, but it is often put off or overlooked. According to the U.S. Small Business Administration, less than 30 percent of small business owners have a formal succession plan. Given that 90 percent of U.S. businesses are family owned and less than 15 percent succeed to the third generation, the importance of a succession plan cannot be overstated.

 

Forming a Limited Liability Company and Federal Tax Filing Consequences

The limited liability company (LLC) form of business organization is extremely popular and provides many advantages to its members. The benefits of this form of organization includes limited liability for its owners (known as members) and the avoidance of the double taxation which afflicts corporations. Members can also participate in the management of the entity without losing limited liability protection. With the large proliferation of this form of business organization across the United States the federal tax filing consequences of the LLC are also important to consider.

A Limited Liability Company (LLC) is a business structure allowed by state statute. Each state may use different regulations, and you should check with your state if you are interested in starting a Limited Liability Company.

Owners of an LLC are called members. Most states do not restrict ownership, and so members may include individuals, corporations, other LLCs and foreign entities. There is no maximum number of members. Most states also permit "single-member" LLCs, those having only one owner.

A few types of businesses generally cannot be LLCs, such as banks and insurance companies. Check your state's requirements and the federal tax regulations for further information. There are special rules for foreign LLCs.

Does A New LLC Need An Operating Agreement?

When forming a limited liability company (LLC), business partners often wonder whether they really need a written operating agreement. At the outset, they may feel like they are all on the same page, so putting it in writing in an operating agreement seems like an unnecessary expense. However, this single document could prevent costly partnership disputes that may arise later, and the beginning is the perfect time to create one.

When Should A Business And A Vendor Break Up?

The recent end of the partnership between Sears and Whirlpool illustrates that no business relationship lasts forever. For many businesses, the real challenge is determining when to bring a vendor partnership to a close. That question is complex, but looking at the end of the relationship between retailer Sears and appliance manufacturer Whirlpool can offer some lessons on timing.

Why It's Crucial Not To Commingle Personal And Company Assets

Limited liability companies (LLCs) are entities unto themselves, separate from the members that comprise them. Because of that, it's imperative that members not mix their personal assets with those of the business, either by freely using business assets in a personal capacity, or by lending their own personal assets for business use.

Similarly, it's important that the financial statements and other records from the LLC show independence as well. And any business dealings must be done strictly on behalf of the LLC as well. For example, a member of an LLC cannot do business on behalf of the LLC but give out his or her personal business card or write a personal check.

Why newly formed LLCs need an operating agreement

Some people who are forming a limited liability company (LLC) balk at the idea of creating a written operating agreement. They believe it is too large of a cost for a new company, and the agreement can always be written at a later date.

The reality is that it is important for LLCs to take the time and ensure they have an operating agreement in place.

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