Limited Liability Company

San Francisco Bay Attorneys Assisting with Limited Liability Company Formation

A Limited Liability Company (LLC) has the advantage of being a hybrid between a partnership and a corporation. The advantage of a Limited Liability Company (LLC) is that most states require fewer formalities be observed in an LLC than in a corporation. A Limited Liability Company (LLC) generally offers liability protection similar to that of a corporation but is subject to different business tax requirements.

In addition to filing the applicable documents with the California Secretary of State, you must construct an operating agreement among the members as to the affairs of the Limited Liability Company and the conduct of its business. Professional limited liability companies are restricted in California at this time.

As noted above, the Limited Liability Company (LLC) is a hybrid business entity that combines the best features of partnerships and corporations. It also eliminates certain disadvantages of limited partnerships and corporations. LLCs are ideal for corporate joint ventures, entrepreneurs, family businesses, start-up businesses, high technology and research businesses, real estate investments, venture capital projects, and professionals.

Advantages of LLCs

LLCs have many advantages over other types of entities, especially for the acquisition and holding of real estate. Those advantages include greater informality and flexibility of management, lacking the stock structure and shareholder limitations that exist in S corporations. This flexibility in the allocation of income, gain, and loss is very advantageous. Other advantages include:

• The ability to hold real estate in the LLC name, which allows transfers of interest within the LLC without recording requirements 
• No management restrictions as in a limited partnership 
• Partnership "pass-through" business tax treatment 
• LLC members may divide income and tax liability among themselves. 
• The ability of investors to participate in management without losing their liability protection as in a limited partnership 
• LLCs avoid corporate-level income tax gain when appreciated property is sold

Disadvantages of LLCs

The disadvantages of an LLC include the following:

• The laws covering the nature and characteristics of LLCs vary greatly from state to state. There are variations, for example, in filing and periodic reporting requirements; and some states make provisions or impose limitations not found in LLC statutes of other states. 
• A member usually may not transfer his or her interest without the vote or written consent of a significant percentage of the remaining members. This limits the use of LLCs that have a large number of members or are publicly traded entities.

The attorneys and staff of Law Offices of G. J. Mugg have extensive experience with of the advantages and disadvantages of a Limited Liability Company (LLC). Our lawyers listen carefully to your needs and your situation, and then provide careful legal advice as to whether an LLC is right for you.

For further information about a Limited Liability Company (LLC) in California please contact us today. Our lawyers take clients nationwide, with a majority of our clients having business interests and concerns in California’s Bay Area, including San Francisco, San Jose, Oakland, North Bay, East Bay, South Bay, San Francisco County, Alameda County, Marin County, Sonoma County, Napa County, Solano County, Contra Costa County, San Mateo County, and Santa Clara County, CA.