As a new member of a limited liability company (LLC), you should familiarize yourself with the applicable LLC legislation in your state. The laws from state to state might differ widely from one another. Members of an LLC in Virginia and Oklahoma must be listed in the articles of incorporation, while in Delaware and South Dakota, this is not a requirement. Dissolving a limited liability company in Alabama needs 100% approval, but just a simple majority is required in Florida.
Articles of dissolution may be signed by someone other than the LLC member or their agent in certain jurisdictions (including California), whereas a power of attorney is required in others. If you want to incorporate an LLC in a state other than your own, you should research the rules that will apply to your business. As an LLC member, these statutes may shed light on your legal obligations and protections. To help new members of an LLC get started, these are the rules they must follow:
The Law of Limited Liability
Establishing an LLC for the first time is a big deal. Therefore it’s vital to keep in mind that you and your company are shielded from personal liability in the event of a lawsuit. Suppose your limited liability company (LLC) is found accountable for wrongdoing. In that case, the owner of the LLC will only be held personally liable to the extent of the LLC’s financial interest. A member of an LLC is not personally responsible for the company’s debts or claims.
Let’s imagine you manage a small office building for a customer, and a janitor employed by the facility has accidentally hurt someone. The plaintiff chooses to sue you and the janitor because they believe you should have provided more thorough training on building safety. Though your name isn’t formally added to the LLC’s registration documents, you may be held personally accountable for the LLC’s debts and damages even if the LLC is legally formed and registered with the state (a legal procedure called “admitting” oneself as an owner).
The Law of Agency for Your Limited Liability Company
Members of a limited liability company (LLC) act as agents for the business and take personal responsibility for the LLC’s obligations. This indicates that if the company cannot pay off a debt, all members may be obliged to do so, even though they were in no way responsible for the debt. To prevent this issue, each member needs to take measures to restrict the amount of personal responsibility that falls on their shoulders.
Members should avoid exposing themselves to personal
liability for the LLC’s conduct by refraining from making personal assurances, acting on their behalf without prior approval from the other members, and making every effort to fulfill their duties as ordered by the other members.
The Law of Partnership
The law of partnership is another example. A partnership is a business entity in which two or more person act as equal partners but do not file for incorporation. All partners have an equal say in the company’s management and board members’ election. It is up to the partners to determine whether they want to operate as true partners or if they would like to utilize a contract to define their roles and responsibilities. If you’re thinking of forming a new LLC but aren’t sure how you want to handle your partners just yet, it’s best to do so as an LLC and revisit the issue later if you decide to incorporate it.
The Law of Corporate Entity
For an LLC, this is the single most important rule. Articles of formation must be submitted to the Secretary of State to establish a legal business entity (SOS). For a business to proceed, something must be finished. Pick a name for your limited liability company that stands out from the crowd and can’t be readily mistaken with other businesses in your state.
You shouldn’t form a business named “Joe’s Other Fun Park LLC” if there’s already a firm with the name “Joe’s Fun Park LLC,” for instance. Your company’s name may need to be changed to avoid legal complications if it sounds too much like another firm’s. If you skip this stage and start doing business under a name similar to another, a court or a creditor of the other firm could confiscate your assets under the pretense that you owe money to them.
When you’re starting a new LLC, you may have a lot of questions about what comes next in terms of registering your business with the state. After creating your LLC, one of the first things to do is write it as a legal entity with the state where you’re doing business. This can be done either through the Secretary of State’s office or the Corporation Center. Contact Corporation Center at (800) 580-4870 for more information.