Limited Liability Company and the Law

You can read about Limited Liabilitiy Sttructure, Using the Limited Liability Company for Asset Protection.

Once you have a company, you have to mange it.  Managing the company and staying compliant with the tax codes and the laws sounds a lot easier than it is.

First you will need a Corportate Resolution.  A Corporate Resolution is your declaration that your company exists and that the members are listed and that you have banking authority, usually to open a bank account.  Even if you are the only person in your company you will still need to produce this document.

The company is comprised of Managing Members and they do not own shares, they own Equity in Membership.  This means that they own a percentage of the company.  The percentages can be different for each member and it is not recommended that a single person own an LLC.  In this case the court will treat the LLC as if it were a person for liability purpose.  Since th Managing Members own equity in the company, you will have to decided how they govern and what rights and privledges they posess within the company.  This agreement is titled “The Operating Agreement.”

By Laws govern C Corps and S Corps, Operating Agreements govern LLCs and partnerships and Trust Deeds govern trusts.  In a media business or intellectual property business you might deal with any of these entities.  Concerning LLCs, the Operating Agreement is increasinly important when it comes to disputes within the LLC and in litigation.

Members are bout to conduct business by the Operating Agreement.  The Operating Agreement will have standard clauses and it will have specific guidelines.

Standard Clauses

  1. Formation Information
  2. Contact Informaiton for all the members
  3. Resident Agen Information
  4. Banking Instructions
  5. Capital Account Information (how members get paid or compensated for expenses)
  6. Authority over Major Functioning
  7. Policy for New Growth and Acceptance of New Members
  8. Decision for type of taxation
  9. Clear defined Boting Rights
  10. A statement as to the operating in “Good Faith” agreement
  11. Termination of Membership Conditions
  12. The Winding Down of the Company
  13. A Morals Clause

Read About LLC Case Law

Read about Establishing a Media Business