How Do I Set-up an LLC?

A limited liability company ("LLC") is formed when Articles of Organization signed by an "Authorized Representative" are filed with the appropriate government agency.  In Ohio that agency is the Secretary of State of Ohio.  The Authorized Representative may be the Manager of the LLC or one of the members of the LLC or any other person authorized by the members of the LLC to act in that capacity.  The Articles of Organization are part of the public record.  For this reason, the Articles of Organization generally contain no more information than is required by state law.  In most cases, the only information contained in the Articles of Organization are the name of the LLC and the name and address of the person or entity appointed as statutory agent for the LLC.  

Once the Articles of Organization are filed, the LLC is operated and governed in accordance with state law and the LLC Operating Agreement.  State law provides a framework that governs the operation of an LLC absent contrary provisions in the Operating Agreement.  A typical Operating Agreement will contain provisions concerning: (a) members and their ownership percentages; (b) management and voting; (c) allocation of profit and loss; (d) distribution of cash and assets; (e) restrictions on transfer of LLC interests; (f) dissolution and liquidation; and (g) amendment of the Articles and Operating Agreement. 

An LLC is a very flexible business organization format.  An LLC may be managed by the Members or may be managed by a Manager.  An LLC may have voting units and non-voting units.   An LLC may have common units and preferred units.  An LLC unit might be treated as a regulated security by the SEC or state regulatory agencies, or not.  An LLC may be taxed as a partnership or a corporation, or treated as a disregarded entity.  You should talk to your business or tax advisor if you are considering setting up an LLC and discuss what makes the most sense in your particular situation. 

Hope you found this material helpful.   If something you read here raises a question, please call or email me at Jsenney@pselaw.com or 937-223-1130.  If you like what you read, forward this email to a friend and tell them to check it out by clicking on the following link:  SenneySays
  

AND ONE MORE THING:  While the burdensome Form 1099 reporting requirements contained in the Health Care Reform Act have been repealed, the majority of its provisions remain in effect.  Certain Health Plan Coverage Mandates are effective for plan years beginning on or after September 23, 2010 including coverage for children with pre-existing conditions, limitations on annual and lifetime coverage, and required coverage for certain preventive services.   These mandates are certain to drive up health insurance premiums. You may be able to avoid these mandates and other requirements of the Act by maintaining your health insurance plan as a grandfathered plan.   If your plan is subject to the Act, the Small Employer Health Insurance Credit can be used to reduce the annual out-of-pocket costs for employer-provided health insurance.  My associate Matt Stokely has studied the Act in depth.  Please give us a call if you want to discuss the Act or its effect on your health plan at Jsenney@pselaw.com or 937-223-1130.