While many states do not legally require your Limited Liability Company (hereinafter “LLC”) to have an operating agreement, it is not a wise idea to operate an LLC without one, even if you are the sole owner of your company. An operating agreement will help you protect your limited liability status, specify financial and management roles to avoid common misunderstandings, and in order to make sure your business is governed by your own rules, not just the default rules created by your state.
For instance, if an owner/manager contributes more assets than the others, you may want to give that person a greater share of the profits. Or you may want one or more of the owners to receive a salary for their participation and services. Most importantly, you will need to have tailored provisions on how to value an owner’s interest in the business if the owner dies or leaves the company. It will also get you to focus on issues you might not have thought through with your other business partners.
A well-drafted Operating Agreement will provide the following, but not limited to:
- Provide a framework for the settlement of disputes between members/managers;
- Prevent a member from selling his/her interest to a third party without first offering it to existing members (rights of first refusal);
- Provide a framework for the purchase of membership interests by the remaining members in the event a member dies or becomes legally incompetent;
- Prevent a member from competing against the company both now when he is a member and for a number of years after leaving the company;
- Require members to maintain the confidentiality of all customer names and other company records;
- Prevent a member from impairing the goodwill of the company;
- Prevent a member from soliciting customers away from the company. Provide for the indemnification of the members and officers of the company;
At Gulati Law we ensure that our clients are furnished with a tailored operating agreement drafted to suit the needs of your business and the laws of our state. Contact us today, for yours!
As many of you know, the process of purchasing a new home, or commercial property involves quite a few important documents that you need to be familiar with. Title and Deed documents are given to you by your attorney. Usually, these documents are also accessible online via your county’s property appraiser’s website FOR FREE. In instances where you have purchased a new property, you may receive a letters in the mail that might look like an official county or state document which states that you will need to take additional steps to finalize documentation, or that you will need to order vital documentation that shows ownership of your property.
This mailing will have your name, parcel number, and property address on it. What Record Transfer Services is doing might not be illegal; however, these services are usually already performed either before or at closing by a title company or real estate attorney. A title search is usually performed by a title company or an attorney, who researches the vested owner, the liens or other judgments on the property, the loans on the property and the property taxes due before the closing is done. If duplicates are needed or documents are misplaced from your records, these documents can usually be found via your county property appraiser’s website or you may contact your real estate attorney.
Given that the letter includes a deadline for which to request for these documents, it appears to be an official document, however, make special note of the disclaimer in fine print at the bottom of the letter: “This product or service has not been approved, or endorsed by any government…” Generally, if you receive a solicitation asking for more money after your closing, it is not necessary and is rarely legitimate. If you are not sure or you would like more information, contact your Florida Real Estate attorney or title company as soon as possible.
Broward County, Florida, has released a recent update on their new record keeping procedures. Effective January 1, 2015, Broward County will no longer assign Book and Page numbers to the documents being recorded. The new record keeping procedures will be done through an “Instrument Number” which is how the documents will be found if searched in their database. They do make an exception for large format documents. See Broward County’s Memo for further information.
Source: RTT Instrument Number Memo
A Florida company based out of Tallahassee, Florida, has been attempting to convince new business owners who have recently formed a new corporation or LLC, to send money by exaggerating to be involved in a vital step in the business formation process. This “company” has gone by other aliases such as the “Florida Center of Corporation,” and now currently operates under “United Business Services”
In the letter it states: “You have one step left to receive your Florida Certificate of Status”, they are instructed to complete their filing by filling out a stub and to “mail back to the corporations center with your payment of $47.00 (some recent mailings have said $47.99 or a similar amount) to complete your articles of organization certificate.” We urge caution because the correspondence is made deceptively like it is coming from a government agency. And note in the image here, that in very fine print, it states that “This is not a government agency.”
We classify this as an inappropriate deception of the Florida Department of State services because the only service United Business Services is providing is to obtain a Certificate of Status (or good standing) from the Secretary of State of Florida. The state only charges either $8.75 (for an INC) or $5 (for an LLC) for this. Furthermore, when we checked the address for the company, it came up as an empty office space which is available for rent. The company came up in no searches affiliated with that address, or any other.
If you have any questions as to the legitimacy of these letters, do not hesitate to contact your Florida Business Law Attorney as soon as possible.
The most common mistake that can be made when estate planning is the failure to keep your forms and documents up to date. As simple as it sounds, there are countless instances where people who did not have updated beneficiary forms inevitably ran into complications later in the process.
Without proper documentation, the money and property you saved for your loved ones may fall into the hands of ex-spouses, irresponsible or untrustworthy family members, or other unintended heirs. Besides having control over who gets your money and how much, designating a beneficiary also avoids probate in some circumstances. Updating your estate plan regularly, you can be certain your wishes will be carried out in your absence the way you want them to.
Here are some of the forms that you should update regularly: bank accounts beneficiary lists, retirement accounts, life insurance benefits, and so on. If a divorce, death, or any other life or relationship change occurs that will affect how you plan your estate, it is imperative you make those document changes immediately. Contact us today to speak with a Florida Estate Planning Attorney and ensure you are protected in all aspects of your estate planning.
Source: Estate Planning Digest
So you have decided to join forces with someone who shares your vision and passion to start a new venture. Before coming up with a business plan, marketing strategies, and services offered, it is important to lay some groundwork and draw up a Florida Partnership Agreement, Florida Bylaws, or a Florida Operating Agreement depending on the type of business entity you form. Although it is not legally necessary to have such a document, the Partnership Agreement along with other preliminary steps discussed in this article will potentially irradiate issues or conflicts arising from poor planning.
This first thing to discuss with your partner is the tasks and roles that each of you will be responsible for. How well do your abilities complement each other? If one is better at keeping track of finances and records, the other may take over sales and marketing. Get to know each other’s strengths and weaknesses, past experience, and expertise. Make sure you both feel comfortable expressing your needs and expectations for your business from the very beginning. Ask questions about values, goals, and motivations to make sure you are on the same page before moving forward. You might want to try working together on a smaller project or plan a trip to focus on understanding your chemistry and how you deal with certain situations on a small scale.
Once you feel confident to move forward, the absolute next step is the written agreement. Your document should include the roles and responsibilities of the partners, exit clauses, compensation, investments, and ownership, among others, depending on the terms. Use this as an opportunity to outline the business terms and establish weekly, monthly, and yearly routines for partners, managers, and staff. Defining each detail about your business and the documents, contracts, and licenses will protect you from headaches and other legal issues if any conflicts were to arise. See what Gulati Law can do for you and your business partner today!
Source: Wall Street Journal – Small Business- Starting a Business
Bill 49 has amended Florida Statute §893.147, which will effect smoke shops, convenience store owners and Florida Business Owners that sell these certain pipes, more specifically discussed below.
According to the amended Florida Statute §893.147, it is a “first degree misdemeanor for a person to knowingly and willfully sell or offer for sale at retail any of the drug paraphernalia listed in Florida Statute §893.145(12)(a)-(c) and (g)-(m), and a second or subsequent violation a third degree felony. The drug paraphernalia included are:
- Metal, wooden, acrylic, glass, stone, plastic, or ceramic smoking pipes, with or without screens, permanent screens, hashish heads, or punctured metal bowls; water pipes; carburetion tubes and devices; chamber pipes; carburetor pipes; electric pipes; air-driven pipes; chillums; bongs; ice pipes or chillers.
- The bill provides an exception for pipes that are primarily made of briar, meerschaum, clay, or corn cob.”
If any of the items listed above are offered for sale in your store, you should immediately remove and lawfully dispose of them; however, if you know that the pipes are used for tobacco use only, you may be permitted to sell these items. If you are questioning a certain pipe, it is safer for you to remove the product for liability reasons and lawfully dispose of it.
There are many things members of family owned businesses need to know. Whether you are opening a new business or operating an established family owned business, you must take a good overall look at the structure of your business. It is in our nature to immediately consider our best friend, cousin, uncle or even brother and sister a trustworthy partner, but you never know what different circumstances may occur during the business term.
It is very important that once you consider going into business or adding a family member to your Company, that you structure your assets in the Company carefully, to protect everyone’s interest. You have to be clear on what each individual role will be and what responsibilities each member has. Such clarity can avoid future conflicts as long as it is expressed from the beginning and written in the Corporate Documents.
Also ask yourself, how qualified is this person for the position? Do we share common goals? How much experience do they have? Do you feel confident in sharing equity with this person? Can we keep a professional life and integrity of the company separate from our personal lives? How can I evaluate them? What to do if it does not work out? Do we have a succession plan?
Having a stable business structure will protect you now and in the future and also will provide you with a sense of security.
Choosing your business structure could have both legal and tax implications, that why it is so important to structure your business according to Federal and State laws.
In Florida there are a variety of different corporate entities with both advantages and disadvantages.
Below are just a few corporate entities that Florida offers:
- Limited Liability Company:””A limited liability company is a hybrid type of legal structure that provides the limited liability features of a corporation and the tax efficiencies and operational flexibility of a partnership. The “owners” of an LLC are referred to as “members.” Unlike shareholders in a corporation, LLCs are not taxed as a separate business entity. Instead, all profits and losses are “passed through” the business to each member of the LLC. LLC members report profits and losses on their personal federal tax returns, just like the owners of a partnership would.”
- Corporation (C-Corp):”A corporation (sometimes referred to as a C corporation) is an independent legal entity owned by shareholders. This means that the corporation itself, not the shareholders that own it, is held legally liable for the actions and debts the business incurs. Corporations are more complex than other business structures because they tend to have costly administrative fees and complex tax and legal requirements. Because of these issues, corporations are generally suggested for established, larger companies with multiple employees.
- Corporation (S-Corp):”An S corporation (sometimes referred to as an S Corp) is a special type of corporation created through an IRS tax election. An eligible domestic corporation can avoid double taxation (once to the corporation and again to the shareholders) by electing to be treated as an S corporation. An S corp is a corporation with the Subchapter S designation from the IRS. According to the IRS, S corporations are “considered by law to be a unique entity, separate and apart from those who own it.” This limits the financial liability for which you (the owner, or “shareholder”) are responsible. Nevertheless, liability protection is limited – S corps do not necessarily shield you from all litigation such as an employee’s tort actions as a result of a workplace incident. What makes the S corp different from a traditional corporation (C corp) is that profits and losses can pass through to the your personal tax return. Consequently, the business is not taxed itself. Only the shareholders are taxed. There is an important caveat, however: any shareholder who works for the company must pay him or herself “reasonable compensation.” Basically, the shareholder must be paid fair market value, or the IRS might reclassify any additional corporate earnings as “wages.””
- Partnership:”A partnership is a single business where two or more people share ownership. Each partner contributes to all aspects of the business, including money, property, labor or skill. In return, each partner shares in the profits and losses of the business. Because partnerships entail more than one person in the decision-making process, it’s important to discuss a wide variety of issues up front and develop a legal partnership agreement.”
If you are interested in setting up a corporate entity, it is important to consult with a Florida Business Law Attorney, one who has set up business entities as well as understands them.