The nitty gritty specifics of how the new(ish) LLC law might affect your business!

Now that I have piqued your attention with my sky-is-falling attitude in my previous entry (link here) let’s get into the specific ways the new(ish) LLC law might affect your existing or new business. Oftentimes, clients come to me with an existing operating agreement that they found on the internet. Here’s a big problem with that strategy: you have no idea where that agreement came from, who wrote it, and now thanks to the RULLCA, the most important issue is

Read more

How the “new” California LLC law may affect your existing LLC

On January 1, 2014, now more than two years ago, the California Revised Uniform Limited Liability Company Act (RULLCA) went into effect. It’s codified as new Title 2.6 of the California Corporations Code starting with Section 17701. Many existing businesses have been operating as Limited Liability companies for years, some even for decades, without looking at their company’s operating agreement. You might be running your business with a friend or family member and not have an operating agreement in place.

Read more

Why the time of year matters for your California incorporation

If you’re starting a California corporation, take a second and look at the calendar. Depending on what time of year it is, you might want to wait on your incorporation. Why? Three important words: The Franchise Tax Board. In California, every Limited Liability Company (LLC), S-Corp or C-Corp, or Partnership has to pay an annual fee to the Franchise Tax Board. This fee must be paid, and it’s not cheap: it’s $800.00 every year and it doesn’t have anything to

Read more

Why You Shouldn’t Incorporate Your Business.

You can find many informative articles on the internet detailing the reasons why you should incorporate your business. But one thing seems to be in short supply, and it’s articles that detail the reasons why you shouldn’t incorporate a business. Of course incorporating a client’s business is lucrative to me, and incorporations make up a large portion of my practice, so it might seem like I’m shooting myself in the foot but I should tell you why incorporating a business

Read more

The Most Common Misconception About Copyrights

I attend Comic-Con every year and I’m a dyed-in-the-wool comic book nerd. As my practice grew I took on more and more comic book artists, video game designers, etc. Artists often have great ideas, but they have trouble monetizing them. Well aware of the great potential value of these ideas, they want to file copyrights. The most common misconception they have, and I don’t know where they got this idea from, but somehow it’s become some sort of Legal Urban

Read more

What YOU Should Ask Your Attorney

In my last blog post, I concentrated on the importance of a specific question an attorney should ask their client before forming a business for them. In this entry, I’ll concentrate on what a client should ask their attorney. Many questions come to mind, but I’ll focus on which questions a client should ask an attorney before hiring them to form a business entity for them. The first question I believe every client should ask their prospective attorney is what kind of

Read more

The Very First Question Your Attorney Should Ask YOU

Today’s post refers to the situation clients face when they meet with an attorney for the first time to discuss the incorporation of their business. Presumably, every client has questions for their attorney. But sometimes the value of an attorney’s work comes not from their ability to answer questions, but instead their ability to ask their client the right questions. Any business attorney that has experience forming business entities can perform the tasks that you ask of them, and likely

Read more

How to Finance a Buy-Sell Agreement

In a previous blog entry I discussed the importance of the buy-sell agreement to any new business, especially when it is closely held (i.e. a small number of members/owners/shareholders). The question my clients ask me at this point is how can they finance the buy-sell agreement. Oftentimes they simply don’t have the money to buy their partner out, but there are ways around this. One way is called key-person insurance. It is a life insurance policy on each member,  either paid for by the

Read more

The Buy-Sell Agreement

When people come to me with their idea for a business, one of the first things I bring up is the buy-sell agreement. Perplexed, my clients ask why I want to talk about selling a business before it’s even come into existence. The answer is, because a buy-sell agreement operates like a prenuptial clause, and in this case, the marriage is the business itself. If a fledgling company is forced to divide its assets, it is likely to go out

Read more