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Business Planning

Limited Liability: The Benefit of Conducting Business Operations as an LLC (Over Partnerships and Sole Proprietorships)

Sole proprietorships and partnerships can be simple forms of conducting business. The owners make all of the decisions relating to the business and are taxed on business income and loss as individuals, with no taxation at the entity level, as is the case with corporations. However, sole proprietors and individual partners in a partnership are personally responsible for the performance of all contracts and obligations of the business. This means that sole proprietors and partners risk losing assets belonging to them which have no relation to the business in the event the income from business...

Benefits of Single Member Limited Liability Companies

The limited liability company (LLC) form of entity is the appropriate form of conducting business for, many, if not most, sole proprietors. The primary reason for this is that this form of entity permits an individual to enjoy the benefits of limited liability and to continue to be taxed as a sole proprietor. Following is a brief summary of several factors we think should be considered by clients currently engaged in business as sole proprietors, a basic explanation of the LLC form of entity and a brief explanation of the process of forming an LLC.   General Observations. The sole...

Basic Standards of Conduct for Partners in a Partnership and Members of an LLC

Statutorily Imposed Duties. State statutes provide that individuals associated with partnerships shall discharge his or her duties in good faith, with the care an ordinarily prudent person in the like position would exercise under similar circumstances and in a manner he or she reasonably believes to be in the best interests of the partnership. How well they perform their functions is measured largely by fiduciary law; specifically by what is commonly known of as a “duty of care.” In performing your functions, you may be subjected to personal liability for a breach of the duty of care. You...

What Is An LLC? Limited Liability Companies In General

What is a Limited Liability Company? Basically, a limited liability company (LLC) is a legal entity that became available under Washington law. An LLC is an unincorporated association that provides its members with the beneficial tax aspects of a partnership and the limited liability shareholders of a corporation enjoy. For tax purposes, an LLC is a “pass-through” entity, meaning that all items of gain and loss pass directly through to the owners, rather than being taxed at both the entity and owner levels. The benefit of “limited liability” means that a business owner is liable only for the...

What You Need to Know About the FLLC

One popular yet confusing estate planning tool is the Family Limited Liability Company (“FLLC”). FLLCs are frequently created as part of an estate planning strategy used to facilitate gift giving to a person’s children and grandchildren. FLLCs are also used to shield assets from creditors. As the name implies, a FLLC is a type of business. When used as an estate planning tool, a FLLC is a company owned by several family members. Members jointly own any assets transferred to the FLLC. In order to create a FLLC, family members must enter into a written agreement that outlines its terms and...

Three Ways to Transfer Your Family Business

For family business owners, estate planning is crucial to the success of the business. If you have not already drafted an estate plan that includes the succession of your business, begin today. Not only will early planning allow you to slowly implement the plan, thereby increasing its chances of success, but early planning will also ensure that your family’s main source of income is protected. The first step is considering how you would like to transfer your business. This article discusses three common options: 1. Sell Your Business Outright One way to transfer your family business to your...