Are there requirements I must follow when choosing a name for my corporation or LLC?

Yes. Each state has different requirements (we can guide you through the specifics for your state), but generally speaking, your name must be different than all others on file in the state in which you wish to incorporate. Additionally, your name generally cannot contain certain words that suggest an association or affiliation with the federal government, and must end with a corporate designator (i.e. “Corporation”, “Inc.”, “Ltd.”, etc.)

I am forming an LLC in New York. Why do I need your services?

New York State is one of a handful of states that requires LLCs (and certain other corporate entities) to publish an announcement of their formation in the county of their principal business location. The specific publishing requirements are complex, and failure to comply to the letter could prevent you from doing business in New York. Attention to detail and a thorough knowledge of the law are essential for success.

What does New York’s LLC publication process involve?

In New York, you must publish a notice of formation in two newspapers – a daily and a weekly – in the county of your principal business location. Each notice must run for six weeks in newspapers approved by the county clerk for this purpose. When the six weeks are complete, the newspapers send you Affidavits of Publication, which are then forwarded with the Certificate of Publication to the Office of the Secretary of State for filing. The entire process must be completed within 120 days from the date of formation. Notably, Windsor Publishing completes the process within 10 weeks of receiving your work – guaranteed.

I want to form a Corporation in Delaware. What paperwork is required by the Delaware Secretary of State?

The Delaware Secretary of State requires anyone forming a corporation in Delaware to file a Certificate of Incorporation, which includes information on the corporation’s name and address, name of incorporator, number of shares the corporation is authorized to issue, name of registered agent, etc. You are not required to file corporate bylaws with the Secretary of State, although we highly recommend you create bylaws and keep them on file in your primary place of business.

I am forming an LLC in Texas, and I was told I needed to file a Certificate of Formation. What is involved in that process?

Texas requires anyone forming an LLC in that state to file a Certificate of Formation with the Texas Secretary of State. This document includes the LLC’s name; certain details on the LLC’s management; and information about the LLC’s registered agent, governing person(s) and organizer, among other things. We can handle the filing and submittal process for you in a timely and cost-efficient manner.

When forming a corporation in California, how do I make sure my corporation’s name is acceptable, and how do I reserve it?

California offers free preliminary availability checks for new corporation names. To take advantage of this, you must complete a Name Availability Inquiry and mail it into the California Secretary of State’s office. We can assist with name availability searches and performing the inquiry on your behalf. Notably, California allows you to reserve a new corporation name for up to 60 days. Again, we can handle this process for you as it can become a rather involved process.

The Importance of an Operating Agreement for Your LLC

21 Tuesday, December, 2022

Whether you are a sole proprietor or in a partnership, your LLC needs a formal Operating Agreement. Even if your state does not legally require you to have it, an Operating Agreement helps formalize your business relationships within your LLC, and clearly lays out the nuts and bolts of your business operations.

An operating agreement will:

– Establish the role of each member
– Define the percentage of ownership and shares for each member
– Outline the rights and responsibilities of each member
– Establish decision-making protocols
– Determine what happens when a member leaves the business

Protecting Your Limited Liability

A well thought out Operating Agreement for your LLC can protect you and your business from unforeseen pitfalls. It lends credibility to your company and distinguishes it from a Sole Proprietorship or Partnership in the eyes of the law. If your company flounders and you end up in court, your Operating Agreement will reinforce your LLC status and serve to help limit your personal liability.

Establishing Decision-Making Hierarchy

No matter how much you try to keep everyone on the same page, when you deal with other humans, there are bound to be occasional differences of opinion about finances and management. Your Operating Agreement can outline how decision-making in your business will be handled. Since everyone agreed to the terms from the beginning, they will be difficult for any member to dispute.

Maintaining Your Rights of Ownership

Without a formal Operating Agreement, you could be subject to your State’s default rules of operation. Say for example there is a dispute and you decide to dissolve the business. Perhaps you invested your life savings in the business, while the other members of your LLC invested only a small portion of that amount. Without an Operating Agreement, the court could decide to distribute the assets of the business equally to all members, leaving you with the greatest loss. A formal Operating Agreement specifically states how profits and losses of the business will be distributed among individual members.

Details to Include in your LLC’s Operating Agreement

Your Operating Agreements should be highly detailed to cover all contingencies. This may seem unnecessary when you are starting your business and everyone is invested both financially and emotionally. Yet things can get messy, especially when money is involved, and you are better off to try to foresee problems and spell them out in your Operating Agreement, than to have to figure out how to handle them later.

Your Operating Agreement Should Include:

Percentage of each member’s interest in the LLC: Ownership percentages are usually distributed in proportion to members’ capital contributions, but they may be divided any way the LLC chooses. Distributive shares are usually in proportion to ownership, but again it is up to the LLC to determine.

Distribution of profits and losses: How much of the profits will be distributed each year to members? Even when profits are put back into the business, they count as income to the members for tax purposes. Will the LLC cover each member’s taxes related to the business? At what intervals will distributions be made to members?

Responsibilities and rights of each individual member: Will all members be actively involved in the daily operations of the business, or will they act as investors or silent partners only? How much say will each member have in the LLC’s daily operations?

Voting power of each member: Will each member’s vote carry weight in proportion to their interest in the business, or will all votes carry equal weight?

Management structure of the LLC: How will the daily operations of the business be managed, and by whom?

Meeting and Voting Rules: How often will members meet, and what protocols will be followed at each meeting. How will votes be taken?

Provisions for sell-out, buy out, and member death or disability: Will other members have the option to buy out the shares of someone who wants to leave? Will their shares of interest be divided equally among remaining members? If a member dies or becomes disabled, can a family member assume their role and interests?

Clearly, drawing up an Operating Agreement for your LLC is no small matter. There are many considerations to be made, and everything needs to be spelled out in language that is not ambiguous or vague. The professionals at Windsor are ready, willing and able to help you sort out the details of your LLC’s Operating Agreement. We know all the ins and outs of starting a business, including the legal aspects. Don’t let you business falter because you failed to create a formal Operating Agreement.

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