An LLC, or limited liability company, is a term used to describe a private limited company. LLCs, along with LLPs, are relatively new forms of business organization in the United States. In particular, LLCs have gained much traction and popularity in the United States because of the many perks they offer over other, perhaps more traditional, forms of business organization. They carry with them very few disadvantages and as such, for many businesses an LLC is an idyllic means of conducting business. If you are considering which form of business is best for your new venture, or if you are considering changing your business to an LLC, it is definitely worth taking a few minutes to read on about their potential benefits to your business.
Many of the perks and benefits that a limited liability company offers stem from its unique status as a hybrid form of business organization. This hybridity allows for it to offer the benefits of limited liability like a corporation, while also simultaneously providing the tax advantages of a partnership. Essentially, an LLC can dip in between both types and offer dual benefits to its member-owners. As a result of these dualities, many businesses favor becoming an LLC, a trend that is only further encouraged by state statutes permitting and simplifying their establishment and longevity.
Insofar as questions of jurisdiction, LLCs share many traits with corporations. Like corporations, LLCs are creatures of the state. As such, they are formed and operated in accordance with state laws. Furthermore, both corporations and LLCs are treated as legal entities separate and distinct from their owners, who are instead referred to as ‘members’. Given their status as a legal entity, LLCs can sue or be sued, enter into contracts and arrangements, and hold titles to property or estates.
Notably, the members of an LLC enjoy limited liability just like the shareholders of a corporation would. Members can also undertake actions on behalf of the LLC, and as with a corporation’s shareholders, any damages or charges recovered go to the LLC, not to the members themselves. However, just like how courts can, on occasion, determine that they ought to disregard a corporation as a legal entity and hold shareholders personally liable for damages, so too can the courts pierce the corporate veil of an LLC to hold individuals accountable for damages. These cases, however, are extremely rare and far and few between.
As previously alluded to, the advantages of LLCs are many and the drawbacks are relatively few. One such disadvantage to consider is that the management structure of an LLC is not clearly stated nor defined in the legal literature. More often than not, it is up to the members to create, agree upon, and sign off on articles of organization which outline the key rules and principles of operation of the company. While, this may seem inconvenient at first, it can actually be viewed as a major advantage of an LLC, speaking to its flexibility and the level of freedom and control it can offer to its members. Below is a chart that effectively sums up the potential pros and cons of an LLC. Things to Consider About LLCs:
Advantages
Disadvantages
As you can see, the benefits of an LLC generally outweigh the drawbacks. For further information, use the following chart as a reference; it provides answers to many common questions surrounding the details of how an LLC works.
Characteristics of
A Limited Liability Company
Method of Formation
It is formed by an agreement of the owner-members of the company. Articles of organization are filed. Charter has to be given by the state.
Legal Position
It is treated as a legal entity.
Liability
Member-owners liability is limited to the amount of capital contributions or investments.
Duration
Can have perpetual existence, unless there is only one member (like a corporation).
Interest Transferability
Member interests are freely transferable.
Management Scheme
Member-owners can fully participate in management, or they can designate managers to oversee the firm on their behalf.
Taxation
LLC does not get taxed, and members are taxed personally based on the profits that get “passed through” the LLC.
Fees and Annual Reports
Organizational fee is required, as well as a possible business privilege fee.
Foreign Business Transactions
Generally no limitations.
While an LLC can offer you and your business many powerful tools and advantages, getting it set up as an LLC can be a somewhat difficult process. That’s where we can help. We have helped many clients start up LLCs for their businesses as well as converting an already existing business into an LLC. We always look for ways to help our clients maximize their profits in the legal realm, and this is no exception. If you or a loved one wishes to open an LLC, or has any further questions, we invite you to give us a toll free call at (310) 943-1171 to speak to one of our Los Angeles business lawyers today.
KAASS LAW is authorized to practice law in California. The above content is intended for California residents only. This content provides only general information which may or may not reflect current legal developments. KAASS LAW expressly disclaims all liability in respect to actions taken or not taken based on any of the contents of this website. The above content DOES NOT create an attorney-client relationship. KAASS LAW does not represent you unless you have expressly retained KAASS LAW in person at the KAASS LAW office. KAASS LAW helps clients in: Los Angeles, Burbank, Hollywood, Glendale, Van Nuys, North Hollywood, Studio City, Highland Park, Eagle Rock, Sunland, Tujunga, Sylmar, San Bernardino, La Crescenta, La Canada, Beverly Hills, Westwood, Santa Monica, Brentwood. Pacoima, Montebello, Commerce, Alhambra, Downey, Bell, Maywood, Walnut Park, Vernon, Lynwood, Echo Park, Silverlake, Mission Hills, Northridge, Woodland Hills, Encino, Canoga Park, North Hills, Porter Ranch, Chatsworth, Reseda.
If one cannot duplicate a phone number or street address, then why should one have the power to duplicate a domain name? Domain names, similar to words and symbols, can be used to identify a seller’s products and distinguish them from the products of another, and are thus viewed as trademarks. The Ninth Circuit U.S. Court of Appeals recently ruled that a business must use its domain name to sell goods or services in order to protect the name — even if a competitor starts to use the name after you registered the domain. In other words, merely reserving a domain name isn't enough. Thus, its important to register your domain name, because if your domain name has a trademark, the URL has protection under the USPTO.
The Trademark Act of 1946 (“Lanham Act”) prohibits uses of trademarks that are likely to cause confusion about the source of a product or service. 15 U.S.C. §§ 1114, 1125(a). Moreover, to establish a trademark infringement claim under the Lanham Act, a plaintiff must establish that defendant’s use of a mark is confusing similar to plaintiff’s. Id. The main area of inquiry in trademark infringement cases is whether the similarity of the marks is likely to confuse customers about the source of a product or service. ., 174 F.3d 1036, 1062 (1999).
A contract is an agreement to do or not to do a certain thing. Recovering damages for breach of contract, the plaintiff must prove all of the following:
If you entered into a contract and you fail to abide by the terms of the agreement. Consequently, you may face the likelihood of having a lawsuit against you. If a party contracts with you and does not fulfill the terms of the agreement. In return you may also have the right to seek legal remedy and likewise file suit against the breaching party.
Regardless of whether you own an business with a family member, a friend, or hold a position on the board of a large corporation, you know that business and contract disputes can often times cause major problems. Specifically, business owners that face contract disputes with other companies and even more so, between their own ownership structure. For instance, a business contract dispute may arise between two or more partners, when one partner fails to fulfill his responsibilities. Often times business owners do not anticipate disputes until they arise. As a result, income might be lost due to contract breaches; ownership might be in the limbo due to outside lawsuits and claims; and tensions amongst business owners may rise. Lastly, a California business that is facing a lawsuit must be represented by an attorney. As such, a business owner cannot represent themselves in pro per.
As a matter of course, each general partner has an equal right to take part in the . Disputes in the ordinary course of business are decided by a of the . While, disputes or disagreements of or any to the . Be that as it may, in an partnership of any size the will provide for certain electees to manage the partnership along the lines of a company board. Generally, unless otherwise provided in the , no one can become a partner of the However, an existing partner may transfer partnership interests and assign his share of the profits and losses and right to receive distributions.
People operating businesses or startups probably have so much on their plate that they don’t spend much time worrying about the legal issues they may face.
It would be wise to familiarize yourself with some of the common legal issues that small business owners are occasionally faced with.
Interested in investing in business startup? It is crucial to understand your rights as an investor to ensure you are making a safe investment.
Investing can be a very stressful process for first-time investors. Knowing your legal rights as an investor can ease this process and provide you comfort in moving forward with an investment. To effectively assess the legitimacy of an investment, investors have the right to honest advertising, complete and accurate information, and disclosure of risks and future obligations. Providing investors with false or misleading information is against the law and subject to civil, criminal, or regulatory penalties. It is a good idea to become familiar with business law or get help from an experienced professional before opening a business.
Honest Advertising. The person or entity selling the investment is required to provide honest and lawful information about the investment they are advertising. Advertisements can be deceiving and an easy way to convince potential investors to invest their money and trust that it will provide them with a solid return. An investor will never know the true position of that person or entity in the market without conducting proper and thorough research to learn “what they’re all about.” In 1986, ZZZZ Best, Inc., claimed itself as a multimillion-dollar carpet cleaning company and after going public, reached a market capitalization of $200 million. Shortly after, the owner, a teenager at the time, was found to have “built” this company based on fraudulent invoices and documents. The owner provided dishonest advertising to investors and as a result, spent 25 years in prison.
You must select a proper entity while structuring a business. Corporations and limited liability companies (LLCs) are two common options in the United States, each with a unique combination of benefits and drawbacks. Therefore, this blog strives to offer a thorough breakdown of the variations between corporations and LLCs in Delaware, USA, and how they contrast with those in other nations.
Corporations are well-known and frequently used business entities in every country. Here are a few essential traits of corporations:
To protect your business or brand from infringement, you may want to trademark your domain name in addition to a logo, slogan, or design. Merely, registering a domain name does not give you trademark rights, rather it identifies your website and generally will not prevent others from using the name. If you trademark your domain name, you have legal protection if a third party uses your trademarked name. You can file a trademark infringement action against the infringing party and recover money damages, financial losses, and other damages you might have incurred.
The domain should function as a "source indicator." It must convey to whoever sees the URL what products or services are behind the name. A domain qualifies as a trademark when it is a "source indicator." Your domain must convey the products or services associated with the name to whoever sees the URL. Not all domain names can be registered as trademarks. The PTO is particular about what can be registered as a domain name.
Consumer confusion occurs when another company has a domain name close in spelling to your domain. The other company's name might different by one letter. Generally, consumer confusion matters only if a domain name that's similar to the one you want to use is a protected trademark. To be protected, a trademark must be distinctive. If the trademark owner has been able to register a name with the U.S. Patent and Trademark Office, it is probably distinctive. The dispositive question in trademark infringement cases is whether the similarity of the marks is likely to confuse customers about the source of a product or service. Interstellar Starship Services, Ltd. V. Epix, Inc., 304 F. 3d 936, 941 (2002).
Initial interest confusion occurs when the defendant’s use of plaintiff’s trademark sways consumers towards their own product or service by capturing “initial consumer attention.” Brookfield at 1045. In the context of website domain, the defendant’s unauthorized use of the trademark confuses consumers who expect to find the plaintiff’s product or service at that web address. Interstellar at 942. Although actual confusion is not required, plaintiff must prove a probability of confusion, as the mere possibility is not enough. Perfumebay.com Inc. v. eBay, Inc., 506 F.3d 1165, 1176.
To evaluate the likelihood of confusion, including initial interest confusion, the Sleekcraft factors considered are:
(1) the similarity of the marks;
(2) the relatedness or proximity of the two companies' products or services;
(3) the strength of the registered mark;
(4) the marketing channels used;
(5) the degree of care likely to be exercised by the purchaser in selecting goods;
(6) the accused infringers' intent in selecting its mark;
(7) evidence of actual confusion; and
(8) the likelihood of expansion in product lines.
Courts consider these factors within the totality of the circumstances through the eyes of the “reasonably prudent consumer” in the marketplace, not a person with a legally trained mind. Dreamwerks Production Group, Inc. v. SKG Studio, 142 F.3d 1127, 1129 (1998).
In the context of website domain, courts have held that the three most important Sleekcraft factors in evaluating a likelihood of confusion are (1) the similarity of the marks, (2) the relatedness of the goods or services, and (3) the parties’ simultaneous use of the Web as a marketing channel. Interstellar at 942.
No one factor is to be considered conclusive and the relative importance of each individual factor will be case-specific. Compare Brookfield, 174 F.3d at 1061 (holding that use of the domain name “moviebuff.com” violated plaintiff’s trademark rights in the mark “MovieBuff,” as consumer confusion is likely to result from the relatedness of the products and the companies’ simultaneous use of the Web as a marketing and advertising tool) with Interstellar at 943 (finding that domain name “epix.com” for website showcasing creator’s electronic pictures did not infringe the trademark “EPIX,” used in connection with printed circuit boards and computer programs, because there was a lack of relation between the products and both parties marketed to a different consumer base through the web).
The Federal Trademark Dilution Act (FDTA) allows a trademark owner to obtain an injunction against another’s “commercial use in commerce” of a mark or trade name” 15 U.S.C. § 1125(c)(1). “Commercial use in commerce” has been generally interpreted to mean use of mark in relation to any goods or services. Mattel, Inc. v. MCA Records, Inc., 296 F.3d 894, 903 (2002).
If you believe someone is infringing on your trademark or have questions regarding trademark registration, copyright, or any other intellectual property related question, we invite you to contact our office and speak to an experienced Los Angeles trademark lawyer at (310) 943-1171.
It is important to remember that a California business owner cannot represent themselves in a lawsuit as pro per, this is because in California, a California business that is facing a suit or wish to file a lawsuit against another must be represented by an attorney. Please review all the provisions in the contract to ensure you don't file a frivolous lawsuit against the other party. Often times contracts can be confusing and thus require the assistance of a business law or contract attorney. Breach of contract can occur in many different ways, such in business service contracts, employment contracts, or business partnership contracts. If you believe that another party did a breach in their terms or didn't fulfill the terms under a contract it is important to speak to a experienced business lawyer, to ensure you rights and remedies are protected.
Businesses can dissolve the entire or part of a company by engaging in the "winding up" or "dissolution" process. The winding up process is subject to a strict legal rights of its partners, as well as creditors and claimants. Terminating a California business, often times involves a "liquidation process", where the company begins to wind-up affairs, pay debts, and dissolve. Furthermore, there are special procedures for dissolving corporations that are undergoing Chapter 7 bankruptcy, or have disposed of all assets, and not conducted any business for the last five years.
During the winding-up process is subject to strict legal rights of the shareholders, thus must be both "just and equitable" Thus, to ensure that all issues are considered and addressed appropriately, its is recommend to that you consult with California corporate attorney prior to submitting termination documents to the California Secretary of State. If you wish to dissolve or terminate your corporation, we invite you to contact our Glendale business corporate lawyers and discuss the proper legal steps you must take in order to property terminate your California corporation. Under California’s General Corporation law (“GCL”) shareholders holding shares with at least 50 percent of the voting power can voluntary elect to dissolve the corporation. It is important that you review your articles of incorporation and bylaws, and speak to a experienced Glendale business lawyer, to ensure that you are following the proper dissolution procedures specifically for your corporation. If a all members have approved that dissolution, your corporation continues to exist only for the purpose of taking care of final matters. As such, all board members have full power to wind up and settle the affairs of the corporation, including paying all known corporation debts and liabilities, and then distributing remaining assets, if any, to persons entitled to those assets.
A startup is a company in the early phases of its development, known for its innovative business model and potential for quick expansion. Often technology-driven, it encourages high levels of creativity and innovation. On the other hand, a small business is usually operated by its owner. They adhere to a more conventional business model, concentrating on offering products or services to a particular local market.
Startups aiming to disrupt the industry frequently look to alter the current situation. They emphasize creating new technologies or products that can be rapidly expanded. Conversely, small businesses usually stick to a more conventional business model, focusing on delivering products or services to a particular local market.
Startups typically have a greater capacity for growth compared to small businesses. They often concentrate on creating a product or service that can be expanded rapidly and has substantial market opportunities. Conversely, small businesses generally have restricted growth potential, focusing on a specific local market.
Startups and small businesses can have different legal structures. To protect liability and attract funding, startups are frequently organized as corporations or LLCs. In contrast, small businesses are commonly organized as sole proprietorships or partnerships.
Startups and small businesses should also consider taxes. Startups might qualify for tax incentives or credits to promote expansion and progress. While small businesses might have a simpler tax framework as they concentrate on a particular local market.
The number of team members in startups is usually smaller than that in small businesses. Startups tend to concentrate on creating innovative technologies or products, necessitating a compact group of highly proficient personnel. Conversely, small companies generally employ a larger workforce to deliver products or services to a local market.
Startups take longer to become profitable than small businesses because they are dedicated to developing new technologies or products, which may require longer to bring to market and expand. In contrast, small businesses generally achieve profitability more quickly because they concentrate on a specific local market and can generate revenue rapidly. Do not hesitate to contact KAASS LAW if you have questions about California Startup or Small Business laws or discuss your case confidentially with one of our experienced attorneys.
Complete and Accurate Information. Having access to complete and accurate information will allow investors to make well-informed decisions about their investments. Companies are required by law to provide investors with all the information necessary to make that informed decision. It is illegal for companies to hide information from the public or from potential investors to make their company sound healthier than it really is. As an investor, you have the right to seek more information needed to make your decision including any formal documentation, financial statements, or annual reports.
Disclosure of Risk and Future Obligations. The person or entity selling the investment is required to provide information about any risks they face or future obligations they are expected to meet. There are many different factors that can make an investment risky and knowing exactly how risky it is will be a crucial indicator to the long-term success of that investment. Individuals or companies, who have future obligations that they are required to meet, increase the risk of the investment and put investors in an undesirable position. A business lawyer at KAASS LAW can provide you with any legal assistance you may require regarding business law. Receive legal assistance from an experienced professional now!
In all, be sure to know your rights as an investor so that you can make the best-informed decision you possibly can. There are many people and companies who make an effort to provide the least information possible while making a great effort to reel you in. Be cautious of the investments you decide to take on and remember that you are protected by the law in situations where there are efforts to fraud an investor out of their money.
The popularity of restricted Liability Companies (LLCs) has grown recently as a result of their adaptability and restricted liability protection. Let's examine their main characteristics:
Furthermore, Delaware's relatively straightforward formation requirements, along with its greater flexibility in structuring stock classes and LLC ownership, the option for a single-member board of directors for corporations, the choice between member-managed and manager-managed LLCs, and the less formal requirements for corporate records and meetings, are some of the key differences that set Delaware apart from other nations in terms of corporations and LLCs. These distinguishing characteristics not only highlight Delaware's reputation for flexible and advantageous business regulations but also solidify its position as a highly desirable destination for companies seeking to incorporate in the United States. Therefore, to ensure compliance and make wise choices, it is crucial for business owners to take into account the particular laws and regulations of the nations in which they conduct business.
Despite the fact that this blog offers a broad overview of the distinctions between corporations and LLCs in Delaware, the USA, and other nations, it is essential to seek legal counsel from a licensed professional to get personalized legal advice. Additionally, an experienced lawyer can evaluate your particular business needs, assist with business formation, and guarantee adherence to all applicable rules and regulations. By consulting a qualified attorney, you can gain valuable insights, and receive personalized guidance. Also, make well-informed decisions that support your company's objectives and safeguard your interests. Therefore, we encourage you to contact us today at 310-943-1171 or visit our website to explore our range of services and areas of expertise.