We work with a number of entrepreneurs, companies, and visionaries. The goals and needs are different for each one of them. Yet there are a series of steps to take when forming a multi-member LLC:
Step 1 Choosing the Right Entity
Below is link to a short article that explains the different types of entities. After reading this, you may decide to stay with the LLC, or you may decide to switch entities. This is a decision best made in concert with your attorney and accountant.
Step 2 Assuming an LLC, Create an Operating Agreement
While the operating agreement is not filed when incorporating, this is a critical document, as it sets up how the LLC is managed, which members have what authority, and how to resolve disputes, among other things. Because you have multiple members, you want to spend a considerable amount of time with your attorney on getting this document right.
Step 3 Create Buy-Sell Agreement
In addition, because you have multiple members, you should have a buy-sell agreement in place that sets out what happens should one of the member-owners leave the business, or be forced to leave.
Step 4 Incorporate
Have your attorney help you decide which state you will incorporate. Delaware has advantages in terms of predictability of resolving disputes, but there are some additional fees since technically you would be a foreign corporation in your state. You may decide to file in your state after consideration as well. The filing includes the certification of formation and/or articles of incorporation.
Step 5 General Counsel
After formation, continue to consult with counsel, such as Fogel & Potamianos’ Corporate Practice Group or General Counsel Group regarding how your company is operating in relation to the LLC you have formed.
This blog is provided for general informational purposes only and no attorney-client relationship with Fogel & Potamianos LLP is created. By using the blog, you agree that the information on this blog does not constitute legal or other professional advice. The blog is not a substitute for obtaining legal advice regarding a potential matter from a qualified attorney licensed in your state.