What does “super-majority voting” mean?

Voting rights in your entity are an important element of its governance. Sometimes a minority investor, or group of investors, may want the right to vote (or veto) certain business decisions, even though they don’t have the equity to sway a vote. Nevertheless, you may want to give them certain veto rights as part of [...]

February 14th, 2020|0 Comments

What’s a “distribution”?

In lay terms, a distribution is another way of saying a payment to a shareholder, partner or member of the business’s profit. Typically the distribution is in the form of cash, but sometimes it’s in the form of property like an asset. What you receive typically depends on your percentage interest in the business. So [...]

September 2nd, 2020|0 Comments

What’s a K-1?

In very lay terms, a K-1 is the partnership equivalent of an employee’s W-2 or a contractor’s 1099. Because a partnership doesn’t generally pay taxes of its own, it issues a form to each of its partners, telling the partners what each of them needs to put on his/her/its own tax return. LLCs taxed as a partnership (the default for multiple-member LLCs) issue K-1s. For more on forming partnerships, here's an article. Or, if you prefer to be entertained, here's a video.

July 19th, 2015|0 Comments

I want to add my boyfriend to my single-member LLC. Is that complicated?

Well, if I was your mother, I’d say yes, that’s very complicated, and please just pay him for services rendered. But, as your lawyer, adding him is not that complicated. However, the result is that you’ve now turned what was essentially a sole proprietorship into a partnership, requiring tax returns, fiduciary duties, and ideally, a written partnership agreement for when you want to show your boyfriend the door.

July 19th, 2015|0 Comments

I want to convert my LLC into a corporation. Can I? How? Vice versa?

Depending on what state your company is located in, this could be as simple as filing a single form with that state’s governing agency. In some states, this may be more complicated, but there’s always a way. Keep in mind, by converting the entity, you will likely have to get it a new Tax ID Number, since it’s now a different entity. If there’s a partnership agreement, or certain rights with respect to voting or capital return, be careful about property transferring all of that over. Consult with tax and legal counsel.

July 19th, 2015|0 Comments

What’s a limited partnership (LP)? When should I use one?

Limited partnerships (LP) have been the go-to entity for certain kinds of industries for years. The most prevalent use has been in real estate, where the ownership is usually made up of one person who manages the operations and the cash flow, and the rest of the partners are silent partners, or “limited partners”. Why [...]

August 6th, 2020|0 Comments

What’s a general partnership? When should I use one?

A general partnership (GP) can come in very handy when you want to be in a joint venture or some other enterprise, and liability is either not an issue, or each “partner” has their own entity for liability protection. In fact, people who start “doing something” together can find themselves in a general partnership without [...]

August 6th, 2020|0 Comments

Can a general partnership be taxed as an S Corporation?

In short . . . yes. Who knew?!

August 6th, 2020|0 Comments