Ch. 3: Other Organizational Forms For Small Business – No. 1
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
Limited Liability Company (LLC): A hybrid form of
business, which is
held” – meaning that it may have unlimited investors.
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
LLC PROS AND CONS
Key Advantages:
flexibility in management and operations.
Key Disadvantage: Non-uniform state LLC statutes create
uncertainty as to personal liability and the respective
Ch. 3: Other Organizational Forms For Small Business – No. 3
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
LLC OPERATION AND MANAGEMENT
Operating Agreement: An agreement among the members
of an LLC, addressing management, profit-sharing, transfer
of ownership, dissolution, and other important issues.
members are wise to have both to clearly delineate the
members’ rights and responsibilities.
Management: LLCs are typically either member–managed –
meaning that all of the owners of the LLC participate in its
Ch. 3: Other Organizational Forms For Small Business – No. 4
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
LLC DISSOCIATION
(2) by judicial (or arbitral) order, or
(3) due to death, incapacity, bankruptcy, or assigning her
partnership interest for the benefit of creditors.
A member’s dissociation generally does not cause the
in its management, and
(3) ceases to owe the LLC a duty of loyalty and continues to
owe it a duty of care only with respect to events that
occurred before his dissociation.
Ch. 3: Other Organizational Forms For Small Business – No. 5
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
LLC DISSOLUTION AND WINDING UP
Dissolution: An LLC can be dissolved by
(1) the occurrence of some event stipulated in the LLC
agreement,
(2) vote of the (non-dissociated) members, or
(3) judicial decree.
LLC assets are distributed as follows:
(1) payment of third party debts and refunds of loans
or advances made by members to or for the LLC;
then
(2) return of each member’s capital contribution and
Ch. 3: Other Organizational Forms For Small Business – No. 6
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
JOINT VENTURES
Joint Venture: A business venture where two or more
persons or entities combine their interests in a particular
enterprise and agree to share in the losses or profits equally or
authority because the activities of a joint venture
are more limited, as a matter of law, than those of a
partnership.
The death of a joint venturer generally does not
more of the joint venturer’s other business, conflicts of
interest need to be disclosed and dealt with openly.
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
LLC PROS AND CONS
Key Advantages:
flexibility in management and operations.
Key Disadvantage: Non-uniform state LLC statutes create
uncertainty as to personal liability and the respective
Ch. 3: Other Organizational Forms For Small Business – No. 3
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
LLC OPERATION AND MANAGEMENT
Operating Agreement: An agreement among the members
of an LLC, addressing management, profit-sharing, transfer
of ownership, dissolution, and other important issues.
members are wise to have both to clearly delineate the
members’ rights and responsibilities.
Management: LLCs are typically either member–managed –
meaning that all of the owners of the LLC participate in its
Ch. 3: Other Organizational Forms For Small Business – No. 4
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
LLC DISSOCIATION
(2) by judicial (or arbitral) order, or
(3) due to death, incapacity, bankruptcy, or assigning her
partnership interest for the benefit of creditors.
A member’s dissociation generally does not cause the
in its management, and
(3) ceases to owe the LLC a duty of loyalty and continues to
owe it a duty of care only with respect to events that
occurred before his dissociation.
Ch. 3: Other Organizational Forms For Small Business – No. 5
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
LLC DISSOLUTION AND WINDING UP
Dissolution: An LLC can be dissolved by
(1) the occurrence of some event stipulated in the LLC
agreement,
(2) vote of the (non-dissociated) members, or
(3) judicial decree.
LLC assets are distributed as follows:
(1) payment of third party debts and refunds of loans
or advances made by members to or for the LLC;
then
(2) return of each member’s capital contribution and
Ch. 3: Other Organizational Forms For Small Business – No. 6
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
JOINT VENTURES
Joint Venture: A business venture where two or more
persons or entities combine their interests in a particular
enterprise and agree to share in the losses or profits equally or
authority because the activities of a joint venture
are more limited, as a matter of law, than those of a
partnership.
The death of a joint venturer generally does not
more of the joint venturer’s other business, conflicts of
interest need to be disclosed and dealt with openly.