Who runs the LLC?

If there are many members of an LLC, a limited number of people can be chosen to actually run the LLC for the members. They are the managers. The managers can be, but do not have to be, members of the LLC. The managers can be set up to resemble a board of directors if that is what the members want. Managers are not required for an LLC. The members may simply retain all managerial authority for themselves. Or they can grant partial or limited powers to certain members and/or managers. In fact, almost any practical division of power among members and/or managers is possible with an LLC. This flexibility of control by the owners is one of the very best features of the LLC.

Answer provided by Chuck Roach - Roach Law Office

How is an LLC created?

After submitting Articles of Organization to the Secretary of State's office, the members enter into a written agreement, called the "Operating Agreement," about how the LLC will be run, who is in charge of running it, how profits will be divided up, etc. If there is no operating agreement, then the "default" rules for running an LLC kick in. These default rules are found in Indiana LLC statute. Generally speaking, it is better to have an operating agreement than it is to rely on the default rules, if only because it forces the members to think about many practical aspects of running a business at the outset and then agree about such matters before real money is at stake.

Answer provided by Chuck Roach - Roach Law Office

What are the specific qualities of an LLC?

As discussed previously, the LLC is advantageous for small businesses becasue it combines the limited personal liability feature of a corporation with the tax advantages of a partnership and sole proprietorship. Profits and losses can be passed through the company to its members or the LLC can elect to be taxed like a corporation. LLCs do not have stock and are not required to observe corporate formalities, such as the maintenance of annual director or shareholder minutes. Owner are called members, and the LLC is managed by these members or by appointed managers.

Answer provided by Chuck Roach - Roach Law Office

What are the qualities of the "simpler" business organization - sole proprietorships and partnerships?

The sole proprietorship is a simple, informal structure that is inexpensive to form; it is usually owned by a single person or a marital community. The owner operates the business, is personally liable for all business debts, can freely transfer all or part of the business, and can report profit or loss on personal income tax returns.

Partnerships are inexpensive to form; they require an agreement between two or more individuals or entities to jointly own and operate a business. Profit, loss, and managerial duties are shared among the partners, and each partner is personally liable for partnership debts. Partnerships do not pay taxes, but must file an informational return; individual partners report their share of profits and losses on their personal return. Short-term partnerships are also known as joint ventures.

Answer provided by Chuck Roach - Roach Law Office

Do I need a written contract for a small project?

Of course the answer to this question is…. it depends. The benefit of a written agreement is clarity, as its job as a legal matter is to define the duties of the parties, establish the consideration to be “paid” by each party to the other, and set forth remedies in the event either party defaults on his or her obligations.

There are occasions in our personal relationship when this kind of certainty may not be absolutely necessary. But in business, the best practice is to have written agreements in place to avoid misunderstandings, preserve relationships, and when absolutely necessary, have a legal basis to obtain a remedy through the court system. That doesn’t mean the contract must be lengthy. A one page agreement is often sufficient. Other times it makes sense to include more terms to cover various contingencies.

As in all business matters, the key is to use your best business judgment in assessing the cost versus benefit to your operations. If the agreement is crucial to your business or if it will be used frequently, the answer is you need it in writing. In that event, you should seek the advice of a legal professional to assist in the drafting or review of the document.

Answer provided by Chuck Roach - Roach Law Office

What type of business should I be?

One of the first decisions that you will have to make as a business owner is how the company should be structured. This decision will have long-term implications, so you are strongly encouraged to consult with an accountant and attorney to help you select the form of ownership that is right for you.

Organization of a business entity is done for several reasons, the most important being to limit liability and financial expenses to the capital dedicated to the venture. You need to respect the entity, keep proper records and take appropriate actions. This will preserve the "insulation of liability" and make key issues like "who owns what and what rights are there" much easier to determine down the road.

While there are several factors that determine how a business is initially organized, tax factors generally play a primary role. The form in which a business is organized depends on an analysis of the particular facts of the business. However, start-ups often are organized as a "flow-through entity" which is an entity that is subject to a single level of tax. Specific types of flow-through entities include partnerships, limited partnerships, LLCs and S corporations.

These are the entities of choice for most new business owners looking to formally organize. Subject to certain restrictions, start-up losses of such an entity may "flow-through" to its owners in the form of tax deductions. Alternatively, a company may be organized as a regular, or "C" corporation. A significant disadvantage to operating as a C corporation is that its earnings are exposed to "double taxation" which means that the corporation is subject to income tax on its earnings and the owners are taxed when the company distributes the earnings as a dividend. But there is no single "right" answer. It depends on what kind of business you have, who will own it, what sort of deductions it will generate and the accountant you use.

Answer provided by Chuck Roach - Roach Law

Do you have product or service to sell to the federal government?

Many business owners are interested in selling to the federal government, however this endeavor can be overwhelming. Before you invest time, talent and expenses on pursuing
federal government businesses there are several issues to consider in determining your eligibility.

As a federal contractor, the government requires the following information:

• Are you eligible under the laws and regulations to do business with the federal government?
• Do you have adequate financial resources to perform the contract?
• Do you have a good past performance track record?
• Do you have corporate records that demonstrate ethics and integrity?
• Do you have the necessary skills, personnel, and experiences to perform the contract or can you acquire the necessary skills (through subcontracting etc.)?
• Do you have the necessary facilities and production capacity to deliver the products and/or services required?
• Can you meet the federal performance schedule or delivery schedule with all the other commitments placed upon your business?
• Do you have an experienced Contract Administrator with the academic and personal experience in acquisition management on your contract team?

The information and documentation from the questions above are utilized by the federal government to determine if a contractor is eligible to be awarded federal contracts.

For additional assistance with your federal business needs, please feel free to contact BIG FISH CONSULTING – “minnows to marlins” no service request is too small and no contract too big, contact us at boothb.L9600@sbcglobal.net or (765) 243-1782.

Answer provided by Marlin Boothby - Big Fish Consulting