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Loren
Loren, Attorney
Category: Business Law
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Experience:  30 years experience representing clients .
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I am an experienced IT Professional who is going to start an

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I am an experienced IT Professional who is going to start an LLC. This LLC's area of business would be to sell software products and other IT programming Services. I have a few questions as follows:

1. The software which I develop is my own personal knowledge. Is it possible that I retain ownership of the software and only permit the LLC to sell the Software's Licenses to customers and not let the LLC own my software. This way, even if there is a situation where my LLC becomes bankrupt and needs to be liquidated, I will still not lose my software to the debtors.

2. In the Articles of Association, I will be the only member of this LLC. What is the process of hiring an employee ? This employee is neither a member nor a manager. I just want this person to work for me. Should I mention this in the operating agreement? Or can I simply give this employee an offer letter ?

3. A friend of mine would like to work for free, just to gain the experience. Can an LLC have an employee who is not paid any salary ?

4. I will be the President of this LLC. Is there any limit to the salary that I make.

5. My company will be registered in North Carolina State. Any formalities or procedures required to sell my products across USA?
Submitted: 7 years ago.
Category: Business Law
Expert:  Loren replied 7 years ago.
Hello,

Congratulations on your new business.

I will take on your questions as you have presented them.

1. Someone or something will have to own the rights to the software. You or a second entity may license the software to the LLC to market further licensing to customers. The license to the marketing LLC should contain terms for automatic termination of the licensing rights of the marketing LLC upon the occurence of certain events which you can delineate.

2. The operating agreement should set forth the rights and obligations of the member (you) and the manager (you). The employment contract is a separate agreement between the employee and the LLC.

3. It is a bad idea to have someone working for you for free. That is either a slave (illegal)or volunteer (uncontrolable). Figure out a way to provide some sort of compensation.

4. The only limit is your LLC's ability to pay it. I would discuss the arrangement with your tax preparer to maxamize the tax benefits of the LLC structure.

5. It would be handled on a state by state basis.

Good luck with your new venture I hope it is profitable for you.

If you find this information helpful, please click on the green "ACCEPT" button. Thank you.
Customer: replied 7 years ago.

A couple clarifications please:

 

3. The person who volunteered to work for free is a close-relative and has no problems working for free. Is it illegal to work for free ? I have read that CEOs of troubled companies are ready to work for a Dollar per year.

 

5. My company will be registered in NC. Can I simply sell my company's software products all over the USA, or should I obtain licenses / permissions from individual states. Thanks.

Expert:  Loren replied 7 years ago.

No, it is not, per se, illegal for a family member to help out by working for free. They just don't fall into the definition of "employee".

 

As for state licensing, you will need to check with the individual states where you are doing business. I would doubt there are any states which would require a license to sell software. However, it is never a bad idea to check the particular state's website to make sure.

 

As for the LLC, if it wants the ability to use the court system of another state (for example, if you want to sue someone for failure to pay, or something) the LLC will need to qualify in that state. Qualification is a matter of filing a form, paying a fee and hiring a registered agent (there are companies who will act as registered agents for out of state businesses).

 

Good luck

 

 

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