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Legalease
Legalease, Attorney
Category: Business Law
Satisfied Customers: 14502
Experience:  14 years experience corps, LLC's and partnerships; preparation, negotiation of complex contracts and business agreements
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What is a limited liability contract? Do I need one for my

Resolved Question:

What is a limited liability contract? Do I need one for my tshirt company with my partner. If so how do I go about getting it done?
Submitted: 1 year ago.
Category: Business Law
Expert:  Richard - Bizlaw replied 1 year ago.

bizlaw :

Hello, I will try to help you. Please remember I just report or interpret the law, so the outcome may not be what you hoped for. Do you mean a limited liability company rather than a limited liability contract?

Expert:  Legalease replied 1 year ago.

Hello again Joshua --

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Thank you for requesting my assistance for this question. I was delayed in answering because there were 2 customers ahead of your question and our computer system forces experts to answer lined up questions before other newer asked questions can be answered. My colleague was good enough to step in and start a conversation with you but I can take this over now and it will make more sense because we were already having a conversation regarding your proposed T shirt business prior to this question being asked.

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When you set up a company and you are just starting out in business, you must choose the type of entity that you want to use as the company. The most common choices are a corporation, a partnership or a limited liability company (you can also use a sole proprietorship as your business but such an entity is generally used only when you are operating alone -- if you have a partner then you would generally choose one of the other business entity forms to operate under). For a small business with 2 or more persons owning it, the most common choice is a limited liability company (the owners are called "members" rather than partners) and when organizing the limited liability company you and your partner would come to an agreement regarding how the business is to be run (from first penny invested to winding up the business in the event that it closes) -- the agreement is put into writing and is called a Limited Liability Company Agreement or OPerating Agreement. TYpically you and your partner would go to a lawyer to have the agreement drafted (but there are some online websites where you can get some forms and actually write your own operating agreement (which I do not recommend because of the legal liability involved in preparing the agreement and then using the agreement as the guidebook to running the company as you go along)). Once this document is prepared and you and your partner(s) have signed it, then you must register the limited liability company with the state where you will be operating the business. In every state in the US, there is a state agency that handles the registration of businesses operating in that state (in some states it is the Secretary of the State's office that handles these filings and in some other states there is actually a separate state agency set up to handle these issues -- you can determine which agency handles the business organization and registration functions in your state by doing an online search). You then file a very short informational sheet called the Articles of Organization for your limited liability company with the state -- and the information the state requests is typically just the names of the members, a valid address where you can be contacted and where legal service of process can be served upon the business in the event you are sued for anything, and a short statement of the purpose of the limited liability company. Once the LLC is registered with your state then you hold onto the Limited Liability Company / Operating Agreement as part of the business operating records in your offices (the operating agreement does not need to be filed with the state -- that is private information applicable to running and carrying on your business and so it is kept with the corporate documents in the main office of your business).

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So, that is what a limited liability agreement is, what it is used for, and how to file to be recognized as an LLC in your state. Please let me know if you have further questions.

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MARY

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Legalease, Attorney
Category: Business Law
Satisfied Customers: 14502
Experience: 14 years experience corps, LLC's and partnerships; preparation, negotiation of complex contracts and business agreements
Legalease and other Business Law Specialists are ready to help you
Customer: replied 1 year ago.
Sounds like this is going to take some time. Is this an importance before we do our business plan? Is this priority number 1? I just want to do this right. My idea is golden but I won't have longevity if I don't handle the steps correctly
Expert:  Legalease replied 1 year ago.

Hello again Joshua --

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It truly does not take very long to have an LLC agreement written. You do not need an LLC agreement until well after you have developed a business plan and secured funding -- you can actually complete the LLC Articles of Organization and file them with the state so that you are a legal limited liability company and you can operate without an LLC agreement for as long as you wish to do so. However, the LLC agreement is needed to determine how the profits of the company will be split, and if there are any reasons why your LLC must take a vote on something. So, it is legal to start operating without an LLC agreement and you can carry on the business for quite some time before even needing an LLC agreement -- but you will eventually have to get one prepared if you want to be certain that the agreement between you and your members (partners) is set forth in writing and will be legally enforceable in the event that you end up in court over any matters that have to do with the LLC or running the LLC.

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MARY

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Please press the 3rd, 4th or 5th smile face below so I will be paid for my time. I am paid NOTHING unless you press a positive rating below. You are on a subscription plan which means that you should press a rating under/below each ANSWER posted and it will NOT cost you any additional money -- it simply acts as the trigger to Just Answer to pay me for my time for each answer provided to you. THANK YOU

Expert:  Legalease replied 1 year ago.

Hello again Joshua --

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Do you have any further questions regarding the LLC or LLC agreement for me? These are separate questions and if you have nothing further for me on this I would appreciate it if you would press the 3rd, 4th or 5th smile face underneath each of the ANSWER boxes above so I will be paid for my time in assisting you with these additional questions. You are on a subscription or free trial plan so pressing a positive rating underneath the ANSWER boxed above will NOT COST YOU ANY ADDITIONAL MONEY. Pressing the 3rd, 4th or 5th smile face under the answer boxes above simply acts as the trigger to Just Answer to pay ME for the time spent assisting you on these additional two questions.

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THANK YOU

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MARY

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