How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Richard - Bizlaw Your Own Question
Richard - Bizlaw
Richard - Bizlaw, Attorney
Category: Business Law
Satisfied Customers: 10174
Experience:  30 years of corporate, litigation and international law
Type Your Business Law Question Here...
Richard - Bizlaw is online now
A new question is answered every 9 seconds

I have a talent management business in California that has

Customer Question

I have a talent management business in California that has been operating under the name The Partnership, which is a filed DBA for an LLC which is Customer, LLC. There are three of us who are all equal members of the LLC. Is this the best way to structure this company (The Partnership)?
Submitted: 6 months ago.
Category: Business Law
Expert:  Richard - Bizlaw replied 6 months ago.

Hello, my name is ***** ***** 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.

What you have outlined as your structure is fine. I assume you operate as a partnership with decisions being made by a majority of the members. If there is a particular concern you have let me know and I will address that. But the answer to the basic question is yes, your current structure is a perfectly acceptable way to structure your business.

If I have answered all your questions, please positively rate my answer as that is how I receive credit. If you have more questions, please let me know. If the answer was especially helpful you can provide a bonus.

Customer: replied 6 months ago.
I'd been given conflicting information recently -- that being called The Partnership could cause problems if any of us is sued individually so I'm looking for clarification. We have also been working as two merged companies -- Hot Rock Media and Cohen Thomas Management, each with its own LLC before rebranding as The Partnership (DBA for Customer, LLC) The two companies have had separate as well as joint clients. What we've done is if our company (Cohen Thomas) received payment from a client, we would cut a check to Hot Rock Media for their percentage. Can we still do that? Yes...this is certainly confusing for those of us who aren't business or tax attorneys! (Thanks btw)
Customer: replied 6 months ago.
We need to figure out how to deal with bank accounts. If we have an account for The Partnership (DBA of Customer, LLC) and clients write checks to The Partnership, can we then disburse monies to each of the other separate companies -- or do we just write individual checks to each partner??
Expert:  Richard - Bizlaw replied 6 months ago.

Merger is a term of legal significance so let us be sure we are talking about the same thing. If you did a legal merger you had to file a certificate of merger with the Secretary of State. I suspect you did not do that. I assume what you did was to create a new LLC and the partners in each of the separate companies became members of the new LLC. If my assumption is correct then the two old companies continue to exist. The way to make sure everything is cleaned up, you should have a document transferring to the new LLC all the assets and liabilities of the old companies in exchange for the membership interests in the new LLC. The old companies would distribute their memberships they received for the assets to their members and in that way the members of the old LLCs become members in the new LLC. The old LLCs should be dissolved because there is no need to keep them. Any checks that come in made out to the old LLCs just get deposited by the new LLC because the right to those collections was transferred to the new LLC. Funds that come in can be disbursed to the members of the new LLC, you do not need to disburse anything to the old LLCs.

If I have answered all your questions, please highly rate my answer as that is how I get credit for working on your question.

Customer: replied 6 months ago.
Appreciate this, however the one partner (Hot Rock Media) is also an independent contractor who gets paid as a performer as well as does production and needs to keep that LLC. CohenThomas has no part of that. It's why it's so baffling. I'm at a meeting but will continue the question later....trying to make this as simple as possible. If we kept all three LLCs can we , as an example, get checks in Cohen Thomas and then write individual checks to each partner-the same with HOT ROCK MEDIA with any pertinent checks - and Any into the actual The Partnership account also be paid out to each partner?
Expert:  Richard - Bizlaw replied 6 months ago.

What you will need to do is to identify income that is supposed to go to the Partnership from those that are solely for a particular LLC. So if Hot Rock gets a check for consulting under the Partnership it can deposit the check and then write a check to the Partnership or its members. However, to make the audit trail easier, I recommend that checks made to the individual LLCs be deposited into the account of the LLC and then a separate check written to the Partnership. The Partnership would then disburse the funds. The reason for this is that people who pay you for services are supposed to issue 1099s at the end of the year. If you do not track the money you could have 1099s to Hot Rock for example that reflect money that actually was due the Partnership. Hot Rock wants to have an audit trail that reflects the receipt of those funds, which will match the 1099 and then show the transfer to the Partnership.

You want to have those who are being served by the Partnership to pay the Partnership and not the other LLCs but until that happens you want to have an audit trail for all funds.

If I have answered all your questions, please highly rate my answer as that is how I get credit for working on your question.

Related Business Law Questions