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TexLaw
TexLaw, Attorney
Category: Business Law
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Experience:  Internationational Commercial Attorney
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What is the difference between an llc & being incorporatin

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What is the difference between an llc & being incorporating?
Hi,

Thank you for your question.

An LLC is different from a regular corporation in the following ways:

1. An LLC has members, not shareholders. The members may not sell their shares to the LLC freely and their memberships do not necessarily have set values. A membership is more like a partnership interest.

2. An LLC may not issue "shares" to be sold to raise money for the LLC. To raise money, it must either issue a promissory note, or it must bring in more members to become investors.

3. An LLC may be managed by the members, or by a professional manager, who is hired by the members.

4. An LLC pays taxes differently than a corporation. A corporation is taxed on the corporate level, and then the shareholders are taxed on the distributions from the corporation. An LLC is not taxed on the corporate level and is taxed as a partnership.

Please let me know if you have any further questions. Please also kindly consider rating my answer positively so that I am compensated by the website for my work on your question. Rating positively does not cause an additional charge and does not prevent us from further discussing your questions.

Best Regards,
ZDN
Customer: replied 4 years ago.

I have opened a new business as an llc. however I may want to convert it to incorporate it. I will be the sole owner. My husband is under a non compete at the moment & will not have anything to do with it. I do not want them to be able to say he does. We are filing a postnuptial to state that he is excluded from my new business...can I do this as only an llc or should I incorporate?

I don't see any reason here why you should incorporate, or why your husband's non-compete has anything to do with your business.

Your husband is not a member of the LLC is he?

Your husband is not performing work for the LLC is he?

Incorporating is not going to make a difference on this issue.
Customer: replied 4 years ago.

because the business he sold is the same type as the one I am opening. The new owner of his old company is next to bankruptcy however he won't release my husband to work. We moved to Florida from VA & my husband has since opened a new company. I am taking over a company that our previous lead supervisor owns. It's kind of complicated. I just don't want my husband to have any legal issues over this. DO you think the post nuptial will cover this?


 

Yes. I think that a post nuptial stating that your husband has no interest in your company or in the income will protect him from lawsuit over violation of the non-compete.

I think its over kill personally. As long as he is not competing by having no ownership interest and by not working with you, and he can show he is working elsewhere, he is not violating the non-compete.
Customer: replied 4 years ago.

I'd rather overkill to make sure..thanks for your help!

I was thinking the same thing. Overkill has another name...legal certainty.

Please let me know if you have any further questions. Please also kindly consider rating my answer positively so that I am compensated by the website for my work on your question. Rating positively does not cause an additional charge and does not prevent us from further discussing your questions.

Best Regards,
ZDN
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