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Is it legal to have an LLC (2 partners) form a DBA that has…

Is it legal to...

Is it legal to have an LLC (2 partners) form a DBA that has 3 partners

Lawyer's Assistant: Can you tell me what state the LLC is registered in?

Texas

Lawyer's Assistant: Has anything been officially filed? If so, what?

The LLC was formed 2 years ago and the DBA was filed under the LLC 4 months ago. One partner in the DBA is not a partner in the LLC.

Lawyer's Assistant: Anything else you want the lawyer to know before I connect you?

Is this going to cost me anything?

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Answered in 2 minutes by:
8/17/2017
Roy Hadavi
Category: Business Law
Satisfied Customers: 1,278
Experience: Attorney at Law Offices of Rosenstein & Associates
Verified

Hi. My name is ***** ***** I am a licensed attorney. I would be happy to provide assistance. Please give me a moment to formulate a response.

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What you are proposing is not possible.

A DBA (also known as "doing business as" or a "fictitious business name") is simply a name registered to a specific legal entity (such as an LLC, Corporation, Partnership, Sole Proprietorship, etc.). A DBA cannot have partners, members, shareholders or any other group of individuals, because a DBA is just a name.

This third individual has no legal rights or responsibilities (except for in certain rare instances). This means that they do not receive the protection of the LLC shield either.

Also, just to hone your terminology and ensure that you do not incur any personal liability for misrepresenting your legal status. LLCs do not have owners or partners, they have members (who hold a membership interest in the LLC) and sometimes managers (who manage the day-to-day operations and make most decisions regarding the LLC).

Thank you so much for allowing me to help you with your question. I have done my best to provide information which fully addresses your question. If you have any follow-up or clarification questions, please ask! There is no additional fee. If I have fully answered your question(s) to your satisfaction, I would appreciate you rating my service as Good or Excellent (i.e., 4 or 5 stars)(hopefully Excellent/5 stars!). Otherwise, I receive no credit for assisting you today. I thank you in advance for taking the time to provide me a positive rating!

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Customer reply replied 9 months ago
I formed a DBA 3 years ago and was not able to keep it operation. Two members from an LLC purposed that they set up an DBA under their LLC. We signed a Certificate of Ownership for Unincorporated Business. They setup a bank account under there LLC (which im not a member) with my company name as DBA. I was not getting complete financial reports so when I pulled bank statements it was not adding up. Apparently they were mixing funds between the LLC and the DBA. I confronted the CFO and he told me he wasnt keeping the books separate. Is that legal since we signed a general partnership?
Customer reply replied 9 months ago
You state that "If you have any follow-up or clarification questions, please ask! There is no additional fee." I sent you a follow-up and a question...........
Customer reply replied 9 months ago
2 stars it is....
Customer reply replied 9 months ago
I have with no response

I was formulation a response. Please give me a moment.

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Was the DBA registered to the LLC or the three individuals?

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Customer reply replied 9 months ago
Sorry...been under a lot of stress lately. The bank account says DBA but what I signed was a "General Partnership" that was filed with the County Clerk.
.

I understand. Hopefully I can help you and turn around the 2 star rating.

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From what I understand, the CFO violated his fiduciary duty and intermingled assets from two separate entities. The LLC and the General Partnership (under a DBA) should have had kept the accounts separate.

What he is doing is not legal and can actually lead to personal liability for the members and managers of the LLC. Your best option is to send him a written demand letter (by certified mail, return receipt requested) stating that he must immediately cease and desist all intermingling of funds, provide an accurate accounting of the partnership and immediately divide the funds between the two entities. The demand should state that if he fails to do so, you will first demand a vote to have him removed as CFO and if that fails that you will file suit for breach of fiduciary duty.

Does that all make sense?

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Customer reply replied 9 months ago
You have been very helpful...Thank you. I will change my star rating. Again I am sorry for jumping the gun. All of this has me freaked out.

I understand. Legal matters can be very stressful. That is why I am always patient. I wish you the best of luck with this matter.

Roy Hadavi
Category: Business Law
Satisfied Customers: 1,278
Experience: Attorney at Law Offices of Rosenstein & Associates
Verified
Roy Hadavi and 87 other Business Law Specialists are ready to help you
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Thank you so much for the 4-star rating! I know rating takes an additional step and I truly appreciate you taking the extra time! It's been my honor and privilege to help you with this. If I can help you in any way in the future, I'll be happy to help. For easy access, my bookmark is: https://www.justanswer.com/law/expert-royhadavi/ Or, simply request “Roy only” in the first line of your question.

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