by Andy Chen | Oct 13, 2021 | California, Enterprise
Nowadays, it’s really easy to form a Limited Liability Company (LLC). A simple Google search leads you to a bunch of websites that — apparently — will fill out and file all of the forms for you in a few minutes for a low flat fee. I’ve not used any of those sites before so this is absolutely not an endorsement of any of them. Perhaps I’m old-fashioned in this regard, but I still form all of my California LLCs by hand myself with the California Secretary of State’s office. In this post, I’m going to go over a little bit about what California law allows an LLC to be used for. As it is me, I’m going to specifically answer whether an LLC can be used to form a law firm. If you’re a lawyer or law student in California, you probably know that the answer to that question is “no” but I’ll describe the specific statute(s) involved that support that answer. To answer the first question of what an LLC can be used for in California, the answer to that question is in the California Corporations Code, and specifically Section 17701.04. In short, an LLC can be used for a wide variety of purposes — assuming it is lawful, of course — in California, with the exception of a few purposes that are explicitly prohibited. For example, section 17701.04(b) says: “A limited liability company may have any lawful purpose, regardless of whether for profit, except the banking business, the business of issuing policies of insurance and assuming insurance risks, or the trust company business. A domestic or...
by Andy Chen | Oct 10, 2021 | California, Enterprise
In this post, I’m going to go over a very common question that people have when they form a Limited Liability Company (LLC) in California. Forming an LLC used to be very complicated and expensive. Very few people formed them. Nowadays, though, that cost and difficulty has gone way down. LLCs are now available to more people. Just do a quick Google search and you’ll inevitably find many sites promising to help you fill out and file all of the necessary forms in a short time for a low fixed fee. The question, though, is this: Is the Operating Agreement one of those documents that has to be filed with the State of California? Before answering that question, as background for those who don’t know, an Operating Agreement is, well, an agreement between the various people or entities who have decided to form the LLC together. As all of these parties are going to be involved in the LLC, two of many things an Operating Agreement typically goes over are (1) what the various parties are each responsible for doing, and (2) what the various parties are each entitled to receive. As you can hopefully guess, any time multiple people are involved in doing something, there is always the chance for disagreements to occur. Disagreements, fundamentally, are what lead to litigation. For a more complete list of what an Operating Agreement can cover, take a look at Section 17701.10 of the California Corporations Code. If you’re interested, the term “Operating Agreement” is defined in Section 17701.02(s) of the California Corporations Code: “’Operating agreement’” means the agreement, whether or not...
