by Andy Chen | Jul 8, 2025 | California, Enterprise
In today’s post, I want to discuss how California Limited Liability Companies (LLC) are managed. If you search through my past posts, you’ll find several posts on topics related to California LLCs, including (1) filing of Statements of Information, and (2) whether California LLCs can have different classes of members. Like any organization, an LLC requires that someone be in charge. There are two common options. Member-managed First, the various members manage the LLC themselves in a democratic manner. They, for instance, might have meetings, vote on what actions the LLC will and will not take, etc. As a reminder, the term “member” simply refers to a person or entity that owns some portion of the LLC. When discussing corporations, the analogous term for “member” would be “shareholder”. Understandably, many people are not enthusiastic about this idea. They might, for instance, not want to deal with the headache of having meetings. They may also be not want to engage in debates, arguments, or any sort of conflict with other members about why a particular course of action is good, bad, or neutral. Additionally, a member might conclude that the administrative burden of having an LLC is something that should be minimized. Running the business should be the main focus. That is, after all, the whole reason why they formed an LLC in the first place. Manager-managed The second option is for the members to, in essence, outsource the management role by, for instance, hiring someone to manage the LLC. The downside of this, of course, is that this manager won’t work for free. This could make hiring an outside...
by Andy Chen | Jul 7, 2025 | California, Enterprise
In my last post, I went over how a California Limited Liability Company (LLC) is managed. One of the possibly ways to do so is to hire a person to fill that role. By default, the various members or owners of the LLC can manage the LLC between themselves as a group with meetings, votes on decisions, etc. Some members, understandably, don’t want to manage the LLC themselves. Having meetings and conducting votes can, for instance, cause conflict and disagreement. It also can take significant time and energy to handle the administrative tasks needed to actually run an LLC properly. The members might conclude that these administrative tasks are a necessary evil of the real world, the burden of which should be minimized as much as possible. The real focus should be on actually running their business. In a prior post from 2024, I went over one of these administrative tasks — namely, the need to file Statements of Information with the California Secretary of State. Today, I want to go over another of those administrative tasks, namely the paperwork that a California LLC must maintain by law. In my experience, this is something that is a significant problem for the average person who, for instance, just started an LLC as a means to the end of running their business. Generally-speaking, the average person tends to do a very poor job of maintaining documentation and paperwork. The relevant California law here is Section 17701.13(d) of the California Corporations Code, which states: Each limited liability company shall maintain in writing or in any other form capable of being converted into...
by Andy Chen | Jul 6, 2025 | California, Enterprise
In today’s post, I want to discuss the idea of member classes in a California Limited Liability Company (LLC). In prior posts, I’ve mentioned that nowadays, it is extremely easy and inexpensive form an LLC in, basically, any US state. There are many companies on the Internet that claim to be able to do this in just a few minutes. One common situation that I’ve seen arise is the desire to have two or more groups of members within an LLC. Remember that when discussing LLCs, the common terminology is to refer to an owner as a “member”. You might be more familiar with the term “shareholder” when discussing owners of a corporation. LLCs do not have shares so the term “shareholder” doesn’t technically apply. However, aside from the words, the idea behind “shareholder” and “member” is the same. Anyway, one group of LLC members might be, for instance, those who own a part of the LLC, but also have decision-making ability. Members of this group might own very large portions of the LLC so they have more at stake or they might be heavily-involved with the day-to-day given their specialized skills or expertise. The other group of LLC members might be, for lack of a better word, “silent partners”. These members might only own a small percentage of the LLC. They have limited decision-making ability and, basically, are only there for the financial benefits, such as receiving a portion of the LLC’s profits. Some investors may not want to be involved in the day-to-day details of running a business. They instead just want to provide the money and reap...
by Andy Chen | Jul 5, 2025 | Enterprise, New York
In two of my most recent posts, I went over some of the naming requirements for Limited Liability Companies (LLC) in both California as well as New York. In today’s post, I’ll describe the analogous rule for Name Suffixes for corporations under New York state law. The relevant law here is Section 301(a)(1) of New York’s Business Corporations Law. That section states the following: Except as otherwise provided in this chapter, the name of a domestic or foreign corporation shall contain the word “corporation”, “Incorporated”, or “limited”, or an abbreviation of one of such words; or, in the case of a foreign corporation, it shall, for use in this state, add at the end of its name one of such words or an abbreviation thereof. In other words, yes, New York law requires that a suffix be included in the name of a corporation that indicates that the corporation is indeed a corporation. If you’ve read my prior posts about LLC Name Suffixes in California and New York, you’ll detect a theme: namely, that an entity must include a suffix in its name that indicates what kind of entity it actually is. As with all of my posts, this was not intended to address every possible permutation or possibility that might exist regarding name requirements under New York law for a corporation. If you do have a situation involving a corporation in New York, hopefully this post and the links in it have helped inform you at least a little bit. If you do have a situation involving a corporation in New York, please do consider finding a lawyer...
by Andy Chen | Jul 4, 2025 | California, Enterprise
A few years ago, I wrote about how Operating Agreements work in a California Limited Liability Company (LLC) work. To refresh you all slightly, an Operating Agreement is, in essence, a contract between the various members or owners of an LLC that details the substantive relationship between them. If you want to see more in-depth what an LLC Operating Agreement in California can and cannot contain, take a look at Section 17701.10 of the California Corporations Code. LLC Operating Agreements in California are extremely flexible and can, practically-speaking, be customized in an almost infinite number of ways. This is one reason why LLCs are so popular. In today’s post, I want to go over one topic that can be addressed in a California LLC Operating Agreement and that’s the question of having officers. When it comes to companies, most people have heard of positions such as Chief Executive Officer (CEO), Secretary, Chief Financial Officer (CFO) and so on. Officer jobs like these are customary in corporations, but what about in an LLC? If you’ve created your own LLC, you may be wondering if you can have officer jobs like these also or whether you’re required somehow to have them and, if you do not, then it’s illegal in some way. The short answer to this question of “Can I have officers in an LLC?” is that it depends on what the Operating Agreement says. If the members or owners of an LLC want to have the traditional or customary officer jobs like CEO and CFO, they can. However, the existence of officer roles like this must be clearly specified...
by Andy Chen | Jul 3, 2025 | Enterprise, New York
In my prior post, I described the naming rules for Limited Liability Companies under California. Nowadays, it is extremely easy to quickly form a Limited Liability Company (LLC) anywhere in the United States for just a moderate fee. LLCs are, thus, much more common now which, unfortunately, also means that there is more opportunity to run afoul of all the rules that LLCs have to follow, including rules about LLC names. Today’s post is the New York counterpart to my prior post. In other words, what suffix does New York law require an LLC to include in its name? The relevant law here is Section 204(a) of the New York Limited Liability Law, which states: The name of each limited liability company as set forth in its articles of organization shall contain without abbreviation the words “Limited Liability Company” or the abbreviation “L.L.C.” or “LLC”. As you can see, this requirement basically is the same as what California law requires. As with California as well, New York law has other requirements for LLC names. These are specified further in Section 204. I’ll go over those requirements in future posts, but feel free to read Section 204 on your own if you wish. As with all of my posts, this was not intended to address every possible permutation or possibility that might exist regarding name requirements under New York law for an LLC. If you do have a situation involving a New York LLC, hopefully this post and the links in it have helped inform you at least a little bit. If you do have a situation involving a New...
by Andy Chen | Jun 29, 2025 | California
Nowadays, Limited Liability Companies (LLC) are extraordinarily common due to, among other things, the ability to quickly form an LLC online for a relatively low price. As part of forming an LLC, you need to come up with a name for it. In California, there are numerous requirements for that name. In this post, I’m going to go over one of those requirements: Is it necessary to include the abbreviation “LLC” in the name? For instance, if you want to use “Banana Pancakes” as the name of your LLC, does it have to be “Banana Pancakes, LLC” or can you literally just name your LLC “Banana Pancakes”? You might prefer the latter because you think it would be more catchy for advertising purposes, making merch, etc. In California, the answer to this question is found in Section 17701.08(a) of the Corporations Code, which states: “The name of a limited liability company shall contain the words “limited liability company,” or the abbreviation “L.L.C.” or “LLC.” “Limited” may be abbreviated as “Ltd.,” and “company” may be abbreviated as “Co.” “ You’ll notice that I bolded and highlighted the word “shall”. I did that because it reflects that the inclusion of “limited liability company” or “LLC” or “L.L.C.” is mandatory when choosing a name for an LLC in California. To refer back to my prior example, the name “Banana Pancakes” doesn’t comply with this requirement and is, thus, not an acceptable name in California for an LLC. If we follow Section 17701.08(a), however, the following would be acceptable names: Banana Pancakes, LLC Banana Pancakes, L.L.C. Banana Pancakes, a Limited Liability Company Of...
by Andy Chen | Dec 6, 2024 | California, Estate Planning
In 2013, I wrote a post that went over the basic requirements needed to create a Power of Attorney under Section 4121 of the California Probate Code. For clarity, I want to make clear that this is for a financial power of attorney or a non-medical power of attorney. Section 4121 requires that a Power of Attorney either be (1) notarized, or (2) witnessed by at least two witnesses. From a practical perspective, I always favor the notarization option because it is generally going to be very easy to quickly tell one way or the other if that Power of Attorney is notarized or not. In short, look for the notary’s stamp. On the other hand, if you use the witness option, you could potentially run into a whole host of problems. For instance, suppose there is a problem and the witnesses need to come in and testify about what they actually saw when the Power of Attorney was made. The witnesses might not want to get involved. They might have died already. If you can actually locate your witnesses, what’s going to happen if they simply do not remember what they saw because the Power of Attorney was created ages ago? From the perspective of certainty, speed, efficiency, cost, etc., the notarization option is, in my view, superior. One common question that arises with witnesses, though, is who can be a witness? More specifically, can the agent who is being appointed under a Power of Attorney also be one of the two witnesses? The answer to that is no. The governing law for this is Section 4122(b) of...
by Andy Chen | Dec 4, 2024 | California, Estate Planning, Philosophy
Many people are in the position where they are preparing an estate plan for the very first time. Typically, they hear that they should have one or that they see on the news that it’s a good thing to have. In my experience, interest in estate plans seems to pique whenever someone famous dies, such as Michael Jackson in 2009, Steve Jobs in 2011, or Prince in 2016. Prince, in particular, died without an estate plan of any kind. When this happens, it’s called “dying intestate” and a process called Intestate Succession applies. I went over California Intestate Succession in a prior post from 2017. Anyway, despite all of the interest and the publicity, when a person actually sits down to create an estate plan, they usually don’t know where to start besides, for instance, “find a lawyer”. The process gets too daunting and, human nature being what it is, the person usually puts it aside and promises to “get back to it soon” which, in real life, means never. Lawyers, after all, are expensive. Today’s post, therefore, is aimed at that person who wants to make an estate plan, but doesn’t know where to practically start. If that’s you, keep reading. First, let’s define the term “estate plan”. That refers to the set of documents that a person creates to specify what they want to have happen as they near death. This can include many concerns, including (1) what happens to the person’s property, (2) who cares for their minor children, if any, and (3) what medical care they want to receive in the event they cannot articulate...
by Andy Chen | Jul 22, 2024 | California, contracts
A question that many people involved in civil cases ask is whether they can get the other party to pay their attorney’s fees. As you might guess, many people who ask this question are defendants who have been sued for reasons that are frivolous, meritless, or some combination of the two. After all, the cost of hiring a lawyer is substantial. Why should a defendant who has done nothing wrong have to pay for an attorney when the plaintiff is the one truly at fault? In today’s post, I’m going to go over how California law answers this question. The short answer or rule of thumb to remember is that attorney’s fees and costs are generally recoverable in three scenarios: (1) when authorized by a contract signed by the parties, (2) when the law in questions itself authorizes attorney’s fees and costs to be awarded, or (3) if the judicial officer in your case awards attorney’s fees and costs for whatever reason. As you’ve perhaps seen or experienced, judges have significant discretion about how to handle the cases before them. If you’re looking for California authority on this, look at Section 1021 of the Code of Civil Procedure, which states: “Except as attorney’s fees are specifically provided for by statute, the measure and mode of compensation of attorneys and counselors at law is left to the agreement, express or implied, of the parties; but parties to actions or proceedings are entitled to their costs, as hereinafter provided.” Section 1021 also draws a distinction between fees paid to an attorney for their time and costs — for instance, court filing...
