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...
