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Colorado LLC Formation: Protects Co Entrepeneurs from Liability

March 23, 2009

More business owners are now choosing to form a Colorado LLC than a Co Corporation. In fact, business owners now choose the former option four times as often as the latter.

The number one reason business owners form this kind of legal entity is for limited liability protection. In addition, the LLC is much easier to maintain and operate when compared to a corporation.

In this article, we will explain exactly how the Colorado LLC formation laws extend these important asset and liability safeguards to Colorado LLC business owners.

Colorado Limited Liability Protection Provision

There is a specific provision in the Colorado Limited Liability Company Act which states that members and managers are not liable personally for the dents, obligations and other liability of an LLC business.

Without this vital protection, a business owner who runs a company as a sole proprietor could be held personally responsible for company liabilities resulting from business activity. With the soaring numbers of civil suits filed against Colorado small businesses, this is why Colorado LLC formation is crucial.

Additional Protection Provision under Colorado LLC Laws

While the above protection provision is the essence of this kind of legal entity and is found in the LLC laws of all states, Colorado actually has passed additional protection provisions in their statutes.  This is good for business owners.

Of note is that the failure of an LLC to comply with formal requirements regarding the management of its business affairs cannot on its own be used to hold LLC members personally accountable for said failures.

This extra level of protection provides entrepreneurs with even more security because it nullifies the strongest claim that lawyers use to pierce the protection veil and try to hold members personally liable in a lawsuit.

This is where Colorado stands out from other states because in some other states, members run the risk of losing protection if they are negligent in not properly following LLC business formalities.

While it is not recommended that any LLC business not follow typical LLC maintenance procedures, this provision should give comfort that, after a Colorado LLC formation, any neglect in this area will not cause personal liability.


As noted above, the Colorado LLC is the most popular choice of entity for small business because of its strong protection features and because it is quite easy to maintain and operate.  Just ensure that your formation is done properly and in strict compliance with the laws to ensure you gain these protection benefits.

Click Here for a FREE Guide on the Benefits a Colorado LLC Formation for Co Business Owners


LLC in Colorado: What is Required to Organize One?

March 18, 2009

Colorado LLC (limited liability company) laws are made to give small businesses flexibility and simplicity in their operations. These laws also provide dependable liability protection for owners of LLCs.

To take advantage of Colorado LLC laws and ensure proper protection under the law, you must be certain that you understand and follow the requirements set forth by Colorado LLC regulations.

Ongoing regulation, formation, and processing of Colorado LLC entities are handled by the Secretary of State, overseeing Colorado corporations. This agency is particularly strict in enforcing Colorado LLC regulations and requirements when forming an LLC in Colorado.

There is a set of required disclosures and information that must be included in the formation documents submitted to the agency.  Also, you should look up any formatting parameters required as part of the filing submission.


One of the most important Colorado LLC requirements is making sure that the name you provide for the limited liability company name is available for use in the State of Colorado as a limited liability company name. Colorado has certain name related rules and restrictions that must be met.


A registered is the officially designated person in Colorado who can accept legal papers for your LLC.  This must be a person or entity with a permanent address in the state and one that is trustworthy and official enough to serve in this role.


In the Colorado statutes, there is a list of required disclosures that must be strictly included in your formation documents.  Also, every filing must be accompanied by the required fee which is currently $50.

Before submitting any paperwork to the state, double check this list to ensure you have included everything that is needed.  You do not want to experience a delay and having to figure out how to get your filing back on track once it is deemed rejected or deficient.

Also, the liability protection of a LLC  in Colorado depends on a proper and complete formation. Do not risk your personal liability.

Click Here for a FREE Guide on the Benefits of an LLC in Colorado for Business Owners

The Limited Liability Operating Agreement

March 17, 2009

Prior to a limited liability company (LLC) becoming fully functioning and operational, it will be important that all issues regarding the limited liability operating agreement be addressed.

This Article provides a checklist of what must be in every operating agreement. If these matters are not properly addressed, you are inviting problems later which can be costly to your business.

One- Purpose of LLC Entity

The LLC’s operating agreement should describe the purpose of the business. Generally, the purpose description is broad and may encompass various business aspects and activities. In some situations, the purpose may be more specific and limited to only particular activities.

2. Financial Terms

The financial terms of the operating agreement should be both accurate and detailed. The financial terms should describe in detail the financial obligations of each of the LLC’s affiliates and the rights, especially economic rights, afforded them through membership in the LLC. Tax related issues and profits distribution should also be detailed in the financial terms.

When it comes to what financial rights and obligations are required, it is key that your agreement covers these matters completely. People sign up and agree to contribute money and efforts to an LLC business in exchange for these rights so the last thing you want is misunderstandings in this area.

Third- Issuing and Transferring Membership Interests

The majority of LLCs are utilized in small businesses, giving owners control over who owns and manages the business. The membership provisions are the third necessary item in your operating agreement, guaranteeing business continuity and harmony.

FOUR-Management Matters

The operating agreement for your LLC must also detail daily rules for operation. Be sure you describe which members have authority to act on the company’s behalf and the voting rules for company action.

5. Dissolution

The fifth and final vital aspect in your operating agreement addresses the company’s lifespan. Companies can be perpetual, but there may be practical reasons when it is logical to dissolve the business. A proper operating agreement contains a provision with the methods needed to dissolve the company.

The limited liability operating agreement is the most crucial document your company will file upon formation. Be certain your agreement is proper and complete. Make sure you work from a starting point that does not provide incomplete or unprofessional documents.

Click Here for a FREE Report: Tips to Ensure You End Up with a Proper Limited Liability Operating Agreement

Operating Agreement for LLC: Why It is Necessary

March 15, 2009

An Operating Agreement for LLC provides an LLC business is not only needed as a guide for running the business but also serves three important protection purposes.

Fortified Safeguards Against Individual Responsibility

A LLC provides owners with protection for their personal assets.

Every state has a law that makes clear that an owner of this kind of legal entity is not personally liable for the debts and obligations of the business entity merely because he or she is a member.

What is less known is that this liability protection is not absolute and can be challenged. The official name of a challenge to this what is called piercing the LLC veil. This is when a party suing your business attempts to get a court of law to set aside the LLC protection and still hold owners personally liable.

Piercing the LLC veil can be achieved, if the plaintiff can prove to a court of law that the owner of a limited liability company was using the business as a front for his or her own private interests or just plain ignored the separate legal entity when running the business.

These formalities are most often written up in what is known as an operating agreement. Having an operating agreement is therefore a good practice to protect against these kinds of lawsuits. Ensuring that your limited liability company business follows this operating agreement can avoid future complications.

An operating agreement for LLC gives the legal entity its own personality and its own set of rules. Once adopted and followed, the owners become independent owners and agents of the separate business entity. This is what is required to ensure they remain personally protected against liability for business debts and obligations.

Maintaining Good Order in Business Operations

An LLC only exists because the law says it does. Once an LLC is formed, it is a shell legal entity. It still needs to adopt a set of rules for how it will be managed.

These rules should be set out in the operating agreement. This gives the owners and employees knowledge of what can and can not be done within the LLC, and what things need to be duly authorized during the normal course of business.

Not having this set of rules can lead to a sense of insecurity that may cause trouble. It can lead to an interruption of regular operations.

Plus, third parties may avoid doing business with the LLC if it too is uncertain about whether the LLC is authorized to do business with them. The agreement resolves all these potential problems.

Even more importantly, an operating agreement will help maintain harmony between owners, who will know that the procedures for running the business have been set down on paper.

Click Here to Visit The LLC Expert Learning Center or to Learn More about the Operating Agreement for LLC

Texas Limited Liability Company – 4 Kinds are Available

March 8, 2009

In the state of Texas, many business operations are formed under the Limited Liability Corporation (LLC) designation. In 2007, almost 70,000 LLCs were formed in the state. Many businesses organizations prefer the LLC designation because of the benefits and advantages it affords to business owners.

Within the State of Texas, there are 4 distinct types of LLCs that can be established.

1. Domestic Texas Limited Liability Company

The Domestic Texas Limited Liability Company is the most prevalent type of LLC in the state. Small businesses and joint ventures are typically classified as this type of LLC in the state. Business owners prefer this type of LLC because of its flexibility it offers and because of the few limitations it imposes on the business entity. As long as the operations are conducted in a lawful manner and for lawful purpose, there are few restrictions placed on business operations.

LLCs can outlast their founders and be used for many purposes. The documents that form the LLC must be carefully written to comply with all of the Texas requirements and to ensure that the LLC will do what the creators intended it to do for as long as it lasts.

2. Professional Texas Limited Liability Company

The Professional Texas LLC allows business owners to provide licensed professional services within the state. Business organizations with this particular LLC designation are limited to providing only those specific services for which the business, and its owners, is licensed.


If a Texas charity or other non-profit organization wishes, it can create a non-profit Texas limited liability company. A non-profit LLC has many of the same advantages of a non-profit corporation, but it is easier to create.

It should be noted that tax exempt status is not implied by the formation of a non-profit LLC in the State of Texas. An accountant can help non-profit organizations choose the correct tax elections in regard to tax exempt status.


Businesses that are formed in another state but conduct business in the State of Texas are referred to as Foreign LLCs. There are Texas LLC laws that address how Foreign LLCs are to be regulated. The Texas Secretary of State is in charge of issuing certificates of authority for out-of-state operations to conduct business within the State of Texas.

Creating a foreign LLC in Texas does not change the terms and conditions of the LLC. It remains subject to the laws of the state where the original LLC was created. The foreign LLC must also obey the Texas laws that apply to it.

CLICK HERE for a Free Guide about the Texas Limited Liability Company and to get a Free Texas Name Search

LLC Georgia- Ensure Your Meet These 3 Strict Requirements

March 7, 2009

A smart move for the Georgia business owner is choosing the Georgia LLC because it is easy to maintain and provides a flexible business vehicle to operate most any business.

When forming a legal entity, it is best to ensure you have a complete and compliant filing to avoid the delays and additional work required to address any problems in the process of formation. The state is quite strict about verifying that your filing is proper prior to processing it and creating your LLC in Georgia.

A representative of the state will review your application for completeness and to make sure that all the necessary information has been included.

It is really important that you do not indulge in business activity until formation is completed properly. This is because if for some reason your LLC Georgia formation filing is deficient or contain errors, your pre-formation business activity will not be covered by the liability protection of a Georgia limited liability company.


Some applications do not include the right fee, or include a check made out to the wrong agency in the state. Ensuring the requirements of Georgia are followed is the surest way to avoid this basic error.


The selection of name is the second area that needs to be carefully looked into. Georgia LLC laws require that a new name cannot be the same or too similar to another name being used by a legal entity registered in Georgia.

Also, the name must end with an appropriate designation acceptable by the state. These are listed in the statute or a reputable service can ensure this is met when preparing your filing.


Georgia laws, regulations and form instructions all impose specific requirements that must be met when preparing and submitting a formation filing. Matters including document formatting, address requirements and registered agent information must be included and meet these rules.

Appointing a qualified registered agent and registered office is a must as failing to meet these rules can lead to loss of status of the Georgia LLC. When a Georgia limited liability company loses its status, there is risk of liability and other potentially costly consequences.


Major mistakes involved during the LLC Georgia formation process if avoided helps in a smooth filing process.

One great way to avoid the time, stress and uncertainty of forming a Georgia LLC is to use a reputable document formation company.

CLICK HERE for a Free Guide about the LLC in Georgia and to get a Free Georgia Name Search

State of Texas LLC Formations Grow Because of Huge Benefits to Business

March 3, 2009

In 2007, almost 70,000 Limited Liability Corporations (LLCs) formed in the state of Texas. LLC growth in recent years has been fairly strong throughout the United States, but the growth in Texas LLCs has been outpacing most of the other states substantially.

Texas is large and has a large population, but that is not the primary reason for the rapid growth of LLCs. Texas also still has something of the “frontier” spirit that leads to the type of entrepreneurship that characterizes LLC growth. Beyond the character of the state’s residents though, is an important legal aspect. Texas has stayed at the forefront of providing the positive business environment to foster LLC growth, through efforts to keep laws easily understood and generally friendly to the small business community.


The biggest reason to use an LLC in Texas is for personal asset protection. Section 101.114 of the Texas BOC laws state that unless otherwise provided in the company agreement of an LLC, a member or manager is not liable for the debts, obligations or liabilities of an LLC merely because such person is a member or manager.

This is not the case with a sole proprietor business. Without this protection, you are placing yourself and your assets at risk for business.

By using a State of Texas LLC, you manage that risk effectively and protect yourself from financial liability risks.


Section 101 of the Texas Business Organizations Code confirms that only one member is required to start an LLC. There are no limits or caps on the number of members so this entity can handle everything from the solo owned business to the large complex business with hundreds of owners.


Texas is unique in that its laws specifically allow for different kinds of potential LLC vehicles. You can see the different limited liability companies available in the BOC statutes, Sections 1-5. The primary and most popular choice available to small businesses in Texas is the traditional domestic LLC.

But there is also the Professional company that is often used to render licensed professional services such as law or medicine. Then there is the non-profit choice for charitable, benevolent and other nonprofit activities.


The business community has clearly seen the benefits of this unique legal entity as evidenced by the number of new ones formed every year. Given the massive benefits and the low costs to form one, the State of Texas LLC will continue to be chosen over other alternatives when it comes to starting a Texas business.

CLICK HERE for a Free Guide about the State of Texas LLC and a Free Texas Name Search

Single Member LLC- Always Have an LLC Agreement for Protection

March 1, 2009

If you are the single owner of a business which is run through a limited liability company, you must have a company operating agreement. Why? Because without one, the chances of you losing your liability protection greatly rises.


The same liability protection for multiple-member LLCs is available to single-member companies under the law. The problem is that the single member entity runs a higher challenge risk in a court of law. Many single-member owners have been shocked to find out that they have lost personal liability protection because they failed to operate their LLC entity in the proper way.

LLC laws demand that the limited liability company is operating the business itself and not being run by you personally. The law is written this way because a sole owner has no one to answer to. This creates a risk that someone will create a legal entity but then ignore it while operating the business.

Even if you do run your business properly, aggressive lawyers can work to convince the court that your are running the business personally and not as the LLC itself. Claims of this type are called “piercing the veil”. One way to protect yourself against this kind of claim is by having an operating agreement properly filed. You must also follow the requirements of the operating agreement to ensure your protection.


The LLC Agreement will have to hold sufficient specifications that acknowledge the single member LLC as an independent and separate entity that is the business’s actual operator. In doing this, it is important that you have a provision requiring that the owners vote on major decisions.

As a sole member, you must follow the procedures outlined in the operating agreement and you should be sure to document particular processes that you are complying with. Proper documentation will form a structure in which the owner acts separately and distinctly from the business.


You should not worry that you will be subject to burdensome or overwhelming documentation requirements. Keeping paperwork for your single member limited liability company is not difficult. You can do this through a process called Written Consent.

Now, before a single owner can use a written consent, the LLC Operating Agreement must allow this. Another must have provision in your Agreement is the written consent authority provision which allows the single owner to vote and act via a simple written approval document. This will allow you to very easily meet and document sufficient independence to preserve your personal liability protection.

A single member LLC is different from a multi-member company because there is no need to collaborate among owners. So, the same level of checks and balances regarding governance is not required.

The limited liability company agreement is where you show separateness and by implementing simple governance and paperwork, you can better protect yourself.

CLICK HERE for details on a Single Member LLC Operating Agreement Package

A MO LLC Formation Requires 6 Disclosures

February 28, 2009

The MO LLC is used more than any other legal entity by new business owners in Missouri. Over 30,000 limited liability companies are formed each year in this state.

Those trying to form an LLC may discover after the fact that their filing does not meet the requirements laid out in the Missouri Limited Liability Company act. Even having a filing processed is no guarantee for business owners, since sometimes a filing already processed by the state may still turn out to be incomplete or noncompliant with the MO LLC act.

You will need to avoid these types of problems because they can create serious liability difficulties for you once your business matures. This Article will summarize the six requirements for forming a limited liability corporation under the LLC laws in Missouri.


Section 347 sets forth specific requirement for a MO LLC name. For one it must include an LLC designation at the end and two it must be distinguishable from other names of record with the state. Always perform a name search prior to submitting a filing.


The filing must include a statement of the proposed LLC’s purpose. A general statement provision is allowed by the state of Missouri, and a standard language provision is acceptable. The statement of purpose for most Limited Liability Companies should be kept broad to avoid limiting the authority of the business in the future.


The Missouri Limited Liability Company Act requires each MO LLC to officially have a designated registered agent, along with an address. Your registered agent has to be a person residing in Missouri, or a legal entity that was created or registered in the state. The address can differ from the principle address of the company.


A Missouri limited liability company member managed automatically. If you prefer your LLC to be manager managed, you must disclose this in the formation documents.


Duration is no longer the sensitive matter it once was because of tax issues. Since 1997, the IRS simplified LLC taxes and made no requirements relating to the LLCs life span. Because of this, Missouri and most other states now allow LLCs to have perpetual existence. However, you should know that Missouri requires a specific statement of duration in the filing documents.


As specified in the MO LLC act, the filing must state an effective date for the LLC. Typically, the date of processing is used, though a future date no more than 90 days from when the filing is submitted can be used.

CLICK HERE for a FREE Report about the Benefits of a MO LLC and a Free Missouri LLC Name Search

LLC: Missouri Requirements

February 24, 2009

Section 347 of the Missouri statutes contains the Missouri Limited Liability Company Act. A landmark law, this act paved a path for Missouri entrepreneurs to make business ownership less risky and less difficult.

Missouri lawmakers passed this Act in 1993. Since then, many choose an LLC in Missouri for operating their business. This is because the limited liability company was designed for small business.


The primary state agency for forming LLCs is the Secretary of State, in Jefferson City. This regulatory body handles the rules for all legal entities including an LLC Missouri.


Types of LLCs allowed by the Missouri Limited Liability Act of 1993 include professional, domestic and foreign limited liability companies. The Act also provides for the perpetual life of a business under section 347.039.

Many attorneys assert that section 347.035 of the Missouri laws governing business makes it impossible to form a non-profit LLC within the state. Although the Act does not specifically address non-profits, the law states that a limited liability company must be formed for a lawful business purpose, which by nature is typically divergent from nonprofit purposes.


Missouri law requires that all LLCs have an operating agreement, which is generally not required by other states. One important way the operating agreement comes into play is the admission of a member to an LLC Missouri, which is governed under Section 247.113 and requires inclusion in the operating agreement.

The requirement gives the Missouri LLC an advantage. It minimizes the chance that there may be uncertainties, misunderstandings or disputes later.

Section 247.065 of the Missouri Act covers management matters and states that every Missouri LLC is member managed as a default structure. A company can change this to a manager managed structure if desired.


The Internal Revenue Code subjects every business to federal taxation. In most cases, a Missouri LLC’s income is reported by owners on their private tax returns. The Missouri tax code requires that an owner pay taxes in Missouri if the owner is a resident of Missouri, or if the income was gained through Missouri sources. State tax issues are handed by the Missouri Department of Revenue, which is also domiciled in Jefferson City.


The Act contains straightforward provisions for what is required to form an LLC in Missouri. Provisions cover all relevant areas including name rules, registered agent, business purpose, management, duration, organizers and effective date.

In order to successfully form and manage a Missouri-based limited liability company, it is essential that entrepreneurs and business owners adhere to the legal requirements provided by the Act.

CLICK HERE for a FREE Guide about the LLC Missouri or a Free Missouri LLC Name Search