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    Archive for January, 2014

    Posted by Bernie Dietz
    Categories: FAQ, Virginia limited liability companies

    One of the nice things about a Virginia LLC is that it is completely flexible in how you set it up.  Unlike a corporation that has a more historical and set way of doing things, the sky is really the limit with your LLC.  So with a little advance thought and planning, you can arrange your Operating Agreement for your new LLC to handle things the way you would like.

    One of the first things to decide for your LLC is how it will be managed on a day to day basis.  For example, how will decisions be made, who will be in charge, and how will you hold yourself out to the public – your customers, vendors, suppliers, etc.  There are two basic options with a Virginia LLC, both of which can be further customized to suit your needs:

    1. Management by the Members (also known as the owners).  Member management is less formal than traditional corporate-style management by directors and officers and more mimics operations as sole proprietorship (without the terrible legal risks of actually being a sole proprietor) or a partnership (without those major legal risks, too).  Especially for start up businesses with just one or a few owners, this simple informal structure can help you get things done quickly without a lot of back office paperwork to keep track of.
    2. Management by designated Managers (appointed by the Members – aka owners).  Manager management more closely resembles a traditional corporate management structure where individuals are appointed to specific roles and given titles such as “President,” “Vice-President,” “Treasurer,” and the like.  The managers don’t necessarily have to be owners of the LLC as well but can be if you like.  This management structure is more appropriate for a larger scale operation where you want to be sure all company tasks and responsibilities have been delegated and covered so nothing slips through the cracks.

    If you handle it properly in your Operating Agreement, you can even set your LLC up so that you start out as member-managed initially, enabling you to move swiftly and informally, and then are able to transition to a manager-managed structure in the future when more formality and role responsibility structure is needed.

     


    Posted: January 18th, 2014 at 8:06 pm | | Email Post |
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    Posted by Bernie Dietz
    Categories: FAQ

    The short answer: No.  A benefit corporation, like a normal stock corporation, cannot have tax exempt status because it has owners (aka shareholders) and because it uses the majority of its profits to benefit those owners.  For those reasons, a benefit corporation will not be approved as a 501(c)(3) entity that can offer charitable tax deductibility to its donors.

    If you want your entity or organization be tax exempt, you need to form a non-stock corporation.  And one tip: be sure you do not use the State Corporation Commission online eFile formation service for your non-stock corporation because it will not contain the provisions the IRS requires and you’ll have to do it over.


    Posted: January 14th, 2014 at 12:10 pm | | Email Post |
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