Advance Payment, Indemnification, and the Single-Member LLC

The Colorado statues provide that an limited liability company (LLC) member is entitled to be reimbursed for expenses incurred for the company. LLCs can also provide their members, managers, officers, employees, agents, and so on with indemnification for liabilities they incur for the company. While there are limits to the indemnification that can be provided, because LLCs are contractual entities, the indemnification generally has to be granted within the Operating Agreement.

The first thing to keep in mind is that this […]

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Following Corporate and Entity Formalities—Individual Roles II

Directors

The board of directors of a corporation is responsible for the company’s management. The board of directors select the officers of the company, and established the overall policy for the business. The board of directors makes the major decisions for the corporation including compensation to officers and employees, stock issuance, approval of important contracts, borrowing or lending money, purchases of capital, and the payment of distributions to shareholders.

Like shareholders, the board of directors must act as a group. Actions are […]

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Following Corporate and Entity Formalities–Introduction

The limited liability and tax benefits of doing business as a corporation or separate entity results from the corporation or entity operating, and being treated, as a separate entity from its owners, directors, members, and officers. It is very tempting and easy for a closely held business to overlook these formalities while still expecting the corporate form to protect the individuals involved. However, to ensure that the protections will be in place, the persons involved must understand the formalities and […]

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Weinstein v. Colborne Foodbotics, LLC: A Difference Between a Corporation and an LLC

Now that it is July, I am circling back to the topic of company start-up and entity structure issues.  In January and February, I highlighted several of the types of business entities:

Business Legal Entities and Structures: Sole Proprietorship
Business Structure and Entities: General Partnerships
Business Structures and Entities: Limited Partnerships
Business Structures and Entities: Limited Liability Companies (LLCs)
Business Structures and Entities: S Corporation
Business Structures and Entities: C Corporation

Today, I will highlight a significant difference between LLCs and Corporations in the context of a […]

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