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Rosana G Herrera

Rosana Herrera’s Answers

52 total


  • I have a 50/50 S-Corp financial adviser firm. I want to remove myself from the S-Corp and start my own firm. Best method?

    95% of the existing clients are going to follow me to the new firm with a new broker dealer. We didn't sign a non-compete agreement. Does the S-corp own the clients? Am I liable to pay future income to the partner if he doesn't want to di...

    Rosana’s Answer

    I agree with my colleagues in recommending that you immediately consult with a business litigation attorney who can assist you with this matter. The fact that you and your co-shareholder did not sign a non-compete agreement (which, by the way, depending on its terms and provisions may be void in California), does not protect you against the various claims that he may have against you. These could include, as my colleagues have accurately stated, breach of fiduciary, self-dealing, conversion, raiding and other possible claims. You will also need assistance with structuring the sale of your ownership interest in the corporation. You will also want to provide your attorney with the company's buy-sell agreement, should one exist.

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  • Adding a new property to an existing LLC.

    We have an existing rice ranch in California. The ranch is currently owned by a four member LLC which we created. At this time, we are interested in purchasing an orchard, and we are also planning to have this under the LLC. Can the purchase of th...

    Rosana’s Answer

    There are several facets to your question and a proper response requires additional information from you. I believe that the smartest thing you can do is seek counsel from a business attorney and CPA or from a tax attorney. There are liability as well as tax issues that you should consider in integrating additional real property into an existing LLC.

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  • Christmas Bonuses

    Just curious when an Employer gives out the Christmas bonuses they they have many years before and you noticed for the past 4 years you haven't received one I not only know it's not fair but shitty.Ive been there the longest out of the other emplo...

    Rosana’s Answer

    Typically, bonuses are discretionary. Barring any express agreement with the employee, the employer is therefore not obligated to give employees a bonus regardless of employment tenure/longevity. Perhaps you should meet with your employer and inquire why you have not been given a bonus.

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  • What is the best business structure for a company that plans to do both: e-commerce and charity?

    I plan on running online retail store, thinking of registering as an LLC. 10% of the revenue of every sold item I plan on putting into a charity fund. Then, from that fund, I plan on financing educational programs for children. What are the legal ...

    Rosana’s Answer

    I recommend that you meet with a qualified attorney with experience in the area of nonprofit and business, as there are various issues and laws, regardless of the state in which you plan to conduct business, to consider in structuring these types of entities. If your principal office is in California, it has a couple of fairly new entities that may serve your purpose. You will also need to adhere to commercial co-venturer laws overseen by the Attorney General's Office.

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  • As a managing partner with a minority share in a Nevada based LLC, can I give the other partner notice and leave the LLC ?

    I am a partner in a LLC registered in Nevada but do not have the majority share. Business seems to be going nowhere. We have no operating agreement. Can I give the partner written notice and leave the LLC ?

    Rosana’s Answer

    Yes, you can. I understand that the company does not have an operating agreement and that you do not therefore have a guide regarding resignation. I recommend that you put the resignation in writing, that you resign as a managing member, assuming you were designated as such. Managing members are members who participate/are involved in the management of the company. As stated by my colleagues, you want to ensure you are not subject to company liabilities, such as personal guarantees, leases, etc. As you have an ownership interest in the company, you will want to discuss the return of your capital with your CPA and then with the other partner(s).

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  • Corporation Ownership and Partner share

    I am 50 percent owner of the company and by agreement I cannot sale my shear to any one except my partner. My question is if I die than how my son can get my company’s Shear. Or if I want to transfer in my life how I can do that?

    Rosana’s Answer

    I agree with my colleague, who provided you salient information. I would add that the buy-sell agreement or provision (such as in a limited liability company's operating agreement) will likely contain a clause that specifically allows the owners to bequeath their ownership interest to their heirs. Some individuals prefer to transfer their ownership interest in a company to their trust during their lifetime so that the trust, and not the individual, becomes the owner of the interest in the company; however, there are certain issues to consider in doing so. I recommend that you seek the advice of an attorney so that they can review the pertinent documents and appropriate counsel you.

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  • I've had an CA LLC for 3 months, can i cancel and not pay the FTB $800 Tax?

    I formed an LLC 12-24-13, and now I owe my $800 Tax to the FTB. If I want to dissolve this LLC, can I submit a cancellation and not have to pay the $800? I have received money to an account connected to this EIN/LLC. Am I stuck Paying thi...

    Rosana’s Answer

    Per the California Franchise Tax Board, LLCs are not subject to the annual tax and fee if they did not conduct any business in California during the tax year and their tax year was 15 days or less. Although the company's 2012 tax year was less than 15 days, If the LLC received money in the LLC account from the business of the LLC (e.g., sales, services, etc.) it arguably conducted business and does not meet the criteria for tax exemption.

    You can always cancel the LLC by filing the appropriate certificate. You can obtain additional information on the California Secretary of State's website. You can likewise obtain additional information on company tax issues at the California Franchise Tax Board site.

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  • How do I add/remove people from a corporation? Thank you

    My brother/business partner resigned from position and I need to legally remove him from the corporation and add 2 other people. I understand that a Statement of Information needs to be submitted to the Secretary of State, but I'm not sure how to ...

    Rosana’s Answer

    I am assuming that your brother/business partner resigned from his position as director and possibly officer of the corporation and not that he is selling his ownership interest in the corporation. You are correct that the corporation will have to file an updated Statement of INformation to reflect the change. This can be done by logging onto the California Secretary of State's office, clicking on "forms" and finding the Statement of Information form, which can be filled out and downloaded or can be filed online. It is good practice to document the resignation and have your brother sign the resignation. The resignation and the board of director's acceptance of the resignation should be documented in minutes if done pursuant to a special meeting or in a written consent, which is a consent in lieu of holding a meeting. The addition of two people to the board is likewise done through appointment by the shareholder(s) via a special meeting of the shareholders or a written consent of the shareholders. The minutes or written consents do not have to be filed with the CA Secretary of State. If the two people are purchasing an interest in the company and/or your brother is selling his interest in the company, you should consult an attorney to assist you with the sale/purchase.

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  • LLC vs LLC taxed as S-Corp

    What are the main difference between LLC vs. LLC with subchapter S election (i.e. taxed as an S-Corp)?

    Rosana’s Answer

    • Selected as best answer

    I would recommend that you consult with your CPA or a tax attorney on this issue. From a general standpoint, assuming that you are referring to an LLC with two or more members (non-subchapter S), without the LLC having made any pertinent elections, the IRS will treat the LLC as a partnership. Distributable partnership income is subject to self employment tax while S corporation distributable income is not. Additionally, an S corporation operating in the State of California is required to pay a 1.5% tax on its earnings. A single member LLC is considered a disregarded entity by the IRS, which means that the IRS ignores the entity and you are treated as a sole proprietorship for tax purposes. There are other issues to consider, which you should, again, discuss with your CPA or a tax attorney.

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  • How do we add an officer to a "s"corp in CA

    We have a " s " corp in ca for the last 3 years and now we need to add my dad as an officer to the company so we can use his general contractors license . Is it as easy as just filling out a statement of information on line with the state ? An...

    Rosana’s Answer

    Adding an officer to your corporation is an internal process. The board of directors appoint the officers of the corporation and should do so on an annual basis. This can be done through a meeting or, if approved unanimously by the board of directors, through a unanimous written consent. You should check the corporation's bylaws to determine if the date/timing of the annual meeting is identified in the bylaws. If so, you should conform to that date. Alternatively, it can be held at any time on an annual basis. You should ensure the memorialization of the resolutions taken by the board of directors at that meeting through minutes. If done through a unanimous written consent, the secretary of the board of directors should ensure that all resolutions of the board are recorded therein. The board can also hold a special meeting to appoint officers. Make sure you follow the special meeting notice procedures set forth in the corporation's bylaws. Bear in mind that the process I've stated does not automatically transfer your father's general contractor's license into the corporation nor does it authorize the corporation's use of his license. Your father, the general contractor, must apply to transfer his general contractor's license to the corporation if that is his and the corporation's intent. In California, a sole owner license is issued to a specific individual although the license can be qualified by the owner or an Responsible Managing Employee (RME). Go to www.cslb.ca.gov for additional information.

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