Does this new owner also get his shares diluted? For example, let's say we agreed to give him 40% for sweat equity (vested of course). He doesn't actually get 40% right because his shares would also be diluted? Also, does it matter whethe...
The answer for the most part depends on how the company is structured. . If you promise someone 40% that would normally mean that only 60% is available to others. If one person or group of persons holds 60% of the authorized shares (or membership units for an LLC) then the new person will hold 40% and no more.
Having said that, if you had 100,000 authorized shares and the new person received 20,000 shares while other owners held 50,000 shares, with 50,000 unissued, the new owner would have 40% of the company so long as no more shares were issued. Ownership is determined by issued and outstanding shares or membership units.
When dilution occurs because of someone investing capital, the value of the remaining shares or units typically stays the same or increases. Here, of course, with no capital investment, dilution of value is a very real, indeed probable, result.See question
It refers to Software quality assurance..I mean in the Software Quality Assurance context..
Your question lacks context, so I raise that caveat first. Having said that, I could certainly tell you stories of clients who signed agreements without either understanding all of the terms and/or without having an attorney review them. If you are talking about an agreement in which you are buying or selling services or goods, or in which you have any possible exposure at all, money spent having counsel review the agreement is money very well spent. A few hundred dollars invested now could save you lots of aggravation and possible money later.See question
LLC, Incorporation, Corporation etc. wholesale of cars on different auctions.
I generally prefer S corporations because they have tax advantages. At the end of the day if you are the only owner, the decision should be driven primarily by tax considerations. Many folks are intimidated by corporations, but in DE you can create a close corporation for your S corporation allowing you to run it almost like an LLC. Unless your accountant advises something else for tax reasons, you might want to seriously consider a Delaware close corporation and elect to be taxed as an S corporation. That could save you 15.3% tax on some of your income.
Fortunately you are in the state I like best when setting up new companies. Delaware does this better than anyone else in my view.
I do think you are best served by consulting with your accountant before deciding and using business counsel to set up the company, rather than one of the one size fits all companies that create new companies.
I am happy to discuss with you of course without obligation.
If a corp. in the process of IPO gifts be 50k shares of common stock by writing a handwritten letter or making their own stock certificate, is this considered owning actual stock when it comes time to sell it?
If you are in the process of an IPO, I strongly urge that you consult with your counsel. The articles of incorporation and/or bylaws (and/or the statute) may address the requirements as to a certificate. Typically a certificate is not required. It is the entry on the books of the corporation and the authorization by the Board of Directors that controls. What concerns me is that if you are gearing up for an IPO, you need to have all the t's crossed and i's dotted in your corporate records.
I am happy to spend a few minutes explaining without cost if you don't have counsel. Of course, if you are at this point I am hoping that you in fact do have counsel in whom you have confidence.See question
Because my company is not making any money will this pose a problem? My company has been in existence for less than 3 years.
I agree with Ms. Jurado. If the company really has no value then you could issue the shares or membership interests with little or no tax consequence. The process is easy. The only question is the value of the company. If the company has value and you give them an interest there could be tax consequences, depending on how the numbers add up.See question
The company who set us up as an LLC charged a lot of money and was not there for us when we originally spoke with them. We were lead to believe it was better to be a Delaware LLC and only after we paid the initial fee did they hit us with having t...
First, let me underscore why I think companies that form LLC's for clients rather than business lawyers often end up costing the client more in the long run. I know that clients want to save money, but scrimping on accountants and attorneys is often a disaster. Of course it is too late for you on that issue, but hopefully others will listen to the advice.
There are a lot of advantages of being organized in Delaware, depending on long term goals. Their organization is efficient, fast, reasonable in cost, and competent. In California it may take me a few days to get an answer to something while in DE it may only be a few minutes or a few hours. Converting LLC's to corporations is a snap in DE, but not so everywhere.
If your business is concentrated in California and you have no plans to go public or seek investment from outside investors, organizing in CA alone might make sense. On the other hand, you are now organized in DE and the annual fee there is $250 for an LLC. You are on the hook for the $800 annually in CA no matter what you do. Unless money is really tight, I would suggest you remain organized in DE and register as a foreign LLC in CA and pay the annual fee. If you had not already organized in DE, I might say go with CA, depending on your plans. However, since you are in DE already, why not enjoy the benefits of organization there since your extra cost is only $250 annually and down the road you could well appreciate operating your company under DE rather than CA law. To clarify, corporate/LLC matters are governed by DE law, while tort, contract, etc. will be governed by CA law if the events are in CA.See question
I would like to form a company that will basically be in the trucking business, just regular dry freight. I would also like a subdivision or a part of that company to be in a different business, like brokerage for getting shipments or even offer ...
You have three basic options. Either you create a single company which has two divisions, a trucking division and a brokerage division, or you create a trucking company which has a subsidiary in the brokerage business (or vice -versa). You could also have a single holding company which owns a trucking company and a brokerage company.
Any of those structures will likely give you the insulation from liability you want. The threshhold question is a tax question. Which structure serves you best for tax purposes.
Personally I favor S corporations as they provide tax advantages (I am assuming you are a citizen of the U.S., a prerequisite). You could have an S corp that owns an LLC or two LLC's but not the other way around.
Our firm does a lot of this kind of work and I am happy to discuss with you. I would also urge you to speak to your accountant about tax ramifications. Sometimes attorneys and accountants disagree as we look at governance, liability and things other than tax, while their focus is tax. However, if you are the sole owner whatever structure your accountant favors will probably work.
Kenneth A. Sprang
Washington International Business Counsel
Does the cost of the LLC outweigh the liability protection of a $2m - $3m umbrella
I generally recommend that a client hold each property in a separate LLC so that liability is limited to that property. Setting up and operating LLC's is relatively simple. However, you should definitely have insurance as well. If someone was injured in one of your condos, with just the LLC the condo as the asset is at risk. Having insurance, which is relatively inexpensive, is an inexpensive way to protect yourself. An umbrella for all of the condos would probably be the most economical option.
In short, you are really mixing two issues. The first is whether to use one or more LLC's. There are various business reasons for the LLC, as well as liability insulation. Those business reasons are perhaps less important with real property LLC's but worth considering. The second issue goes to liability protection. You get some with the LLC but you should unequivocally have substantial insurance as well.See question
Considering restructure to LLLP with brother for estate planning purposes. No properties in AZ - just IL. Want to avoid liability + tax for bro and minimize my tax burden to US + CDN gov'ts. Bro lives in USA, I live in CAN. Bro is not investing...
Your question has multiple issues. First, what business are you in that led you to use an LLP rather than an LLC? I am inferring real estate but I am not certain.
Second, the best vehicle for estate planning is a trust. I would structure the trust under the law of the state where the trustee, e.g., your brother, lives. That is a much better way for estate planning given that any will you create will be probated in Canada in all likelihood.
There are enough moving parts here that your question requires a conversation. Who gets your property in the event of your death? Have you other family to include. Will the business continue after death. Are there other goals to accomplish? The answer is likely rather straightforward, once one knows that totality of your goals and needs. Among other things you also need a partnership agreement in your current configuration or an operating agreement for an LLC.
I am happy to discuss if you like. Our firm does a great deal of work with foreign nationals with businesses in the U.S.
Washington International Business Counsel
I am a resident if Jamaica and living in Jamaica. Looking to take a business preferably in Florida.
I work a lot with foreign nationals seek to set up businesses in the U.S. Are you seeking to launch a new business or to buy an existing business? Are you intending to operate it from Jamaica or is your long term goal to emigrate to the U.S.
It is relatively simple to launch a new LLC for you here if that is your goal. However, you cannot come to the U.S. and earn money working for the company without the proper visa.
In short it depends on what your near and long term goals are. I am happy to discuss the matter with you if you like. Of course, you will need to have adequate funding to establish and capitalize a new business.
Washington International Business Counsel