LLC Glossary
An involuntary dissolution of an LLC by an act of the Secretary of State or similar state authority, caused by the company's failure to comply with certain statutory requirements, especially the failure to file an annual report, to pay franchise taxes or maintain a valid Registered Agent.
An agent, required to be appointed by an LLC, who is appointed to receive process to be served upon the company. Also known as a Registered Agent, Resident Agent, and Statutory Agent.
A doctrine of law which disregards the principle of limited liability enjoyed by a legal entity when no separation of identity and affairs of the individual and company exist. The alter ego principle may also apply to relationships between entities and their subsidiaries. This doctrine, usually difficult to prove, is used by creditors in court to get around LLC limited liability.
A document issued by a state amending its original certificate of authority.
An addition, deletion, or a change of existing provisions of the articles of organization of an LLC.
A required annual filing in a state, usually listing members, managers and financial information.
Official government authentication of a document, usually by the State Department, Justice Ministry or Foreign Ministry, which legalizes it for use in another country.
The form filed in many states to qualify an LLC to transact business as an LLC.
The document filed in many states to register a limited liability company (LLC) with the state. Also known as articles of formation.
A name, other than the true name, under which a business organization conducts business. Also referred to as a fictitious name, a trade name or "doing business as" (d/b/a), name or title.
Formal evidence of qualification as an LLC issued by a state to a foreign LLC.
A certificate issued by a state as conclusive evidence that an LLC is in existence or authorized to transact business in a state. The certificate generally sets forth the company's name, that it is duly incorporated or authorized to transact business, that all fees, taxes and penalties owed the state have been paid, that its most recent annual report has been filed, and that articles of dissolution have not been filed. Also known as a certificate of existence or certificate of authorization.
Commingling, is the sharing and pooling of personal and company assets. It is often alleged to have occurred in an “alter ego” situation. For example, rather than maintaining separate business and personal bank accounts, you choose to use one account for personal and business purposes. This is considered commingling and an easy way to become personally liable for LLC acts.
This term refers to completion of the formalities of LLC existence under the laws of the jurisdiction in which it is formed.
A consent resolution is any resolution signed by members or managers that authorizes a particular action. This act eliminates the need for face-to-face meetings of members and managers.
A corporate kit is a binder usually containing items for the routine maintenance and administration of a limited liability company, including minutes, bylaws, membership certificates, and a seal. These binders are no longer required or often used.
A corporate seal is a device made to either emboss or imprint certain company information onto documents. This information usually includes the company's name and date and state of formation. Corporate seals are rarely required anymore.
"Doing business as." see
Fictitious Name.
The statutory procedure that terminates the existence of a domestic LLC.
When a company pays taxes on its earnings and individual shareholders pay taxes on any dividends that are distributed. Generally, "C" corporations are doubly taxed in this manner, unlike LLCs.
This term describes how long a business will be recognized as a legal entity. A company with a perpetual duration will last forever unless the state dissolves the company. A 30-year duration means that the company will automatically dissolve on its 30th anniversary of existence. Some states set durations by law. Or, the LLC can set its own duration.
An employment agreement is a contract between your company and an employee. These agreements can be written or verbal, although all employment agreements should be in writing. Employers are more likely to have employment agreements with key employees. The terms and conditions of an employment agreement should be consistent with statutes, articles, operating agreements, and any existing shareholder agreements.
This is a name other than the true name under which a business organization conducts business. Also referred to as an assumed name, a trade name, or "doing business as" (d/b/a) name.
This is a relationship in which one party (the fiduciary) must act in good faith and with due regard to the best interests of the other party or parties. LLC members and managers generally have fiduciary responsibilities to each other to not undermine the LLCs purpose or business.
This is an LLC doing business in a state other than its state of formation.
This is a tax or fee usually levied annually upon a limited liability company or similar business entity for the right to continue to exist or do business in a particular state. Failure to pay the franchise tax or similar fees may result in the administration dissolution of the company and forfeiture of the charter.
An LLC is said to be in good standing when it has remained current with the necessary reports and fees required by the regulatory jurisdictions under which it operates.
The termination of an LLC's legal existence pursuant to an administrative or judicial proceeding in a dissolution forced upon it rather than decided upon by the company.
Involuntary dissolution of an LLC can occur by a court at the request of the state attorney general, an owner or a creditor. This may occur in an “alter ego” situation.
This is a notarization citing under oath that a signature has been witnessed.
An artificial legal entity created under and governed by the laws of the jurisdiction in which it was formed. Limited liability companies provide limited liability of corporations and pass-through taxation of partnerships or S Corporations.
The protection generally afforded a member of a limited liability company from the debts of and claims against the company.
The managers of a limited liability company are its management, subject to the vote, at times, of the members.
The individuals who are responsible for the maintenance, administration and management of the affairs of a limited liability company (LLC) are its managers. In most states, the managers serve a particular term and report to and serve at the discretion of the members. Specific duties of the managers may be detailed in the articles of organization or the operating agreement of the LLC. Members of an LLC may also serve as the managers.
The owner(s) of a limited liability company (LLC) are its members.
Evidence of ownership of and membership in a limited liability company can be evidenced by a membership certificate, like a stock certificate.
The statutory combination of two or more business entities in which one of the companies survives and the other companies cease to exist.
The minutes are the written record of transactions taken or authorized by the members or managers. These are usually kept in the minute book in diary fashion. LLCs commonly do not keep minutes.
The filing of a document to protect an LLC name, often in anticipation of qualification in the state, can be done by a representation with the state of the proposed LLC name.
This is a procedure that allows an LLC to obtain exclusive use of a business name for a specified period of time.
This is a contract among the members of a limited liability company governing the membership, management, operation, distribution of income, and all rights and obligations of the company.
The person(s) who performs the act of forming a limited liability company is the organizer. This person can be a member or a manager.
A business organization in which two or more persons agree to do business together for a profit.
Rather than tax the income of the entity directly, taxation is "passed through" to the individual shareholders in S Corporations and LLCs. Income or losses of the company are declared on their individual tax returns.
This is unlimited term of existence.
Piercing the corporate veil is a legal theory used to impose personal liability on members and managers for LLC acts. This theory permits a court to disregard the separate identity of the business.
The filing of required documents by an LLC to secure a certificate of authority to conduct its business in a state is qualification.
A person or entity designated to receive important tax and legal documents on behalf of the business is its registered agent. The Registered Agent must be located and available at a legal street address within the specified jurisdiction. Failure to maintain a Registered Agent in the jurisdiction in which an LLC is registered may result in the forfeiture of good standing status. Also known as a Resident Agent and Statutory Agent.
In states requiring the appointment of a Registered Agent, this address is usually the address of the Registered Agent.
Regulations are administrative rules which have the force and effect of laws. Government agencies promulgate negotiations. If you don't comply, you are subject to the possibility of fines or revocation of the company charter.
Returning an LLC to legal status that has been administratively dissolved or had its certificate of authority revoked is to reinstate it. This usually requires payment of fees and fines.
A formal statement of any item of business that has been voted upon. Can be summarized and written out in a resolution to be used at a bank or for other purposes.
A document that combines all currently operative provisions of an LLC's articles of organization and amendments thereto are restated articles.
An unincorporated business with a sole owner in which the owner may be personally liable for business debts and claims against the business in a sole proprietorship.
Statutes are laws passed by the state legislature or U.S. Congress. Statutes often authorize an administrative agency to declare regulations which are used to supplement the statute. In the event of a conflict, statutes control over regulations.
A tort is any act or failure to act (if there was a duty to act) which causes harm or damage. It does not include a breach of contract. Examples of torts include assault, battery, fraud, misrepresentation, defamation, libel, slander, invasion of privacy, and negligence. If there is a tort claim against your LLC, it will likely be based in contract or tort.
A word or mark that distinctly indicates a product or service and that is legally reserved for the exclusive use of that owner. It usually is a logo or distinctive script.
An action by members dissolve an LLC is a voluntary dissolution.
The discharging of an LLC's liabilities and the distributing of its remaining assets to its members in connection with its dissolution is a winding up.
This is the statutory procedure whereby an LLC obtains the consent of a state to terminate its authority to transact business there. This is usually done after the state is satisfied that all taxes owed by the LLC have been paid.
