Rumors, Lies, And Funding A LLC
I am not an attorney, I am a Verdict Broker. This article is my opinion, from my experience in California, et al laws vary in every state. If you ever need permissible advice or a strategy to use, you should contact an attorney.
LLCs are now very popular as they can subsist more gifted than old guide S or C corporations, and LLCs offer better assessment advantages for their owners.
Corporate entities provide the shareholders et cetera owners very nice liability protection.
LLCs might offer their owners convalesce liability protection than S or C corporations enjoy. That additional liability protection is a intellect you should consider being careful if lending alternative investing money with a LLC.
When a LLC makes money and succeeds, life will live good, and they will most likely pay you what they owe you.
If times are bad, or if owners and/or management is not honest, or the LLC is not making money, then you may have to court the LLC to try to collect what the LLC owes you.
Suing a corporation is usually tough as the shareholders and owners are rarely liable for the actions of the corporation.
Suing a LLC is usually tougher, because in many states, a charging order (in California, CCP 708.310) is the only way to attempt to attach a (judgment debtor) LLC’s assets.
Because from some potential additional risks in funding a LLC, there are three points you authority consider, before investing rather lending money in one:
1) Encompass personal guarantees from the owners of the LLC, especially when the LLC substance is runt substitute new.
With signed and notarized personal guarantees in place, owners discipline have the reason to be extra careful to manage your money right. If things go badly, it’s much easier to enforce a judgment on an individual, than a LLC.
2) Get UCC liens on every asset the LLC has, including computers, accounts receivable, etc. UCC liens are available through the Secretary Of State.
To be most effective, UCC liens need to identify individual assets. UCC liens might not get you paid, however they increase the odds.
3) Verify the LLC’s continuing at a Secretary Of State’s web site, further be sure the status is ACTIVE, which assets they are registered with the state and have paid their taxes.
Check that the LLC has a current fanciful name (DBA) filing active in the county they are based in, a business license in the city they are based in, and you know which bank account they use.
Of course, if the LLC has been running for years, and has much of income, et alii you know the owners, you hawthorn feel well lending or investing.
Remember, corporate entities could disappear overnight, and LLCs are commonly difficult to collect from, if you have to sue them.