Privacy, Business and Law

Yes, under a fairly recent amendment to the California statutes, which authorize limited liability companies, one member LLCs are now allowed in this state. LLCs are governed by state statutes, which are not consistent or uniform from state to state. If you are in a different state and wish to form an LLC, you should pose this question to an attorney in your state.

The choice of legal entity is a difficult issue and must be addressed on a case-by-case basis, depending on the type of business to be conducted, the goals of the owners, and the financial arrangements. There are certain types of entities that are commonly used for some types of businesses, but there is no “right” answer to this question. Normally, when we advise a client on this issue, we work with his or her accountant or other financial advisor to arrive at a recommendation that will best suit the client’s needs.

In a general partnership, all partners have joint and several liability to third persons for the obligations of the partnership, no matter what their contribution or investment in the partnership was. With a limited partnership, the general partner(s) have this unlimited liability, but the limited partners’ liability is limited to the amount of their contribution to the partnership. In most other respects, the entities are very similar, although they have different filing requirements with the State of California and in certain circumstances, the tax ramifications are different.

The Franchise Tax Board requires that all corporations pay an annual tax, or fee, for the privilege of doing business in the State of California. If a corporation is incorporated in another state but is required to be legally qualified to transact business here, then it must pay a similar fee, even if it is a Subchapter S corporation or is incorporated in a state that has no corporate income tax. Other business entities such as limited partnerships and limited liability companies also pay such a fee.

A “regular” corporation is a corporation that is taxed under Subchapter C of the Internal Revenue Code. No election is made for this purpose; it is the default method of taxation for corporations. Under Subchapter C, there is a tax paid at the corporate level and at the shareholder level, assuming the shareholders receive dividends or other income or distributions from the corporation. Corporations, which meet certain requirements, may file an election to be taxed under Subchapter S of the Code, which is similar to taxation of partnerships. The tax items of the corporation are passed through to the shareholders. There are restrictions on the type and number of shareholders that a Subchapter S corporation can have, and the election must be filed within a specific time period to be effective.

An LLC, or limited liability company, is a form of entity that is usually treated as a partnership for tax purposes but where all owners, called members, have their liability for obligations of the LLC limited to the amount of their investment in it. Its existence commences with the filing of Articles of Organization with the Secretary of State, and the members are governed by an Operating Agreement, which is similar to a partnership agreement. For tax purposes, items of income, loss, deduction, expense, deprecation and gain are taxed to the members as reported on K-1 schedules. It is similar to a corporation which has elected to be taxed under Subchapter S of the Internal Revenue Code.

Shortly after the September 11, 2001 terrorist attacks, Northwest Airlines submitted millions of passenger records — including credit card numbers, addresses and telephone numbers — to the National Aeronautics and Space Administration’s Ames Research Center. (Read more…)

Colorado would become one of the first states in the nation to add nonprofits, political organizations and politicians to its “no-call” law under a bill proposed by two lawmakers.

Under the bill introduced this week by Sen. Dan Grossman, D-Denver, charity and political organizations, nonprofits and politicians also would not be able to telemarket to consumers on the no-call list. (Read more…)

In actual practice, litigation may begin even before both sides of a dispute even realize that a lawsuit is contemplated. Litigation is the entire production of marshalling the facts, determining the applicable law, putting the matter at issue, maneuvering for advantage, and ultimately affixing liability on one side or the other. (Read more…)

UK Information Commissioner, Richard Thomas, January 14 announced a package of measures in response to calls for greater guidance on interpreting the Data Protection Act 1998 (DPA). (Read more…)