Legal Question in Business Law in California

Re: LLC Paperwork

First, why an LLC over a corp.? Second, one of the main purposes of forming and operating an LLC or corp. is limited liability. However, not forming or operating the entity in a proper manner may destroy the limited liability protection. Thus, my advice is to spend the money up front and have the entity formed correctly. Money up front is much cheaper than money later when you get sued personally under alter ego theories. The lawyer also gives you advice on how to maintain the separateness of the entity and how to preserve the limited liability protections. Let us know if you would like our help in this regard. We have set up hundreds of entities for clients.

Re: LLC Paperwork

First, an LLC is not valid unless it has a written operating agreement. That makes the answer "Yes" If you do not have an operating agreement, you will lose the protection that the LLC provides.

Next, especially a family owned business should have a written agreement. Memories seem to fade in all verbal agreements, and when that happens in a family, the family structure can be destroyed. Take off the rose colored glasses, discuss all aspects of the business (positive and negative) and put everything in writing.