Legal Question in Business Law in California

Re: Both LCC and Inc. ???

If a business enterprise forms both a corporation and an LLC, it has legally divided itself into two pieces, whether each piece has the same name or not. An asset cannot belong to both at the same time. Sure, both real and personal property can be held by tenancy in common, but ownership is nevertheless divided.

The particular arrangement you describe has all the hallmarks of a device to avoid tax liability or perhaps a union contract. It is theoretically possible to do what you say, of course. When the LLC pays the workers and the Inc. gets the benefit of the workers' services, the Inc. becomes indebted to the LLC, and unless some arrangement (not discussed in your question) is in place for the Inc. ultimately to reimburse the LLC, the balance sheets of both will get increasingly out of whack and, eventually, the whole thing will collapse under creditor or shareholder claims, tax audits or something.

So, you can do it, if looked at in a vacuum, but why? Whatever you're trying to avoid will un-do the plan and come back to bite you twice as hard.

If you can give me one GOOD (non-crooked) business reason for doing this, I'll re-evaluate my answer.