Bring Out Your Dead!
By Brian Taylor Goldstein, Esq.
Dear Law and Disorder:
Many years ago I hired an attorney to create an LLC for me, but I wound up never using it. Recently, I was presented with another business opportunity, but I’d like to have an LLC to do this. Can I still use the original LLC even though it would be for an entirely different purpose? I’d hate to have to hire an attorney to create a new one as the last one was very expensive.
When you create a corporate entity, such as a Limited Liability Company (LLC), a C-corporation or S-corporation, its like creating a living creature. It has its own legal identity, pays its own taxes, and can sue and be sued entirely separate from its owners. However, like leaving a fish abandoned in a fishbowl, if you ignore it, don’t feed it, and don’t change the water, it will die.
Corporate entities such as LLCs are created and formed in the state where they are located. Once formed, most states require the payment of a yearly registration fee to keep the entity “alive.” If the fee is not paid, the entity will be listed as “inactive” (ie: put into a medically induced coma.) While you can often pay the past due fees and make it “active” again, if it stays “inactive” for too long it will be removed from life support and you will have to start all over again. Also, even if you could somehow resurrect a dead corporate entity, unless they were originally created to be generic, such entities can’t be used for different purposes than those for which they were originally created. For example, if you created an LLC to represent artists, you can just use the same entity to operate a record company or produce a play.
However, whether you are creating a new corporate entity or resurrecting an old one, the process does not require an attorney and should never be “very expensive.” I have heard of people paying attorneys $5000 – $10,000 for this process which is, quite frankly, insane. Creating an LLC, C-corporation, or S-corporation in most states only requires a simple form or two (most of which can almost always either be downloaded or completed on-line) and the payment of a registration/filing fee. Often, its advisable to consult with an attorney or an accountant (or both) about the various legal and tax implications of different corporate entities, as well as to flag any potential business or legal pitfalls. Also, if your entity will involve more than one owner or partner, then you will want an operating agreement or shareholder agreement, and possibly even some by-laws to make sure everyone knows who’s in charge, how decisions are made, how to bail out, etc. However, unless you are creating an entity which will be involved with complex securities and exchange transactions or plan to do a corporate takeover of Apple or AT&T, the forming of the entity itself is quite simple. If you can complete your name and address (which I do acknowledge is more challenging for some that others), you can create and register an LLC.
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legal and business issues for the performing arts, visit ggartslaw.com
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All questions on any topic related to legal and business issues will be welcome. However, please post only general questions or hypotheticals. GG Arts Law reserves the right to alter, edit or, amend questions to focus on specific issues or to avoid names, circumstances, or any information that could be used to identify or embarrass a specific individual or organization. All questions will be posted anonymously and/or posthumously.
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THE OFFICIAL DISCLAIMER:
THIS IS NOT LEGAL ADVICE!
The purpose of this blog is to provide general advice and guidance, not legal advice. Please consult with an attorney familiar with your specific circumstances, facts, challenges, medications, psychiatric disorders, past-lives, karmic debt, and anything else that may impact your situation before drawing any conclusions, deciding upon a course of action, sending a nasty email, filing a lawsuit, or doing anything rash!
Tags: artist, attorney, attorneys, Brian Taylor, corporate entity, corporation, Goldstein, law and disorder, limited liability company