By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold Township, Monmouth County, New Jersey LLC Attorney The New Jersey Revised Uniform Limited Liability Act (RULLA) contains an express provision granting relief to oppressed minority LLC members. The current LLC Act authorizes the remedy of a buy-out in lieu of dissolution. Unlike the corporate statue, which expressly provides that the buy-out be at fair value (assuming there is no contrary direction in a shareholders agreement), the current LLC Act does not specify at what value the buy-out is to be made. In an Operating Agreement LLC members, like shareholders in a shareholders agreement, can dictate the agreed value standard under which a member claiming oppression is to be …
LLCs vs. Corporations- Economic Differences Part 2
By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold, NJ Business Corporate Attorney In our last post, I discussed the differences between LLCs and Corporations as it relates to management and operation. We saw how an LLC allowed its members and managers more flexibility in its operation and allowed its member owners to avoid some of the more enjoyable responsibilities and duties imposed on directors or officers in a corporation. Today, we will discuss the economics of both types of entities, including how each gets taxed. One of the biggest differences between the company types is how you can transfer ownership of the company. With a corporation, (unless there is a shareholder’s agreement), ownership interests can be …
What Should I Select? LLCs vs. Corporations- Management and Formation Differences (PART 1)
By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold, NJ Business Corporate Attorney If you are reading this article, it probably means that you are looking to form a business. You have this awesome idea, whether it is to sell the next greatest gadget, open up a local dry cleaning business, or anything in between. One of the first questions you probably have is what type of business should you open. You might be hearing a lot about limited liability companies, also known as “LLCs.” 80% of entities formed in New Jersey are LLCs. Why? Because if a lawsuit occurs, your personal liability is limited to what you put into the company, as compared to a sole …
Converting a Sole Proprietorship to LLC in New Jersey
By Fredrick P. Niemann, Esq. of Hanlon Niemann, a Freehold, NJ LLC Attorney There are a number of benefits to operating a business as a sole proprietorship. Sole proprietorships are easy to form and operate and cost little to create. There are a few administrative costs and burdens, and income and losses are simply reported on a taxpayer’s Form 1040, without the need for a separate tax return filing. The most significant disadvantage to a sole proprietorship is that there is no limited liability for the owner as its proprietorship status exposes your personal assets to the risks and liabilities of your business operation. Most states, including NJ, allow a sole proprietor to conduct business as a Limited Liability Company …
NJ LLC MEMBERS TAKE NOTICE: PROBLEMS ARISING IN FAMILY-OWNED LLC’S
By Fredrick P. Niemann, Esq., a NJ LLC Law Attorney Many individuals look up to family-owned LLC businesses, as they have been a staple in the American economy. While there have been numerous success stories, it is important to note that not all family-owned LLC’s, also known as Limited Liability Companies, run smoothly. In fact, there are a number of problems that can arise within a family-run enterprise that the general public does not usually think of. Family-run LLC’s present an ideal situation for majority members to oppress minority members. The closed-nature of the business allows majority members, typically the older family members, to rule over the company to the detriment of younger family members that hold a minority share …