2010 Changes to Corp-LLCTuesday, July 20, 2010
The Maitland & English Law Firm helps many of our clients create new North Carolina business entities for business or investment ventures. It is important to choose the best entity, Corporation (S or C Corp.), Limited Liability Company (Member or Manager managed LLC), Professional Corporation or PLLC, General Partnership, or other options to fit your needs and tax situation. From a legal perspective, our primary concern is to ensure “limited liability” for the owners and investors of the entity to make sure their personal assets are never at risk for the sake of the business entity.
The simplest, and a particularly relevant situation in our area, might be where parents are buying a rental property for the use of their college bound children and intend to rent portions of it to third party roommates. Should something happen, say during a “study session” or party where a third party slipped and fell or otherwise became injured, most landlords choose the LLC as an effective way to limit their potential exposure to the equity in the rental property rather than put all of their hard earned personal assets at risk. Of course, a more traditional scenario is where the client is starting a new business venture and wants to create the proper structure to encourage investment and provide management. We can assist clients with the myriad of issues to consider and make sure your new business gets off on the right foot.
Once we advise on the creation of the new entity, we believe it is our responsibility to keep you informed of annual changes to the law and other developments that might affect your business. The most common way for people to lose the benefit of “limited liability” even after creating a business entity, is to fail to comply with the simple formalities required of a business. Such failures can invalidate the business entity or open the door to “piercing the corporate veil,” “alter ego,” and other issues. We advise our clients along the way to make sure they avoid these pitfalls.
Along those lines, each North Carolina business entity is required to file an Annual Report with the North Carolina Secretary of State and pay an annual fee. The Legislature recently passed new legislation changing the due dates and reporting requirements for most business entities effective June 30, 2010. A summary of the changes can be found here. Please feel free to contact us with any questions. Thanks!