How to Use Limited Liability Companies & Limited Partnerships. Garrett Sutton
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A SuccessDNA Nonfiction Book
Copyright 2001, 2004, 2009, and 2017 by Garrett Sutton. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopied, recorded, or otherwise, except in the case of brief quotations embodied in critical articles or reviews, without the prior written permission of the publisher. For more information, write Success DNA, Inc., 2248 Meridian Blvd., Suite H, Minden, Nevada 89423 or visit www.successdna.com.
SuccessDNA, Inc.
SucccessDNA is an imprint of Brisance Books Group
COPYRIGHT 2001, 2004, 2009, and 2017 Garrett Sutton
All Rights Reserved
10 9 8 7 6 5 4 3 2 1
Library of Congress Control No:
ISBN No. 978-1-944194-15-4
This publication is designed to provide general information regarding the subject matter covered. Because each individual’s legal, tax, and financial situation is different, specific advice should be tailored to the particular circumstances. For this reason, the reader is advised to consult with his or her own attorney, accountant and/or other advisor regarding that individual’s specific situation. The author has taken reasonable precautions in the preparation of this book and believes that the information presented in the book is accurate as of the date it was written. However, neither the author nor the publisher assume any responsibility for any errors or omissions. The author and publisher specifically disclaim any liability resulting from the use or application of the information contained in this book, and the information is not intended to serve as legal, tax, or other financial advice related to individual situations.
012017
For Mom and Dad
Thanks for everything.
Contents
Acknowledgements
Introduction
Chapter One
Entity Selection
Chapter Two
Entity Formation
Chapter Three
Entity Management
Chapter Four
Entity Taxation
Chapter Five
Capital Contributions, Ownership and the Securities Laws
Chapter Six
The Importance of Following the Formalities
Chapter Seven
Asset Protection
Chapter Eight
Single Member LLCs
Chapter Nine
Estate Planning and LLCs/LPs
Chapter Ten
Real Estate
Chapter Eleven
Joint Ventures and LLCs/LPs
Chapter Twelve
Intellectual Property and LLCs/LPs
Chapter Thirteen
Series LLCs
Chapter Fourteen
Admission, Withdrawal and Expulsion of Members/Partners
Chapter Fifteen
Transfers of Membership and Partnership Interests
Chapter Sixteen
Entity Dissolution
Chapter Seventeen
When Not to Use an LLC/LP
Chapter Eighteen
Entity Conversion
Chapter Nineteen
Bankruptcy
Chapter Twenty
Special Situations – Divorce, Limited Liability Partnerships and Limited Liability Limited Partnerships
Chapter Twenty-One
Comprehensive Strategies Made Easy
Conclusion
About the Author
Index
For the fourth edition of this book I would like to thank our dedicated staff members at Corporate Direct for their assistance in all matters towards creating this book. As well, I would like to thank Lori Ream of ProVision for assistance on the taxation chapter and James Burau, Esq. for help with the estate planning chapter. The editing skills of Scott Cooper are also greatly appreciated.
Also, thanks are offered to my wife and children, Jenny, Teddy, Emily and Sarah for their patience as this book was being written.
Congratulations. You are about to learn powerful legal strategies used by the rich for generations to protect their assets and operate their businesses. By reading this book, you will come to understand the concepts necessary to establish a customized strategy for the protection of your business and personal assets and to create your own legal defense against the improper threats and claims of would-be creditors. You will learn when and how to use Limited Liability Companies and Limited Partnerships both in specific situations and in general business scenarios. And you will learn a mantra and attitude that the rich have successfully used for hundreds of years – protect and grow. How to protect and grow your assets through the strategic use of Limited Liability Companies, Limited Partnerships or Corporations is one of the greatest skills you can acquire.
The journey begins with a consideration of the entities you can use to your maximum advantage.
This book is designed to explain how and when to use two of the most popular and powerful business entities available today. As you go through the book you will learn that both Limited Partnerships (LPs) and Limited Liability Companies (LLCs) offer the advantages of:
• Limited liability
• Protection from creditors
• Retained management control
• Family wealth transfers
• Transfer restrictions
• Flow Through Taxation
• Flexibility
The question of when to use either an LP or an LLC will be discussed first in this chapter where we will review scenarios for each entity. Later chapters employ a question and answer approach as well as scenarios to deal with