Offit Kurman business law and transactions attorney Michael Mercurio was a recent guest on AHA Business Radio on Baltimore’s WJZ AM 1300, CBS Radio. During his appearance on the show, Mercurio discussed business entities from sole proprietorships to C corporations and S corporations including LLCs.
Business Law and Transactions Attorney on LLCs
“So, LLCs or limited liability companies are really becoming the dominant corporate structure that I see in the marketplace,” explained Mercurio. “And, essentially, what an LLC does is it marr[y] the best attributes of a partnership or a sole proprietorship with the best attributes of a corporation.” Unlike Sole Proprietors and Partnerships, also discussed by Mercurio and Hirsh, an LLC is a formalized entity. It’s actually recorded with the State. “You file what are known as articles of organization,” explained Mercurio, “which becomes your contract with the State of Maryland or whatever the state is that you are [operating] within.” In exchange for that filing, you get your LLC formed or what is known as organized and get limited liability as the member of the company. The owners of LLCs are called members. In a partnership, you’re called a partner. In a sole proprietorship, you’re called a proprietor. “[An LLC] marries the best attributes of a partnership, so it is very flexible, very adaptable,” reiterated Mercurio. “And because of their flexibility and because of their friendliness to business, they’re a very popular business tool.” “But its weakness is also its flexibility,” added Mercurio. When the statutes were written for LLCs in the various states, they were intentionally written very, very thinly. There’s not much there. But that’s by design. This is what gives an LLC its flexibility, which can be a great asset, but also a detriment. “I would strongly caution anyone that’s going to enter into an LLC relationship that in addition to articles of organization, you really want what’s called an operating agreement,” advices Mercurio. “Your operating agreement is that contract between the members and the company that’s going to fill in all the gaps that the statute doesn’t provide for you. For example, the operating agreement will stipulate how profits are allocated.” When considering entering into an LLC relationship it helps to seek the counsel of a seasoned business attorney, like Mercurio, who has experience with a wide range of clients, from sole proprietorships, partnerships, and limited liability companies, to small and large corporations, and not-for-profits as well as family owned and closely held businesses. Mercurio is the chair of the Offit Kurman business law and transactions practice group and is well versed in the various issues and challenges companies of all sizes and industries face in the business life cycle. Each week, host Allan Hirsh and his guests seek to provide listeners with useful information to help them run their business and guide decision making. If you have any questions regarding LLCs, please contact Offit Kurman business law and transactions attorney Mike Mercurio at: firstname.lastname@example.org | 301.575.0332 Mr. Mercurio regularly counsels entrepreneurial individuals and assorted entities on all aspects of business and commerce including formation and structure; ownership, management and control; financing and capital; expansion and acquisition; sale and transfer; and contraction and dissolution. He is well versed in the various issues and challenges companies of all sizes and industries face in the business life cycle. You can also connect with Offit Kurman via Facebook, Twitter, Google+, YouTube, and LinkedIn.