Tag: LLCs

Part 1: What is an LLC? Section B: Let’s Answer the Question In my previous post, I explored the distinctions between partnerships and corporations. Now, let’s take a bird’s-eye view to understand the central elements of LLCs. An LLC is a unique business structure that combines the advantages of both corporations and partnerships. As a… Read More

This blog frequently laments the lack of Washington case law across a number of LLC and corporate topics. One such topic includes records requests in both a corporate and LLC context. The scant authority makes every new case on the subject worthy of discussion—enter Lott on behalf of Blue Mountain Farms, L.L.C. v. Lott, No.… Read More

LLCs are either “member-managed” or “manager-managed.” Determining which management structure applies is significant—it impacts everything from fiduciary duties to the authority to act on behalf of the LLC. The easiest way to determine management structure is to look at the LLC agreement. However, when the LLC agreement is silent on this issue (or does not… Read More

Per RCW 25.15.246(1), “a member has no interest in specific limited liability company property.” There are a number of consequences that flow from such a brief statement in the LLC Act.  This article will discuss a few of such consequences. First, the members have no right to prosecute a cause of action owned by the… Read More

At the outset of forming an LLC, everyone gets together around the table to agree on the operating agreement and its provisions. A party who is always at the table, but who is frequently forgotten, is the LLC itself. Sometimes, I see operating agreements signed by the members, but not the LLC. A recent Washington… Read More

The Washington LLC Act provides “courts may order dissolution of a limited liability company whenever: (1) it is not reasonably practicable to carry on the limited liability company's activities in conformity with the certificate of formation and the limited liability company agreement; or (2) other circumstances render dissolution equitable.” RCW 25.15.274. This begs the question:… Read More

Introduction Since approximately 2010, I have had the privilege of participating in Washington’s Partnership Law Committee.  One of the functions of the Committee was to completely revise our LLC Act, which was achieved in 2016.  The Committee continues to work to improve our LLC Act and the 2022 legislature adopted several significant changes dealing with… Read More

Lawyers advising LLCs and their members must understand capital accounts from a tax perspective. When LLCs are taxed as a partnership, a member’s capital account reflects a portion of a member’s economic interest in the LLC. The tax regulations surrounding capital accounts are lengthy and complex, but understanding the basics allows practitioners to fully counsel… Read More

As I have noted previously (along with numerous other commentators), LLCs are not corporations. Both the basic structure of, and the laws applicable to, each respective entity are significantly different.  However, there may be similarities as to the tax structure of LLCs and corporations if the LLC members so elect. A corporation can choose only… Read More