Manager Managed LLC

A Limited Liability Company can decide whether to be manager managed or member managed.  When manager managed, one or more managers will make the pertinent business decisions for the LLC.  Having an LLC manager can have its advantages and disadvantages.  A Denver business attorney from The McGuire Law Firm has prepared the article and video below to discuss a manager managed LLC.

A manager for an LLC may be beneficial when the LLC has many members, and maybe more so when these members are passive and do not actively participate in the day to day operations of the business. Under such a situation, a manager well versed in operating a business such as an LLC and with experience in the business industry the business is operating in, may work well for the company.  On the other hand, if the members of the LLC are few or fewer, and these members actively participate in operating the business each day, then the members themselves may want to manage the LLC, and thus the LLC would be member managed.  Each business and the business owners must make important decisions as to how a business will operate and no two businesses will operate in entirely the same manner.  That being said, you may find it more likely to see a manager managed LLC when there are a larger number of members (maybe eight to ten or significantly more) and/or some or the majority of the members are not actively involved with the business operations.  For example, if thirty individuals invested in a partnership that was purchasing and selling real estate and most of the members were passive investors, and real estate was not their expertise, you may find this LLC to be manager managed.  However, if three individuals formed an LLC to purchase and sell real estate and one was a real estate broker, the other a contractor to fix up the houses and the third an attorney to draft up the partnership documents and contracts, this LLC would probably be more likely to be member managed.

As stated above, the choice to be manager managed or member managed is a question that will be answered by the business owners and typically the overall size of the business, nature of the business and day to day involvement of the partners.  There is no right or wrong answer for each business, and an LLC that begins as a member managed LLC, may end up choosing to be a manager managed LLC after the business operates and the partners see the need for one or a few individuals to be making certain decisions for the business.

If you have questions regarding the operation of your LLC or other business issues speak with a Denver business attorney and tax attorney at The McGuire Law Firm.

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Denver Small Business Attorney John McGuire

As a business attorney John McGuire works with small and medium sized businesses regarding their legal needs.  The article and video below are to help provide information regarding the services John provides to small businesses.

John advises and provides services for small businesses regarding the following business issues:

–          Choice of entity

–          Overall entity and business structure

–          The business & individual tax implications given a choice of entity

–          The tax implications & impacts from specific business transactions

–          Business contracts- drafting & negotiations

–          The sale or purchase of a business- stock sales and assets sales

–          Business tax planning

The above are a few examples of the services Mr. McGuire can provide a small business.  Mr. McGuire can assist a business at every level from formation of the business, to legal needs as the business operates and the eventual sale or disposition of the business.  Please view the video below to hear more about these services and meet Mr. McGuire.

Contact The McGuire Law Firm to speak with a Denver small business attorney.  The McGuire Law Firm provides a free consultation to all potential clients and would welcome the opportunity to meet you and learn more about your business needs.

Asset Sale Discussed by Denver Business Attorney

Generally speaking when one business buys or acquires another business the transaction can be either an asset sale or a stock sale.  There are different tax implications, liability matters and other issues depending upon how the transaction is set up.  The video below has been prepared by a Denver business attorney at The McGuire Law Firm to discuss general matters relating to an asset sale.  Please remember that the information provided in the video below is for informational purposes.  You should always contact your business attorney and/or tax attorney to discuss the sale or purchase of any business assets or the stock of a corporation.

If you feel the need to speak with a business attorney in Denver, please contact The McGuire Law Firm to schedule a consultation.

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Denver IRS Tax Debt Relief

What constitutes IRS tax debt relief?  As a tax attorney, I think the following constitute IRS tax debt relief: formalizing an agreement to resolve an outstanding tax debt, resolving a tax audit in a manner favorable to a taxpayer or with no change to the taxpayer’s tax return and saving a taxpayer money through a successful penalty abatement with the IRS or tax settlement with the IRS.  In short, whenever a tax matter with the IRS is resolved and/or the taxpayer is able to be relieved of some of the tax debt they owe this should constitute IRS tax debt relief, right?  These issues are discussed in greater detail in the article and video below.  Please feel free to contact The McGuire Law Firm at anytime to speak with a tax attorney about your tax matters and questions.

What types of agreements are available to resolve a tax debt?  In addition to an installment agreement whereby you make monthly payments to the IRS, you may be a candidate for an offer in compromise, which can be considered a settlement with the IRS.  Yes, you pay the IRS an amount that is less than the total amount due for a resolution of your tax liability. Additionally, the IRS may agree to place your liabilities in a currently non-collectible status.  While in this status, the IRS will not actively enforce collection of the debt, and the collection statute will run.

If you are being audited by the IRS, relief may come in the form of the IRS issuing a no change letter meaning they agree with your return and are not going to issue a notice of deficiency, or the IRS agrees not to currently audit other periods.

In terms of lowering your tax bill and saving money, a potential for big relief comes in the form of the IRS agreeing to abate penalties.  If you can establish causation for the accrual of penalty and such causation is deemed reasonable cause for the abatement of penalties, the IRS can waive all or portions of the tax penalties that have been assessed.

If you are being audited by the IRS or owe taxes to the IRS please consider contacting The McGuire Law Firm to speak with a tax attorney.  A free consultation is offered to all potential clients and a tax attorney is likely to be able to help you resolve the matter.

 

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Denver Tax Lawyer John R McGuire

John McGuire is a tax lawyer at The McGuire Law Firm.  As a tax lawyer, John assists clients with many tax issues, matters and questions.  Below is a list of some of the tax issues that John assist client with.

– Individual & Business Tax Planning

– IRS Tax Debts, IRS Tax Audits and other IRS Problems

– Analyzing the tax implications of business transactions such as the sale of business assets, stock, business interests and other business acquisition matters

– The application of the tax law to the gifting of property whether at life or death

– Preparation of Tax Returns

Please view the video below to meet John and hear more about the services John provides as a tax lawyer.

You can contact The McGuire Law Firm at anytime to schedule a free consultation with a tax lawyer in Denver or Golden, Colorado.

Shareholder Issues in an S Corporation

An S Corporation is a corporation that has made an election with the Internal Revenue Service to be taxed as an S Corporation.  As such, an S Corporation is a pass through entity whereby the shareholders claim the corporate items of income, gain, loss etc on their 1040 Individual Income Tax Returns.

To be eligible for an S corporation election and to maintain the status as an S corporation the Internal Revenue Code mandates the S corporation allow only a certain number and types of shareholders.  For example, currently, I believe an S corporation can have only 100 shareholders and only one class of stock.  This differs from a C corporation as C corporation can or could have many more shareholders and many different types of stock.  For example, a C corporation can have multiple classes of stock, such as common stock, preferred stock, A shares, B shares etc.  Additionally, generally only individuals can be a shareholder in an S corporation.  Some exceptions apply for specific types of trusts (QSSTs).

A corporation will initially file their articles of incorporation with the secretary of state and thereafter file the election with the IRS to be taxed as an S corporation.  Form 2553 can be filed with the IRS to make the S election.  If the S corporation violates the Internal Revenue Code with a disallowed shareholder, the corporation can lose its S corporation status and be taxed as a C corporation, which could be very disadvantageous to the corporation and the shareholders.

In addition to the allowable shareholders and related issues, a corporation that operated as a C corporation for some time and then made the S corporation election must consider additional issues such as built in gain matters, which refer to the gain in certain assets at the time the corporation made the S corporation election.

If you have questions related to your choice of entity, entity structure or the taxation of your business or certain business transactions, speak with a Denver business attorney and tax attorney at The McGuire Law Firm.  The McGuire Law Firm offers a free consultation where you can meet with an attorney and discuss your current business operations, business questions and tax questions.

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What is Fair Market Value?

In terms of a business transaction, such as an asset sale, stock sale or otherwise, how would you define fair market value and why do we care?  One could define fair market value as what a knowledgeable and willing buyer under no compulsion to buy would pay and what a knowledgeable and willing seller under no compulsion to sell would sell an item for in an arm’s length transaction.

Ok, so in short, fair market value is what someone is willing to pay and what someone is willing to sell an item for, but what is an arm’s length transaction?  Arm’s length is referring to the relationship between the parties.  When related parties, such as father and son, mother and daughter, grandfather and grandson etc. enter into a transaction, such transaction may not be considered arm’s length because of your relationship.  The idea or thinking is that you would be more willing or likely to give a family member a “deal” on the purchase or sale of an item.  The Internal Revenue Service takes into account and considers related parties in regards to the tax treatment of certain items and transactions in the Internal Revenue Code.

Why do we care about fair market value?  You may care for many reasons, and a few will be discussed below.  If fair market value is not provided or exchanged in a transaction, the transaction could be considered part sale and part gift.  This part sale and part gift issue brings in too many issues to discuss within this article, but in short implicates gift matters, gift exclusion issues etc.  In terms of inheriting an asset, when you inherit property, you take such property with a stepped up basis, meaning your basis is the fair market value of the property on the decedent’s date of death (or there could be an alternative valuation date).  Thus, the current fair market value of an item becomes very important as it can dictate your basis in an asset and thus the gain whenever the asset is sold, transferred or disposed of

The video below has been prepared by a tax attorney and business attorney at The McGuire Law Firm.  The McGuire Law Firm hopes that you have found this information useful.  If you have questions relating to the tax treatment of an individual transaction or a business transaction, you can schedule a free consultation with an attorney by contacting the firm.

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What is a W-2?

A W-2 is the document you receive that reports your gross wages and the federal, state and local wages that have been withheld.  You use this document to prepare your 1040 individual income tax return.  You receive a copy of the W-2 and a copy is forwarded to the Internal Revenue Service.  You may have heard of the IRS filing a substitute tax return for a taxpayer who does not file their return.  The IRS is able to do this because your employer must report your wages and withholding on Form W-2, and others must report income on 1099s etc.  Thus, a W-2 is an informational return used by the IRS and the taxpayer.

If you have questions regarding your individual or business tax matters, you can speak with a tax attorney by contacting The McGuire Law Firm.  The video below has been prepared to provide additional information regarding a W-2.

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Limited Liability Partnership (LLP)

What is a limited liability partnership?  Limited liability partnerships (LLP) were initially developed in Texas as a response to the liability faced by partners of legal and accounting firms for failures of the savings and loan associations.  An LLP could be considered a form of a general partnership.  Under the legislation creating the LLP, an LLP can permit general partners to limit their liabilities for those partners that did not participate in the wrongdoing that brings liability upon the partnership.

Thus, the LLP shielded partners and protected these partners from the liability they would face as partners for the improper conduct and actions of other partners or of the partnership.  You can compare this to shareholders in a corporation as the most a partner in an LLP could lose would be his or her investment in the firm.

This concept of limiting liability spread quickly and now, I believe, most every state recognizes an LLP.  You can elect LLP status relatively easily.  A general partner will file a statement with the appropriate state office (maybe the Secretary of State) electing LLP status.  Some states may call an LLP a registered LLP because the partnership must register with the state.  The business must state “LLP” or “Registered Limited Liability Partnership in it’s name.  Additionally, some states may require an LLP to carry a certain amount of insurance or maintain a certain value in partnership assets.  The failure to maintain this threshold can cause the entity to lose its limited liability status.

Most statutes do not afford limited liability to the partner or partners who committed acts of negligence or malpractice.  However, the LLP statutes brought along the idea that a partner in a general partnership can have limited liability, and thus in some form or fashion these partners begin to look like shareholders in a corporation whereby they are owners, but not liable for debts.  However, unlike a shareholder, a partner can have full rights of management in terms of managing the partnership.

Although, a partner is not liable for the debts or torts of the LLP (if not caused by their negligence etc) it is important and practical to note that most loans or lines of credit will need to be personally guaranteed by one or more partners.  Thus, a partner in the LLP may be liable for a debt because they have personally guaranteed the note.

An LLP will be taxed as a partnership by filing Form 1065, which is the income tax return filed by partnerships.  Speak with a Denver business attorney or tax attorney at The McGuire Law Firm if you have questions regarding the formation of your business, your current entity structure or other business and tax matters.

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What is a 941 Tax Return?

If you pay yourself wages or an employee wages, you are required to complete and file Form 941 with the Internal Revenue Service.  So, what is Form 941?  The article and video below have been prepared by a tax attorney at The McGuire Law Firm to provide information regarding this form.

Form 941 is an Employer’s Quarterly Federal Tax Return.  As the title would indicate, the return is filed quarterly, and the return states gross wages paid, federal income tax withheld, social security & Medicare tax withheld, federal tax deposits made and other information.  Form 941 is due on or before the following days for the applicable quarter:

-1st Quarter (January through March) due on or before April 30th

-2nd Quarter (April through June) due on or before July 31st

-3rd Quarter (July through September) due on or before October 31st

-4th Quarter (October through December) due on or before January 31st (following year)

An important issue related to the Form 941 is federal tax deposits.  These deposits are how the business or employer pays in the withholding taxes to the IRS.  An employer can deposit these taxes on line through the EFTPS, mail payment or through other means.  The important question is, how often or when do I need to make these Federal Tax Deposits?  The frequency depends upon the employer’s payroll liabilities and could be with every payroll, monthly (on or before the 15th) or with the filing of the 941 tax return.

If you have questions regarding your 941 requirements or other tax issues, please contact The McGuire Law Firm to speak with a tax attorney in Denver.  A tax attorney can assist you with tax and business matters.