[crud3w4re]

ok. cool. So if I have some guys that run things equally to me, would it be wiser having an LLC, or LLP? I'd be the GP, I am the founding member. Though, they don't live anywhere near me, but we do network well..

[akula]

Originally Posted by crud3w4re

Nah. We know how to run a webhost, but I was wondering if down-the-road would it be possible to "install" people to run it? Similar to installing a puppet government in a country.

In other words, can an LLP own companies?

Well...good question.

Many entrepreneurs assume they can start a company, get people to "run it" and spend their days observing the whole thing from distance in Tahiti. Of course, that doesn't happen in private companies (save for a few exceptions).

Basically, when you are a major shareholder in a company and you hire agents (i.e. employees) to operate the business, you're gonna be incurring "agency costs"...this involves everything from the employees misappropriating company cash/assets to the employees not doing their job properly. To control these costs, you have to stay involved in the business. This is why entrepreneurs are extraordinarily overworked. The more successful they become the more work they have to do.

Now...no...an LLP can't own a company. The GP who is employed by the LLC can own shares in a company, which may be a controlling stake of shares. In this scenario, the GP will be able to exercise some voting rights, raise questions in the AGM and some other less important things...in terms of telling the management what to do (i.e. exercising ownership)...this right does not extend to the shareholders - it extends to the directors, who are controlled by the shareholders to some extent

So yes...the LLP, through the GP, can own some share in a company, but it can never own the company in a practical sense. The company is owned by the people who work in it on a daily basis.

[akula]

Originally Posted by crud3w4re

ok. cool. So if I have some guys that run things equally to me, would it be wiser having an LLC, or LLP? I'd be the GP, I am the founding member. Though, they don't live anywhere near me, but we do network well..

LLC

an LLP structure is designed for other circumstances

It only works where the GP has extensive professional indemnity insurance

That's why it's a popular structure with lawyers and accountants (because they must have insurance by law)

If you don't have PII, then you need an LLC to carry on business

[crud3w4re]

Okay, and have you ever heard of the LLLP?

Can an LLC be a parent company? Thanks. I'm referring to, starting multiple businesses, and running them "from a distance" as you say, but perhaps, more along the lines of business architecture. For example, we, me, and my partners, would be in charge of the entire company, and each of the businesses that we would own would be a "branch", headed by people, and they would report to us. So they would esssentially run the day to day, but we'll the [i]real[i/] owners. I don't own multiple businesses, but I'd like to down the road, that's why I ask. I'm trying to establish multiple avenues of revenue, but it would be difficult running everything at once, that is why I'm asking if we could possibly hire executives.

Example:

Anoniche, LLC owns Vivacityhost, LLC ... Vivacityhost, LLC members run the day to day, but report to Anoniche, LLC. Is this, at all, possible? Or perhap's we'll establish a Corporation S-class? down the road in order to do this.

[akula]

I've heard of LLLPs in some passing conversations, but it's a new concept, regulated by state legislation and currently untested in precedent. If operators want limited liability I don't see why they should opt for this new concept as opposed to the well tested and established protections of the corporate veil.

Yes, an LLC can own/control securities in other companies.

No, I don't think there is any reason to discuss how to structure a corporate group. You're not doing any acquisitions, you're not getting exposed to tax liabilities and you're not entering international markets or doing jurisdiction arbitrage.

What you are talking about in terms of subsidiaries and parents is the result of mental accounting. Specifically, you derive comfort by compartmentalizing various business activities into different legal entities.

If talking about all these different hypothetical companies controlling some other hypothetical companies makes you feel more confident - then so be it. Unfortunately, I can't discuss these issues with you unless you're trying to solve some kind of objective tax/operating problems

[crud3w4re]

I think of them to make me comfortable? nah. I've brought them up so that I wouldn't have to keep control of everything I own, that's why. I'm not really even talking about anything in the short term, the relevence is longterm, whenever I get to that point. Anyway, short term now:

Can I form an LLC with members not even in my own state, or country? Or maybe just include them even if it's not legally binding eh

[akula]

hehe

great question

i think you're gonna have a lot of fun getting in touch with the New Jersey Division of Revenue (or an alternate regulator) and asking them about it

The rules for NJ incorporation are in The New Jersey Limited Liability Company (LLC) Act, N.J.S.A. 42:2b-1, provides for the establishment of LLCs in New Jersey.

More info: http://www.state.nj.us/njbusiness/st...ype/liability/

...as far as I know, there are no restrictions on member domicile...your shareholders can live anywhere and not be prevented from being on your cap table

[crud3w4re]

Cool. I would start a Corporation, but don't they need to keep reports of EVERYTHING? Kind of annoying. LLC has the benefits of not needing to keep tons of records, and the benefits of being treated as a separate entity, so good taxwise. That's my reasoning.

It's not even to that point, so I don't have to think about it right now, but we do discuss this. Is it illegal saying that you're a company, even if you aren't, but still run like one?

[akula]

yes it is illegal because it is deceptive and it because it can cause a lot of problems