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Thread: LLC Partner ? Texas

  1. #1
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    Default LLC Partner ? Texas

    How does one become a "Partner" in an LLC business? Are there offical papers to be signed? If you work for the company, and you are a payroll office manager, does that make you a "Partner"? Can you be held responsible for the companies debts, if you were never officially a "partner"? Please respond.....just found out my spouse has been sued over 6 months ago, he was not notified and we have a judgement against our personal home.

  2. #2
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    You need to talk to a lawyer at once. There are no easy answers to any of your question. Generally there is no specific documentation required for a person to become a member (which you are calling partner) in an LLC. However it doesn't just happen either, there must be some action, whether written or not, that shows that the person has agreed to become a member and the other members of the LLC have agreed to admit the person as a member.

    That means that simply serving in some managerial or administrative capacity does not make the person a member of the LLC.

    Even if a person becomes a member, that does not mean that he is liable for the obligations of the LLC. An LLC offers limited liability, which means that a member is not ordinarily liable for the debts of the LLC. However, limited liability does not mean that there is never any potential exposure. There are several ways that a member (or even non-member) can be responsible for the debts and obligations of the LLC. For example, a "responsible person" is liable to the IRS for any payroll taxes that are not paid. It is very possible that the manager of the payroll office could be a "responsible person" under the IRS rules.

    Like I said, you really need to visit a lawyer right away.
    David K. Staub (www.illinoisbusinessattorney.com)
    Forum posts are not legal advice, are for informational and educational purposes only, and are not a substitute for proper consultation with legal counsel.

  3. #3
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    From the TX Sec of State site:
    'Limited Liability Company: A Texas limited liability company is created by filing a certificate of formation with the Texas Secretary of State. The Secretary of State provides a form that meets minimum state law requirements. Online filing of a certificate of formation is provided through SOSDirect.

    The limited liability company (LLC) is not a partnership or a corporation but rather is a distinct type of entity that has the powers of both a corporation and a partnership. Depending on how the LLC is structured, it may be likened to a general partnership with limited liability, or to a limited partnership where all the owners are free to participate in management and all have limited liability, or to an “S” corporation without the ownership and tax restrictions imposed by the Internal Revenue Code. Unlike the partnership, where the key element is the individual, the essence of the limited liability company is the entity, requiring for its creation more formal requirements. 1 William D. Bagley & Phillip P. Whynott, The Limited Liability Company, §2.10, (2d ed. 2d rev. James Publishing, 1995).

    The owners of an LLC are called “members.” A member can be an individual, partnership, corporation, trust, and any other legal or commercial entity. Generally, the liability of the members is limited to their investment and they may enjoy the pass-through tax treatment afforded to partners in a partnership. As a result of federal tax classification rules, an LLC can achieve both structural flexibility and favorable tax treatment. Nevertheless, persons contemplating forming an LLC are well advised to consult competent legal counsel.

    A limited liability company can be managed by managers or by its members. The management structure must be stated in the certificate of formation. Management structure is a determination that is made by the LLC and its members. The Secretary of State cannot give advice about management structure."


    The actual LLC law is here: http://www.statutes.legis.state.tx.u...htm/BO.101.htm Section 101.114 is important as is 155 and Section 401....starting at 501 it also talks about right to inspect company records.....But only someone knowledgable in the whole process can pick out where and what is important.

    That said, a lawsuit can be brought by any person for any reason. Often times, employees in the HR/financial/payroll part of the company can be sued and the employer provides something called EPLI and/or E&O insurance to cover liability/errors and omissions. You need to see if there was a policy for that.

    Texas has (or at least had) a place where you could search who owned a specific business on the Sec of State page. I rarely use it and have to hunt it down when I do. You need to check to see if your spouse was listed.

    That said, I think you need to consult a local attorney with as much infomration as you can provide....

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