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Unlimited Possibilities with Limited Liability Companies

(May 2008) posted on Sun May 11, 2008

More screen printers are looking toward LLC status as a way to operate competitively while protecting their personal assets. Read on to find out about the other advantages associated with limited liability companies.

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By Mark E. Battersby

Another downside is that the laws of various states governing LLCs vary. No uniform law prevails, thereby making doing business in more than one state difficult. Like partnerships, LLCs do not have perpetual life. Some states stipulate that the screen-printing business, when structured as an LLC, must dissolve after 30 or 40 years. Technically, an LLC venture dissolves when a member dies, quits, or retires.


Forming the LLC

An LLC can be formed in most states simply by filing articles of organization with the state’s LLC filing office—usually the Secretary of State’s office—and paying a filing fee. Many states, in fact, provide a fill-in-the-blank form that takes only a few minutes to prepare.

The operating agreement, for the most part, contains any procedures and rules that the parties desire and, once put into place, can just sit there, maintenance free. The operating agreement explicitly states the rights and responsibilities of the LLC members. Without a written LLC operating agreement, the LLC laws of your state will govern the inner working of the LLC. Generally, it is preferable to clarify your business arrangements and decide how your LLC will be run, rather than having the state dictate its terms.

No one needs any more red tape in his or her life. Under the LLC rules in most states, there is no need to keep exhaustive minutes, hold meetings or make resolutions to, in effect, stay legal. However, this freedom is often a trap for the unwary and is the first place the IRS or an aggressive attorney will attack when attempting to pierce the corporate veil and go after the shareholders personally. If records are not maintained perfectly, the LLC’s corporate protection may be lost.



In most situations, a screen-printing business operating as a partnership can quickly and inexpensively convert to an LLC. Partnerships can usually convert without tax consequences, with the new LLC continuing to file a partnership tax return with the IRS. Because of the similarity of the structure, the IRS does not usually look at the conversion as a taxable event.


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