2:00 I'm a little confused by this. If an LLC without any starting capital and a member wishes to buy equipment for use by the business out of their own pocket, would each transaction need to be documented as a capital contribution?
@hatersgotohell627
2 жыл бұрын
i don't get that either.
@HowtostartanllcOfficial
2 жыл бұрын
Hi, thanks for the question! Economically, there is no difference between contributions in cash and kind. A member makes a capital contribution either (i) by contributing cash which the LLC can then use to buy equipment or (ii) by buying the equipment and then contributing it to the LLC. It’s good practice to document capital contributions made by members to an LLC, since that could be a factor in ascertaining what proportion of the business each member owns. Hopefully that helps!
@CSECLectureSeries
4 жыл бұрын
Great video
@mosesaltair3893
9 ай бұрын
If I don't comingle finances, but I do literally everything in regards to the business, can the corporate veil be pierced via the "alter ego" doctrine?
@HowtostartanllcOfficial
9 ай бұрын
That's a great question. The answer comes down to precedent rather than a hard fast rule or regulation. Only a court can apply the "alter ego" doctrine and it will only do so if there is misuse of a company’s legal personality. Courts generally are very reluctant to ‘pierce the corporate veil’. However, there are two rationales the courts may rely on to pierce the veil: evasion and concealment. Here are two cases that explain the rationales. In United States v. Bestfoods 524 U.S. 51 (1998), the federal government sought to hold Bestfoods, a subsidiary of CPC International Inc., liable for environmental cleanup costs at a polluted site. The Supreme Court found that Bestfoods could be held liable for its parent company's environmental obligations because it had been formed as part of a scheme to evade liability. The Court held that the corporate veil could be pierced under the "evasion" principle because Bestfoods was created to shield CPC International from environmental liability. In Walkovszky v Carlton (1966), the New York Court of Appeals allowed the piercing of the corporate veil under the "concealment" principle. The case involved multiple corporations owned by the same individuals and operated as a taxi business. One of the corporations was responsible for an accident, but it argued that the others should not be held liable. The court found that the corporations were used to conceal and confuse liability, and therefore, the corporate veil could be pierced to hold the owners personally liable for the accident. Many business owners “do literally everything in regards to the business”. In that role, they act as an agent of the corporate entity, which retains its separate legal identity. So unless there is some monkey business, a business owner need not be afraid the courts will apply the alter ego doctrine.
@eddieteah3102
Жыл бұрын
great video
@HowtostartanllcOfficial
Жыл бұрын
Thank you!
@jennisoto847
3 жыл бұрын
Hi, I have a question. I'm confused about the signature still. Am I supposed to sign my personal name and write "by: (my personal name, followed by my title, ex: Authorized Member)"? Because the video shows that a personal name is signed "Ben Rice" instead of the name of the LLC business entity. I thought I had to sign the name of my business and not my personal name? Can you help clarify?
@HowtostartanllcOfficial
3 жыл бұрын
When signing business documents for an LLC, owners should sign their personal name followed by their official company title, and the company for which the signature is made. Example: John Smith, as Authorized Member of ABC LLC, for and on behalf of ABC LLC. Thank you for clarifying!
@jennisoto847
3 жыл бұрын
@@HowtostartanllcOfficial alright I understand now, thank you so much!
@maximilianocrespo7012
2 жыл бұрын
Under "what the corporate veil does not cover", If I sign a personal guarantee of my companies' obligations, what do you mean by " It would be a voluntary waiver of the Corporate veil"?
@HowtostartanllcOfficial
2 жыл бұрын
What we mean by “It would be a voluntary waiver of the Corporate veil" is that by signing your personal guarantee, you are willfully breaking the corporate veil. You are renouncing the protection of the corporate veil because you are personally involving yourself through your signed guarantee.
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