Menu
Please Note: We sincerely hope you're staying safe during the COVID-19 Emergency. At IncNow, we've made adjustments to keep our team safe, like working remotely, but we're still here and open for all of your incorporation and registered agent needs.

Archives for "W"

What Is a Statement of Organizer?

A statement of organizer is a document stating the initial members or managers of an LLC. In an LLC, when the company is formed, a Certificate of Formation is filed naming the authorized person. However there is little connection between this individual and the members or managers of the company, other than a cover letter to the company.

What Is the Purpose of a Statement of Organizer?

To provide for more of a “paper trail” and “bridge” from the Authorized Person (also known as an Organizer) to the initial members or managers, the authorized person can sign a Statement of Organizer setting forth the name of the initial members or managers. To make this even more official, if requested by the customer, this document can also be notarized and even certified by the Secretary of State as being an authentic Delaware notary in what is called a “Re-Notary”. If used for international business dealings this “Re Notary” can even be apostilled or legalized alongside the Certificate of Formation.

When to Create a Statement of Organizer

Generally, initial members or managers will request a statement of organizer when they apply to open a business bank account. It is important to do this as soon as possible after formation to make sure you can obtain one.

What is an LLLP (Limited Liability Limited Partnership)?

The LLLP is a sub-set of the Limited Partnership, similar to a traditional Limited Partnership (LP) where the ownership is divided into two categories: Limited Partners (passive investors without management authority with limited liability) and General Partners (Managers). The difference between an LP and a LLLP is that in an LLLP, the General Partner has limited liability, not unlimited personal liability.

Often, real estate investors will hold title to investment property through an LP by making themselves the limited partners and forming an LLC to act as the general partner to avoid unlimited general partner liability. The LLLP is an alternative to this tiered structure in real estate because it limits the liability of the general partner without the need to form a separate LLC. Nonetheless, LLLPs are uncommon in the context of commercial real estate.

Creating an LLLP begins with the filing of a Certificate of Limited Partnership, which in turn, makes the election to be a limited liability limited partnership. After the development of the LLC Act, most prefer the simplicity of the LLC to the complexity and higher annual state fees of the LLLP.

What is an Economic Interest?

An economic interest is an ownership share of an LLC that only entitles the holder to receive distributions. This is different than a membership share because an economic interest does not entitle the holder to any control or voting rights.

The benefit (and potential downside) of an economic interest in a company is that you are able to benefit from the company’s profits without having to make the tough decisions that the controlling members make. These people are often called “silent partners” or simply “investors.”

Workmen’s Compensation Insurance

Insurance plans that compensate for the death or injury suffered by a worker while on the job.

Working Capital

The amount of capital/current assets that is available for use in company operations. Working Capital is calculated by subtracting current liabilities from current assets.

Winding Up

The process of ending a business. This typically involves selling the business’s assets, paying creditors, distributing the remainder to equity holders, and then dissolving the business.

What is Form SS-4?

The SS-4 is the one-page IRS form which is filed in order to obtain an Employer Identification Number (EIN).  Typically, this will be filled out and submitted to the IRS immediately after incorporation. However, an entity can submit this form later in its life. It is a fairly simple form to complete. It asks for information that is usually readily available, such as the address of the headquarters, the formation date, the type of entity, etc.

You can obtain this form on the IRS website. However, many customers prefer to have IncNow assist with the process of obtaining an EIN.

MORE: How to Get an EIN