Massachusetts Certificate of Formation for Domestic Limited Liability Company LLC

First, the LLC operates as tax partnership (“TP”) as the default tax status if no election has been made as noted in Treasury Regulation Section 301.7701-3(b)(i). For legal purposes, we have a LLC. For tax purposes we have a tax partnership. Since we are discussing a tax issue here, we will discuss the issue from the perspective of a TP.A partner cannot under any circumstances be an employee of the TP as Revenue Ruling 69-184 dictated such. And, the 2016 preamble to Temporary Treasury Regulation Section 301.7701-2T notes the Treasury still supports this revenue ruling.Though a partner can engage in a transaction with the TP in a non partner capacity (Section 707a(a)).A partner receiving a 707(a) payment from the partnership receives the payment as any stranger receives a payment from the TP for services rendered. This partner gets treated for this transaction as if he/she were not a member of the TP (Treasury Regulation Section 1.707-1(a).As an example, a partner owns and operates a law firm specializing in contract law. The TP requires advice on terms and creation for new contracts the TP uses in its business with clients. This partner provides a bid for this unique job and the TP accepts it. Here, the partner bills the TP as it would any other client, and the partner reports the income from the TP client job as he/she would for any other client. The TP records the job as an expense and pays the partner as it would any other vendor. Here, I am assuming the law contract job represents an expense versus a capital item. Of course, the partner may have a law corporation though the same principle applies.Further, a TP can make fixed payments to a partner for services or capital — called guaranteed payments as noted in subsection (c).A 707(c) guaranteed payment shows up in the membership agreement drawn up by the business attorney. This payment provides a service partner with a guaranteed payment regardless of the TP’s income for the year as noted in Treasury Regulation Section 1.707-1(c).As an example, the TP operates an exclusive restaurant. Several partners contribute capital for the venture. The TP’s key service partner is the chef for the restaurant. And, the whole restaurant concept centers on this chef’s experience and creativity. The TP’s operating agreement provides the chef receives a certain % profit interest but as a minimum receives yearly a fixed $X guaranteed payment regardless of TP’s income level. In the first year of operations the TP has low profits as expected. The chef receives the guaranteed $X payment as provided in the membership agreement.The TP allocates the guaranteed payment to the capital interest partners on their TP k-1s as business expense. And, the TP includes the full $X guaranteed payment as income on the chef’s K-1. Here, the membership agreement demonstrates the chef only shares in profits not losses. So, the TP only allocates the guaranteed expense to those partners responsible for making up losses (the capital partners) as noted in Treasury Regulation Section 707-1(c) Example 3. The chef gets no allocation for the guaranteed expense as he/she does not participate in losses.If we change the situation slightly, we may change the tax results. If the membership agreement says the chef shares in losses, we then allocate a portion of the guaranteed expense back to the chef following the above treasury regulation.As a final note, a TP return requires knowledge of primary tax law if the TP desires filing a completed an accurate partnership tax return.I have completed the above tax analysis based on primary partnership tax law. If the situation changes in any manner, the tax outcome may change considerably. www.rst.tax

In the United States, corporate laws are creations of the states. This means there are no less than 50 ways to answer your question. It truly just depends on the state of incorporation. In the state of Florida, you can look up companies by directors, officers and registered agents, but not true in Wyoming or Delaware. It really depends.

I'll share my story…and it's all true.Right at the end of my 1st company's life, I discovered my, very trusted, business partner, and ex best friend, was “embezzling.” I use the term embezzling because here's the setup:Me: 100% ownerHe: 100% access to everything - trusted, like with my life, trustedHe was taking money outside of payroll and distributing the withdrawals across multiple lines on the P&L…just enough to not cause attention in individual ledger lines. I, only looking at the P&L level and not at the individual transaction level, didn't see anything out of line to draw the red flag. Plus, I didn't have reason to look for this, cause I trusted him.History: Me - first time business owner. He - 2nd timer, coming off a $10 million company, that went out of business, which had 5 owners.Fraud covers many areas; each despicable. None are good for anyone. I love stories where the fraudulent gets nailed.When I discovered the embezzling (1 month before closing the business), I was instructed to call the police and make a report. I did. AND, embezzling is considered a white collar crime. White collar crimes are put on the bottom of lists for police detectives and county attorneys to handle. The stack tends to be rather large in larger metro areas of more important things like violent crime and cases that have a lot of money backing them. They never signNow the bottom.A police detective did call my partner telling him the company is accusing him of embezzling, and that was the extent of jurisdiction's involvement. No further action was taken by the city police nor the county attorney.I also happen to have a cousin who, at the time, was involved in business fraud cases with the FBI. I had coffee with him. FBI covers cases that are large ($million and more) and cross state lines. My case, no so large and only in my state, but signNow enough to cause big trouble…a major factor in closing the business…another story.My cousin told me this: You can sue him in civil court for damages. It will most likely have a jury because he can simply plead not guilty and have a trial. It would be my attorney's job to convince the jury that I didn't know anything about the embezzling. His attorney would simply say this: jury, it's a small company run by 2 best friends. Do you really think both don't know what the other is doing? Not guilty.I also contacted a civil attorney, independently, and was told the exact same thing.A short while later, I had another chance to talk with another civil attorney, and was told the exact same thing.He got away with it. Me, on the other hand, had to pay for his sins.Back to answering your question. My understanding of the situation is you, as a minority owner, would have to prove you were not involved with the fraudulent activity. This means someone with a summons is asking you what's going on. If you can not prove your innocence, your exposure liability is limited to the amount of “basis” you have in the company. Basis is any initial investment you gave and any profits you took. Basis is different than payroll. Definitely consult an attorney if you feel there could be trouble.Also, most likely, the company would be sued for fraud. If the prosecuting attorney is also going after the owner's personal assets, there is a major situation going on, news worthy situation. Usually, only the company's assets will targeted. If an attorney is attempting to pierce the corporate veil, the owner(s) is a bad dude.If you are a manager, employee, the company protects your personal assets from customer fraud cases against the company. If you are committing fraud, it is proven and you are terminated for it, you can also be sued by your previous employer for damages. In this case, your personal assets are in jeopardy.

WHOA! You may have a BIG problem. When you started, are you certain you did not fill in a W-4 form? Are you certain that your employer doesn’t have your SS#? If that’s the case, I would be alarmed. Do you have paycheck stubs showing how they calculated your withholding? ( BTW you are entitled to those under the law, and if you are not receiving them, I would demand them….)If your employer is just giving you random checks with no calculation of your wages and withholdings, you have a rogue employer. They probably aren’t payin in what they purport to withhold from you.

How long does it take for a new boss from outside the company to figure out which existing employees have been more productive and which have been more of a liability?Depends on the company and the new leader or boss. If many leading and lagging indicators (KPI) are in place, a picture of where improvement needs to happen will become clearer each day. Depending on the frequency of who needs help, this could become apparent by the end of the week. If it takes longer, it will still be clear according to the measurement system (KPI).If the company doesn't use or have metrics (KPI), it might take 6 months to start to get an understanding on where problems occur.Good leaders will recognize if metrics are not in place to measure performance and will work to establish them. This way they can control the process and not vice versa. This is how good leaders get in front of problems.Bad ones will use old school tactics such as spying, taking into account other people's opinion (which cannot be substantiated due to a lack of data) and trying (and sometimes failing) to identify the point of cause. This is often confused with point of observation. That is when the wrong people are targeted. It also speaks to their style of problem solving- the attempt to fix the person instead of the process. This is how bad bosses go from putting out one fire to the next.

To form an LLC in Massachusetts, you must choose a unique business name, file a Certificate of Organization with the Secretary of the Commonwealth, and create an Operating Agreement. Additionally, you should secure an EIN from the IRS for tax purposes. Understanding these steps is essential for a successful LLC formation.

The cost to form an LLC in Massachusetts includes a filing fee of $500 for the Certificate of Organization. You may also consider additional costs for obtaining an EIN and creating an Operating Agreement. Overall, the investment in how to form an LLC in Massachusetts can be worthwhile for the benefits of limited liability protection.

Forming an LLC in Massachusetts provides owners with limited liability protection, separating personal assets from business debts. It also offers flexibility in management and taxation, making it an appealing choice for many entrepreneurs. Learning how to form an LLC in Massachusetts can enhance the credibility of your business.

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