Dissolving and Winding Up an LLC in West Virginia

Business owners in West Virginia should be familiar not only with forming an LLC but also with properly dissolving and winding up their company if circumstances require.

The rules for dissolution are found in the West Virginia Code, Chapter 31B – Uniform Limited Liability Company Act. Following these statutory steps ensures that obligations are met, members are protected, and the LLC is officially closed in the eyes of the law.

When Does an LLC Dissolve in West Virginia?

Under West Virginia law, an LLC may dissolve in several ways:

• Voluntary Dissolution – Members may agree to dissolve, either under the operating agreement or through statutory procedures.

• Administrative Dissolution – The Secretary of State may dissolve an LLC for failing to file annual reports, pay fees, or comply with state requirements.

• Judicial Dissolution – A court may order dissolution when it is no longer practicable to operate, or if disputes or misconduct make it impossible to continue.

The Winding Up Process

After dissolution, the LLC must “wind up” its business. This involves:

1. Ending Business Operations – The LLC may only act to close its affairs.

2. Notifying Creditors and Claimants – The company must notify creditors and give them an opportunity to file claims.

3. Paying Debts and Obligations – All liabilities, including taxes, must be satisfied.

4. Distributing Remaining Assets – Remaining property or funds are distributed to members as outlined in the operating agreement or by state statute.

Risks of Improper Dissolution

Improperly dissolving an LLC can leave members exposed to:

• Creditor lawsuits

• Unpaid tax obligations

• Penalties from the West Virginia Secretary of State

How Legal Counsel Helps

At The Skeen Firm, we help West Virginia business owners manage the complexities of LLC dissolution. Our attorneys can:

• Draft and file dissolution paperwork

• Advise on disputes among members

• Oversee creditor claims and distributions

• Ensure compliance with Chapter 31B of the WV Code

If you’re searching for a West Virginia business law attorney to provide guidance on winding up an LLC in West Virginia, our team is here to protect your interests. Properly winding up your LLC ensures a clean break and safeguards against future liability.

Contact us today to learn more about dissolving an LLC in West Virginia with the help of experienced counsel.

Read about LLC dissolution in Pennsylvania here.

*Disclaimer: The advice provided is for informational purposes and is not intended as legal advice.  It should not be relied on, nor construed as creating an attorney-client relationship

Understanding Pennsylvania LLC Dissolution and Winding Up Under Title 15

Starting a limited liability company (LLC) in Pennsylvania can be an exciting step for business owners. But just as important as forming your business is knowing how to properly dissolve and wind up your company if the time comes.

Under Title 15 of the Pennsylvania Consolidated Statutes, Chapter 88, Subchapter G, the law lays out the process for closing an LLC. Following these steps correctly helps protect members from future liability, ensures debts are settled, and wraps up business affairs in compliance with state law.

When Does an LLC Dissolve in Pennsylvania?

Pennsylvania law recognizes several ways an LLC can dissolve:

• Voluntary Dissolution – Members may agree to dissolve under the terms of the operating agreement or, if no agreement applies, by statutory procedure.

• Automatic Dissolution – Certain events, such as the expiration of a set duration in the operating agreement, can automatically trigger dissolution.

• Judicial Dissolution – Courts may order dissolution when it becomes unlawful or impracticable to continue the business, or if member misconduct or disputes prevent the LLC from functioning.

The Winding Up Process

Once dissolution begins, the LLC enters a “winding up” period. The company must:

1. Cease Operations – Business stops, except as needed to wind up affairs.

2. Notify Creditors and Claimants – Known creditors and claimants must receive notice to file claims.

3. Settle Debts and Taxes – All debts, obligations, and taxes must be satisfied.

4. Distribute Assets – Remaining assets are divided according to the operating agreement or, if no agreement, according to Pennsylvania law.

Risks of Improper Dissolution

Failing to follow Title 15 procedures can create long-term problems for members, including:

• Ongoing liability for unpaid debts or lawsuits

• Tax issues or penalties

• Continued filing obligations with the Pennsylvania Department of State

How Legal Counsel Helps

At The Skeen Firm, we guide Pennsylvania businesses through dissolution and winding up. Our services include:

• Drafting dissolution resolutions and notices

• Managing disputes between members

• Handling creditor claims

• Ensuring compliance with Title 15

If you’re looking for a Pennsylvania business law attorney to help with LLC dissolution in Pennsylvania, our team provides the guidance you need. Closing a business is never easy, but with proper legal support, you can protect your interests and move forward with confidence.

Contact us today to discuss closing a Pennsylvania LLC with an experienced attorney.

*Disclaimer: The advice provided is for informational purposes and is not intended as legal advice.  It should not be relied on, nor construed as creating an attorney-client relationship.

Kubican v. The Tavern, LLC: LLC Veil Piercing in West Virginia (and What Changed in 2022)

In the evolving world of limited liability company (LLC) law, the West Virginia Supreme Court decision in Kubican v. The Tavern, LLC marked a pivotal moment. The ruling challenged conventional protections afforded to LLC members by opening the door to personal liability through veil piercing. However, the story didn't end there. In 2022, the West Virginia Legislature enacted significant reforms to the Uniform Limited Liability Company Act (ULLCA), effectively rolling back the court's broader interpretation. This post will explore the case, its implications, and the legislative changes that followed.

What Was Kubican v. The Tavern, LLC About?
The case arose from a personal injury claim filed by Joseph Kubican. He initially sued Bubba’s Bar and Grill for negligence after being injured in an altercation. Upon further investigation, Kubican learned that the bar was operated under The Tavern, LLC. The company had two members: James Paugh and Lawson Mangum.

Kubican moved to amend his complaint to include Paugh and Mangum personally, asserting that they used the LLC structure to shield themselves from liability while effectively controlling all its operations. This brought up the critical legal question: Can the corporate veil of an LLC be pierced in West Virginia?

The Supreme Court’s Ruling: LLC Members Not Always Shielded
In a landmark decision, the West Virginia Supreme Court ruled that the state's Uniform Limited Liability Company Act does not provide absolute protection to LLC members. In other words, the "corporate veil" can be pierced under certain conditions, holding members personally liable for the company's obligations.

The court set out a two-pronged test for when LLC veil piercing could be justified:

1. Unity of Interest and Ownership: The court must find that there is such unity between the individual and the LLC that their separate personalities no longer exist.

2. Fraud or Injustice: The LLC structure must be used to promote fraud or cause injustice.

This ruling aligned West Virginia with a majority of other jurisdictions that recognize veil piercing as an equitable remedy.

Immediate Implications for LLCs in West Virginia
The decision in Kubican created immediate concern among business owners and legal professionals in West Virginia. Many worried that the case opened the floodgates for more lawsuits targeting LLC members personally. The ruling emphasized the importance of proper corporate governance, adequate capitalization, and maintaining clear separation between personal and business affairs.

LLC members were now at risk if they failed to respect the formalities of the entity structure or if they engaged in fraudulent behavior. The decision effectively put business owners on notice: the LLC shield is not impenetrable.

2022 Legislative Changes: A Reversal of Course
The response from the business community and legal commentators was swift and strong. Concerns about the uncertainty the decision created led to legislative action. In 2022, the West Virginia Legislature passed amendments to W. Va. Code §31B-3-303, aimed at reasserting the strong liability protections that LLCs are known for.

Key Highlights of the 2022 Amendment:

• Reaffirmed Limited Liability: Members of an LLC are not personally liable for the debts or actions of the company solely by being members.

• Restricted Veil Piercing: The revised statute expressly limits veil piercing to narrow circumstances, such as:

  • When a member personally guarantees a company obligation.

  • When the member is liable for unpaid taxes.

  • When a member commits fraud that directly causes harm.

• Codified Protections: The amendment codifies protections that had previously been interpreted by courts, thereby reducing uncertainty and litigation risk.

This legislative fix effectively nullified the broader implications of the Kubican ruling. It restored confidence in the LLC structure, ensuring that the veil could only be pierced under very limited and clearly defined conditions.

Why This Matters for Business Owners and Legal Advisors
The Kubican case and subsequent legislative response highlight an essential truth in business law: legal interpretations evolve, but legislatures often have the final word. Business owners in West Virginia and elsewhere must be vigilant not just about compliance but also about keeping up with legal developments that can alter the risk landscape.

Here are some practical takeaways:

• Maintain Proper Records: Always keep business and personal finances separate.

• Avoid Fraudulent Behavior: Engaging in misleading or deceptive practices can pierce the LLC veil.

• Stay Updated on Law: Laws can change. Regularly review updates or work with legal counsel to stay compliant.

• Use Written Agreements: If you’re guaranteeing an obligation or making personal commitments, document it clearly.

Conclusion: The Legacy of Kubican and What Comes Next
Although the 2022 legislative amendment curtailed the impact of Kubican v. The Tavern, LLC, the case serves as a powerful reminder of how judicial interpretation can shift the legal landscape. For a time, it seemed that West Virginia might join the ranks of states willing to more readily pierce the LLC veil. Instead, the Legislature decisively reaffirmed the LLC structure's protective purpose.

For attorneys, entrepreneurs, and business consultants, Kubican remains a landmark case—not for what it ultimately changed, but for how it spotlighted the balance between fairness and legal certainty in the realm of limited liability.

*Disclaimer: the advice provided is for informational purposes and is not intended as legal advice.  It should not be relied on, nor construed as creating an attorney-client relationship.

Maximizing Your Estate Plan with LLCs: A Smart Strategy Before 2026

As we approach 2026, many people are looking for ways to protect their wealth and ensure their loved ones benefit as much as possible. One powerful tool in estate planning is the use of Limited Liability Companies (LLCs). LLCs offer flexibility and control, making them a smart choice for families and individuals with significant assets.

Let’s dive into what LLCs are, how they can be used in estate planning, and why now is the time to take action.

What Is an LLC?

An LLC, or Limited Liability Company, is a legal structure that combines the benefits of a corporation and a partnership. It provides protection for your personal assets while offering flexibility in how the company is managed and taxed.

In estate planning, LLCs are often used to hold family assets, such as:

• Real estate

• Investments

• Family businesses

By transferring assets into an LLC, you can manage and distribute wealth in a way that aligns with your goals.

How Can LLCs Help in Estate Planning?

LLCs can be a key part of your estate planning strategy for several reasons:

1. Centralized Asset Management When you place assets into an LLC, you can manage them as a single entity. This makes it easier to oversee investments, collect rental income, and handle other financial activities. You can also name specific family members or trusted advisors to help manage the LLC.

2. Gift Tax Benefits One of the biggest advantages of using an LLC is the ability to gift ownership interests to your family members. For example, rather than giving a piece of property directly to your children, you can transfer shares of the LLC that owns the property.

Here’s the benefit: The value of the shares can often be discounted because they represent a minority interest in the LLC. This means you can transfer more value without exceeding the annual gift tax exclusion.

1. Control While Sharing Wealth Even if you give shares of the LLC to your children or other heirs, you can retain control as the manager of the LLC. This allows you to make important decisions about the assets while still sharing the benefits with your family.

2. Protecting Assets LLCs can also shield your assets from creditors and lawsuits. If someone sues a member of the LLC, the LLC’s assets are usually protected. This makes LLCs a great choice for safeguarding family wealth.

Why Act Now?

The upcoming changes to the federal estate and gift tax exemptions make now the perfect time to consider an LLC. Here’s why:

• High Exemption Limits: Currently, the federal gift and estate tax exemption is $12.92 million per person. This allows you to transfer significant wealth without paying taxes. But in 2026, the exemption is expected to drop to around $7 million per person.

• Maximize Your Gifting Opportunities: By creating and funding an LLC now, you can benefit from the higher exemption limits. Transferring ownership interests before 2026 can help you lock in these tax benefits.

Steps to Get Started

1. Consult an Estate Planning Professional Setting up an LLC requires careful planning. A lawyer or financial advisor can help you understand the legal and tax implications.

2. Choose Your Assets Decide which assets you want to place in the LLC. This could include real estate, stocks, or a family business.

3. Draft an Operating Agreement The operating agreement outlines how the LLC will be managed, who the members are, and how profits and losses will be distributed.

4. Transfer Ownership Interests Once the LLC is set up, you can start transferring ownership shares to your family members. Be sure to follow all tax laws and reporting requirements.

Final Thoughts

Using an LLC for estate planning is a smart way to manage your wealth, reduce taxes, and protect your family’s future. With the federal tax laws set to change in 2026, now is the time to take action. By planning ahead, you can make the most of today’s tax advantages and ensure your legacy is secure.

If you’re ready to explore how an LLC can benefit your estate plan, our law firm is here to help. Contact us today to schedule a consultation and take the first step toward protecting your family’s future.

Understanding West Virginia’s Uniform Limited Liability Company Act (Chapter 31B): Key Provisions for Business Owners

Starting a business comes with many legal decisions, and one of the most important is choosing the right structure. For entrepreneurs in West Virginia, forming a Limited Liability Company (LLC) offers flexibility and liability protection. The West Virginia Uniform Limited Liability Company Act (Chapter 31B) lays out the rules and requirements for LLCs in the state.

If you’re thinking about starting an LLC in West Virginia, this guide will help you understand the key provisions of Chapter 31B and how they impact your business.

What is Chapter 31B?

Chapter 31B is West Virginia’s legal framework for Limited Liability Companies. It provides guidelines on LLC formation, management, member roles, liability protection, and dissolution. Understanding these rules can help business owners stay compliant with state laws while benefiting from an LLC’s benefits.

Key Provisions of Chapter 31B

1. Formation and Organization of an LLC

To legally form an LLC in West Virginia, business owners must file Articles of Organization with the West Virginia Secretary of State. The Articles must include:

• The LLC’s official name (must contain “LLC” or a similar designation).

• The LLC’s business address.

• The name and address of the registered agent (the person or company designated to receive legal documents).

• The names and addresses of the LLC organizers.

• The business purpose of the LLC.

2. LLC Operating Agreement

West Virginia does not require LLCs to have an Operating Agreement, but it is highly recommended. This document outlines how the LLC will be managed and can help prevent disputes among members.

A well-drafted Operating Agreement should include:

• Each member’s ownership percentage.

• Voting rights and decision-making processes.

• Profit and loss distribution.

• Rules for adding or removing members.

• Steps for dissolving the LLC.

3. Limited Liability Protection

One of the biggest advantages of forming an LLC is personal liability protection. Chapter 31B ensures that LLC members are not personally responsible for business debts or lawsuits.

That said, members can still be held liable if they:

• Personally guarantee a business loan.

• Commit fraud or wrongful acts.

• Fail to separate personal and business finances.

4. Management Structure

West Virginia allows LLCs to be member-managed or manager-managed.

• Member-managed LLCs: All members participate in daily business decisions.

• Manager-managed LLCs: Members appoint a manager (who can be a member or an outside person) to run the business.

The Operating Agreement should state the management structure clearly to avoid conflicts.

5. Annual Reporting Requirements

Every West Virginia LLC must file an Annual Report with the Secretary of State. The report updates the state on the company’s key information and requires a $25 filing fee. Failure to file can result in penalties and potential dissolution of the LLC.

6. Dissolving an LLC in West Virginia

If an LLC decides to close, it must go through a legal process called dissolution. Common reasons for dissolution include:

• Members vote to close the business.

• The LLC reaches an expiration date set in the Operating Agreement.

• A court orders the LLC to dissolve.

After dissolution, the LLC must:

1. Pay off debts and obligations.

2. Distribute remaining assets to members.

3. File official dissolution paperwork with the West Virginia Secretary of State.

Final Thoughts

The West Virginia Uniform Limited Liability Company Act (Chapter 31B) provides a solid foundation for business owners looking to form an LLC. By understanding key provisions like LLC formation, liability protection, operating agreements, and dissolution, entrepreneurs can make informed decisions about their businesses.

If you need legal guidance on forming or managing your LLC, consulting an experienced West Virginia business attorney can ensure you meet all state requirements and protect your business interests.

Are you ready to form your LLC in West Virginia? Contact our law firm today for expert legal advice tailored to your business needs.

 *Disclaimer: this article is for informational purposes only. It is not providing legal advice. It does not create an attorney-client relationship.

Hold Up! How Holding Companies Benefit Small to Midsize Business Owners

That Warren Buffett fellow is really onto something, and that’s not even considering his inclusion on the Forbes 400.  So, what exactly is he onto?  Glad you asked!  His company, Berkshire Hathaway Inc., is the gold standard of a holding company (holdco).  Hold up, what was that term?  A holdco, sometimes known as a parent company, is an entity that owns investments in the form of stocks, bonds, other companies (operating companies/opco), or anything of value.  With the definitions out of the way, we can move on to how a holdco can help SMB owners.

As we have said in earlier articles, outside of generating a profit, the key purpose of any corporate entity is asset protection for its owners.  (Click Here and Here)  But how many entrepreneurs get other ideas to increase their revenues, which might not match their current business?  That answer is unsurprisingly a lot.  So, what happens if you run two opposite businesses through one entity?  That’s right – increased liability exposure.

What’s the best way to deal with liability as a business owner/operator?  You guessed it – a properly structured corporate entity.  This is where a holdco comes into play.  Imagine one business owner running a car wash plus several rental properties.  Those ventures have different customer acquisition strategies, earning potentials, and risks.  Even so, the owner wants them both for diversification and smoothing out cash flow.

It makes no sense for this owner to have both operations within the same business.  They have distinct functions, markets, capital allocations, and so on.  So, why risk the car wash if there is a slip and fall on the sidewalk at a rental?  See where we’re going with this?  It also creates a problem if the owner wants to sell one of the two.

Say someone wants to buy the car wash.  Separating it from the assets of the rental properties will create an allocation nightmare.  The acquisition time allocation is much more straightforward if they are each their own entity.  That will help you avoid the top deal killer – time.

So, as you, the serial entrepreneur explores expansion through acquisition, remember the holdco structure and its many benefits.  It can add asset and liability protection, decrease time spent closing deals, and provide natural exit strategies.

*Disclaimer: this article is for informational purposes only. It is not providing legal advice. It does not create an attorney-client relationship.

Holiday Primer 2022 - 5th Anniversary Edition

’Twas the month of the holidays across the Commonwealth,

We hope this year's primer finds you in good health.

While we have your attention,

Let us share some holiday wit,

Because most of the info we see on the interwebs is bull $%!t.

This is not legal advice per se,

More demystification to make readers say, “Yay!”

You can’t eliminate taxes with your LLC,

The IRS is watching

Just wait and see.

If you’re a parent who uses custody as leverage,

We suggest you chill out and have an adult beverage.

This year the market was trash.

Don’t rob a store;

There’s no need to act rash.

As we speed toward the new year, reflect on the past,

Do things that excite you and have a blast.

Next year we promise, no poems or rhymes,

To receive next year’s primer, we advise not doing the crimes.

In closing, we thank you for 5 years of holiday fun,

This isn’t the last primer,

We’ll continue our run.

So, happy holidays one and all,

Get yourself out there and have a ball.

*Disclaimer: this article is for informational purposes only. It is not providing legal advice. It does not create an attorney-client relationship.

The 1,2,3s of Asset Protection from Pennsylvania LLCs

To say there is an abundance of information online about Limited Liability Companies (LLC) is an understatement. With such great resources, why do many owner-operators have common problems? Whether going it alone or with a team by your side, it is important not to ever lose focus of the main value of an LLC: personal asset protection. That protection lasts only if the corporate veil stays intact. 

Now, wait a second. Who said anything about an old-timey word for curtains? What do curtains have to do with business anyway? 

Simple. A veil, or curtain, supplies concealment and protection from elements. The same concept is present to protect an LLC owner-operator's assets, at least to the extent that they follow corporate formalities. The corporate veil concept is the personal asset protection mechanism. While it is strong, it is not impenetrable. 

Piercing the corporate veil is a broader concept than many realize. Plus, in Pennsylvania, there is not a clear set of factors to define when a party can pierce the corporate veil. In Mortimer v. McCool, 255 A.3d 261 (Pa. 2021), the PA Supreme Court chose an “equitable powers” approach. This approach allows PA courts of all levels to evaluate the actions of owners to decide whether veil piercing is proper. This approach avoids setting out predictable factors and makes it tougher for owner-operators to avoid any specific conduct that could cost them the protection of their corporate veil. 

So while you cannot eliminate the odds that someone could pierce your LLC’s veil, you can do things to mitigate your risk. The three pillars of protection are 1. collect case law, 2. maintain formalities, and 3. capital control. While the first is out of an owner-operator’s control, there is no denying that the other two pillars are not only within your control: they are also best business practices for LLCs. 

Maintaining corporate formalities is easy. Keep all business and personal assets separate. And proper levels of insurance for your business. And keep accurate records. All things a healthy business does daily. Capital control for an LLC is an important sub-set of corporate formalities. It is important to adequately fund your LLC and to avoid treating it like a personal piggy bank. Again, both practices a healthy business would adopt. So where does that leave LLC owner-operators? As case law collectors. 

In Mortimer, the Court adopts a “geological accumulation” of case law to guide their equitable powers approach for veil piercing. The lack of precedent is unsettling. The decision makes keeping a watchful eye on veil piercing cases part of the path to understanding veil piercing, which in turn leads to a collection of precedent. As the number of cases grows, more elaborate guidance will evolve. In the meantime, follow best business practices. Take action to mitigate the potential of veil piercing by running a healthy business.

If you have questions about your business and asset protection, give us a call at 724-550-6970.

*Disclaimer: this article is for informational purposes only. It is not providing legal advice. It does not create an attorney-client relationship.

I’ll Take Corporate Transparency Act and Beneficial Ownership Disclosure for $500

Answer: The Corporate Transparency Act (“CTA”) is part of the Anti-Money Laundering Act of 2020, which Congress added to the National Defense Authorization Act for Fiscal Year 2021 (“NDAA”). 

Question: What is the first time the federal government has stepped into entity formation involving companies that are not publicly traded?  

Excuse our love of Jeopardy! While we are here though, why put your company in jeopardy? By the way, the $500 in the headline is a potential daily penalty for non-compliance with the CTA. Let’s dig in to how this supposed defense measure impacts you and your small business. 

Why did Congress think the CTA is useful?  The CTA requires Beneficial Ownership Disclosure (“BOD”) of all reporting companies. To keep it simple a reporting company is any corporation, LLC, or other similar entity formed with any state or foreign government. A beneficial owner of this kind of company is any person or entity with over 25% ownership. 

Why is it important and how does it relate to national defense? That answer is more complex than it appears. It boils down to two main reasons. The first reason is the difficulty of tracking owners of the more than two million corporations and LLCs formed each year. The second reason is the potential to launder money created by this difficulty. 

With that in mind, Congress decided now was the time to up its efforts in fighting money laundering. The current regulatory scheme allows for a lot of anonymity in business ownership for companies not regulated by the SEC. This regulatory scheme creates an ideal environment to conduct business through “shell” companies. These shell companies further distance an individual from ownership. It is easy to see how this scheme could create a laundering operation labyrinth. The complexities could make prosecution elusive. So as is often the case, the many now pay for the few. 

While the regulations are not final, we do know that all newly registered entities will have compulsory BOD reporting at filing. The rule for existing entities is less clear. The United States Treasury Financial Crimes Enforcement Network (FinCEN)did propose rules for implementation in 2022 in December 2021. Comments on the proposed rule close on February 7, 2022. Either way, the time to get ahead of this change and rule is now. We will keep you updated on the final rule once it is available. 

Contact The Skeen Firm today at 724-550-6970 or info@theskeenfirm.com to set up your CTA compliance plan. 

*Disclaimer: this article is for informational purposes only. It is not providing legal advice. It does not create an attorney-client relationship.

LLC filings are easy and cheap—true protection is priceless.

You filed Articles of Organization for your own LLC, saving yourself a lot of money. Great! Now you can run the business of your dreams without the fear of impact to your personal assets. Well, not completely.

Liability protection only exist if there is a corporate veil. A corporate what? The corporate veil assumes the business and its owners are separate entities. This separation is one of the major benefits of forming an LLC. So, how do you create it? 

Pennsylvania LLCs are not subject to the same formalities as corporations. The corporate formalities are instructive nonetheless. LLC owners should have an operating agreement. Like corporate by-laws, an operating agreement provides the framework of the LLC. 

New LLCs need start-up capital. LLCs should maintain enough capital to cover its debts. Capital goes to the LLC and not an individual member or manager. Directing it to them can create a commingling issue.

LLCs should maintain separate bank and credit accounts to avoid commingling. Separate accounts make it more difficult for creditors to prove individual liability. Note, this does not cover debts with personal guarantees.  

Whoa! Getting and maintaining liability protection is not as simple as filing Articles of Organization. 

Contact The Skeen Firm today if you have questions about your LLC. We are passionate about business success and asset protection. 

*Disclaimer: this article is for informational purposes only. It is not providing legal advice. It does not create an attorney-client relationship. 

Sole Proprietorship or LLC – How to go about Small Business Formation

There is no time like the present to start your business. With a favorable tax environment and technological advances that act to reduce barriers to entry, working for yourself and calling the shots has never seemed more attainable. For many, the ideas come natural, but every other step in the process is foreign. There are filings, meetings, fees, and an endless list of other associated regulatory measures that keep many from pursuing their dreams. However, with sound, affordable legal guidance anyone can get their ideas off the ground and chase their passions. (Think of how much more successful the Pet Rock would have been with the Internet.)

Formation is perhaps the first major hurdle for any new business. Each designation recognized by the Commonwealth comes with a variety of benefits and potential issues. Making the right determination early will set the stage for long-term success. The following discussion is aimed at clarifying two of the most popular and practical formation solutions. 

• Sole Proprietorship – This option is the least costly if going it alone. There are less regulatory hurdles, as the government recognizes you as the business, so there is no need to maintain separate financial accounts and accounting methods. The same holds true for taxes, as you will get taxed as self-employed. Potential issues for owners in this structure are sole liability for all business debts meaning you are subject to personal lawsuits for business related activities. 

• LLC – Limited Liability Company (LLC) is a structure that protects the individual manager/owners/operators from most personal liability for debts and lawsuits brought against the business.  An LLC is also considered a pass through entity for tax purposes, depending on the elections during formation, which can shift some of the tax burdens. There are potential significant drawbacks related to filing fees to form an LLC with the state. Once formed there are meeting requirements and ongoing regulatory fees, as well as maintaining operations as a going concern under state law. One major requirement is the separation of banking accounts and other business records. Failing to follow through on these requirements could cost the business at tax time, which is a major setback in the near term and potentially the long term. 

While the above addresses a laundry list of benefits and potential issues, it is in no way comprehensive. At The Skeen Firm, we are committed to answering all of your business questions in depth and ensuring your business journey starts with solid footing.

Call us today, at 724-550-6970, or email at info@theskeenfirm.comto schedule a consultation to discuss affordable solutions to start your business and pursue your dreams.  

*Disclaimer: The advice provided is for informational purposes and is not intended as legal advice.  It should not be relied on, nor construed as creating an attorney-client relationship.