Limited Liability Company and Corporate Litigation

Birmingham Limited Liability Company & Corporate Litigation Attorneys

A Limited Liability Corporation (LLC) may be the best structure for your small business. As the name states, an LLC can limit your liability by protecting your personal assets from creditors. Business owners have enough to worry about without adding losing their home to corporate litigation to the list. But there are still plenty of legal issues that arise and having corporate counsel that is deeply familiar with the issues that impact LLCs can be extremely valuable. 

What Are the Benefits of an LLC? 

An LLC offers entrepreneurs more than liability protection. The business structure is also flexible, combining characteristics of a standard corporation with those of a sole proprietorship. The flexibility allows ownership to decide on the best management structure for their situation. The LLC structure allows for pass-through taxation to ownership, which can prove financially advantageous when it’s time to file business returns. Finally, while all corporate structures have compliance requirements, the burden on LLCs tends to be lighter. 

Call (248) 609-3526 to set up a free consultation or reach out online.

Common Legal Issues Facing LLCs

A Limited Liability Corporation can find itself in the same legal disputes as any other business, but the nature of the LLC structure can create some unique obstacles. 

For example, the co-mingling of funds can present a significant problem for LLC owners. This is when your personal and business finances start intersecting. 

The core benefit of the LLC is to protect your personal assets. However, if an owner easily moves between accounts with their money, a court could decide that the business is really not separate from their personal finances. Therefore, under these circumstances, the owner’s personal assets could end up subject to seizure. 

An attorney works with clients to establish a good bookkeeping structure that accounts for their unique business needs. Let’s say the LLC in question is a painting company. It’s common for someone to have to make a run for supplies in the middle of a job. Not everyone on staff is going to have the business credit card, and co-mingling could easily start happening. 

When that happens, the courts may determine that your business is really your “alter ego” and now indistinguishable from your personal finance. A good attorney can advise on what practices to avoid and what accounting structure will be functionable for your business. 

Ironically, another legal issue might arise from the very thing a business owner sought to avoid — personal liability. The LLC’s protections are broad, but they aren’t unlimited. When an owner is personally at fault for something through negligence, they can still be liable. Personal negligence can’t be protected by an LLC, nor can personal liability that might exist through a loan. 

Our lawyers are here to advise you on what type of insurance you may need and what type of financial structures give you the best chance for success.

Setting up Your LLC

When you file to create an LLC in Michigan, you’ll be required to appoint a resident agent. This is someone who is effectively the point of contact for all legal documents. The next step is to file Form 700, which is your Articles of Organization. This can be done online. 

The Operating Agreement is distinct from the Articles of Organization. The Operating Agreement is a legally binding document that will lay out how your business intends to function at the highest levels, including issues like how profits will be distributed. It is intended to avoid future conflicts between the partners. 

Once the LLC is filed and the business is off and running, compliance requirements still exist. The business must maintain all appropriate licenses and permits and file all necessary reports with the state of Michigan. 

An experienced lawyer can think proactively and help you decide if the LLC structure is best for your business and advise you on how to set it up. Your counsel will then work with you in ongoing compliance and risk management. 

  • We are often in demand to assist as local counsel in litigation and transactional matters in Southeastern Michigan.
  • Our elite team of attorneys is committed to pragmatic, client-focused counsel.
  • Our team has over 100 years of collective experience.
  • Our firm specializes in the core areas of Commercial Litigation, Business and Real Estate Law.