I’ve Filed an LLC. I’m Personally Protected from Lawsuits, Right?

Filed LLCHow useful is a condom that is never taken out of its box and wrapper?

If you were the kind of person with enough forethought to buy a condom, you would probably want it to protect you from several things.

But it would not be very useful to go through the trouble of buying the condom and not taking the additional necessary steps to get its benefit.

Lawyers call certain legal services “prophylactic.” That’s because their purpose is to prevent problems and unwanted consequences.

Completing your necessary corporate compliance and regulatory paperwork is prophylactic. Buying an LLC and not taking it out of the box will not give you the desired results.

Video Transcript:

Say you filed an LLC using Legal Zoom. Are you personally protected from lawsuits?

Maybe a few, but mostly, no.

Because they don’t give legal advice, budget legal sites don’t tell you there are numerous things to do after you file the LLC to legitimately and legally set up your business.

After years of starting businesses, we have developed a list that is several pages long made up of single spaced bullet points.

If you don’t do all the things on this list for your LLC, then the “corporate veil” can be pierced.

But more likely, if you don’t do all of the things you are supposed to do to start up your business legally, you will violate one of several laws that carry personal liability even if you are incorporated.

There are legal traps in the areas of taxes, wage laws and even corporate laws and torts.

You may also be liable for some contracts and debts.

There are ways to limit your liabilities and protect your assets. While nothing is foolproof, a business-minded lawyer can help you significantly.

Do you know where your legal land mines are? To find out, call us for a Business Risk Review at 800-449-8992 or email us at [email protected].

5 Must-Read Business Books That Might Change Your Life

Reading the top 5 Must-Read Business Books

I have a college degree in English Literature. So you would think that I read a lot of novels. You’d be wrong. Since I graduated, I have mostly read must-read business books and law books.

It’s not that I’m boring. (Although I may be that.) Rather, I’m extremely focused on growing Bellatrix PC into the greatest law firm ever. (I may also be a tad bit competitive.)

Running a successful business requires more than vision, dedication and an entrepreneurial spirit. It requires being a lifelong learner.

Business books can inspire, motivate and help you get past operational, management or financial blocks. Here are my favorites:

  • How to Win Friends and Influence People by Dale Carnegie

Published in 1936, this book is still relevant and insightful. This book teaches three fundamental techniques for dealing with people, both in business and everyday life. It also teaches six unique ways to make people like you, twelve ways to turn people to your way of thinking, and how to influence change in people without making them resent you.

This is perhaps one of the most important must-read business books for small business owners and decision makers to read. Understanding people is one of the keys to success in business and sales.

  • The 4 Hour Workweek by Tim Ferris

I didn’t I was an entrepreneur until I read this book in 2007. I started my first business almost immediately after read this book. So Tim Ferris literally changed my life.

This book promises to teach you how to “escape 9-5, live anywhere, and join the new rich.” Working only 4 hours a week is not immediately feasible for an entrepreneur, though, so it’s promise is initially elusive. But the ideas in this book form the cornerstone of a new school of thought in the business world.

Pen-ultimately, The 4 Hour Workweek teaches the art of leverage, which is the key to finding freedom as an entrepreneur. It also teaches you how to eliminate 50% of your work in 48 hours using proven principles. A lot of the work you do does not move the needle enough. Ferris teaches you to ruthlessly slash those things so you can make more money and take back your life.

This Must-read business book is not for the faint of heart.

  • The E-Myth Revisited by Michael Gerber

Truer words have never been put on paper about why small businesses fail than what is in this book. Most small business owners have bought themselves a job and are not flourishing as entrepreneurs. This book explains why through examples and by contrasting how most small businesses operate to successful models, such as franchises.

If you are struggling as a business owner, doing it all, and barely making ends — read this book right now. It could save your business and your sanity.

  • The Hard Thing about Hard Things: Building a Business When There Are No Easy Answers by Ben Horowitz

Building a successful business is hard! I wish more “gurus” would acknowledge this fact.

What is useful about this book is that Horowitz goes there. Ben discusses how difficult it can be to run a successful business. Where other books focus on inspiration, founding a company and getting started, this one focuses on the myriad challenges that can derail a business after it’s up and running.

Throughout the book, the author shares insights on managing, buying, investing in and developing a business (with a focus on tech companies, but applicable to all industries).

  • Dotcom Secrets: The Underground Playbook For Growing Your Company Online by Russell Brunson

When I got this book, I devoured it…. And then I promptly read it again. The only other business book that I’ve read more than once is The 4-Hour Workweek. Now Dotcom Secrets sits dog-eared on my desk and I refer to it regularly.

Dotcom Secrets is a hardcore marketing and sales book. I already knew a lot about marketing and sales when I read it. But this dense book filled in some gaps for me. It’s made easier to digest with a lot of stick figure diagrams.

This book generously doles out evidence-based advice on how to sell to your audience (in any context — not just online). There is applied psychological theory in masterful sales. Don’t just emulate — understand.

Optimizing your sales processes could change your business and change your life.


Five Steps to More Productive Meetings

Staff meetingOne of the most rewarding aspects of being a business owner is making things happen.  You take action on your own schedule.  You control your destiny.

Nothing brings this feeling of self-determination to a screeching halt like a business-meeting smack in the middle of a productive day.  You know the feeling.  You’re cranking the work out – really making progress – and there it is on your calendar – like quick sand in the freshly cut path through the jungle.   A meeting.

As much as you’d like to, you can’t avoid them.  Sometimes you need to sit with someone face-to-face and hash things out.   Occasionally, it’s the only way to get things done.  There are some things you can do to keep things moving and make the most out of your time.  Here are five steps you can take to have productive meetings.

Step One:  Set a Start Time and An End Time

Most people have a firm start time for their meetings but the end is a loose guideline at best.  This is a huge mistake.

Setting an end time and letting everyone know you will walk out of the room when that time comes is the best way to create urgency and stay on track.   This also helps keep distractions to a minimum.

When you set the meeting and when you confirm it, make sure you get agreement from everyone involved about the “hard stop” at the end.

Step Two:  Publish an Agenda in Advance

There should be no surprises during your meeting.  All attendees should have the opportunity to prepare in advance.  Start on time and stick to the published program.

Predictability is your friend.  It helps everyone stay focused.

Step Three: Agree on a Desired Outcome

As soon as the meeting starts, announce the desired outcome and get buy-in from all attendees.

Working toward a common goal is the best way to make certain this time is productive.  This also creates a sense of common purpose and a feeling of goodwill – both of which lead to a higher level of productivity and engagement.

Step Four:  Only Invite Necessary People

Limit the meeting attendees to people invested in the outcome.  All too often people create meeting invitations using a scattershot approach – in other words they invite everyone they know.

This is a bad idea.  Keep the list of attendees to people who have maximum control over the desired outcome.  If you’re not sure if some belongs, when in doubt, leave them out.

Step Five:  Create Actionable Next Steps

As the meeting ends, make certain each person knows what he/she needs to do next.

The key to making the most of the meeting is to assign tasks as a result.

Each person agreeing to take some action is the best way to make this happen.  Without this step, the entire meeting will be a waste of time.

This doesn’t need to be an elaborate production. Simply go around the table and get people to agree on the action item assigned to them.

You cannot avoid every meeting. Sometimes they are a necessity. Follow these five steps and your next meeting will be focused and productive.

Business Transaction Attorney

The Best Business Transaction Attorneys in Riverside, St. Louis, San Diego

A mismanaged business transaction can have devastating effects on every aspect of your company.  From tarnishing your public image to damaging your professional relationships to hurting your bottom line, issues like breach of contract, disagreements over profit distribution, or partnership disputes can quickly escalate into costly, disruptive, and time-consuming litigation.  Employers and business owners must take careful steps at the outset of any business transaction in order to minimize the risk of exposure to these legal and financial problems.

man with money mouse trap for greedy

The knowledgeable business attorneys of Bellatrix PC have years of experience assisting limited liability companies, corporations, and partnerships with a wide range of business transactions.  We pride ourselves on balancing aggressive and tenacious client advocacy with nuanced and strategic planning, and have obtained favorable outcomes for numerous clients during our many years practicing business and employment law.  Matters our business transaction attorneys handle include but are not limited to the following:

    • Breach of Contract and Breach of Fiduciary Duty
    • Commercial Debt Collection
    • Commercial Leasing (Real Estate and Equipment Leasing)
    • Construction and Real Estate Transactions
    • Contract Negotiation
    • Corporate Bylaws (S-Corporations and C-Corporations)
    • Due Diligence
    • Distributor and Supply Agreements
  • Mergers and Acquisitions
    • Non-Disclosure Agreements
    • Operating Agreements (LLCs)
  • Partnership Agreements (GPs, LPs, LLPs)
  • Partnership Disputes
  • Purchase Agreements
  • Sale of Business
  • Trademarks and Intellectual Property

Whether you’re still thinking about starting a business, are looking for cost-effective ways to grow your company, or are preparing the company for a sale of business or business dissolution, the attorneys of Bellatrix PC are here to help guide you through the process.  To learn more about how we can help your company reach its goals, call our law offices at (800) 449-8992 today.

Breach of Contract and Commercial Litigation

A significant portion of business disputes occur because one party alleges a breach of contract.  While breach of contract is occasionally intentional (known as anticipatory breach of contract), in most cases disputes are caused by one of the following issues:

  • Attempts to include clauses and terms which are unfair or even unenforceable.  In some cases, the contract itself is inherently unenforceable.  For example, non-compete agreements are typically unenforceable in California, with several exceptions.
  • Confusion caused by use of contradictory language.  In cases where transactions involve multiple cities, counties, or states whose laws contradict one another, questions of jurisdiction must be settled as early in the process as possible.
  • Failure of the contract to account for new or updated laws, such as RULLCA as it pertains to LLC operating agreements.
  • Use of unclear, ambiguous, or jargonistic wording.
  • Use of a generic template contract which does not account for one or more factors of the transaction.

By utilizing contracts which are clear, enforceable, and tailored to the circumstances of the transaction, you dramatically reduce your risk of being sued for breach of contract or inviting other problems.  The business lawyers of Bellatrix PC are prepared to draft contracts and file legal documents ranging from partnership agreements to stock options to mechanic’s liens.  We are aggressive negotiators focused on identifying and avoiding contractual issues before they arise.

Sale of Business, Formation, and Entity Selection

The steps you take during the entity selection and business formation process will set the stage for success or failure for the rest of the entity’s life cycle.  Our attorneys will assess every aspect of your business plan to help you make an informed decision about which legal structure will give you the right tools for making your vision a reality.  We will handle all of the paperwork and filing requirements necessary for incorporation and registration, so that you can feel confident you are starting your new business out on the right foot.

At the other end of the spectrum, it is equally important that your sale of business or business dissolution is handled with care and attention to detail.  Our legal team will advise you of the benefits and disadvantages associated with asset sales versus entity sales, help you assess the potential outcomes of selling versus dissolving the business, and keep you informed with regard to your rights and responsibilities before, during and after the change in ownership.

Operating Agreements, Partnership Agreements, and Corporate Bylaws

Even in situations where written contracts are optional, as is the case with partnership agreements, all entrepreneurs are strongly advised to prepare written documents explicitly addressing the goals, needs, rights, and responsibilities of the entity and its individual owners, members, partners, managers, and so forth.  The ability to refer to written documentation will serve as your best defense against future claims ranging from wrongful termination to workplace discrimination to acts of corporate fraud.

Operating agreements, partnership agreements, and corporate bylaws provide the legal and financial framework for limited liability companies (LLCs), partnerships (GPs, LPs, LLPs), and corporations (S-Corporations and C-Corporations), respectively.  These documents will serve as your entity’s blueprint, and should, where applicable, set forth guidelines with respect to matters such as:

  • Capital contributions
  • Conflicts of interest
  • Death and disability
  • Distribution of profits and losses
  • Employment and workplace policies
  • Insurance coverage
  • Personal liability for debts and restitution
  • Procedures for amendment or modification of agreements and contracts
  • Structure of ownership, membership, management, the Board of Directors, etc.
  • Tax liability and IRS profit and loss reporting requirements
  • Voting rights and powers

No matter which stage of its life cycle your business has reached, the employment attorneys of Bellatrix PC are ready to help you bring your company to the next stage of its development.  To arrange for a private consultation, call our law offices today at (800) 449-8992.  Our law offices are located in St. Louis, San Diego, and Riverside, California.


Sale of Business


In certain circumstances, selling a business can prove to be a lucrative and beneficial exit strategy. It can also be a lengthy and complicated procedure. Before you embark on this challenging process, it is critical to consult with an experienced business attorney, like the attorneys of Bellatrix PC.

handshake detail

Our legal team routinely works with partnerships, corporations, and limited liability companies across a broad spectrum of industries. We are prepared to advise and represent you on every aspect of selling your business, including preparing your entity for sale, performing due diligence, negotiating with potential buyers, and drafting and reviewing covenants not to compete, non-disclosure agreements, business sale agreements, security agreements, and other documents necessary to complete the process smoothly.

Even if you aren’t entirely sure whether it’s the right time in your entity’s life cycle to consider selling the company, our business attorneys can offer counsel on your legal options and their potential financial outcomes and ramifications. We pride ourselves on our in-depth understanding of the intricacies of the state and federal laws, and will work closely with you to identify a strategic approach toward achieving your desired outcome.

To discuss whether a sale of business is right for you, or other ways we can help you succeed, call the law offices of Bellatrix PC at (800) 449-8992.

Asset Sale vs. Stock Sale: Which is Right for Your Business?

Business sales are not one-size-fits-all. For instance, the distinction between selling stocks and selling assets should not be understated. The type of sale you enter will have a significant impact upon your tax liabilities, and in turn, your ability to benefit financially. Our attorneys will evaluate you specific situation and counsel you on the decision that is the most advantageous to you.

When you sell a company’s assets, it means that the buyer purchases your assets while you retain possession of limited liability company membership interests or corporate stocks, depending on how your entity is structured. Examples of company assets include industrial equipment, furniture and appliances, trade names, trade secrets such as software or algorithms, items included in inventory, accounts receivable, real estate, and other items. While you continue to own the company from a technical standpoint, the entity’s assets are no longer in your possession or control.

Business buyers tend to favor this type of sale. In addition to benefiting from a tax standpoint, by purchasing only the entity’s assets and not the entity itself, the buyer avoids the danger of assuming the company’s outstanding liabilities, including the company’s debts and civil liabilities like like breach of contract or sex discrimination lawsuits.

While sellers have the power to exclude from the sale any assets which they decide they would like to keep, the so-called “tax bite” generally make asset sales unfavorable to sellers. This is particularly true of C-Corporations due to their susceptibility to double-taxation. As a business seller, it is typically more favorable to make a stock sale.

Stock sales are effectively the inverse of asset sales. In other words, instead of selling the assets and keeping the corporate stock or LLC membership interests, the company continues to own the entity’s assets and you sell your stocks or LLC membership. Likewise, the pros and cons for buyers and sellers are also inverse: prospective buyers may resist accepting stock sale proposals because they are hesitant to assume the entity’s liabilities, while sellers benefit from a taxation and liability standpoint.

For all of these reasons, it is crucial to enter buyer-seller negotiations with an experienced and aggressive business sale lawyer on your side. Your attorney will protect you from inadvertently accepting unfavorable terms, and will keep you informed of the potential advantages and drawbacks throughout the negotiations process.

Due Diligence Checklist for Selling Your Company: Preparing for Buyers

Due diligence is generally associated with business buyers who must carefully appraise and evaluate a potential purchase before committing to the transaction. However, it is equally important for business sellers to prepare for the inevitable due diligence phase of the purchase and sales process. Advance preparation can make the business appear more attractive to potential buyers, and in turn, can allow you to complete the sale more rapidly and with an enhanced financial benefit. Needless to say, a seller’s failure to disclose information to a potential buyer can make even the most promising transactions turn sour. That’s why preparation is for a sale is as critical to a seller as it is to a buyer.

In order to keep the transaction as smooth and efficient as possible, sellers should gather and prepare the following documents and records:

  • LLC records or corporate books, including but not limited to, where applicable:
    • Business Ownership Certificates
    • Certificates of Good Standing
    • Corporate Meeting Minutes
    • Corporate Resolutions
  • Contracts with vendors, distributors, suppliers, customers/clients, and other businesses.
  • Trade secrets and intellectual property.  Trade secrets can potentially include any of the following:
    • Algorithms
    • Blueprints/Inventions
    • Databases
    • Marketing Strategies
    • Recipes
    • Software/Computer Programs
    • Supplier Lists
  • Tax and other financial documents, including but not limited to:
    • Balance Sheets
    • Profit and Loss Statements (“P&Ls”)
    • Tax Returns
  • Any special permits and/or licenses your business may hold, such as a liquor license or an outdoor entertainment license.
  • A breakdown of your business’ inventory.
  • Documents pertaining to real estate and property, including but not limited to:
    • Commercial Leases
    • Deeds of Trust
    • Mortgages
    • Property Liens
    • Zoning Permits

The forgoing is not a complete list, and should be evaluated on a case by case basis. If you’re ready to sell your entity, or are still thinking about whether the sale of the business could be right for you and your company, the business lawyers of Bellatrix PC can help. To start discussing your goals in a private consultation, call our law offices at (800) 449-8992 today. If a sale is not desired or appropriate for your entity, we may be able to assist with business dissolution or other alternatives.

Incorporation and Entity Conversion


There are numerous practical advantages to incorporating a business, including, but not limited to, tax benefits, protection against personal liability, increased credibility, greater ability to raise capital, and facilitation of ownership transfers. While each business has its own unique set of financial and legal circumstances to consider, incorporation or strategic entity conversion have proven to be valuable tools to innumerable companies and business owners.

Russian nesting dolls

The business attorneys of Bellatrix PC have extensive experience aiding entrepreneurs and business owners through each and every stage of their business venture, including the incorporation or conversion processes. We are prepared to help new entities draft and file articles of incorporation, or to guide existing entities through all steps required to successfully convert to another legal structure. Bellatrix PC is a results-oriented firm dedicated to providing efficient and customized business solutions for companies and entrepreneurs across all industries and levels of experience.

To learn more about how Bellatrix PC can help your company meet its goals, call our business lawyers at (800) 449-8992 to arrange for a confidential legal consultation.

Why Incorporate a Business Entity?

There are no laws mandating that an entrepreneur must incorporate his or her new businesses. As a business owner, you are free to structure your new entity as a sole proprietorship or partnership in lieu of opting for formal incorporation as a limited liability company (LLC), C Corporation, or S Corporation.

That being said, the advantages to incorporation are innumerable, and should be carefully considered by business owners when selecting and setting up a legal structure as part of the business formation process. Moreover, new business owners should bear in mind that entity selection is not necessarily permanent, and an entity which begins its life as a partnership or sole proprietorship may choose to incorporate later should the company’s objectives or circumstances change.

By incorporating your business as an LLC or corporation, you stand to reap a variety of significant practical benefits. Importantly, you will dramatically increase your protection against personal liability for the entity’s financial obligations should a debt or lawsuit arise in the future. LLCs and corporations offer members and shareholders robust legal protection against creditors, with a few exceptions for situations involving personal injury, personal guarantees, alter-ego, liability by statute, or acts of fraud. By comparison, general partners and sole proprietors remain completely vulnerable to personal liability for satisfying debts owed by the business.

In addition to providing a shield against creditors and debt collection, incorporation can also be favorable from a tax liability standpoint. For example, limited liability companies enjoy excellent tax flexibility, as the Internal Revenue Service (IRS) permits LLCs to elect to be classified as a corporation, a partnership, or a disregarded entity.

Moreover, both LLCs and S Corporations are considered flow-through or pass-through tax entities, meaning members report profits and losses on their individual income tax returns. C Corporations are subject to double-taxation, but allow full deductions for expenses pertaining to health insurance and fringe benefits, such as employer vehicles or public transportation costs.

Other notable benefits of incorporation include, but are not limited to:

  • Increased authority and credibility from a business perspective.
  • Ability to raise capital by selling stock.
  • Lengthened entity life (with some limits for LLCs). Sole proprietorships and partnerships dissolve upon the death of a partner or owner, with some exceptions where partners make special arrangements in advance.

Our attorneys are well versed in California’s business incorporation requirements, and will insure that you are compliant with state and federal law. Among other things, we will help you file your Statement of Information, assess your ability to satisfy California’s directorial and shareholder requirements, and prepare and review your corporate bylaws, articles of incorporation, and/or articles of organization where applicable.

Can You Convert a Corporation to an LLC or Vice Versa?

As mentioned above, entity selection does not always have to be permanent. In many cases, entity conversion is not only possible, but also favorable to the business from a legal and financial standpoint. It is not uncommon for business owners to convert limited liability companies to corporations, or conversely, for corporations to be converted to LLCs. Alternately, depending on the needs of your limited liability company, it may be desirable to convert a multi-member LLC to a single-member LLC, or to add members to a single-member LLC.

Moreover, there are several different methods of conversion, some of which are less complicated than others. For example, the streamlined statutory conversion process allows limited liability companies to convert to corporations (or vice versa) with minimal paperwork and automatic transfers of debts and assets. As an added benefit, the converted corporation does not need to go through the process of business dissolution.

Nonetheless, even simplified conversion procedures can be rife with opportunities for errors and mistakes. In order to convert smoothly and successfully, you must file a Certificate of Conversion with the California Secretary of State, create a formal plan of conversion, and, in the case of corporations, obtain approval for conversion from the stockholders and board of directors — to name just a few components of the legal process.

The steps you take during the incorporation or conversion process will create the framework for your business’ future. A misstep or omission during this crucial period could undermine your company’s ability to meet its full potential, depriving your entity of the financial flexibility and legal protection it needs to grow and thrive as the business matures.

Therefore, it is absolutely critical that your articles of incorporation, conversion plan, operating agreements, and other pertinent documents are drafted and reviewed by a knowledgeable business attorney with experience representing companies and employers in these matters. When you work with Bellatrix PC, you can feel confident you will be guided by trusted and dependable legal advice in all your business decisions.

Let’s start discussing how our team can help yours. Let us act as your corporate general counsel. To schedule a confidential personal evaluation, call Bellatrix PC at (800) 449-8992 today.