LLC FAQs

Owning an LLC (Limited Liability Company) in New Jersey means you have an ownership interest in a type of business entity that combines the flexibility and pass-through taxation of a partnership with the limited liability protection of a corporation. As an owner or member of an LLC, you have certain rights and responsibilities such as limited liability protection, ownership interest, operating agreement, management structure, pass-through taxation, record keeping and compliance, and flexibility.

LLCs (Limited Liability Companies) are a popular choice for many types of businesses in New Jersey due to their flexibility, limited liability protection, and favorable tax treatment. The most common businesses/industries in NJ that operate under an LLC are real estate, professional services (i.e. designers, marketing agencies, photographers etc.), retail and ecommerce, construction and home improvement, restaurant and food services, health and wellness, small family businesses, wholesale and manufacturing, and freelance and independent contractors (i.e. writers, graphic designers, etc.).

While these are some of the most common types of businesses that operate as LLCs in New Jersey, this business structure can be suitable for a wide variety of industries and business models. It’s essential to consult with a legal or financial professional to determine if forming an LLC is the right choice for your specific business needs.

The most common issues that may lead to an LLC litigation in New Jersey are as follows: Breach of Fiduciary Duty, Member and Manager Disputes, Breach of Operating Agreement, Dissolution and Winding Up, Minority Member Oppression, Fraud or Misrepresentation, Employment Disputes, Intellectual Property Disputes, Contract Disputes, and Real Estate Disputes.

To protect the limited liability of an LLC member in New Jersey, it’s essential to maintain the separation between the LLC and its members’ personal affairs, as well as to ensure the company complies with relevant laws and regulations. Some common steps to take in order to protect the limited liability of an LLC member in NJ are proper formation, operating agreement, separate finances, signed contracts and documentations, maintain adequate records, comply with laws and regulations, Adequate Capitalization and Insurance: Ensure that the LLC is adequately capitalized to cover its debts and liabilities. Obtain appropriate insurance coverage, such as general liability insurance or professional liability insurance, to protect the LLC and its members from potential claims and lawsuits.

Avoid personal guarantees, and always treat the LLC as a separate entity.

Buying or selling an LLC in New Jersey involves several steps and requires careful planning to ensure a smooth transaction and to protect the interests of both the buyer and seller. Here’s an outline of the process for buying or selling an LLC in New Jersey: conduct thorough due diligence on the target LLC., both parties should negotiate the terms of the transaction, once the terms are agreed upon, the parties (or their attorneys) should draft a thorough purchase agreement, secure a financing agreement before closing of the transaction, obtain necessary approvals, transfer of licenses and permits.

Once all conditions and contingencies have been met, the parties can proceed with the closing of the transaction. After the transaction is complete, the buyer should update the LLC’s records with the New Jersey Division of Revenue and Enterprise Services, including filing an amended Certificate of Formation or an amended Annual Report, if necessary. The buyer should also notify any relevant third parties, such as customers, suppliers, and creditors, of the change in ownership.

The removal or expulsion of an LLC member in New Jersey should be handled carefully to avoid potential disputes and legal issues. Here’s a step-by-step guide to help you navigate this process: review the operating agreement, determine the grounds for removal, follow the procedures in the operating agreement, follow the RULLCA provisions if the operating agreement is silent, document the removal, update the operating agreement, state filings and records, notify relevant parties, and finalize the buyout or distribution of the removed member’s interest.

If you find yourself involved in an LLC litigation in New Jersey, it is important to take appropriate steps to protect your interests and navigate the legal process effectively. We recommend these steps if you find yourself in an LLC litigation in New Jersey: consult with an experienced attorney, gather all relevant documentation, preserve evidence both digital and physical, work with an attorney to understand the dispute, explore alternative routes before proceeding to litigation, communicate effectively, be prepared for the litigation process, comply with all court orders and deadlines, maintain professionalism, and remain focused on running your business.

Navigating LLC litigation in New Jersey can be challenging and stressful. Having an experienced business litigation attorney, like Frank Marciano on your side can help you protect your interests, guide you through the process, and work towards a resolution that is in your best interest.