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Maury and Sons Transition to a Limited Liability Company

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Introduction

Maury and Sons Transition to a Limited Liability Company Law 529 December 7, 2004 Maury and Sons Transition to a Limited Liability Company Business ownership is a balance between the rewards of success and the risk of failure. Maury and Sons is an example of a success in the small business ownership. Maury and Sons is an oilfield-drilling contractor that is doing well, with lucrative contracts awarded to them in the past year for over one million dollars in revenue from ExxonMobil and BP-Amoco. Maury and Sons is a business that is lead by Max and Monty, both are grandsons of the founder Maury, which employs fifty oilrig crewmembers and ten administrative positions. Maury and Sons, having reached the one million dollar milestone for the first time this year, have decided that now is the time to limit their own liability, but still lead the business to a successful future. After careful review, and considering the many other options available, Maury and Sons have decided to become a Limited Liability Company instead of remaining a partnership that it is today. Max and Monty each own twenty-five percent of the business, with the remaining ownership being held by their two aunts. ...read more.

Middle

Wilma and Betty are both senior citizens and own the other half of the business equally. The LLC offers permanency of a business's perpetual existence as described by Reed et al (2002). This means that the death of one member will not dissolve the business. In addition, Limited Liability Companies have advantages in organization and control. LLC's may have multiple levels of membership interests, beyond just that of control and benefits limited by the controlling members. Again an important factor when considering the age of Wilma and Betty and not knowing whom the beneficiaries may be or how their ownership interests are to be disturbed upon death. With no current, formal, partnership agreement in writing, the formation of the Limited Liability Company will enable all four members involved to have, in writing, a legal and binding contract. This agreement, called an operating agreement by Mallor et al (2004), shall define the LLC's dissolution, the selling of the business, what is expected to occur after the death of a member, the early withdrawal of membership consequences, or the disability of a member. Included in the process if creating a Limited Liability Company, one or more of the members must file the articles of organization. ...read more.

Conclusion

Federal and state laws designed to protect individuals and the environment, such as the Clean Water Act, Clean Air Act, OSHA regulations all affect the daily operations of the business and should be reviewed by an outside source. In addition to gaining useful knowledge, it may limit their liability further by using these counsels periodically to review their practices in the event of an accident or incident that may lead to criminal or civil law suite. After careful review, and considering the other options available, it is in the best interest for Maury and Sons to become a Limited Liability Company instead of remaining a partnership that it is today. The factors include the liability, the age of some of the members, and the vision set forth by the managing members. Limiting the liability and combining the best legal and tax characteristics of corporations and partnerships while avoiding the many tax disadvantages of incorporating are the prime reasons for selecting Maury and Sons, LLC as the new form of business entity. In addition to limited liability and tax advantages, Maury and Sons now have a documented operating agreement and the articles of organization to truly define the business. ...read more.

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