Forming a cooperative can be done through a limited liability company (LLC). The LLC is a legal entity separate and distinct from the personal affairs and other business involvements of its owners (called “members”). A LLC has some characteristics similar to those of a limited partnership, some corporation-like characteristics, and still other characteristics unique to the LLC form of business organization.
In some states, limited liability companies have been authorized for several decades. Nebraska‘s LLC authorization was first enacted in 1993 and amended in 1994 to authorize formation of family farm limited liability companies. One or more persons may organize a LLC by preparing and filing duplicate copies of articles of organization with the Nebraska Secretary of State. Upon issuance of a certificate of organization by the Secretary of State, the LLC can commence business activities unless a delayed effective date is specified in the articles of organization.
A LLC may be dissolved when: (a) a life span specified in the articles of organization expires, (b) the members unanimously agree in writing that it should be dissolved, (c) any other dissolution cause specified in the articles of organization becomes a reality, or (d) a court rules that the LLC should be dissolved. LLC management can be vested in a member or members, or in a manager or managing entity with no ownership interest. With the exception of liabilities for unpaid taxes, members and managers of a LLC are not liable for LLC debt, liabilities, or other obligation including a judgment or decree. This limitation of liability can be nullified if members give personal guarantees for the LLC.
An ownership interest in a LLC is part of a member’s personal estate and can be transferred or assigned according to procedures specified in the articles of organization or in the operating agreement. If neither the articles of organization nor the operating agreement specifies the procedures for an ownership interest transfer, a transfer to a non-member of the LLC must be approved in writing by members other than the transferor who hold a majority in interest. As a separate legal entity, LLC finances and records are established and maintained independently of the members’ personal financial arrangements and other business involvements. For more information or to begin forming your own LLC, visit IncParadise.