First, what is your definition of winning? Often, winning does not actually mean getting what you sued someone for, or emerging from a lawsuit without having to pay the plaintiff anything. Most cases these days do settle before going to trial. In fact, in many jurisdictions – including our hometown of Dallas – there exist standing orders that require parties to mediate prior to trial. So, having one’s proverbial day in court most often will not materialize, but will instead take place over many months. So, “winning” most frequently means getting to a resolution wherein both parties feel heard, closer to whole, and in a position to move forward.
Second, lawyers should never (and really can’t) predict the outcome of a case. A “slam dunk” just doesn’t exist outside of television or movies. There are too many factors, including most notably, people. One can never truly predict an outcome when people are suing each other.
While nonprofits can apply to the Texas Comptroller for an exemption with respect to paying sales taxes on items purchased by the nonprofit, the nonprofit still needs to obtain a sales tax permit to collect and remit to the Comptroller sales taxes on goods sold to its customers.
Many states, including Texas, do not require you to have an Operating Agreement. However, there are many reasons that you should have an Operating Agreement for your LLC.
- If you do not have an Operating Agreement, you will be subject to your state’s default rules. These rules are not tailored to the needs of your business and may even be unfavorable to you and your fellow members. Your company is unique, and an operating agreement allows you to tailor the structure to your needs.
- An operating agreement determines how your business will operate. Unlike other types of entities, it gives you the advantage of determining how you will split profits, work load, distributions upon termination, etc.
- Operating agreements help to protect your limited liability status. The formality of an operating agreement and a properly documented decision structure helps to assure courts that your company is a separate entity from its members. Without an operating agreement a court is much more likely to view your company as a partnership or sole proprietorship and may assign personal liability for the acts of the company.
As a general matter, neither option is necessarily better than the other. Rather, the makeup of your LLC will determine which option suits your organization best.
- Member-managed LLC’s work best when:
- There is a small number of members
- All of the members of the LLC will be involved in managing and operating the business of the LLC, and
- No intention to bring in outside or passive investment.
- In this case, a member-managed LLC provides a streamlined management structure where the decision-making authority is centralized in a single group.
- Manager-managed LLC’s work best when:
- Too many members, to allow for efficient management by all members,
- Some members are passive investors (will not participate in management of LLC),
- Foresee bringing in outside or passive investment.
- In this case, a manager-managed LLC allows the members to delegate the management decisions to a smaller group of managers, while reserving certain important decisions to the members (such as whether to sell, merge or wind down the LLC),
- The managers are often members of the LLC, but the LLC can also hire professional managers who are not members.