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OHIO ADOPTS THE SERIES LLC: Implementation of Ohio’s Revised Limited Liability Company Act is Coming

On January 7, 2021, Ohio adopted S.B. 276. The new legislation establishes the Ohio Revised Limited Liability Company Act (“ORLLCA”), which effectively replaces the current Ohio LLC Act. ORLLCA will be fully effective as of January 2022. While the new law contains numerous changes to the existing LLC landscape, below is an overview of some of the key differences under the ORLLCA.

Series LLCs

The ORLLCA now makes Ohio one of only 16 states that permit the formation of “series LLCs.” The significant advantages of series LLCs are their flexibility and simplicity. They allow a single entity to own multiple “series” of assets, each of which are shielded from liability. Real estate investors are prime users of series LLC’s. Rather than creating multiple companies to own investment property, each series within a single LLC isolates one property from the rest thereby adding protection for the investor.

Under the ORLLCA, an LLCs operating agreement may establish or provide for one or more designated series of assets that has one or more members and may include:

  • Separate rights, powers, obligations or duties with respect to specific property within each of the series;
  • Separate rights concerning profits and losses associated with each series; and
  • A separate purpose or investment objective for each series within the LLC.

Each series formation has a separate operating agreement and is authorized by the articles of organization. The articles of organization only require a simple statement that the LLC may have one or more series of assets.

Series LLCs also enjoy cost and tax advantages. Standard LLC formation requires registration fees for each LLC created. Series LLC registration fees are only charged for the master LLC, and each series created thereafter do not have an associated fee. There is also only one tax identification number (EIN), and all the series are listed on only one tax return. This cuts down on time for tax preparation. In addition, and subject to certain criteria, series LLCs have the potential to avoid Ohio’s commercial activity tax, which is imposed on taxable gross receipts in excess of $150,000.

Management Structure Flexibility

The ORLLCA provides more flexibility in LLC management structures. The current LLC Act requires an LLC to either be member-managed or manager-managed. Default rules in the current LLC Act provide baseline authority of either the member or manager to perform certain actions, which can be modified through an operating agreement. Under the ORLLCA, the distinction between member-managed and manager-managed LLC’s has been eliminated; a person’s ability to act as an agent of the LLC now comes from authorization outlined in the operating agreement, decisions of the members as provided for in the operating agreement, the filing of a “Statement of Authority” with the Secretary of State, or from the default rules contained in the ORLLCA. This new feature of the ORLLCA provides more flexibility for LLC management, allowing each LLC to use a management structure that works best for its unique needs.

Statutory Penalty

There will now be a penalty for not maintaining a statutory agent and/or up-to-date contact information with the Ohio Secretary of State. Under the existing LLC Act, there is no statutory penalty for an LLC that fails to maintain a statutory agent. Under the ORLLCA, the Secretary of State will be required to cancel an LLC that fails to maintain a statutory agent, though the LLC may be reinstated upon the appointment of a new agent and the payment of additional fees. This is particularly important as the cancellation of an LLC may open its members up to personal liability. Under the new ORLLCA regime, it is of paramount importance to appoint a statutory agent and maintain accurate contact information.

The ORLLCA represents a significant shift in the law as it pertains to limited liability companies in Ohio. As the implementation of the new law approaches, businesses operating as LLCs should examine their current operating agreement to make sure its provisions comply with the ORLLCA. To undertake such a review or examine how the series LLC may benefit your business, please contact your BMD attorney, or Blake Gerney at Brgerney@bmdllc.com, S. Matthew Harris at Msharris@bmdllc.com, or Kevin Burwell at Kdburwell@bmdllc.com.

EEOC Provides Updated Guidance Regarding Employer COVID-19 Vaccine Policies

On May 28, 2021, the U.S. Equal Employment Opportunity Commission updated its guidance regarding employer COVID-19 vaccination policies. The new guidance provides much-needed clarification of expectations for employers seeking to promote workplace safety and prevent the spread of COVID-19, including discussion of mandatory vaccination policies, voluntary vaccination incentives, and accommodation of employees based on disability or sincerely held religious beliefs. The full text of the update is found in Section K of the EEOC’s COVID Q&A document. You can also learn more about these and other developments from BMD's Bryan Meek and Monica Andress through the Employment Law After Hours YouTube channel, available here.

What Telemedical Barriers Practices Face and How They Can Manage Them

The onset of the COVID-19 pandemic has led to many businesses and industries having to rapidly adapt new practices in order to stay profitable, and the healthcare industry is no exception. Although telehealth tools and practices have existed and been used since the Vietnam War, the pandemic has caused many individual healthcare practices to heavily rely on telehealth as a large portion of their service mix in order to continue to provide care for patients. Because of this rapid adoption of telehealth practices in order to combat the restrictions of COVID-19, the telemedicine industry’s revenue has exploded in the last year. Experts predict that telehealth will continue to grow in use beyond the current pandemic, estimating the industry’s worth to be $25 billion by 2025. However, this rapid adoption of telehealth was prompted out of need and has not been without its own barriers that practices now face.

Which Entity Should I Form When Starting a New Business?

As a tax law attorney, friends and acquaintances ask me this question all the time: what type of entity should I form when starting a new business? With many business options available it can be confusing determining which business structure would be appropriate. Below is a general overview of each business structure and the tax responsibilities of each.

IRS to Start Automatically Sending Advanced Child Tax Credit Payments in July

The American Rescue Plan Act (the “Act”) expands the Child Tax Credit for tax year 2021. In addition to expanding the Child Tax Credit, the Act provides for advance payments of the 2021 Child Tax Credit. Beginning in July, the IRS will automatically send Advanced Child Tax Credit payments to eligible taxpayers based on their 2020 tax return (or 2019 tax return if the 2020 tax return has not been filed and processed yet). The amount of the advanced payment will be up to $300 each month for each qualifying child under 6 years old at the end of 2021 and $250 each month for each qualifying child between 6 and 17 years old at the end of 2021. For example, if you have 2 qualifying children, one 4 years old and one 8 years old, you may receive up to $550 each month in advance child tax credit payments.

Employment Law After Hours: CDC SAYS NO MORE MASKS FOR VACCINATED PEOPLE: What does this mean for employers and employees?

This morning, ELAH published an emergency episode discussing the questions employers sent us since the CDC’s release of its revised mask guidance late last week. This episode explores questions such as whether an employer can allow vaccinated people to go without masks, while requiring unvaccinated people to wear a mask, whether employers can inspect an employee’s vaccine card, and it discusses the risks of liability an employer faces based on the decisions and policies it makes following the release of this CDC guidance, along with many other questions.