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Question: Jan and Lee are professional photographers who specialize in family portraits. They want to open their own photography studio in Pittsburgh under the name Yellow Bridge Photography. They have found available space that can be renovated and leased, but they have limited business experience. They estimate start-up costs of $40,000 and have agreed to a 50/50 deal to split costs and operate the new studio. Jan tells Lee that she has spoken to her accountant. She proposes to operate the studio "as a 50/50 proprietorship" and explains that this avoids the expense, paperwork, and additional taxes that could be due from forming a new entity.
You are a recent law school graduate practicing commercial law, and Lee is your client. Lee has heard of limited liability companies and wants your legal advice on whether an LLC for the new studio would be a better choice than Jan's proposal. You decide to advise Lee, in writing, on the benefits of an LLC and include an analysis of key issues of liability protection, income taxes, and use of an LLC operating agreement.
Assignment Instructions:
Submit a concise memo of 250-500 words. Grades for this assignment will be based on the quality of your submission and analysis of the key issues of the use of an LLC structure, liability protection, income taxes, and the use of an operating agreement. Be sure to cite any sources used.
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