Four Unusual Questions from Our Clients

By HBS Tuesday, February 23, 2021

can a cat own an llc?Working in any industry can generate some great stories about the daily operations and interactions among the employees and customers. Ours is no different.

We communicate with our clients around the world frequently and our team is accustomed to fielding questions on all aspects of starting and maintaining a Delaware company. Still, there are the occasional questions that catch us off guard.

Below are four questions our team has been asked, as well as the reason behind them.

 

1) "Can an animal own an LLC?"

In many ways, this is a funny question. Imagine the frustrations of a 50% owner in an LLC when his or her “partner” is a golden retriever.

On the other hand, is it so unrealistic to think that there are people who want to make their pets the beneficiary of their business(es) in their will? Surely, it’s been attempted.

It raises an important, if largely unnecessary, point: Members of an LLC, as well as shareholders of a corporation, must be either individual humans or another business (which itself is made up of humans). Pets, plants, and all other objects (living or non-living) are ineligible to be owners of a company.

See more on requirements to be an LLC Member.

 

2) "Can I close someone else’s company?"

This question came to us with benevolent intentions. Our records showed a company being in the name of one client, who apparently sold the company to someone else and hadn’t notified us (his Registered Agent) or anyone else. The change was only made in the LLC Operating Agreement, which has legal standing but is not required to be filed with any third parties.

The new owner wanted to close the company, but was unable to produce the documentation to prove he was the owner. So, he asked us if he could close the company despite it being in the former owner’s name.

This specific scenario is uncommon, but it bears repeating that only the authorized persons can file changes, including cancelations and dissolutions, for a given company.

See more on how to close a company.

 

3) "Can I pay your electric bill?"

Yes, we have been asked on more than one occasion by our clients if they can pay our electric bill, or another utility.

Why? It has to do with the business address.

Clients choose Delaware, in part, because there is limited information put in public records about the company owners, especially for LLCs. As a Delaware Registered Agent, our address is what is shown on the company’s record in the state’s database. In addition, we offer mail forwarding services to allow our clients to have their clients send correspondence to our office, which we then forward to the client.

The confusion comes in when it comes to the company’s physical business address. When creating business accounts for banking or merchant platforms like Amazon FBA, clients are asked for their actual business location. Often, a utility bill copy is required as verification.

The Registered Agent and Mail Forwarding address services we provide do not extend to physical place of business -- there is no other company doing business at our address. Sometimes, clients misunderstand where and how the address is applicable, and as a way of obtaining their address verification for the aforementioned third parties, they ask for a utility bill with their company name on it.

A few have even offered to pay the bill for us. Though we appreciate the creativity, we have to decline.

This confusion about address use is more common than you might think and is the reason we have a blog post entitled, “Where Is My Business Located?

 

4) "Can I use my social security number as my company EIN?"

Nearly every new company will require an Employer Identification Number (EIN) in order to file taxes and otherwise comply with US business regulation and tax code. The number is a nine-digit sequence, similar to an individual person’s social security number (SSN).

In some circumstances, such as a Form W-9, there is an option to enter either your EIN or SSN, depending on whether the filer represents an individual or a business entity.

Occasionally, our clients find themselves with a business entity, but without an EIN. This could be because they did not apply for one, or due to processing delays by the IRS (which became prevalent during the Covid-19 pandemic). This leads some to wonder if they can just use their SSN in place of the missing EIN.

Unfortunately, using your personal social security number in place of your EIN is both incorrect and problematic. While an unincorporated sole proprietor may opt to use an SSN for business dealings, once there is a formal LLC, corporation, or other business entity in place, the SSN is not applicable and could create serious tax and recordkeeping problems.

Additionally, even if this were allowed, it would effectively cancel many of the benefits of having a business entity in the first place. For instance, from a liability perspective, there would be no separation of the business from the individual, since both would be tied to the same federal ID.

*Disclaimer*: Harvard Business Services, Inc. is neither a law firm nor an accounting firm and, even in cases where the author is an attorney, or a tax professional, nothing in this article constitutes legal or tax advice. This article provides general commentary on, and analysis of, the subject addressed. We strongly advise that you consult an attorney or tax professional to receive legal or tax guidance tailored to your specific circumstances. Any action taken or not taken based on this article is at your own risk. If an article cites or provides a link to third-party sources or websites, Harvard Business Services, Inc. is not responsible for and makes no representations regarding such source’s content or accuracy. Opinions expressed in this article do not necessarily reflect those of Harvard Business Services, Inc.

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