CLIENT LETTER ____[Name] ____[Address] RE: New Business Entity Dear [Name] I am writing to inform you of a new business law which has been passed to make doing business more convenient and profitable. When I initially advised you on your commercial options and we set up your company, the business statutes did not permit much flexibility or creativity in designing your business structure. Essentially, you had the choice of the corporate form with the basic corporation, the close corporate supplement or the S corporation. While these entities provide limited liability, the tax consequences can be painful. The only other real option was that of the partnership. However, several events have occurred recently. First, a new law known as the "Limited Liability Company Act." has been enacted. Additionally, the IRS has issued several Revenue Ruling specifically involving the Limited Liability Company Act. As a result of the statute and these new IRS rulings, you can now have a business form which gives the limited liability protection of a corporation and the pass-through tax advantages and flexibility of a partnership. Limited Liability Companies may be organized for any lawful purpose. The Limited Liability Company is similar to a conventional business entity such as an association, proprietorship or partnership, but by complying with the Act and filing notice with the Secretary of State, you give notice to the world that the individual members of the company are not personally liable for debt, obligation, act or liability of the Limited Liability Company. And even though you have corporate liability protection, you are taxed as a partnership, thus avoiding the corporate double taxation. I have written this letter as part of this office's on-going efforts to protect your business interests. If you have any questions or would like an appointment to review your business structure and the effects of these new features, please give us a call. ____[Signature]