Rocco E. Cozza • October 15, 2019

Many people search “how to set up an LLC” online, thinking that it is something that is simple to do.  They may have a small business and someone told them they should be protected.  They perform a little research and determine that an LLC is the right entity for them.  (I won’t get into the detail of why it is important to speak with a professional about entity choice, but trust me it is).  Once they make the determination to set up an LLC, they go ahead and do it themselves.  See, in all honesty, most of the state filings to set up an LLC are very simple and take less than 20-30 minutes to complete. But that is the smallest piece to an LLC.

How to Set Up an LLC – What you need to know.

On top of your state filings (articles or a certificate of organization), there are quite a few other documents one needs to have to ensure the LLC provides adequate protection.  Just filing your state paperwork to create the entity doesn’t cut it.  Yes, in theory, you have a limited liability company.  But without the other pieces, it is like a house of cards.  It can crumble at any time.  And it will.

Problem 1 – Poor or No Operating Agreement

For example, a small business owner that formed their LLC online without an attorney got sued.  Not just the business, but the owner as an individual as well.  The owner thought that the LLC will protect him from the claim brought against him as an individual.  When he submitted the claim to his insurance carrier, the carrier asked to see the operating agreement.  The owner, feeling good, sent the carrier his operating agreement.  This was a document that he downloaded off some website thinking that he was covered.  Sadly, the insurance company denied coverage of the individual claim.  This denial cost this person over $10,000 in legal fees to defend the individual claim.

The reason the claim was denied:  the operating agreement was missing key language needed for an insurance policy for the business to cover claims against an owner.  Unfortunately, this business owner, like many others out there, was pennywise and pound foolish.  The owner had spoken to a few attorneys on how to set up an LLC and was quoted around $800-$1,000 to do so.  Because he didn’t want to spend that amount of money for something he felt and was told, he could do himself, he decided to play lawyer.  That attempt to save $1,000 led to a $10,000+ loss.  All because he did not have the expertise to know what he needed.

Problem 2 – Lack of Proper Financial Advice

Another problem I have seen with people setting up an LLC without the help of a qualified attorney is that they don’t get the advice they need.  There are certain things an LLC owner must do to ensure the legal protection shield remains intact.  When I meet with a client to hand over their new created entity, I spend a decent amount of time outlining the compliance items they need to have in place.  Owning an LLC is not as set it and forget it.  There are ongoing obligations to ensure adequate protection.  From creating a wall between personal and business finances to having an organizational and annual meeting, these are just a few of the things one must do.

Let’s take the finances for example.  Comingling finances is one of the biggest reasons a court will “pierce the corporate veil” and allow a plaintiff to get the assets of an individual owner of an LLC.  One transaction can do it.  One inadvertent transaction.  But you need to understand how the money needs to flow in and out of an LLC to make sure that you are putting yourself in the best position.  This is why working with a skilled attorney to set up your LLC is crucial.  They will be able to provide you the advice you need when it comes to finances.

Problem 3 – Lack of Documentation

Another common misconception people have that set their LLC up themselves is there is no requirement for annual maintenance.  They believe that their articles of organization are all they need.  Unfortunately, they are greatly mistaken.  Banks, future partners/investors, landlords, and even the IRS will request organizational and annual meeting minutes to ensure the organization is not a sham entity.

We have talked about the importance of an operating agreement, but let’s now discuss the ongoing documentation an LLC should have.  Because the LLC needs to be treated as an entity separate from you the owner, certain decisions and acts of the organization should be documented.  This process shows that you are maintaining the entity and respecting the separation you must have from it.  This documentation includes:

  1. Meeting minutes, which should be done at least annually if not quarterly
  2. Resolutions authorizing certain transaction in accordance with your operating agreement
  3. Any ongoing state or local business filings an LLC is required to make in the jurisdiction in which it is located

Beware of Doing it Yourself

As you can see, an LLC is not just a set it and forget it entity.  When searching how to set up an LLC, you won’t find a lot of this information out there.  A lot of the do-it-yourself websites want you to feel that it is easy to set-up and you can do it without a lawyer.  Unfortunately, that is not the case and doing so is an extremely risky move for a business owner.  This article is not meant to frighten or scare you into using an attorney.  I am aware that a lot of you out there will not.  I want to merely educate you on the risks involved with the improper set up of an LLC.  Despite “how to set up an LLC” being a topic frequently written about, that doesn’t mean it is something you should do yourself.

But if you decide to do so after learning how to set up an LLC, I still want to help.  I have created a LLC compliance checklist that is available for free download.  Now understand that the checklist is merely educational in nature and in no way establishes an attorney-client relationship.  You should always seek the advice of your own counsel.  But if you would like to download the checklist, just click here.

Cozza Law Group Business Law Blog

Understanding Shareholder Disputes and How They are Resolved

By Rocco Cozza • June 8, 2026
Shareholders set corporations apart from other types of businesses, and they often help companies achieve considerable levels of success. On the other hand, executives and directors often forget that each shareholder is a part owner. With so many owners, it is easy to see how complex shareholder disputes can become. The first step is to understand why and how these shareholder disputes arise. The second step is to resolve the dispute, potentially with guidance from an experienced business litigation attorney in Pennsylvania . Shareholder Disputes Arise Because of Shareholder Rights To understand shareholder disputes, you first have to understand shareholder rights. Common shareholders have voting privileges, which means they can control the trajectory of the company. Although some shareholders never bother to vote, others take these rights very seriously. The more shares you have, the more power you have to control major decisions. Shareholders also have the right to profit from the success of a company. Because of this, they have a financial incentive to oversee the company’s trajectory. If the company leadership starts to make mistakes or intentionally act against the interests of the shareholders, disputes naturally arise. Finally, shareholders rely on the accuracy of records and corporate books to make their investment decisions. For example, they might choose to sell or hold their stocks depending on the published earnings of a company. If these records are inaccurate or intentionally altered, the shareholders may make poor investment choices as a result. Now that you understand shareholder rights, it is easy to see how shareholder disputes might arise. Shareholders might sue if they feel that the company is making major decisions without bothering to hold votes. They might also sue if they feel that the leadership is acting against their best interests. Another type of lawsuit might involve shareholders suing a company for inflating their earnings and releasing inaccurate data. Shareholder Disputes Often Begin With Alternative Dispute Resolution Most lawsuits, including shareholder disputes, go through a process of alternative dispute resolution (ADR) before parties actually proceed to the courtroom. ADR may involve mediation or arbitration, and it takes the form of private negotiations. The shareholders may select legal counsel to negotiate on their behalf, as it would be impractical for thousands of individuals to sit at the negotiation table. In other situations, an individual shareholder might file a lawsuit on their own. In this situation, that individual might be present at the negotiation table alongside their legal counsel. ADR often serves everyone’s best interests, helping to resolve disputes without resorting to expensive and time-consuming litigation. Public trials are not good for business, and shareholders might be just as willing to resolve these issues in private as the executive suite. Arbitration clauses are often “built in” to the corporate bylaws or charter. In other words, parties may have no choice but to attempt mediation/arbitration before proceeding to a trial. That said, parties are under no obligation to successfully complete the arbitration process. One party could refuse to negotiate, and a trial would subsequently become inevitable. What are Some Common Types of Shareholder Disputes? Shareholder disputes may take various forms. All of these lawsuits fall into four main categories, however. An individual shareholder might file a direct lawsuit against the company. Another type of lawsuit might be a “derivative suit,” which involves the shareholders suing on behalf of the corporation. This type of lawsuit often targets a specific bad actor within the company, such as a self-dealing CEO. Class actions are also relatively common. In this type of lawsuit, numerous shareholders join forces to file a single lawsuit against the corporation, often under federal securities law. Finally, a dispute might take the form of an “appraisal proceeding,” which focuses on whether the company has received a fair valuation before a merger. How Does Pennsylvania Law Affect Shareholder Disputes? Pennsylvania law is quite deferential to the board of directors, granting it considerable control and authority. A common source of conflict in a corporation is the contrast between the “democracy” of the shareholders and the authority of the board of directors. Pennsylvania tilts the scales in favor of the board. First, Pennsylvania requires a shareholder to make a written demand to the board before they can file a derivative lawsuit. The board can then appoint a “Special Litigation Committee” to investigate the shareholders' claims and demands. If the committee determines that a lawsuit would go against the best interests of the company, courts in Pennsylvania may not allow it to continue. It is difficult to circumvent these requirements for derivative lawsuits in the Keystone State because of strict limits on direct lawsuits. Finally, Pennsylvania has no rule that states a board must place its shareholders’ interests above those of other relevant parties. These parties might include employees, customers, suppliers, and even the greater community or environment. This is not the same in other jurisdictions, making the Keystone State a “board-friendly” state that repels takeovers. In fact, it is considered by many to be the most management-friendly state in the country and one of the toughest places for shareholder plaintiffs to sue. While this is good news for boards facing shareholder lawsuits, the Keystone State’s protections are not infinite. Effective legal representation is necessary to take advantage of the jurisdiction’s legal safeguards. On the other hand, plaintiff shareholders can still achieve success in Pennsylvania, but they may need to rely on innovative, experienced business litigation lawyers in the face of strong regulatory barriers. Contact Cozza Law Group PLLC to Learn More About Shareholder Disputes While online research can provide plenty of insights into shareholder disputes, each case is slightly different. Given the varied nature of shareholder disputes, it may help to discuss your specific circumstances with a business litigation attorney in Pennsylvania . Cozza Law Group PLLC serves enterprises of all sizes, offering a fractional counsel model that provides legal guidance that fits your company’s unique needs. Continue this dialogue by contacting us at 412-453-8673 or visiting us online .

What to Do When a Business Partner Breaches a Contract

By Rocco Cozza • May 10, 2026
Business owners in Pennsylvania depend on clear contracts to formalize relationships and enforce obligations. When a business partner breaches a contract, the next steps may seem unclear. Perhaps you assumed that with a clear contract in place, your partner would never dare violate it. So what happens now? What kinds of penalties might your business partner face? Will you both have to go to court? How can you limit the cost of this contractual dispute and maintain your profit margins? These are all questions worth raising during a consultation with a contract lawyer in Pittsburgh . Review Your Contract to Determine the Next Steps The fact that you already have a contract in place is encouraging. This means that at the very least, your business partner will face certain consequences for breaching the contract. That said, the nature of these consequences depends entirely on your unique contract, and some are less effective than others in holding parties accountable for breaches. Perhaps the most obvious step is to confirm whether your contract has an arbitration or mediation clause. If a clause of this nature exists, you must go through alternative dispute resolution (ADR) before proceeding to a trial. If you are not familiar with the ADR process, you should know that resolving a dispute in private is generally preferable to litigation (trials). From a business perspective, private negotiations cost less. They are also faster, allowing everyone to focus fully on running their respective businesses sooner rather than later. Finally, the confidential nature of these discussions may help protect trade secrets, intellectual property, and other details that could be embarrassing or harmful for businesses. Many people feel that ADR is less stressful than trials. You should also check your existing contract for clauses that outline penalties for breaches. These penalties are often financial in nature, and they can dissuade business partners from violating their contracts. Sometimes, simply reminding business partners of these financial penalties is enough to encourage them to adhere to their contractual obligations. You can discuss potential penalties and outcomes with your business partner without involving a lawyer. This is often referred to as “informal resolution,” and it occurs before the ADR process begins. That being said, you may want to inform your lawyer of any plans you might have for resolving the dispute. If you are not careful, you could violate laws and regulations while negotiating in an informal manner. For example, you could inadvertently violate laws against extortion as you attempt to pressure your business partner into fulfilling the contractual obligation. Pennsylvania also has specific debt collection laws that prevent you from contacting debtors in certain ways or at certain times. Evidence Is Important During a Contract Breach Although you may not need to go to court to resolve the contract breach, it makes sense to begin collecting evidence as soon as possible. You should also be aware that your business partner is probably collecting evidence of their own at the same time. Be extremely careful about how you communicate with your business partner during this time, especially in emails, letters, and text messages. All of these written communications could become relevant in a later trial. Assume that your business partner is taking screenshots of your texts, saving your emails, and making copies of everything. If you’re concerned about saying something that could be problematic during a later trial, consider allowing your business litigation attorney to communicate on your behalf. The type of evidence necessary for a breach of contract lawsuit depends on the type of breach involved. If the breach involves a business partner, you may be facing issues like misappropriated funds, confidentiality breaches, leadership disputes, and failures to contribute equally to the business. In the event of misappropriated funds, financial records may be particularly important. If possible, make copies of bank statements and all other relevant financial documents as soon as you notice the misappropriation. If your business partner refuses to provide certain financial documents to you, rest assured that your lawyer can help you gain access through a pre-trial process called “discovery.” The court can compel your business partner to hand over the documents if they refuse to comply. If you are dealing with a confidentiality breach, you can also gain access to key communications through the discovery process. For example, your business partner might have shared trade secrets or intellectual property with an unauthorized third party through email. You can compel your business partner to hand over these emails, giving you the evidence you need to prove the breach. Perhaps your business partner started making important decisions about the business without your input. Maybe you feel sidelined, and you believe that your business partner is trying to take over the business while forcing you out. In this situation, you need to find evidence that your business partner started making key decisions without your input. If a majority vote was necessary, find evidence that this voting process never occurred. If you believe that your business partner is not doing their fair share of work, you should compile evidence that shows you are doing most or all of the “heavy lifting” when it comes to daily operations. Perhaps you believe that your business partner is profiting from your hard work while doing almost nothing to help the business grow. If your contract states that all partners should make a good-faith effort to contribute, this could constitute a legitimate contract breach. Can a Business Contract Lawyer in Pittsburgh Help Me? A business contract lawyer in Pittsburgh may be able to help if your partner recently breached your contract. While online research may help you understand what happens next, each contract is unique. Because of the varying nature of these contracts, it makes sense to discuss your specific circumstances with a legal professional. Cozza Law Group PLLC has consistently earned mentions in lists like “Pennsylvania Super Lawyers” and “Law Firm 500.” Our attorneys have experience in many different industries, and we have helped companies handle numerous contractual disputes. Contact Cozza Law Group PLLC at 412-453-8673 today to get started. You can also find us online .