How to split up LLC ownership?


1

My friend and I are planning on forming an LLC around some services we are providing.

  1. I am working fulltime on our services and started the initial work 6 months in advance
  2. My partner has a fulltime job and is dedicating his off-time to help
  3. My partner has plans to quit his job once the LLC matches his current level of income
  4. Both of us will be providing the same buy-in amount.

What would be the best way to split up LLC ownership?

LLC Equity Partnerships

asked Nov 6 '11 at 11:55
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Sheehan Alam
194 points

2 Answers


0

If you are both putting in an equal amount, then it should be split evenly or slightly more for the partner that will manage it.

It sounds like you will be doing most of the initial work and thus will be getting paid by the LLC. That seems fair if you both agree to it.

They only thing to worry about is if your partners suddenly stops contributing to the venture. You may want to put in some provisions in your operating agreement that states the minimum level of participation to retain shares (or percentage) in the LLC.

It might be best to consult an attorney if you are thinking about doing an operating agreement clause related to participation.

answered Nov 6 '11 at 23:47
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Jarie Bolander
11,421 points

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Since you are working fulltime are you getting paid a fulltime salary or are you just eeking by why your partner works full time making real money and helps you in his spare time?

If you are both working on efforts for the business and you are getting paid OK from the business and you are just waiting to make more so he can then switch over then it seems that 50/50 would be appropriate. If you are starving and busting your butt while he is taking the safey / non-risky approach I would feel the % should be tilted in your favor a little.

answered Nov 7 '11 at 03:42
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Ryan Doom
5,472 points

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LLC Equity Partnerships