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    1 Reply Latest reply on Oct 1, 2009 4:07 PM by bm911tax

    Bringing Partners into LLC

    sammythesm Wayfarer
      I formed an LLC in 2007 for a business I have been working on for quite a few years. Recently, two individuals have come forward as excellent prospects for future business partners.

      I am trying to figure out how to bring them into my business without
      1) giving away too much control
      2) giving away too much ownership too quickly (trial period?)

      My initial thought was to start out the first year as just profit-sharing partners, but have me still control the business. This would be somewhat of a trial period to see if they really fit as business partners.

      Any ideas how to structure such an operating agreement for my LLC? Do I add the two new individuals as "members" with 0% ownership and then list how and when profits will be distributed in the profit distribution section?

      Anything I should be cautious about (tax implications, etc)?
        • Re: Bringing Partners into LLC
          bm911tax Adventurer
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          It sounds like you are on the right direction. The wise move would be to put your ideas in
          writing. So you will need an operating
          agreement drafted by an attorney, he/she will incorporate what you want to do
          into an agreement between you and other individuals. As far as taxes are concerned, it will depend on how your LLC is
          taxed currently. Once the operating agreement is drafted and signed you will
          need to talk to a tax advisor so he/she can pick the most advantages tax classification
          for your LLC (S Corp, Partnership, C Corp).