LLC Members With Uneven Ownership
Despite what the graphic may imply, uneven ownership in an LLC does not necessarily mean an unfair distribution; there may be a number of reasons LLC members may decide to own an unequal share in the company. For instance, some members may have contributed more capital to the LLC and therefore demand a larger ownership interest, or a member may be a silent partner and wish to contribute only a small amount to the company in exchange for a small share. Regardless of the reason, the LLC ownership structure is flexible enough to allow for any distribution of ownership among the members.
You do not need to specify the ownership structure in your LLC’s Articles of Formation, though some states may require you to list all members. However, the distribution of shares should be clearly described in the Operating Agreement or in a separate document — usually a profit sharing agreement or profit share contract — that has been incorporated into the Operating Agreement. Unlike other business entities like corporations and partnerships, the ownership interest in an LLC does not have to directly relate to the member’s contribution to the LLC. Uneven ownership is possible even when members have contributed evenly, and equal ownership is possible even when the members have contributed unequally.
You may want to give ownership interest commiserate with the member’s investment in most cases, but you may distribute ownership in any way that you and your partners, fellow members, or board of managers agree.
Incoming search terms:yhs-ifm1 (29), do capital contributions in an llc have to be equal among members? (2), In an LLC is the ownership percentage the same as voting percentage (1), llc capital contribution declining ownership (1), llc unequal ownership (1), MARRIED COUPLE WITH SILENT PARTNERSHIP (1), membership interest equal to capital contributions (1), ownership percentage capital vs profit and loss (1), ownership percentages in an llcand ending capital account balances (1), profit percentage vs owner percentage (1), sharing partnership losses for unequal contributions (1), tax member of llc with less than 5% ownership (1), unequal ownership of business (1), uneven partnership distributions (1), when can partnership capital accounts not equal ownerhsip interest (1), whenever there is a distribution on the sale of assets from an llc must it be equal to their ownerhsip interest (1), in a operating agreement what does distributions on an annual basis equal to 40% of net taxable profits mean to the individual investor (1), how to structure compensation in 50 50 partnership with 1 working partner and 1 silent partner (1), 2 member llc partnership percentages (1), allocate depreciation 50/50 agreement unequal contributions (1), can llc have different profit % and different owner % (1), can llc have unequal distributions (1), can member of LLC have zero ownership (1), can partner losses be disproportioate to ownership percentage (1), capital accounts the same as profit and loss percentages (1), Capital Ownership LLC (1), do company owners have to make same contributions and distributions (1), do partnership distributions have to be equal? (1), Does a member of a LLC have to have ownership? (1), does a member of an llc have to have percentage of ownership (1), does ownership have to be proportional to capital contributions (1), how to handle percentage ownership equal 100 percent (1), % capital vs % profit and loss (1)