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Written by : Mohamed Geise
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hi miles here with northwest registered agent today we'll be talking how to shift your llc member ownership percentages uh so first llc's are owned by members each of whom are each of them have a certain ownership stake in the company this is known as ownership percentage this figure is usually determined by the amount of equity each member has contributed to the llc and it's recorded in the internal llc operating agreement how do you make this change you'll simply have to draft a proposal that all the members of the llc will sign off on to approve the motion there's also if there's any changes to the members contribution there's a section in your operating agreement it's known as the capital contributions agreement and this is essentially when an llc is formed you have startup equity also known as initial capital contributions this is a section of the agreement where that information is recorded so you can make changes here if needed to if you don't have an operating agreement then your llc is simply bound to the secretary of state's default ownership percentages if you have any other questions feel free to reach out we'll be happy to help you
Thanks for your comment Lon Vien, have a nice day.
- Mohamed Geise, Staff Member
what's up everybody this is attorney Dan winninake dan win again let me say my last name but I want to talk to you a little bit about LLC's and splitting different ownership and profit and loss allocations now this is kind of a more advanced topic but it comes in handy when you have obviously when you have more than one owner and in a traditional case if there's more than one owner let's just say two and if one person puts in $75,000 and one person puts a $25,000 cash then the one person would have 75% of the company and the other person would have 25% of the company but sometimes there are situations where you might want to change this and not adhere to the default rule where the amount of contribution equals the profit loss distribution now it's possible that you can have different profit and loss allocations allocated to the to the owner so in in this this is narrower someone put in 75% another person 25% and you don't have to do that way as long as that everyone agrees in the awkward agreement that maybe one party gets 25% of profits lost other person gets 75 percent profit I don't know why they want to do it this way but technically they could do it now it's really important that it's written down in the upper agreement you don't want this to be a handshake agreement you don't want this to be some backdoor agreement you want this written down that all parties understand that who the ownership structure is who the ownership percentages are and what the profit loss allocation is now here are a couple of reasons my or white why you might want to do it outside of the default rule one sometimes there are party members or owners putting up not cash but maybe sweat equity right maybe they actually doing all the work and another party's just putting up this startup capital and maybe the person that wants that wants to do that is doing other work wants to get more of the company maybe 51% so in those positions situations those that might be a particular reason another situation is maybe one of the owners is using this a loss to offset some income from their other businesses and I've seen this before is one party owns you know let's just say 75% of the profits and losses but they are a very minority shareholders just say they own 25% right but what they can't do is now take if the company is taking a loss which is pretty common in the first couple years then they can carry those losses against their other income and and offset some of the income from their other businesses so this is all just to say the default rule is you know in proportion to their to their to their ownership as to allocation of profits and losses but the parties can agree that it can be distributed differently so this is Dan talking about LLC's structuring them differently according to the ownership and property losses and if you have any questions feel free to reach out to us let's do consultation and we can help you out all right this is Dan dr. C
Thanks swiftvixenX your participation is very much appreciated
- Mohamed Geise
About the author
I've studied ecological psychology at Texas A&M University in College Station and I am an expert in legal psychology. I usually feel happy. My previous job was airline flight control administrator I held this position for 17 years, I love talking about rail transport modeling and cartooning. Huge fan of Christopher Mintz-Plasse I practice croquet and collect first day covers.
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