Jake's Household Repair LLC

Starting a single owner LLC

Operating agreement 
1. Member managed
Don't be member managed. Because when you file it with the secretary of state, these states would like to know who are the members.
File as a manager managed LLC.
2. Forced distributions
In an LLC you have the ability to distribute money out to yourself. That's called a distribution. When you take any money out that's called a distribution. The problem that can happen on an operating agreement is that they have provisions in there that require the company to distribute the profits on an annual basis to its members or distributed enough money so it's members to cover their tax liability. 
It's my company I control it why do I have to have an operating agreement tell me what I need to do? Why not allow the operating agreement to give me discretionary authority to make those distributions?
Here's why it's important let's assume your sued and they get a judgment against you and they file a charging order on your LLC and you've known all about charging orders so you don't have to distribute any money out so predator doesn't get paid. 
But my operating agreement doesn't give me that discretion any longer. Because my operating agreement forces me to distribute money out of it. So Force distribution is a bad thing. Do not have any language in the operating agreement that forces you to make distributions.
3. Non-pro rata distributions
If there are multiple members in your LLC, you don't have to make distributions equally. Example let's say I created this LLC and I have another partner involved at this partner is going through a divorce and so that partner doesn't want to take any money out right now because it's just going to complicate their divorce. So so that member doesn't want to take any money out right now because it's just going to complicate their divorce. So they want to keep the money inside the company. Well what does that do to me? I need the money I want to take the money out. Well if it's pro rata distribution then we have $100,000 in here then I would have to divide it up 50/50. I would get 50K in my partner is going to get 50K.
If I have none pro rata distribution it allows me to take my money and I don't have to give it to my other partner. I decide who gets the money and it doesn't have to be equal. So create your entity with non-pro rat a distribution.
You'll see that in the distribution clause. 


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