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LLC share distribution

Currently I own 90% of our company but would like to distribute some percentage to employees who've been loyal and worked hard over the past few years. Is the best way to just assign them certain percentage of profit or to assign them a percentage of the LLC?
Thanks

1 Response

  • Kim Luu

    http://www.linkedin.com/in/moneyandrisk
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    Editor, Moneyandrisk.com

    (Jun 18, 2010)
    Before you give away part of your company, you need to think through a few things.

    1) What is your exit plan for the company? Owners in the company will have a right to veto any sales or actions by the company depending upon the type of ownership or voting rights that they have. You need to make sure that your decision to give away part of the company will not affect how you run the business.

    2) How will you handle buyouts when someone leaves the company or when they die. Do you have a specific amount in mind for buyout? This will protect you from a widow or widower who have an inflated perception of the company's value when they want a buyout.

    There are a myriads of other issues to address. Perhaps it might be best for you to designate a bonus you want to give this year and take the time to plan and think through how you want to reward loyal employees up to giving a share of the business away.

What do you think?

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