Forming a Limited Liability Company
Please provide the following:
- What is the name of the business?
- Address for the business
- Addresses for all members
- Social security number for the person in charge of day to day operations of the business
- What will be the ownership percentages?
- Who will make the day to day decisions? What dollar amount thresholds are in place? (for instance, manager (“Manager”) can make all decisions under $1,000. Anything above that amount requires unanimous vote). Any notice provisions (for instance, Manager must notify all owners if he/she chooses to spend over $5,000 – but the owners don’t have to approve it)
- Who are the officers (President, Vice President, Secretary, Treasurer, Other)? Who has signing authority for what?
- Buy/Sell Agreements – Should there be any buy-sell provisions? These can be good to have in case owners cannot agree on a key part of the business.
- Who is contributing what to the business (money, time, etc.)? For those contributing non-monetary consideration, be very clear about their contributions.
- Who determines when and if an owner/employee is terminated by the company? Will their ownership interest be purchased by the company? At what price / discount?
- What happens in the event that the company runs out of money? Can members be forced to put money into the company or face losing a percentage of their ownership? Are certain members permitted to automatically make loans to the company without the others’ consent?
- Who determines what to distribute from the company to its owners? Is there an annual automatic distribution for taxes?
- Are there any loans to the company? If so, would you like those documented in the form of a promissory note (this is a good idea)? Do these debts have to be paid off before any distributions?
- What happens in the event of a death / disability of an owner? Does the business have to buy back the ownership interest? How should this work?
- Who must approve of sales of ownership interest from a current owner to a new owner?
- What is the division of work between each?