Re: LLC Operating Agreement
Re: LLC Operating Agreement
Source: http://newsgroups.derkeiler.com/Archive/Misc/misc.legal/2007−06/msg00412.html
• From: "McGyver" • Date: Thu, 21 Jun 2007 15:49:56 GMT wrote in message news:1182369566.236328.149410@xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx I have been reading everything that I can find on forming an LLC (for the purpose of also obtaining an auto dealers license in my State of Missouri). I have read many sample operating agreements and understand the concepts put forth. I am still having problems discerning what I need to draft for my particular situation. I would like to have a single member LLC but in the auto dealership would like to work with one of my son−in−laws. We will work somewhat independently, possibly going to auto auctions at different times. I would like to maintain individual profits according to each persons volume of work. (i.e. autos I sell are my profits and what he sells are his). At the end of the established financial periods, if I generated 60% of the profits and him 40% then that's how it would be carried over to our personal profits or losses (if he's a member) and possibly a small mandatory % of each sale remaining in the business for operating costs and expenses. I am looking for the simple verbiage to draft this, i.e. listed as "Commissions' etc. Without him as a member, I imagine he would need to be listed as an employee of the LLC/business working on as I said commission. Basically if I am putting in the effort to form this business and put up the operating capital, etc., I want sole control. I am just trying to help out my daughter and husband with some extra income but don't want to over complicate things. If the operating agreement turns out to be more of a headache trying to define the financial structure, or by having employee's instead of a partners/members then I will continue to look at the more standard arrangements.
You should form a single member LLC. Make your son−in−law and employee or Re: LLC Operating Agreement 1
Re: LLC Operating Agreement independent contractor, not a member. There is no need to give him any ownership interest under the facts you posted. You should always be stingy with equity. Helping out your daughter and your son−in−law is best done by providing a job. Never give up equity unless you are raising investment capital, and even then, be stingy. The operating agreement is pretty simple because there is only one member. The most important terms are the taxation terms, and you should consult your cpa or other tax advisor on that issue. The cpa might also be a good source of a form of operating agreement. If you are going to do the drafting yourself, I recommend that you draft the operating agreement in such a way that no new member can ever be added without drafting a completely different operating agreement. The reason for that advice is that a single member operating agreement can be kept simple, except for the tax terms. There will be no clauses concerning voting rights or restrictions on transfer, for example. If you make it versatile enough to be used as a multimember operating agreement, it becomes complex and you should not be drafting it yourself. I suggest that you should not be overly concerned with chiseling the government out of the employer's share or social security taxes and the like. If your son−in−law isn't earning enough for you to make those costs inconsequential, you need a better employee. If you want information on what is or isn't an independent contractor, start with the IRS publication on the subject. And the internet has tons of articles on the point. As for how to pay an employee while you don't have much cash flow, one solution is to put your employee on straight commission with minimum wage as a floor. Use a written agreement, drafted by an attorney. This answer must not be relied on as legal advice for the reasons posted here: http://mcgyverdisclaimer.blogspot.com . And I am not your attorney. McGyver
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Re: LLC Operating Agreement
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