How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Richard Your Own Question
Richard
Richard, Attorney
Category: Business Law
Satisfied Customers: 53996
Experience:  32 years of experience practicing law and a businessman.
17027240
Type Your Business Law Question Here...
Richard is online now
A new question is answered every 9 seconds

Richard, I like your recommendation about remaining an LLC

Customer Question

Richard, I like your recommendation about remaining an LLC and electing to be taxed as an S-Corp. A twist though; as a young LLC business owner I hired an important employee and agreed to give him a 10% equity stake in the company. My intent at the time was to grow the company, sell it, and give him 10% of the net proceeds, not distribute 10% of the profits to him each year. Am I committed to a yearly distribution or can I structure the company where I retain control and still honor his equity upon a sale?
Submitted: 8 months ago.
Category: Business Law
Expert:  Richard replied 8 months ago.
Hi Mike. As a majority owner, you control when and if distributions are made...thus, you have no obligation to make annual distributions. But, just so you have equal expectations, I would suggest you communicate with him and you enter into a written agreement spelling out the specific terms of your agreement regarding the equity interest promised. That will facilitate a good relationship going forward.

Related Business Law Questions