When you are forming a business partnership or an LLC, you’ll want to consider the following concerning the business agreement between you and your partner.
- How will ownership of the business be divided?
- How much capital or property should each partner contribute to the business?
- What will happen if a partner doesn’t fulfill their contribution requirements?
- How will major business decisions be voted on? Do you want to require a meeting to approve major business decisions or is written consent sufficient?
- Do you want to plan for the addition of additional partners?Â What procedures and requirements must be followed to add additional partners?
- What will happen if the business needs to raise more capital?
- Do you want to allow or prohibit a partner from transferring or selling their interest in the business?
- What happens if the partner wants to leave the business? Will it trigger the additional partners purchasing the partner’s interest? How will their interest be valued?
- How will the partners be compensated? Will the partners receive a salary? How often will distributions be made? Will distributions be made during regular intervals or will a vote be required to make a distribution? What procedures or requirements must be fulfilled to make a distribution?
- Do you want the partners to be able to withdraw funds form the LLC without a distribution being made through a “draw account?”
If you’re looking to form your own business in Pennsylvania, call me at (484) 362-9286 for a consultation.