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Updated almost 4 years ago,

User Stats

4
Posts
1
Votes
Joel Hall
1
Votes |
4
Posts

How to allocate LLC shares between active members and LLC

Joel Hall
Posted

Hello-

My friend and I are interested in starting a REI LLC in CT. I've read about examples of structuring the the LLC so that a % of the share/profit goes to my friend and I for doing the "work" and the other % of the share would get allocated pro rata based on the investment amount that LPs contribute. My question is what is a common allocation of these % that make sense for both my friend and I and the investors.

For example, we could split 50/50 where my friend and I are allocated 50% of the profits and the other 50% is allocated pro rata based on investment amount.  This could also be split 10/90 where my friend and I are allocated 10% of the profit and the other 90% is allocated pro rata based on investment amount.  What is a common allocation?  10/90, 20/80, 40/60, 50/50?   Any advice would be appreciated.  Thanks!

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