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Updated almost 4 years ago,
How to allocate LLC shares between active members and LLC
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!