Re: Limited Liability Corparations

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LLCs are a creature of state law and your answer depends on
what your state law states. In the state where I am
located, you do not necessarily sell membership units, but
the members of the LLC can always take on new members for
some sort of consideration. You would then owe them a
certain percentage of the net profits earned by the LLC
(determined when the new member is acquired). For
instance, you might grant someone a 10% membership share in
consideration of a capital investment of $25,000. That
means that person is entitled to 10% of the net profits the
business makes as long as he is a member in exchange for
giving you $25,000.

A LLC is not really ideal for issuing membership to the
general public. At least here, LLCs are formed to solve
the "piercing the corporate veil" problems associated with
closely held corporations while at the same time affording
the entity partnership taxation rights. So you may want to
keep the membership unit issuance to people you know and
trust.

On 12/05/03, Charles Keeran wrote:
> I would like to know if a LLC can sell what some have told
> me are called membership units in an attempt to raise
> capital for business use.
>
> I have been told a LLC cannot sell shares because they are
> not incorporated but they can sell membership units.
>
> If this is true that you can sell membership units how
> would you go about doing it and what do you have to file
> for this?
>
> Thanks,

Re: Limited Liability Corparations, 12/13/03, by Rob.

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