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View Full Version : Opening up a new company with a 80/20 split



kingangelo305
12-15-2014, 10:21 AM
When I usually open up companies everything is split evenly amongst the founders but I have a new client who wants to have his company split with his partner who helped him come up with the idea but isn't going to be able to put any money in, have it split 80/20 %. How would I do this? I know what to do as far as taxes and everything in that manner just need help in setting it up 20/80. If anyone can guide me or point me in the right direction that would be awesome. Thank you in advance. It shouldn't matter but the company will be a LLC.

Freelancier
12-15-2014, 10:39 AM
From the IRS web site: (http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/LLC-Filing-as-a-Corporation-or-Partnership)

Depending on elections made by the LLC and the number of members, the IRS will treat an LLC either as a corporation, partnership, or as part of the owner’s tax return (a disregarded entity”). Specifically, a domestic LLC with at least two members is classified as a partnership for federal income tax purposes unless it files Form 8832 and affirmatively elects to be treated as a corporation. And an LLC with only one member is treated as an entity disregarded as separate from its owner for income tax purposes (but as a separate entity for purposes of employment tax and certain excise taxes), unless it files Form 8832 and affirmatively elects to be treated as a corporation.
Unless you're planning to specifically organize as a corporation, you have a partnership and would set up the partnership agreements and define each partner's interest in the company that way.