Forums: Discussions for entrepreneurs and small business.

I have an LLC and need to provide a stock option like incentive to my employee and partner. I want them to have equity as long as they are employed or are officially my partners.

Is it possible?
Any lead as to how I can change the Operating Agreement for it? Article of Organization?
I cannot afford a CPA and an attorney to do this. Any cheap alternative?

While owners of corporations are "shareholders", owners of LLCs are "members". Therefore, any equity you would be giving a partner or employee would be in the form of % membership. LLCs offer a unique flexibility in that you can pay out any percentage of profits you want to each member, it doesn`t need to be dependent upon how much % ownership they have.

So yes, from my understanding, it certainly is possible. You would have to make the individual a member and grant them a percentage ownership. You can then decide to pay this employee a certain amount, whatever you agree on.

I am not positive about the legality about what claims and decisions a minority member would have on the business, although I would assume it is similar to a minority shareholder of a corporation.

Just make sure you have everything ironed out in the membership agreement. You can dowload templates for agreements from a variety of sources, I know entrepreneur.com offers them.


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