Q: Hello I am helping my friend out with his single member LLC and we want to add me as a member. What steps would we tak
A: First, you and your friend should each consult your own attorney. Becoming a member of a limited liability company is economically similar to becoming a partner in a business. You will have rights and responsibilities with respect to your friend and should know what they are and whether you are prepared for them. Not understanding that is a great way to end up with a business partner who is no longer your friend.
In addition, you should agree now on how to exit the business when the time comes and build the exit plan into the Operating Agreement. Unlike a marriage, most businesses do not lasts until your deaths. You will almost certainly want to part company before that. However, also unlike marriage, there is no divorce code for businesses, so you should address how to split up at the time of your formation.
Finally, make sure you understand the consequences of your respective ownership shares and are willing to accept it. Unless you are 50/50 owners, which presents its own challenges, one of you will be the minority owner. My stock advice to clients is to avoid minority ownership. There are better alternatives.
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