Buying into a Company as an outsider - Single Member LLC

[yipfolio]

What is the name of your state (only U.S. law)?

New Jersey.

Hi everyone. There is a single member LLC that I want to buy into the business or give some equity but I need some help with the legal portion of this. First, I do not want to assume any liability for the company besides the portion I am willing to put into the business. As in, if I give $100,000, but the business is in debt for $250,000 I can't be liable for that $250,000. Also, who determines what percentage of the company my equity is worth?

Any advice on the best way to approach this or the right way to do this would be extremely helpful!

I posted this in the investment forum as well, but I see this forum is also specific to LLC's. Not sure which forum to use.

Thanks,

 

[FlyingRon]

Unlike corporations which just issue stock to represent the equitable shares in the company, LLCs have to have an operating agreement between the members. It also changes what is probably a disregarded entity for tax purposes for the single member into a more involved tax structure (partnership). All of this probably begs that you get proper legal and accounting assistance in setting it up and determining whether you really want to continue the business as an LLC or not.

Your liability in an LLC (or corporate entity) is only the potential loss of your share's value. You're not responsible for debts personally unless you specifically make yourself responsible to the lender.

What determines what your membership is worth is what someone will pay for it. Other than that it has no inherent "value" in it's own other than what it's doing for you. If you're determining how the income from the LLC should be distributed, again that's in your operating agreement.