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I am a member of LLC who owns majority of LLC.

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lgcjc

Member
The manager of LLC wants to charge LLC fee to manage property but he is not doing any work. Can he charge LLC $5000 a month if I am doing all the work? I told him he has to actually do work to get paid. What can I do to resolve this. Would we have to go to court. It does not give his salary in operating agreement.
 


quincy

Senior Member
The manager of LLC wants to charge LLC fee to manage property but he is not doing any work. Can he charge LLC $5000 a month if I am doing all the work? I told him he has to actually do work to get paid. What can I do to resolve this. Would we have to go to court. It does not give his salary in operating agreement.
What is the name of your state?

Do both your articles of organization and your operating agreement state the LLC is manager-managed?
 
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LdiJ

Senior Member
The manager of LLC wants to charge LLC fee to manage property but he is not doing any work. Can he charge LLC $5000 a month if I am doing all the work? I told him he has to actually do work to get paid. What can I do to resolve this. Would we have to go to court. It does not give his salary in operating agreement.
He would be entitled to a share of the profits based on his ownership percentage whether he actually works in the LLC or not. Anything above that would depend on your operating agreements and whether or not he works in the LLC.
 

Whoops2u

Active Member
He would be entitled to a share of the profits based on his ownership percentage whether he actually works in the LLC or not. Anything above that would depend on your operating agreements and whether or not he works in the LLC.
Or, if there is a distribution or not. Maybe he's just entitled to pay taxes on his distributive share.
 

adjusterjack

Senior Member
The manager of LLC wants to charge LLC fee to manage property but he is not doing any work. Can he charge LLC $5000 a month if I am doing all the work? I told him he has to actually do work to get paid. What can I do to resolve this. Would we have to go to court. It does not give his salary in operating agreement.
How did you get in bed with this guy in the first place?
 

quincy

Senior Member
If in California, as posting history suggests, the members may have recourse. There is a dearth of facts provided.
 

LdiJ

Senior Member
Or, if there is a distribution or not. Maybe he's just entitled to pay taxes on his distributive share.
Unless the LLC has made an S-corp election it defaults to a partnership...so its less likely that there won't be a distribution. They have to pay self employment tax on their share of the profits. All the partners will want their distributions.
 

LdiJ

Senior Member
More needs to be known.
The concept of members of an LLC being entitled to their share of the profits based on their membership really does not need more information. Yes, the rest of it would depend on their operating agreements etc.
 

Whoops2u

Active Member
Unless the LLC has made an S-corp election it defaults to a partnership...so its less likely that there won't be a distribution. They have to pay self employment tax on their share of the profits. All the partners will want their distributions.
What the members want is entirely different from what they get. The likelihood of making a distribution depends on who decides. It's why charging orders are not always the favored route to get money from an LLC. While all members need to be treated similarly, if the deciding party determines the LLC should retain all of that distributive share for LLC business, making the distribution zero, the K-1 is still reflecting the distributive share and not the distribution. No matter if they make an election to be taxed as a corporation or make the additional election to become an S-corp. While S-corp is usually chosen for that, there are sometimes problems if the member agreement acts as though there are more than one type of stock.
 

quincy

Senior Member
Unless both the articles of organization and the operating agreement state that the LLC is manager-managed, the default is member-managed.

If member-managed, the manager may not have maximum control over business decisions and the members have the possibility of vetoing the manager's decisions.

The operating agreement should define "ordinary course of business" as an LLC manager must have, in a member-managed LLC, unanimous consent of LLC members to act outside the ordinary course of business.

Again, more needs to be known about lgcjc's LLC.
 

lgcjc

Member
It is in California. The manager owns 1 percent. The operating statement does not say what the managers salary is.
 

LdiJ

Senior Member
It is in California. The manager owns 1 percent. The operating statement does not say what the managers salary is.
Ok, then we are basically talking about an employee who has a small share of the business as an incentive. Therefore I do not understand the question. If the LLC has an underperforming employee, why hasn't the LLC fired the employee? Yes, even after firing the employee would still own their 1% of the company but they would not be being paid a salary anymore.
 

quincy

Senior Member
It is in California. The manager owns 1 percent. The operating statement does not say what the managers salary is.
I am not seeing a reason why the manager can't be fired, at least in what you have stated so far.

What is the issue for you?
 

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