Limited Liability Company (LLC) Ownership
Ownership of an LLC can be expressed in two different ways, depending on your preference. The first is by percentage and the second way is in units. In either event, ownership generally confers the right to vote and the right to share in the LLC profits. Unless otherwise requested, we will default to percentage rules.
Because an LLC is allowed so much flexibility through its operating agreement, it can distribute ownership interests basically as it pleases. The amount of money or time invested in the company may not be reflected in the ownership or profit sharing. For example, owner #1 runs the company on a daily basis, but has not invested any money in the company and owner #2 is not involved in running the company, yet he has invested all of the money. The two can agree through the operating agreement that owner #1 will receive 75% of any profits while owner #2 will receive the remaining 25% and their voting rights will mirror the profit sharing percentage. These numbers could also be reversed, just as easily, where owner #2 would receive the 75%. They might also split the profit 50%-50%, but could have voting rights split to favor one owner over the other.
This extreme flexibility is unique to the LLC structure and is one of the reasons they are so popular.