Startup business; 3 partners forming an LLC, but....?

Question

The third partner needs/wants to NOT be a part of the LLC, but a paid employee. How can this person's investment be protected without being named as an owner? Any ideas?

Answer 1

Dear Destiny's

This is a very complicated situation.  Perhaps there is a logical explanation why a person wants to own a business without "owning" a business, but as a 25 year advisor in this kind of situation, I can't think of many legitimate ones - my strong encouragement is that you proceed with caution in going into partnership here.

Having said that depending on the state it is likely that a trust can be established to own the interest of the "silent, paying" partner until such time as he is prepared to place it in his name.

You definately need to speak with an attorney who can advise and also protect your friends confidentiality due to attorney-client privilege.

Good Luck,

Dana B.

www.thebarfieldgroup.com

Answer 2

He can LOAN the money to the LLC. Hire him as an employee. When the time is right modify the LLC.

Answer 3

This is a silly question.

From what I understand, one person is investing money along with the other two people but this particular person will be operating the business.  If so, what is the point in having the other two founders around?

We need more details and more common sense should be used.