Posted on 06/29/2020 5:57:05 PM PDT by TermLimits4All
Seeking to change ownership percentage of my LLC. in Georgia.
Thank you in advance for your input.
You need to see a Georgia Lawyer or a Chartered Accountant.
There are several solutions to the situation.
Each has different tax and liability consequences.
Put y9ur wife on the account.
Capital interest does not have to be same as profits interst. Consider amending operating agreement to give you 100% capital and keep wifes profit share the same.
georgia may now allow single person llc’s
check into it, makes life simpler
some states over time now allow this
What is the purpose of the change? Divorce/Lack of Trust/Set up wrong from the beginning? Each one of these have consequences especially if wife is/or has not been involved in the business.
In other words why do you want this now as opposed to when you set it up?
Your post is very confusing, but it sounds to me like the bank reviewed the operating agreement, saw that your wife owns the majority interest, and is questioning why as a minority owner you would be the signer on the account. Would I be correct in assuming that your wife has the majority interest because you're doing some government business where there is a preference for women owned businesses?
“and is questioning why as a minority owner you would be the signer on the account.”
Not why he is a signer. Why the majority owner is not 9n the account.
The wife could then give him rights to the account.
Not an accountant, nor resident in Georgia.
But, many financial institutions want to see that any accounts they open conform to the organization documents of the entity involved.
For example, I had some investment accounts, and had to make sure that the ownership on the accounts matched the revocable trust I had set up, and they had to agree that was the case. They’re worried about lawsuits against them down the road.
Shouldn’t be a big deal to fix... but whether you do it, or have a lawyer do it is up to you. Sounds to me like you should talk to a lawyer, and it might take a couple of hours of his billable time.
The more important question is, and the one the bank cares about is, why would you open an account for your company which is in your name only? At least that’s what it sounds like you were applying for.
“On the account” means the signer of the account. The account is in the name of the LLC. He said he set up the account, so he is presumably the only signer on behalf of the LLC. The bank is not going to allow a minority member of an LLC to be the only signer on behalf of the LLC without some sort of authority from the majority member. It would be nice if the OP checked back in to clarify since people are going to the trouble to give him free advice.
My wife is 51% majority. I use the LLC for my income from a different company who pays me by 1099.
I took advantage of the PPP loan program due to the 9/10s loss of income due to the shut down in my state. Well that and I figured if the funds were available and we and our children and grandchildren will be paying for it anyhow go for it. In order to get the proceeds for the loan I needed to have a business account set up so I opened one at the bank we do business with both personally and for my wife’s business separate from mine. It was only after the bank did an audit that I remembered she had controlling interest. Just looking to get that changed since the “my name” llc is only for tax purposes and has never since 2013 had any involvement with my wife except for the majority stake.
Hope that makes sense.
I do not live in GA, I am neither a banker or a Lawyer - but it seems odd to me that your bank is giving you legal advice.
Ask them to provide you the “why” along with appropriate references. If there is a controlling law or statute, they should be able to reference it. If it is their policy or just some managers opinion ......
And then by all means, contact an attorney for legal advice.
Yikes, I think you have been too clever by half with the arrangement you have set up. I think it’s best for me to not offer any further advice. I will say that the only reason to have an LLC is to shield the members from personal liability for whatever business the LLC engages in. Doing business as an LLC provides no tax benefits whatsoever. Good luck.
Divorce.
Legal advice you get on the internet is worth what you pay for it. You need to talk to a lawyer in your state.
I agree. We had an LLC set up by a lawyer and in the operating agreement we included an opportunity to allow low level members to increase their shares.
We did this for years with all understanding that the lower partners were nearing the same level as the original partners. Then we agreed to leave the percentages as they stand for the remainder of the partnership.
At that point we changed tax filing firm and the new agent said what we did was totally wrong but we appeared to have gotton away with it. With the right guy filing taxes from then on we had more confidence that things were OK.
We were never audited (too small) but eventually we disolved the partnership and divided up the assets in the ratios of the partners shares. No problem, and no complaints.
So I would say the most important thing short of using a lawyer for everything is to have unanimous consent for everything that you do.
Good luck
I have a 3 member LLC
I am the managing member.
When I open a new account, the bank always insists that the other 2 partners come down and sign a “signature” card to be on record as legal authorization with access to the account.
This is honest practice by a bank and totally legit.
If my partners never signed that card, I still have a new account, but legally they are partners and can scan and email a signature card whenever they find the time.
Access to the accounts should be decided and recorded in your articles of incorporation and filed with the state.
Holy shell companies, Batman, did he just admit to tax fraud?
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