The economic structure of a limited liability company (LLC) determines the amount and timing of the distributions to the members.
The economic structure of a limited liability company relates to how and when distributions will be made to the owners (referred to commonly as “members”). Distributions may occur on a set schedule in regular intervals, when the LLC either redeems (or buys back) the member’s interest, or when the company liquidates. In this next installment in our series on LLC Operating Agreements, we’ll explore some considerations when structuring the distributions and allocation of profits and losses for your LLC.
The default rule under Washington law provides that members will receive distributions and allocations of profits and losses in proportion to the amount of capital each member contributed to the company. To clarify some of these terms: a distribution is any cash or property a member…