J.C. P
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All shares are interests, but not all interests are "shares". An LLC is not a corporation, it is a "limited liability company".
If the company is an LLC, it sounds like you are a Member. The LLC should have an "operating agreement". Ask for a copy. It will contain the answer. Some agreements speak in terms of shares, others speak in terms of interests.
On the other hand, some companies are "partnerships". They usually will not issue shares of stock because the company is owned by partners, not shareholders. Limited liability companies (LLCs) have "members".
The big issue is usually tax related. Usually, corporations (not limited liability companies) have to issue shares and they are taxed by their state of incorporation based on the number of "shares of stock" that are in existence.
Edit:
People mentioning supposed personal liability (for debts or losses) need to do their homework. The LL in LLC stands for "limited liability". |
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Tony
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Stock is only available for publically traded companies. In that case then yes, owning a percentage is owning the stock of the company. However, a privately held LLC, owning a portion of the company is important for determining how much net gain or loss is allocated to you for taxes or in the case that the company is dissolved. Internally it could also be used to define decision making power within the organization but that is up to the individual company charter.
So what you've been told is correct in this case. If you own 2% of the LLC you get 2% of their profit or loss and that should be reported on your tax return. |
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David S
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Essentially, yes, it is the same. Companies don't have to be traded publicly to issue shares. |
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SmartA$$
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The biggest difference between owning 2% of a privately owned LLC and owning stock is that the company (the other owners) might have the right to restrict you from selling your ownership stakes. If you owned stock in a public company, you could sell your stock to anyone at anytime. With a private company you have to have approval from other owners in order to sell or give away your share of ownership. |
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fun1
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No. If you were a stockholder, the value to you would be determined by the price of the stock.
Instead, you are a 2% owner of the LLC, and the value to you is 2% of the total profit or loss.
By the way, if the LLC loses money, do you have to cough up 2% of the loss each year, under your agreement? It sounds like it, from what you wrote.
So if the LLC loses $100,000 in 2009, then you lose $2,000 yourself. Owners have to find a way to cover business losses, and sometimes it is with personal funds.
Be careful. |
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Jack B
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The only difference is if the company loses money, you actually lose money also. Stockholders are free from any liability and can only lose their original investment.
Hopefully this is a thriving business....
Good Luck. |
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kemperk
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one more thing too; for your advantage
if you ever get into a knock down drag out argument about
any policy of the LLC, you can sue in court for a dissolution of
shares.
happy new year |
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Rob C
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hmmmm email me your best answer I get 2.5% in April! Need answers myself. |
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MR.ZILLIONAIRE
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v |
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Beau R
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No it isn't. As an owner you also have the responsibility of being sued, should something happen to warrant a lawsuit. LLC stands for Limited Liability Company. In the United States we use the term Incorporated. |
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Bruce L
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It's not worth anything unless you have some sort of contract. |
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justbecause
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ya companies that are publicly traded have stocks, so you dont have stocks in the company. llc is a limited liabilitity corp. so that means if they at some point go broke, they aren't liable for the companies debts to creditors. they have limitied liability. |
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Sahara
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LLC stands for Limited Liability Corporation.
Corporations can issue stock. You own 2% of the shares of the company essentially. You have less options with your stock because it's not publicly traded. You can't sell your shares of the company in the secondary market.
I relearned something. It's limited liability company?
Hmmm.... could be. You wouldn't be given stock but all stock is is ownership of the company.
You are an owner. You shouldn't be liable for anything because of the limited liability status. I would seek to clarify it though just in case. You should understand completely or not be involved. |
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CFTRAP
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yes |
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♥Slim Diva♥™
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yes |
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Phade3
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In theory it's basically the same thing ! Can I also get 2% ! LOL ! |
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PGILNIKT
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I think it has to be a "stock company" in order for it to be like stock. But, owning stock means you "own" part of the company as well. |
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Scott A
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Nope not the same as owning stocks or shares. Shareholders have a say in the running of the business, with only 2% u won't get a say in the running of the business etc. Also shareholders are the first to receive profits, u will be the last lol |
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