A couple of questions...
1) when calculating a company's total equity, do you include sweat equity? For example if the total capital equity (actual $$) is $100,000 and someone contributes $10,000 in sweat equity... is the total company equity then $110,000? Would this then mean that the individual contributing the sweat equity hold 10% (on $100,000) equity share or 9% (on $110,000)?
2) as i understand it, there is no such thing as an S Corporation. it's simply a designation that an LLC can select for tax consideration by the Feds since the Feds to actually recognize an LLC as a taxable entity (e.g. you're taxed as a person when an LLC or as a corp when electing SCorp status). that said, does one need to structure distributed earnings as a corporation based on % or can you establish whatever distribution you want since you're an LLC? meaning would the individual in the example above have to be paid 10% of earnings or could an arbitrary distribution schedule be established.
sorry, kind of confusing how i wrote that. lol. thanks for the info!
1) when calculating a company's total equity, do you include sweat equity? For example if the total capital equity (actual $$) is $100,000 and someone contributes $10,000 in sweat equity... is the total company equity then $110,000? Would this then mean that the individual contributing the sweat equity hold 10% (on $100,000) equity share or 9% (on $110,000)?
2) as i understand it, there is no such thing as an S Corporation. it's simply a designation that an LLC can select for tax consideration by the Feds since the Feds to actually recognize an LLC as a taxable entity (e.g. you're taxed as a person when an LLC or as a corp when electing SCorp status). that said, does one need to structure distributed earnings as a corporation based on % or can you establish whatever distribution you want since you're an LLC? meaning would the individual in the example above have to be paid 10% of earnings or could an arbitrary distribution schedule be established.
sorry, kind of confusing how i wrote that. lol. thanks for the info!
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