legal, partnershipWould like to accomplish this with one legal entity and minimal additional tax implications.
I am planning to develop multiple product families with several co-developers. For each product family, there will be a different level of involvement and effective ownership of the profits/losses. Therefore setting up LLC with fixed ownership % and then allocations/distributions doesn’t make sense especially as every year the mix will also change.
One thought is to distribute royalties by product line and ownership %, but not sure if this is best or if there is a better approach.
First and foremost you need an experienced attorney to draw up your operating agreement. But once you do, it’s locked into place. If you need to make changes after the fact then you need all owners to agree to the changes. It’s also very costly to have your attorney make these changes.
You may want to consider a different company structure like a C Corp or S Corp, especially when you expect so much volatility. There are a number of ways to do distributions - like thru stock or options that include vesting periods.
All content is licensed under CC BY-SA 3.0.