Legal Question in Business Law in Florida

I'd like to form an LLC in Florida that distributes 15% of its profits to a general "pool" or "fund" whose members are made up of my first 20 employees. Distribution of the pool among them will be determined by their seniority as a percentage of the entire group's seniority. For instance, if an employee has 5 years of seniority in a group that has 30 years of collective seniority, that employee would receive 20% of the pool, while another employee with 1 year of seniority would receive just over 3% of the pool. It's important to note the POOL, not the employees, will own the 15% share of the LLC and that the pool does not entitle them to equity in the company.

My question is what is the best way to accomplish this? Should a separate LLC be formed with the qualify employees as members and that LLC be listed as an owner in the original LLC? Or can the distribution as I've described be written into the original LLC? Or is there some other, better way?


Asked on 8/29/11, 7:40 pm

2 Answers from Attorneys

LLC's are very flexible and you could accomplish it by either way, and then some.

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Answered on 8/29/11, 7:46 pm
Michael Sasso M. Daniel Sasso

Several ways are sufficient for what you intend and neither of them would have the Pooled members as equitable holder with power to vote: A. Create the LLC with 2 classes of memberships (very similar to preferred or varying stock rights in a C corporation and obviously spell out all the specifics) without voting power; B. Create a separate Limited Liability partnership, or another LLC with just those members having non voting rights, with a general partner who is also a member of the "holding" LLC with all controls; C. Use the main LLC with a separate Resolution for management, set the LLC up under the "check the box" provisions as a partnership type taxed entity and distribute profits any way that you set out in the LLC terms - be sure your accountant is familiar with the same as to the specific allocation provisions, and I would suggest the manager of the Main LLC or it's personnel manager (over employees) have the power of appointment and or removal of employees in the pool and subject to death, disability, etc, plus some similar language as to "vesting" of benefits that you set up. Hope this helps but you will need assistance. A good source to look at for allocations would be "Florida Limited Liability Company" Forms and Practice Manaul by Albert C. O'Neill Jr, Nelson Castellano and J. Eric Taylor.

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Answered on 8/30/11, 9:01 am


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