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0 pointspc862y ago0 comments

There is a lot more legal overhead to buying out an LLC owner against their will compared to firing an at-will employee.

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username3322112y ago

Should a worker-owned company be an LLC? An LLC[1] is a union of assets put together for a common purpose. It's not a union of people. A worker-owned company should have a different legal structure, usually something created specifically for such an organization, though one would imagine partnerships would be suitable if the law doesn't provide for a special structure.

[1]Granted, I'm thinking of European definitions here, because I get really confused when I try to educate myself about American ones. An GmbH is more or less an AG with stakes rather than shares, whereas an American LLCs seem to behave somewhat differently (taxation, for example is pass-trough).

mminer2372y ago

Entity laws are all state-by-state in the US, but in most (all?) states, LLCs and corporations are essentially the same ownership-wise. A person buys membership interest/stock in an LLC/corporation, and becomes a partial owner. The organization is a separate legal entity then owning the contributed assets and the members/shareholders own the LLC/corporation. The bylaws will lay out how to divest a member/shareholder of his interest, usually involving the other members/shareholders or a board of managers/directors voting to buy out his shares.

It's not really a union of assets nor people though. The former would be a trust or arguably a non-profit, and the later would be a partnership. And LLCs can elect to be taxed as a C corporation, although I can't fathom why one would. (And most small businesses can elect pass-through taxation!)

singleshot_2y ago

No. Taxation of an LLC is not pass through. Taxation of a single member LLC that is a disregarded entity can be pass through. LLCs can also opt for sub K, sub S or sub C.

I also would not refer to an LLC as a collection of assets for a common purpose; instead I would say it is a popular entity form that limits member or manager liability. However you could take a different view.