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Forum nameFinancial Feast
Topic subjectRE: I need Help Setting up Investors & Returns
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508, RE: I need Help Setting up Investors & Returns
Posted by Phanntom, Sun Apr-06-08 08:53 PM

You should clarify if they are to be lenders or investors. Lenders, generally loan you the money and get their return from the interest you pay during the course of the loan. Investors on the other hand, put up money for an interest in the business and receive their return from distributions of profits according to their vested interest. Investors can either be passive or active. Passive investors just put up money or credit and take an equity position and receive dividends or distributions from profits and will share in any capital gains if the business is successful and is later sold...and will not have any part in the day to day running of the business. Active investors, will also put up money or credit, take an equity position, and will receive the same returns the passive investor does, but they will be active in the day to day running of the business and will usually work in it for a salary.

Check with your state (probably the Secretary of States office) and see how many people you can have as an LLC (Limited Liability Company). I think it'll be 35 to 50. It's simple, doesn't require secuity registration and all that scrutiny. It serves pretty much like a corporation as far as protections go, but allows the business' profits to be passed through to the partners personal returns.
Hope this helps