Legal Question in Business Law in Michigan

Family Business Structure

How to best structure business where father will have controlling interest and will manage business. Wife and children will have equal interest and be advising members not managing members. Father's choice to take advice or go his own way. When business passes from father to another family member to manage it that member receives controlling interest. Wanted LLC but was told IRS would frown on all members being family and look at it as a familybusiness. We want a family business. How do we structure it. C Corp? Do not want outsiders with owning interests.


Asked on 9/10/08, 6:35 pm

1 Answer from Attorneys
Lesley Hoenig Lesley A. Hoenig, Attorney at Law

Re: Family Business Structure

There is nothing wrong with family members having an LLC. I am not sure exactly what the IRS would be frowning on. LLCs can have operating agreements that specify how an ownership can be transferred under what circumstances (as can a corporation). It sounds to me, that this business would probably and and llc that is manager managed and then the operating agreement can specify what is specified in your description. LLCs provide options as to how the entity is taxed, but without more information there is no way to say which method of taxation is best.

Read more
Answered on 9/11/08, 1:14 pm


Related Questions & Answers

More Business Law questions and answers in Michigan