Sorting out your company’s owners’ exit strategy is one the most important considerations when forming an LLC. It may sound odd, but deciding how to get out of your small business in the beginning will save you and your business partners time and money down the road. When it comes to LLCs, one of the primary benefits is flexibility when drafting the operating agreement. This can be especially important when deciding on exit strategies, restrictions, and procedures for your small business. Today’s post highlights some of the more common exit provisions in an LLC operating agreement.

Buy sell provisions detail what will happen when a member of the LLC decides to leave the business, dies, or is otherwise unable to continue…

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At some point during the life of your business, there’s a good chance that you’ll need to figure out the value of your small business. Valuing a small business is not an easy task, and there are often pitfalls if you don’t have business valuation experience. Knowing the basics of business valuation will help you understand how to value your business or at least how your business may be valued by a valuation professional. Today I’ve highlighted some of the main points from a recent post on the iVLG blog that discusses business valuation basics.

What is Value?

According to most, including the IRS, value is the price a willing buyer would pay a willing seller (when there are no other circumstances…

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Selling your small business can be an equally exciting and daunting task to undertake. There are a variety of legal complexities in addition to various tax and practical considerations. Today’s post highlights one of those legal complexities: whether to structure the sale as a stock sale or asset sale. We’ll explore some of the key features and distinctions between the two types of sales.

Selling Your Business Through an Asset Sale
In an asset sale, the purchaser is not only buying the assets but also the liabilities of the business. The seller will retain possession of the legal entity, e.g. Joe’s Hardware LLC, and the buyer purchases the individual assets of the company, including equipment, inventory, fixtures, licenses, goodwill, trade names, etc….

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I’ll set the stage: Two friends decide to start a business. They’ve been friends for years. They see eye to eye on just about every issue, including how the business should be formed and managed. They are ready to start selling, making money, and growing their idea into a sustainable business. They’ve decided that each partner has an equal stake in the business and will receive equal compensation. They want it to be simple, no lawyers, no accountants, no additional partners, etc. To seal the deal they cheers their beers to the future. You get the picture.

Get it in Writing Because The Future is Unpredictable 
Both partners trust each other, and neither has any reason to believe that their relationship will…

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