Members' Initial Contribution

In Mississippi, all limited liability companies must be owned by at least one Member. What the Member really "owns" is a percentage of the company, which entitles the Member to a distribution of any profits the company might make.

When a company is first starting, the founding Members each contribute something of value in exchange for their ownership percentage. We have classified those initial contributions into five categories: Cash, Assets, Services, Real Property and Business Equity. Each of these is discussed more fully below.

CASH: This contribution is just what it says, money. Any Member who contributes money for his or her ownership interest in the Company should choose this category as his or her initial contribution.

ASSETS: Assets can be any kind of personal property that the Company might use, such as tools, raw material, or a vehicle. Assets can also be property that the Company isn't using, but which are nevertheless valuable, such as antique furniture or paintings.

SERVICES: Often the founders of a small company don't have a lot of cash or assets to contribute, but they have time and skills to apply toward the Company's success. Any Member who is going to earn his or her right to ownership through work should select this category as the initial contribution.

REAL PROPERTY: Real property is land and buildings that are affixed to it.

BUSINESS EQUITY: "Equity" in this sense means ownership interest in another business. When a Member contributes GE stock to the new LLC, for example, that Member is contributing equity. Business equity does not need to be publicly traded stock. Any ownership interest in another company, whether public or private, is equity that may be valuable to the Company.

If a Member's contribution falls into more than one category, just choose the one with the largest value. While it is important to characterize what each Member's initial contribution is, it is far more important to accurately describe the percentage of ownership each Member will initially receive for all that he or she contributes.