My partner and I are starting an LLC in california. We are in different financial situations, I have enough of a nest-egg to not take a salary, he does not and needs an income asap.
We have also secured some seed money on the contingency that both founders contribute cash to the pot. I am going to put in ~$50k, my partner is going to borrow so he can contribute $10k-$25k, and then we may raise and additional ~$200k.
My understanding of an LLC means that this means our capital accounts are 50k and 25k initally. If my partner needs $5k/month, my understanding is we have two options:
The $5k is deducted from his capital account. Neither my partner or the company owes taxes.
My partner can have a Guarenteed Payment of $5k/mo. Both the company and my partner would have to pay taxes. And it may be unfair if he is taking 5k from the company and I am not.
What is the best/fair way to pay my partner?
My take is that it should be subtracted from his capital account until it reaches zero. At which point - I don't know what to do. But this is ther first company either of us have setup