In an LLC, distributions need not be related to ownership shares. However, our operating agreement states that positive distributions (gains) will be based upon ownership share.
Here is my question. If the company isn't yet making enough profit to provide any given level of "guaranteed" draw, and a minimum draw is required for one owner to make personal rent payments, how does this affect equity, if at all, for the remaining two partners that must sacrifice their distributions in order for the first partner to have enough to pay rent.
e.g. Is it okay for a long term liability to be issued to the other two partners - and IOU for the distribution that should have been paid given the amount paid to the first partner?
Is it more appropriate to decrease the first partner's equity based upon uneven distributions?
If Partner A owns 50%, B owns 25% and C owns 25%, and this month partner A gets $2,000, partner B gets $1,000 and partner c gets $0, how should this be fairly reflected?
