Complete Guide to LLCs

So you're putting money into your LLC. Maybe it's the initial funding to get started, or perhaps you're adding more capital three years in. Either way, that $75,000 you're about to wire isn't the same as lending your buddy money—it's a capital contribution that'll determine what slice of the pie you own, how much loss you can write off next April, and what you'll walk away with if the company ever sells.

Most new LLC members think this is simple: send money, get ownership. But I've watched too many business partners end up in lawsuits because nobody documented who contributed what, or because someone contributed their grandpa's tractor and everyone assumed different values for it.

What Is a Capital Contribution to an LLC?

Here's what you're really doing with a capital contribution: trading your cash, property, or sometimes labor for a permanent piece of the company. The LLC doesn't owe you that money back like they would with a loan. You're now a partial owner, and your stake gets calculated based on what you put in compared to everyone else's contributions.

Most members choose one of three routes when contributing:

Straight cash is the path of least resistance. You move money from wherever you keep it into the LLC's bank account. Let's say you initiate a $50,000 wire transfer on Tuesday morning from your savings account to the business checking. That's your contribution—clean, trackable, and nobody argues about what fifty grand is worth. The bank records prove exactly when it hap...