Question: My limited liability company needs money. How do I get my money into the LLC?
Answer: There are two ways a member of a limited liability company funds the LLC:
- a Loan: The member loans money to the LLC. The loan should be evidenced by a Promissory Note signed by the LLC. The Promissory Note should state the the terms of the loan such as the interest rate (if interest will be charged), repayment terms and the maturity date. The member(s) of the LLC should sign a resolution or action by unanimous consent that authorizes the loan. The loan should also be reflected as a loan in the LLC’s books.
- Capital Contribution: A capital contribution is the equivalent of a gift from the member to the LLC without any obligation to repay the contribution until the LLC liquidates. Capital contributions are additions to the LLCs’ assets without a corresponding debt that arises when money is loaned to the company. Capital contributions are added to the contributing member’s capital account. The LLC’s books must correctly reflect that the funds were made by the member as a capital contribution. Capital contributions should also be approved by members by signing a resolution or action by unanimous consent that authorizes the capital contribution.
Purchase an Editable Promissory Note & Member Resolution
The KEYTForms store sells a form Promissory Note and a form Resolution of Members authorizing the member loan. Each form is $47, is a downloadable & editable Word file, and comes with instructions on how to edit the form.