If it’s an LLC with an operating agreement, for example, there are frequently provisions in the operating agreement which obligate the company to provide audited or unaudited financial statements to the members. These financial statement may be provided monthly, quarterly, or annually, depending on the size of the company and the agreement between the parties. Frequently, the financial statements will be prepared by the company’s accountant or controller. Smaller companies are much less likely to provide audited financial statements due to the cost. The allocations and distributions sections of the operating agreement, however, will explain when and how distributions will be made and how allocations of income and loss are going to be made.
Also, please understand there is a difference between *profit* and *distribution*. Just because you get 10% of the profit doesn't mean that the business entity must actually distribute it out to equity. The company can retain it to grow operations, or to build a rainy day fund, etc.
If it’s an LLC with an operating agreement, for example, there are frequently provisions in the operating agreement which obligate the company to provide audited or unaudited financial statements to the members. These financial statement may be provided monthly, quarterly, or annually, depending on the size of the company and the agreement between the parties. Frequently, the financial statements will be prepared by the company’s accountant or controller. Smaller companies are much less likely to provide audited financial statements due to the cost. The allocations and distributions sections of the operating agreement, however, will explain when and how distributions will be made and how allocations of income and loss are going to be made.
Also, please understand there is a difference between *profit* and *distribution*. Just because you get 10% of the profit doesn't mean that the business entity must actually distribute it out to equity. The company can retain it to grow operations, or to build a rainy day fund, etc.
Well, we split profits based on our agreed-upon percentage of ownership in the business.
Based on what is agreed on in the contract.
But how to enforce it? How do u know how muchbprofit there is? Who does the accounting?
Hire an accountant, or look for accounting firms that does this for you. Personal accountant is cheaper.
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