if more are needed later, amend the articles with the Secretary of State and pay the filing fee, or authorize ample shares at formation to avoid later changes. S Corporation Ownership limits and the “single class of stock” rule can reduce flexibility, which may narrow financing options relative to a C corporation. Many S corporations rely on bank debt with shareholder guarantees, vendor credit, and private placements that preserve S eligibility. Limited Liability Company LLCs are funded by member contributions and can be structured with multiple classes or series of interests to tailor economics and control in the operating agreement or, if used, the articles. [CLARIFIED: By default, pre‑dissolution distributions are paid in equal shares among members, and on winding up the statute first returns unreturned contributions and then pays any remainder in equal shares among members and dissociated members. If you want distributions or allocations to track ownership percentages or investor preferences, spell that out in the operating agreement and align tax allocations with professional advice. Transferability of Ownership Interests This section explains how ownership changes hands under each entity type and what steps help you complete a transfer smoothly in Minnesota. Sole Proprietorship A sole proprietor transfers ownership of the business by transferring the assets of the business to the new owner. The prior proprietorship is terminated and a new proprietorship is established under the new owner. A sole proprietor transfers the business by selling or assigning the business assets to the buyer; the old proprietorship ends and the buyer forms their own proprietorship or entity. Action steps: • Make an itemized bill of sale for assets and assign any transferable contracts or leases per their terms. • Before closing, notify the Minnesota Department of Revenue about the pending transfer to address successor liability for sales, withholding, and other state taxes. • Re‑register any assumed name and update city/state licenses and permits under the new owner. Partnership Your partnership agreement controls transfers; without an agreement provision, no one becomes a partner without the consent of all existing partners.A partner may assign only the economic interest (right to profits/distributions); the transferee does not gain governance or management
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