So, I have a client who recently started a single-member llc. He's been in the starting phase of business for the past month or so, and now, his brother is coming on as a second 50% member (making it a multi-member llc). While it was still a single-member llc, the company received a signing bonus of $25K. I need to value the business for the incoming member. The income and market value methods won't work since the business is new and closely-held. I could use an asset-based approach, but the first member is looking to take out the majority of the $25K signing bonus in the coming weeks. They are independent contractors for a larger company and are paid commissions weekly based on the customers they service. Each member will be the source of the business profits through their services to the larger company, and thus, 50% of the incoming profits would be attributable to him and his own service. Any thoughts on how to value this business?
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So, I have a client who started a business as a Single-Member LLC and made a $25 member contribution to the business. The company then received a $25,000 signing bonus for signing on to be an independent contractor for a specific company. They have little to no income or expenses as this point other than that. Fast forward, the second member is coming on after the business has been in existence for about 2 months. (This was the plan all along.) How do I value the business for his buy-in? I don't want him to have 'phantom income' for taxes, but both members (they are brothers) expect to have 50% ownership of both the business and profits. I came in in the midst of this process so has anyone dealt with this before? Does QuickBooks Online have any valuation support? Would you consider a signing bonus profit for valuation purposes? Any help is appreciated.
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