Partnerships are often used for business and investment activities, and multi-member LLCs are treated as partnerships for tax purposes. These entities offer federal income tax advantages, the most important of which is pass-through taxation. They also must follow some special and sometimes complicated federal income tax rules.
The Importance of Buy-Sell Agreements for Co-owned Businesses
Are you buying a business that will have one or more co-owners? Or do you already own one fitting that description? If so, consider installing a buy-sell agreement. A well-drafted agreement can do these valuable things:
- Transform your business ownership interest into a more liquid asset,
- Prevent unwanted ownership changes, and
- Avoid hassles with the IRS.