4 Common LLC Disputes

Business disputes can arise from more than just external sources. Internal disagreements can cause significant problems within a company, sometimes to the point where the company may need to be dissolved. However, disputes between owners are very common and can actually be healthy for a company. Either way, it is important to work through internal issues to help your company thrive for years to come.

Below are just a few of the most common internal disputes that affect LLCs. Knowing that these issues will crop up is helpful because you know that not every disagreement will trigger a dissolution of your business. On the other hand, it’s best to be prepared you so can properly react to and resolve any issues that arise.

1. How Daily Operations Should Be Conducted

Business owners are bound to differ in how they think a business should be run. One owner may want to give lower-level employees more input or control, for example, while the other prefers that only management have the main responsibilities. Often, these types of disagreements can be addressed by a simple discussion. Finding common ground will usually create a healthy balance between both preferences.

2. How, When, and Whether to Advertise and Market

Marketing your company is a big deal. Some LLC members may want to keep advertising to a minimum while others see great value in investing time and money in marketing. Marketing campaigns have a big impact on how your company is perceived to your clients and in the community. Again, working through these issues as a team, with open communication and an eye toward the future, will go a long way.

3. Job Performance Issues

Many LLCs, particularly smaller companies, will choose to designate one owner as a manager over certain aspects of the company. Perhaps one person will handle a certain product line or service while the other person does “big picture” work. It can be difficult to value these roles in the company, and if the other owners think that one person is not putting in their fair share of the work, then that can cause some tension. In some cases, how others view your work can have an impact on how much return they believe you should receive from the company.

4. Profit Distribution

One of the most common disputes that LLC members have is with regard to “who gets what” from assets and revenue. It is helpful to spell out everyone’s share of the company at the outset when you create your LLC, but this does not always happen. Owners may also decide that the profit-sharing arrangement they established when you created the company no longer works for their situation.

Having many of these issues already addressed in your operating agreement is very helpful, but it cannot contain every issue that could arise. When you have an internal dispute, Alder Law may be a good resource to help you address the problem. Contact us for more information.

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