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What is an Economic Interest?

By IncNow | Published March 15, 2021

An economic interest is an ownership share of an LLC that only entitles the holder to receive distributions. This is different than a membership share because an economic interest does not entitle the holder to any control or voting rights.

The benefit (and potential downside) of an economic interest in a company is that you are able to benefit from the company’s profits without having to make the tough decisions that the controlling members make. These people are often called “silent partners” or simply “investors.”

When deciding where to form your company, consider that Delaware has advantages over your home state that may benefit you. Go