{3 minutes to read}  In a previous video, I explained what a capital contribution is. I also get the question — How much should my capital contribution be? In this article, I'm going to give you some tips to help you answer that question for yourself. 

A capital contribution is a financial investment made by an owner in an LLC — the owners are called members of a company. The capital contribution is the initial amount that the owners/members give to the company from their personal funds. It can be in the form of cash, property, or even services (sometimes called sweat equity). These contributions are put into the company's bank account to fund the initial operations of the company.

There is no standard to determine the amount a capital contribution should be, so the amounts for an LLC or a corporation can vary greatly. The factors that are going to be involved are the:

• Size of the company,
• Type of business, 
• Number of owners,
• Start-up costs of the company,
• Anticipated cost of labor if people need to be hired before revenue is coming in. 

Sometimes, capital contributions are not made initially but on an as-needed basis, depending on whether the company might not need funds at the beginning but will after things get going. Let me give you a few examples to give you a better idea of how to calculate the amount of capital contribution you should make to your LLC. 

Let's say we have an LLC that has three members, and it's a consulting firm. Initially, each member is bringing in some referrals, so they believe they will have revenue early on and not many expenses. In that case, those three members might have nominal capital contributions like $100.

Assume that the same company, however, must have a website developed, which can be costly. Each member might say they will contribute $10,000 to the company to pay for the website development.

Then, assume the members not only need the website developed, but they need to rent commercial office space. That means they will have the expense of the website, a security deposit, and several months of lease payments, and must have enough in reserve to make sure the company can pay its rent for the first couple of months, which may further increase the amount they contribute to the company. 

As you can see, the answer to that question depends on the precise circumstances of your situation. When you hire Taylor Legal, we'll help you walk through those situations and make it easier to calculate an appropriate capital contribution for yourself.