The process of transferring ownership of an LLC, especially when it comes to adding new LLC members or selling off the whole firm, is governed by the terms contained in the LLC’s operating agreement.
This tutorial examines some of the reasons an LLC may need to transfer ownership and if it is the best option for your company.
A limited liability company’s ownership structure may need to be changed for a number of reasons, including:
There are two options for transferring ownership: selling the whole LLC or transferring a portion of the equity.
When just a piece of ownership is sold, this is referred to as transferring partial interest. This might be due to the addition of a new member, the departure of an existing member, or the desire of a member to sell some of their present ownership percentages. The standard stages for this technique are as follows:
It is important to note that if your operating agreement does not have a buy-sell clause, your state may order you to dissolve your LLC.
You may also sell your LLC to a third party to transfer complete control. This is a more difficult procedure that should be carried out with the assistance of an attorney, although some of the stages are comparable to a partial transfer of ownership. The fundamental stages are as follows:
A family LLC is an LLC founded by family members for the purpose of inheritance planning. The corporate structure is similar to that of a conventional LLC, but family LLC owners are often senior members of a family who establish processes for passing assets to other members of the family (e.g., children, grandchildren, etc.)
When it comes to transferring ownership, family LLCs may employ the same ways as normal LLCs:
If the members of an LLC do not want to continue running their company, they may either transfer ownership of the LLC or dissolve the LLC.
Depending on the circumstances of the ownership transfer, the following procedures might assist you prepare for your next business step: