Adding a member to your single-member LLC

By: Esqueda Law PLLC

If you decide to add a member to your single-member LLC, the first step just to refer to your operating agreement. Even as a single-member LLC you should have still had an operating agreement. An operating agreement encompasses the rules you will run your LLC by.

If you don’t have an operating agreement, look at your state laws. Most, if not all states, are going to have some statute explaining how and under what circumstances an additional member can be added to an LLC.

For example, the statute may say that members can be added to it an LLC you upon unanimous consent of the existing members. So, if you’re a single-member LLC, unanimous consent means you are the only one that needs to consent. So, check the box off as done. 

You will still want to document in writing, signed by you as the sole owner and the single member, consenting to the addition of bringing in this new member. If you have an existing operating agreement that says something different or if your state says something different, for example, if it’s a majority consent that’s required, a document that in the same way as the sole owner. 

You are the majority so whatever your operating agreement or the state says is what you need to follow when you’re adding a new member. Particularly going from single-member to multimember LLC is the time when you would want to amend your operating agreement. If you don’t have an existing agreement, you need one now to reflect the new structure. A multi-member LLC is going to look very different from a typical operating agreement for a single-member LLC because they’re a lot more variables now in place. 

There is now a shift to percentage ownership, changes in voting requirements, etc.  

one of you might die or get a drug addiction or get divorced or disabled and all of these things, and many more, may affect not only the LLC but also going to affect the other members. The operating agreement needs to address various factors and guide what should happen in those situations.

Amending the operating agreement is also going to require some sort of written consent. Your state might require that all members consent to amend the operating agreement before you can amend whether you’re the sole owner or not. Make sure that the proper number of members are consenting to amend the operating agreement. You may also need to amend your articles of organization and this is going to depend on your state. Some states require that the articles of organization list all the members who are part of that LLC.

It best to work with an attorney to help you with this process and if you are the new member who’s coming into the LLC, it is also a good idea to have an attorney of your help.  

 Your interest in the LLC as it exists now may not be the same as the interest before the change, so you want to make sure you have an attorney who is looking out for you. The LLC will have an attorney who is looking out for the LLC. Working together on the agreement of how the new member is coming into the LLC is going to affect you the other members and the company and you want to make sure everyone’s interest is protected.

Need to strategize? Schedule a free constellation TODAY. Book a free 15-minute call: HERE Liza Ann Esqueda is a trademark & small business attorney specializing in trademarks, copyrights, and contract templates. Liza Ann runs a virtual attorney, serving clients nationwide. Visit: LawyerLizaAnn.com for business tips, free downloads, and course information.

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