How do I update the ownership of my LLC?

The requirements for transferring ownership interest in an LLC differ slightly based on the state of formation, but generally involve a resolution indicating the transfer of interest, amending the operating agreement, a purchase agreement, and in some states, filing an updated annual report or statement of information.

First, you will need to find out if your state requires changes in ownership to be reported to the Secretary of State. This information is available on the Secretary of State website for your prospective state.

If yes, this change may be completed through an Amendment or with an Annual Report update, depending on your states requirements. Once you are able to determine which filing is accepted for ownership changes, it can be filed directly with the Secretary of State office in your state.

If your state does not have a requirement to report ownership changes with the Secretary of State to acknowledge new changes to your LLC’s ownership structure, those changes may be acknowledged in your company’s internal documents, such as the Operating Agreement or Company Minutes. 

In this article we will go over both scenarios and help you to understand the best option for your LLC!

Whether you’re looking to bring in new members, transfer ownership, or make significant changes to the structure of your business, understanding the process is crucial. In this guide, we’ll walk you through the essential things to know and provide step-by-step instructions on how to smoothly transition ownership in your LLC.

Updating ownership through the state for LLC means changing the names and percentages of the members who own the LLC. This can happen when a member leaves, joins, or sells their share of the LLC.

The process of updating ownership through the state for LLC depends on the state where the LLC is registered and the operating agreement of the LLC. The operating agreement is a document that defines how the LLC is run and how ownership changes are handled.

Generally, the steps for updating ownership through the state for LLC are:

• Check your state’s Secretary of State website for the rules and procedures for filing changes of ownership for your LLC.
• Submit an amendment to the articles of organization or the annual report to the Secretary of State’s office. This updates the official records of the LLC’s members and their ownership percentages. ️Most states also have a required State filing fee for these items.
• Update the operating agreement and draft a new set of Custom Minutes to reflect the new ownership structure & changes to percentages of each party involved.

What if my state does not require ownership changes to be reported?

In the case where your LLC ownership is not listed on the Secretary of State and your state does not require these changes to be reported on a state level, changes to ownership may be made internally.

This means you can forgo the state filing and present and record changes to your LLC ownership structure by making updates to your Operating Agreement and drafting a set of Custom Minutes. 

Even if you are not required by your state to report changes to your LLC ownership, showing ownership changes for your LLC in internal documents is important for several reasons:

• It helps you keep track of the current members, their ownership percentages, and their rights and responsibilities.
• It helps you avoid disputes and conflicts among the members, especially if there are changes in management or profit distribution.
• It helps you comply with the IRS and state tax laws, as different types of LLCs may have different tax implications.
• It helps you protect your limited liability status, as some states may dissolve your LLC if you don’t follow the rules and procedures for changing ownership. ️

Ready to make changes to the ownership of your LLC? Trust the Expertise of BusinessRocket!

If you are a business owner looking for professional guidance on making ownership changes to your LLC, reach out to us. Navigating ownership changes in your LLC requires careful consideration, communication, and adherence to legal procedures. Our team of experts will research the correct procedure specific to your LLC and state requirements, guide you on making the correct changes. We will prepare & file your documents, ensuring that your ownership transition is completed seamlessly, so you can relax and know that BusinessRocket has got you covered! 

To make this process hassle-free and ensure you are on the right track with federal and state regulations, call us at 310-424-5558, extension 1 and speak with one of our expert onboarding representatives, offering professional guidance and support to streamline your LLC ownership change process. When choosing BusinessRocket you can breathe easy knowing that not only your business’s ownership is properly structured, but your business stays compliant and efficient, and you have the correct documents on hand! Our team’s ability to support you and your business is backed by over 1000, 5-star reviews on Trustpilot!