Can You Add Members to an LLC?

LLC is known as a Limited Liability Company. It is a kind of pass-through taxation of partnership and sole proprietorship with LLC. In US states certain businesses such as legal medical services cannot have limited liability licenses. But they must require a Professional Limited Liability Company (PLLC). This article is about, can you add members to an LLC?

Features of an LLC

• An LLC has a hybrid legal entity. Because it possesses both characteristics of corporation and partnership or sole proprietorship.
• It shares its characteristics of limited liability with the corporation and shares pass-through taxation with partnership or sole proprietorship.
• It is a legal entity.
• LLC is said as ‘organized’ rather than ‘incorporated’ because its documents are always said as ‘articles of organization’ instead of ‘articles of incorporation.
• LLC has a legal partnership with the arrangements that require the fulfillment of ‘articles of organization’.
• Sometimes it is difficult to veil LLC because it does not have many formalities for one to maintain.
• The regulations under limited liability vary according to the different states and their regulations.
• As liability varies from state to state, although, the requirements under the LLC vary from state to state.

Importance of an LLC

• LLC draws some additional benefits to your corporation and partnership or sole proprietorship.
• It maintains the limited liability status among legal entities.
• Having LLC benefits in certain lawsuits, such as, if your company had been caught in certain illegal activity, then the court goes through the assets of the corporation instead of the owner, for the sake of damages.
• But if the owner was involved in a certain scam then here the case changes, the court does not compensate to limited liability.
• It is not compulsory to have LLC for your business or corporation, but it is one of the several methods of organizing your entity.
• In the case of a sole proprietorship, it is not compulsory to have LLC because there would be only one person working as the main of the corporation and does not need any kind of protection from debts.
• It is helpful for, if you are not sure that your business would make that much money then you can always decide to have formed an LLC later for least debts.
• If you are willing to start a business without an LLC, then you might commingle your personal finances with your business finances.
• If you are a single member of an LLC, you are your own decision-maker and do not have to make decisions encompass from other partners.
• A corporation having multiple owners also delineated by different obligations, and not a single person would be responsible for paying debts of an LLC.

How to Apply for Adding an LLC?

• First of all, you have to choose a trading name or business name. While making sure your entity’s name does not infringe on any existing business or trade.
• Secondly, you need to file articles of organization. To create your LLC you must have to file articles of organization of your state’s office.
• Some states mention ‘articles of organization’ as a ‘certificate of organization’.
• Choose your registered agent. LLC requires a registered agent because this agent possesses a physical address in your state to request your LLC.
• Most people with small businesses choose to manage their LLCs on their own, but the request of an LLC includes the involvement of some outsiders to manage your LLC.
• Then you have to create an LLC operating agreement to establish your business with an LLC to run in harmony.
• If you want to hire employees you first need to have an EIN number that would allow you to have it taxed as a whole business of the corporation, instead of giving debt to a single person.
• LLC agents check for the business license before handling you with an LLC. So first make sure you have a proper business license ensuring what kind of business you do to make it public record.
• After handling you with an LLC, you have to file annual reports.
• You cannot use the same LLC of state for settling the same business in another state, you have to apply for a new LLC.

Can I Add Members in One LLC?

Many business holders manage to have their LLC because of its vulnerability and to provide it with the limited liability of a corporation or trade. It removes all the complexity and manages incorporation. If one has his LLC and wants to add members to his LLC then he needs to work with the consent. Every member and make an agreement passing the consent of every single member. Following are some steps to keep in mind and obligate during you add new members in on LLC:

• Before adding members figure out terms and conditions and give a clear vision of obligations members have to follow.
• Voting of members should be done over the terms of the corporation to make sure of the consent and it is compulsory to operate an agreement.
• Make these entire procedures official.
• Keep updated your articles of organization. This will amid all the paperwork when you requested an LLC.
• Then file a tax form. Now you are no more a sole proprietor if your corporation has more than one owner. Then consult your business attorney to avoid lending of taxation on a single owner.
• If you want to change the trade’s name with the whole consent of its members too. Then you have to notify IRS and register a new name.
• But the state government governs the rulings over management and formation of who can be a member of the same LLC.
• This LLC saves owners and shields them from personal liability for the corporation’s payroll of taxes and other debts.
• The operating agreement should have the content of delivering a working guide for every member of a single LLC. This agreement is for the revocation of obligations.

Understand the Consequences Before Adding Members to an LLC

Can you add members to an LLC? Yes. When you add a new member to your trade, he might overcome with growing your business. But at the same time, the profit will also get distributed among all the members. Once someone becomes a member of your corporation it becomes hard to remove him. Bringing a new member to your corporation helps to change the tax status of your profile. Before making a decision over adding a new member vote on an Amendment for adding.