Frequently Asked Questions

How are membership changes handled within an LLC?

Membership changes within a Limited Liability Company (LLC) are managed internally based on the company's operating agreement. This agreement is a crucial document that outlines the operational procedures and guidelines for the LLC, including how membership changes are handled. It can cover a range of issues, from the addition and removal of members to changes in the ownership structure and the determination of who will handle daily operations. In some states, such as Delaware, LLCs are formed without the need to provide a list of names and addresses for each member. This is not a requirement when filing your Certificate of Formation, which simplifies the process and makes handling membership changes easier. The members of an LLC can be individuals or other organizations, such as pension plans, trusts, another LLC, a corporation, or a holding company that owns the LLC. However, there are some restrictions on who can be a member if the LLC is taxed as an S-corporation. In this case, each shareholder must be an individual, and the company can have no more than 100 shareholders at any given time.