Sale of Member Interests

(Ridgeland, Mississippi)

What if I decide later to sell 50% of my SMLLC. Would it be sold as a member interest? If not, what would I be selling exactly? Or, can I even bring in a "partner" in this structure since the name itself indicates a single member?

Answer

An LLC with one member is a "single member LLC".

By selling half your interest to another person, the LLC is now a multi-member LLC.

While the LLC would no longer technically be a multi-member LLC, you would not have to refile your Articles of Organization or anything like that.

The only change you might have to make is if the LLC was previously filing its taxes as a disregarded entity, the LLC would now have to file a partnership tax return (Form 1065) and issue K-1s to each member.

The pass-through taxation would remain the same (unless you choose otherwise).