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How To Change LLC Ownership
An opportunity may arise for you to change the ownership structure of your business.A business partner may decide they no longer want to be involved in the business, or you may meet a new partner who wants to join.If the Articles of Organization have a provision that addresses adding or dropping members, you can change your ownership of the company.If you have to, you can create a new one and destroy the original one.
Step 1: The buy-sell provision of your Articles of Organization should be reviewed.
A buy-sell provision tells you how to add new members.If one of the founding members wants to leave the company, the terms allow it.You may not have included a buy-sell provision in your Articles of Organization if you were the only member.You can either draft a separate agreement or form a new one with your partners.Follow the steps outlined in the buy-sell provision.Many buy-sell provisions have procedures for providing notice to other members.If you had an attorney draw up your Articles of Organization, you may want to consult with them on how to follow the buy-out provision.
Step 2: Check state law for a buy-sell provision in your Articles of Organization.
There are laws that govern changes in ownership.Unless your Articles of Organization cover changes in ownership, you must follow these default rules.If you don't have a buy-sell provision in your Articles of Organization, you have to create a new one if you want to change the ownership of your company.Statutory exit mechanisms may be provided by other states in order for a member of the company to leave.If you don't know the law that governs your situation, you should consult an attorney.
Step 3: You need to complete your articles of amendment.
You can amend your Articles of Organization by filling out a form.You can get a form on the Secretary of State's website or call the local office.These forms are usually fill in the blanks without a lot of legalese.You don't need an attorney to complete and file the form.
Step 4: Sign the articles of amendment.
All owners should agree to the proposed change in ownership by signing the Articles of Amendment.New owners as well as those who will be leaving the business are included.Signing your signatures may be required by some states.The signature process can be completed by taking the form to your local notary public.
Step 5: Change can be registered with your state's Secretary of State.
Changes in ownership of limited liability companies need to be registered with the state's Secretary of State.If registration is required, check with the Secretary of State's office.If your state requires you to file a copy of your company's Articles of Organization, expect to register a change in ownership.Even if your state doesn't require changes in ownership to be registered as a general rule, you still have to register new owners with various licensing authorities.If your business has a liquor license, you need to get a license for the new owner and pay any required fees.
Step 6: You can search online for templates.
You can find a template online that you can download for free if you want to draft your own buy-out agreement.You can buy templates online or at an office supply store.Make sure the template you use is valid in your state.If you don't understand what they mean, avoid copying the provisions of a template.They might not apply to your situation.If you're unsure, contact an attorney or small business expert.
Step 7: Don't hesitate to consult an attorney.
An attorney can help make sure that your buy-out agreement is what you want it to be.If you decide to draft your own agreement, you may want an attorney to review it.If there are large amounts of money at stake, it's important to get help from an attorney.Current or future owners may want to seek their own representation.
Step 8: Meet the outgoing or incoming owners.
The buy-out agreement needs to be reviewed by everyone involved.You want to make sure everyone knows how the change will work.There may be differences of opinion.You may need to make changes to your draft once you're all in agreement.
Step 9: Allow your agreement to be finalized.
The final draft of the buy-out agreement should be printed once everyone is on board.Before printing the copy that everyone will sign, you should proofread it.If you need an attorney to look over the final agreement, you should.Other owners may want to have their own attorneys look over the agreement to make sure their interests are protected.
Step 10: You should sign your agreement.
The buy-out agreement must be signed by everyone involved.You may be required to sign the document in front of a Notary.If you don't have to, you may want to have the signatures notarized.All owners should have a copy of the agreement.Along with your other business records, keep the original in a safe place.
Step 11: If you have to, record your agreement with the Secretary of State.
Buy-out agreements must be filed with the Secretary of State in some states.Even if the agreement isn't legally required, it's a good idea to file it anyway.There is a formal record of the agreement if other copies are destroyed.You can file any documents related to your business organization in most states for a nominal fee.
Step 12: Your articles of organization should be reviewed.
If there is a change in the ownership of the company, the Articles of Organization may have a clause that requires the dissolution.Suppose you used a standard template to create your Articles of Organization.If you sell it to someone else or add different partners, it will have a clause that says you have to dissolution your limited liability company.
Step 13: You need to complete your Articles of Dissolution.
If you want to change the ownership of your company, you need to file the Articles of Dissolution with your state's Secretary of State.You can fill out a form in the Secretary of State's office.The form is called a "Certificate of Dissolution" in some states.Other forms may be required as well.Check with the Secretary of State in your state to find out what documents you need to file.
Step 14: The Secretary of State in your state can file your Articles of Dissolution.
The document should be submitted to the Secretary of State's office once the Articles of Dissolution are complete.When you file this document, you have to pay a fee.Call the Secretary of State's office to find out the amount and methods of payment that are accepted.You may be able to complete the articles of dissolution form online in some states.You will be notified when the Secretary of State approves your dissolution.You can get an official certificate of dissolution at this time.
Step 15: Follow your state's rules for closing the business.
Dissolution is just the beginning of the process of creating a new company.Even if your new company takes over the debts and obligations of your old one, you still need to file a final tax return with the IRS.Under state law, you need to follow the steps outlined in your state's laws.You may have to follow different requirements in different states if you have registered your limited liability company to do business in more than one state.The Secretary of State in your state can give you information on how to properly dissolved your company.You can find this information on the office's website.
Step 16: You can create a new company as a replacement for your old one.
The assets and debts of the dissolved company will be taken over by the new company.You may have to create a different name for your new company if you don't get a new tax ID number.The assets and debts of the old company should be included in the Articles of Organization for the new company.If you have questions or concerns about establishing the new company as a successor to your old one, you should consult an attorney.
Step 17: You need to register your new company with your state's Secretary of State.
You need to use the same process to register your new company.In some states, you have to file your Articles of Organization as well.Call the Secretary of State's office to find out the fees for a new limited liability company.They will be several hundred dollars.