How to Add a Member to an LLC

By Jeff Franco J.D./M.A./M.B.A.

How new members are added to a limited liability company, or LLC, is determined by the LLC's operating agreement provided it has one. However, each state has its own laws for areas where the operating agreement is silent or there is no operating agreement. While the laws vary, most states have adopted the Revised Uniform Limited Liability Company Act in its entirety, or with only minor modifications.

How new members are added to a limited liability company, or LLC, is determined by the LLC's operating agreement provided it has one. However, each state has its own laws for areas where the operating agreement is silent or there is no operating agreement. While the laws vary, most states have adopted the Revised Uniform Limited Liability Company Act in its entirety, or with only minor modifications.

Step 1

Review a copy of the LLC operating agreement to determine the procedures for admitting new members, such as the number of member votes necessary. If the operating agreement provides no instruction,new members cannot be admitted unless all current members consent.

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Step 2

Take a member vote on admitting the member. Only when there are a sufficient number of votes pursuant to the operating agreement, or a unanimous vote in favor when the operating agreement is silent, can a new membership interest be created.

Step 3

Determine the amount of contribution the new member must make. It is not essential that the current LLC members require a contribution from a prospective member, but it’s common to require one. Unless the operating agreement states the amount, a sufficient number of current members must agree on the contribution amount, which can be in cash as well as tangible or intangible assets.

Step 4

Present LLC membership terms to the new member. Since new members must adhere to all terms of the operating agreement that exists at the time of joining the LLC, it’s advisable -- though not a legal requirement -- to provide the new member with a copy of the agreement before finalizing her membership. The operating agreement is the authority on all LLC activities, and, therefore, prospective members considering making an investment in the LLC should be aware of any limitations on their authority to manage business operations.

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References

Related articles

How Can My Company Be an LLC?

All state governments and the District of Columbia allow you to create a limited liability company as the legal entity for your business. The formation requirements are fairly uniform across all jurisdictions, and provide a straightforward process to LLC creation. There is no requirement that you form the LLC in the state you reside in. However, you must adhere to the laws of whichever jurisdiction you choose for as long as the LLC exists.

Can an LLC Operating Agreement Be Amended?

The operating agreement of a limited liability company sets the guidelines and regulations for the company's business functions and structure. The agreement is typically prepared by the founding owner or owners, referred to as members, and kept by the LLC. An operating agreement is a legally binding document once signed by LLC's members, functioning as a contract. The agreement may be amended by the members if changes are needed.

How do I Change a Member on an LLC in WI?

Wisconsin law regulates the creation and maintenance of all businesses organized in Wisconsin, including limited liability companies, or LLCs. The owners of an LLC are called members. During the life of an LLC, it may become necessary to either add or remove LLC members. Neither the Wisconsin Department of Financial Institutions nor the Wisconsin Department of Revenue requires LLCs to disclose either a list of their members or changes to the membership of an LLC.

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