Absolutely, a Limited Liability Company (LLC) is designed to be flexible and can indeed have multiple owners. A multi-member LLC can be formed in all 50 states and can have as many owners as needed unless it chooses to form as an S corporation, which would limit the number of owners to 100.
How Does an LLC Work with Multiple Owners?
An LLC member is an owner of that LLC. Typically, each member of an LLC has made a capital contribution of some kind to secure a stake in the business.
Businesses with multiple owners, family-owned businesses, married couples, and friends going into business together often select this type of business entity. Like a single-member LLC, a multi-member LLC offers liability protection to the owners.
Adding a Co-Owner to an LLC
In a multi-member LLC, there’s flexibility when it comes to management structure. The business can adopt a member-managed structure, where all the owners are actively involved in daily operations and decision-making processes. This model fosters a collaborative environment, as each member has a say in the company’s direction.
Allocations and Operations in a Multi-Member LLC
A multi-member LLC has two or more members. As an LLC, your company has the freedom to allocate percentages of your business’s profits and losses among owners as you choose. Many states offer a lot of flexibility in who can own an LLC, too.
Dividing Ownership of an LLC
An LLC’s owners can divide their ownership by percentages. To change LLC ownership percentages, follow these steps: File new ownership percentages with your state by submitting forms from your Secretary of State or state filing office. Notify LLC members of the change in LLC ownership. Address how LLC profits and losses will be divided – formed as a corporation, divide ownership of profits and losses according to ownership percentages.
You should create an operating agreement indicating how much of the company each member owns. Most states require ownership agreements detailing permitted owners’ stakes. The agreement gives specifics regarding company ownership. LLCs have a formal structure for documenting multiple ownership details in an operating agreement. Owners of an LLC are called members, with their membership interests detailed in the operating agreement.