Multi-Member LLCs

A multi-member LLC is a Limited Liability Company with more than one owner (called "Member" in Ohio LLC law).  There are generally two types of multi-member LLCs: (1) LLCs that start out as single-member LLCs that need to add new members; or (2) LLCs that start out as multi-member LLCs.  There is usually a little bit more work involved in expanding a single-member LLC to properly have multiple members.

Expanding a Single-Member LLC to Have Multiple Owners

Some of the most common reasons a single-member LLC expands to be a multi-member LLC is if the owner of the business wants to add their spouse or child to be joint owners of the company or if the business is taking on new investment and ownership.

With a single-member LLC expanding to have multiple members, there needs to be a New Member Admission Agreement and other documented ratification by the existing owner to allow in the new members.

Additionally, the Operating Agreement will need to be redone to include buy-sell provisions for the membership units (ownership shares).  If the new member is a family member, then the admission of the new member is the perfect opportunity to solidify business succession planning.  If, for example, the new member is the child or children of the original owner then at the time of the new member/s admission is the best time to plan and document provisions for the takeover of gradual full ownership by the children and eventual buyout of the existing owner.

Businesses Starting as Multi-Member LLCs

If a business starts out with multiple owners (members), then the process of drawing up the LLC formation documents is a bit simpler because less documents need to be drawn up.  Aside from the usual business formation documents, a multi-member LLC should have an operating agreement that properly accounts for the multiple-members.  A single member LLC does not need management provisions, but a multi-member LLC should properly dedicate certain roles of management in the company to certain members.  There is as much flexibility in how the management of the company can be as the imagination and drafting ability of the attorney preparing the operating agreement allows.

Taxation of a Multi-Member LLC

A LLC with two or more members is treated for federal tax purposes as a partnership unless IRS form 8832 is filed with the IRS to cause the LLC to be taxed as a corporation.  Otherwise, the LLC must file a tax return and give the members K-1 forms for recognition of their individual share of the LLCs distributions.

Attorneys for Multi-Member LLCs in Ohio

Harris & Engler helps multi-member LLCs get proper documentation and succession planning in order.  The attorneys at Harris & Engler also help businesses with all their contract drafting and business formation needs for growing a single-member LLC to be on solid footing in taking on additional members.  If you would like to discuss your Ohio LLC's needs, then feel free to call (614) 610-9988 to talk to an attorney about your business today.  The law firm of Harris & Engler is located in Columbus, Ohio, but its attorneys help businesses all over Ohio with their worldwide business needs.
Columbus Business Law Firm

Disclaimer:  Harris & Engler offers this website and the content on it for informational purposes only, as a service for our clients and friends.  The contents of this site are not considered legal advice for any purpose, and you should not consider them as such advice or as legal opinion on any matters. 

With Offices Located at: 30 Northwoods Blvd., Suite 350, Columbus, Ohio 43235
Phone: (614) 610-9988  Email: