How do I convert my single member LLC created into a multi-member LLC?
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How do I convert my single member LLC created into a multi-member LLC?
Asked on January 3, 2016 under Business Law, New Jersey
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 8 years ago | Contributor
Very easily: you just need to give, or sell, or have the other prospective members "work for" (e.g. they will get an interest in the company if the work a certain period of time) part of your interest to others. For example, say you have three other people you want to take on board in exchange for investments: you could sell each of them 10% of your ownership for a mutually agreed upon price. You could also give a fourth valuable worker 5%, say, as a reward for his/her work and to keep him/her focused on the business, leaving yourself a majority stake. You'd then go and amend the filings with the state to list the new owners/members.
While you don't need to create or amend an operating agreement (it's not legally required), it would be a good idea to have an operating agreement providing for what happens if someone wants to leave the company or passes away (e.g. buy back of the interest at a a favorable rate).
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