How Many Owners/Members Can an LLC Have?

A limited liability company (LLC) is a corporation and partnership hybrid that allows owners the freedom of decision-making of a partnership along with the liability protection of a corporation. Each state interprets this hybrid status differently and has different requirements for ownership.

Most states require that an LLC have at least one member (owner). This member provides a contact for legal purposes. The sole member is also responsible for filing the business’s tax and making all decisions associated with the LLC.

Every state requires that LLC owners file articles of incorporation. This document provides contact information for the business as well as the business name and the names of all owners. Each state provides a form to be filled out by the owners. If you look at this form, it will state if two or more owners are required.

You may wish to have only one owner when your state requires at least two. The simplest solution to this problem is to include your spouse or a trusted family member to be the second owner. As long as this other member remains silent and never profits from the business, they will not have any liability or be required to file any taxes related to business income. If you cannot think of a single person you would trust to be a named member, then you may wish to consider filing a corporation instead. In most states a corporation only needs one owner. Even if your state has different requirements, your corporate paperwork can be filed in a different state such as Delaware or California that only requires one owner.

If you are trying to decide on the type of business to file and are having trouble navigating your state’s business laws, contact a business attorney for assistance.

Case Studies: Ownership of Limited Liability Companies (LLCs)

Case Study 1: Single-Member LLC and Silent Second Owner

John wants to establish a single-member LLC in a state that requires at least two owners. To meet this requirement, John includes his spouse, Sarah, as a second owner. However, Sarah will not be involved in the business and will not receive any profits. This arrangement allows John to fulfill the ownership requirements and maintain the liability protection and decision-making freedom of an LLC.

Case Study 2: Filing a Corporation Instead of an LLC

Lisa is considering starting a business as a sole owner but finds that her state’s LLC requirements mandate a minimum of two owners. To work around this, Lisa decides to file as a corporation instead.

She discovers that her chosen state, Delaware, allows corporations with only one owner. By filing in a different state that accommodates single-owner corporations, Lisa can establish her business without the need for additional owners.

Case Study 3: Seeking Professional Assistance

Mark is unsure about the type of business entity to choose and is having difficulty understanding his state’s business laws. Mark decides to seek the guidance of a business attorney to help navigate the complexities.

By consulting with a legal professional experienced in business matters, Mark can receive expert advice tailored to his specific situation, ensuring he makes the right decision for his business.