I've had a single-member LLC in Kansas for about eight years. My son is now 24 and has been helping with the business for a while. I'd like to make him a member. What's the actual process in Kansas? Do I need to file something with the state, or is it just an internal document? I want to make sure it's done correctly because we have a business loan.
LLC Membership
I want to add my adult child as a member of my Kansas LLC
You'll need to amend your articles of organization with the Kansas Secretary of State to reflect the new member, and update your operating agreement. Since you have a loan, check the terms for any change-of-control or consent requirements.
Just Did this last year. The amendment filing is straightforward online, but the operating agreement is where you need to be careful. Make sure you spell out ownership percentages and how profits/losses are split.
Does he need to be a manager or just a member? That changes things in the operating agreement.
I'd also talk to your accountant before filing anything. Adding a member changes the tax classification by default, and you might need to elect partnership treatment or file an S-corp election depending on your situation.
Good point about taxes. When we added my daughter, we had to get a new EIN because the old one was tied to the single-member structure. The IRS treats it as a new entity for filing purposes.
What does your current operating agreement say about admitting new members? Some have a clause requiring unanimous consent or a waiting period. If yours is silent, default Kansas law might apply, but I'm not sure on the exact statute.
Also, if the business loan is personally guaranteed by you, adding a member might trigger a review by the bank. They could require your son to sign a guaranty too. I'd get that cleared up before filing with the state.
Following this. My wife and I are thinking about adding our son next year, so I'm taking notes.
One more thing: if the LLC owns real estate, you might need to record the amendment with the county register of deeds. Probably not, but worth checking if there's property involved.
The Secretary of State's website has a form for the amendment. It's like $35 or $40. But the operating agreement is the real work. You can find templates online, but for something with a loan involved, I'd have a lawyer look at it
Thanks for the input. I didn't think about the EIN issue or the bank's consent. I'll check the loan documents and talk to our accountant first. The operating agreement is from a template years ago, so it probably needs a rewrite anyway.
If you rewrite the operating agreement, make sure all members sign it. And keep a copy with the LLC records. Kansas doesn't require you to file it with the state, but you'll want it if there's ever a dispute.