I currently own 100% of a single-member LLC in Louisiana. I want to bring in two partners and restructure as a multi-member LLC. What's the proper way to do this? Do I need to file new articles or just an amendment? And how do I handle the operating agreement? Any help is appreciated.
LLC
I want to change the ownership structure of my Louisiana LLC
Not a lawyer, but I've been through this. You'll need to file an amendment to your articles of organization with the Louisiana Secretary of State to reflect the new members. Also, you'll need a new operating agreement that outlines each member's rights and responsibilities.
Amending the articles is straightforward. You can file online through the Secretary of State's website. The fee is around $25. But make sure you also update your EIN with the IRS if you're changing from a single-member to a multi-member LLC, as the tax classification might change.
Do you have to file a new EIN? I thought you could keep the same one. I'm in a similar situation.
Actually, if the LLC changes from single-member to multi-member, the IRS treats it as a new entity for tax purposes. You'll need a new EIN. The old one is for the single-member LLC, which is disregarded. The new multi-member LLC is a partnership by default, so it needs its own EIN.
Thanks. What about the operating agreement? Do we need to draft it before or after filing the amendment? And does it need to be filed with the state?
Operating agreement doesn't get filed with the state. You You just need to have it on hand. Draft it before you file the amendment so you have the new members' details ready. The amendment form will ask for the names and addresses of the new members.
I'd recommend getting a lawyer to draft the operating agreement. It's worth the money to avoid disputes later. The amendment itself you can DIY, but the operating agreement is the backbone of your partnership.
I'll look into that. How much should I expect to pay for a lawyer to draft an operating agreement for a 3-member LLC?
Expect anywhere from $500 to $1500, depending on complexity. Some lawyers charge flat fees. It's a one-time cost that can save you headaches.
Also, dont forget to check if you need to update your local licenses or permits. Some parishes require you to list members on certain permits. And if you have a registered agent, that doesn't change.
Make sure you also update your bank accounts and Any contracts that list the LLC's ownership. It's a good time to review your insurance too.
Good point. We'll be opening a new bank account with the new EIN. What about the amendment form? Is it the 'Articles of Amendment' form?
Yes, it's the Articles of Amendment. You can find it on the Secretary of State's website. Just make sure you attach the new members' information and the effective date.
Does the amendment need to be notarized? I recall some forms do.
No, the Articles of Amendment for an LLC in Louisiana don't require notarization. Just signatures of the current members. But double-check the instructions on the form.