Who owns an LLC? Contributions and ownership of an LLC
When you create an LLC and become its owner, you put money down to get it off the ground and run it. As an LLC owner, you’re referred to as a ‘member’. A member of an LLC is not its employee.
Here’s how an LLC ownership structure works – as a member, the contribution you made to run your LLC is called capital contribution, and it is effectively your contribution to LLC ownership. As the LLC rules work, your capital contribution gives you shares in your LLC, thus allowing you the right of availing the profits and losses from the LLC. If you’re the only member of an LLC and you operate a single owner LLC, you have a 100% ownership stake in the respective LLC, and if the LLC has several other members as well, your ownership share is determined by the operating agreement that was signed during the formation of your LLC.
Member contributions in the LLC are made both in cash and non-cash (assets, for example). Property contributions in the LLC must be described and listed, and the other members of the LLC must agree on a market value of the non-cash contribution of a member.
How to find LLC owners?
If you search ‘’How to find out who owns an LLC” via the web, you’ll get various confusing answers. This is because can be both tricky and challenging to answer this, as the laws of many states don’t require LLCs to disclose information about members to the public. Even if LLC’s ownership isn’t legally and traditionally required to be in the public domain, some ingenuity and persistence can get you the answers you are looking for.
I have compiled some steps for you that can help you in finding the owners of an LLC:
- LLC’s Website
It is the first step that you should take in the quest of finding owners of an LLC. Visit the LLC’s website, and you can find an ‘about us page, where, if you are lucky enough, you can find the owners of an LLC. Similarly, the website may also have a phone number and email to contact and ask for required information.
- Business Data Firms
Many business data firms can also help you in finding the owners of an LLC. Private companies that sell business credit data can help you find the owners of a particular LLC for a fee. Similarly, platforms like LinkedIn can also answer your quest to find owners of an LLC.
- Trade Associations
If the LLC that you are finding the owner or belongs to an industry trade association, the association may have a directory that can provide you the answers about the ownership of an LLC.
- State Entity Databases
Although it can’t be assured that you will find the name of the LLC owners in the state database of entities, it remains an excellent place to search. The formation documents of the LLC are included in most states only with fundamental details, including the name, purpose of the LLC, and the registered agent of the LLC. These documents may be signed by a member but do not have to be – they can be formed on behalf of its client by a third-party organizer, such as a legal firm.
In certain states, the initial managers of an LLC must be established in the operating agreement if the LLC is to be handled by the managers.
Many states in the USA require LLC reports to be filed annually, but these records do not generally contain a list of active members or include a member’s signature. Even if one or more members are covered by an annual LLC survey, obtaining a copy is charged for most states.
Many states allow specific individuals, such as physicians, lawyers, and architects, to form LLCs known as professional LLCs (PLLCs). Since PLLCs have members who provide essential services to the public, some states require members to disclose their operating agreement or annual report.
How many owners can an LLC have?
A regular LLC has no upper limit as to how many owners (members) it can have. However, there is one exception in this scenario for those LLCs that opt to be operated and taxed as S corporations. S corp cannot have more than 100 members or owners.
The minimum limit for the owners of an LLC is one. Such an LLC is called a single-member LLC, whilst in most cases, LLCs have multiple owners who are also members of the LLC.
The way they operate, LLCs are exceptionally flexible legal entities, and there are only a few restrictions when it comes to the ownership and membership of an LLC. Some states restrict minors from organizing and operating LLCs, but minors can be LLC members in many forms. Corporations, individuals, and other LLCs are allowed to be LLC members. Similarly, there are no residency or citizenship requirements for becoming a member and owner of an LLC.
Again, one exception is there for LLCs that have elected an S corporation status when filing taxes. If you choose this status, non-resident aliens, corporations, partnerships, and some other financial institutions cannot be members of your limited liability company.
LLC ownership percentage
As the name implies, ownership percentages are the stake each member has in the LLC expressed by a percentage. LLC ownership can generally be expressed in two common ways: (1) by membership units and (2) by percentage. Membership units can be imagined as similar to shares of stock in corporations. In either case of ownership representation, ownership does confer the right to share in profits and the right to vote.
How is ownership determined in an LLC?
Unlike other corporations, an LLC can divide its ownership interests the way it wants to, and without regarding the initial contributions of founding members. The ownership percentage is defined in the operating agreement of the LLC.
Do all members of an LLC have ownership?
Yes, all members of an LLC have some ownership stake in the LLC. However, it doesn’t have to be an even split, and it can vary from member to member, as agreed in the operating agreement of the LLC.
Ownership percentage examples
For example, if James contributed $25,000 to the company but chose to become a silent partner, and Sam contributed no money, but agreed to operate the LLC, they could still decide a 50%-50% split between themselves.
Ways of changing the percentage of ownership in an LLC (splitting ownership of an LLC)
If your business is an LLC and you want to split the ownership, you’ll need to refer to the operating agreement of the LLC that signed during setting up your LLC. This agreement includes all the buy-sell provisions that specify how owners can split ownership among themselves.
With an LLC, generally, you won’t need to file updated paperwork with secretary of state. However, again, it all depends on whether or not your initial operating agreement included the names and ownership share (percentages) of your fellow members.
If it does, you’ll need to come up with an amendment in the original agreement with the updated percentages and their respective names. Once you have completed this procedure, you can now issue new certificates of membership to all members (owners) that reflect the updated percentages.
If this all sounds complicated to you, your best bet is consult tax attorneys and lawyers. They’ll advise you accurately you on whether or not signing such a personal guarantee will make sense given LLC’s and your personal financial situation.
FREQUENTLY ASKED QUESTIONS
Here are some of the frequently asked questions answered regarding the ownership of an LLC and other questions in this context:
- What is the owner of an LLC called?
As discussed in the article in detail, the owner of an LLC is called its member. It is essential to not confuse members with the employees of an LLC, as members are purely the owners of an LLC and share the profits and losses of an LLC.
- Can an owner of an LLC be an employee?
LLC’s owners (members) cannot be the employees of their company as per law. Since they can’t be employees of their LLC, they also can’t avail the benefits of employees.
- Is owning an LLC considered self-employed?
Yes. LLC members or owners are considered self-employed owners of businesses instead of being the employees of an LLC. It is why they are not subject to any tax withholding.
- Is the owner of an LLC a CEO?
The owner of an LLC isn’t its CEO by default. However, states allow LLCs to appoint a CEO if it is defined in the operating agreement of LLC, as the state needs to know who has the authority to sign the documents on behalf of an LLC.
As long as the members of the LLC agree on the operating agreement, an LLC can have as many CEOs as it wishes to. So, it is all down to the operating agreement of the LLC.
- What is the highest position in an LLC?
The position of the President is highest in an LLC. Duties of a president are set forth in the operating agreement of the LLC.
Generally, a company can have two presidents, but it all depends where on where your LLC is located, and what was initially agreed in the operating agreement of the LLC.
- Can an LLC have a director?
Although the laws don’t require an LLC to have a board of directors, and a director, it can have one after defining these roles in the operating agreement. Having a director and board of directors can help an LLC in organizing regular meetings, and discussing issues arising out of business.
- Does an LLC require a board of directors?
Generally speaking, an LLC doesn’t require a board of directors, as states laws do not bind LLCs for having one. However, having a board of directors can be an efficient approach towards proper functioning of the LLC, and it can have a board of directors after defining it in its operating agreement.