This guide intends to provide a detailed set of information on all kinds of transfers happening involving an LLC, from the transfer of LLC ownership to the transfer of an LLC to another state, etc.
Please read through the entire article to find the answers that you are looking for, and if you can’t find them in the article, make sure to check the FAQ section of the article. Still haven’t found it? Feel free to write to us, and we will make sure you are properly guided on all the legal aspects of the issue that you are searching for.
HOW TO TRANSFER LLC TO ANOTHER STATE
There are multiple ways to transfer an LLC from one state to another state. One of the most used options for transferring an LLC from one state to another is to domesticate it. However, it is important to know that this option might not be available for all states in the USA.
The following states allow the domestication of an LLC:
5. District of Columbia
11. New Hampshire
12. New Jersey
24. South Carolina
25. South Dakota
To domesticate your LLC, you will need to get a certificate of good standing from your previous state, where your LLC was originally formed. Once you have received it, you can file for the same LLC in a new state and close the older one. However, if it is not in the states mentioned above, it is not an option for you.
Domesticating your LLC comes with many benefits, I.e., you can retain your EIN, all your related bank accounts, along with the credit rating.
When your concerned states don’t allow domestication, you would have to dissolve your previous LLC and form the new one in the new state. While this will help you in retaining the name, you would have to do all the paperwork anew, along with losing all the credit rating, EIN, and linked bank accounts. It can also get tricky if your LLC has multiple members, as you would need permission from all members to make this move.
HOW TO TRANSFER LLC OWNERSHIP
Transferring the ownership of your LLC may seem like an easy and straightforward option, but it is not. You need to be careful in the transfer, as the proceedings can easily be sidetracked by things going back to the time of formation of your LLC. Even worse, you can lose all the protections that you created LLC for if you are not careful in paperwork.
If your original operating agreement includes the terms of buy and sale, it will make everything easier for you. However, if your original articles of organization and operating agreement do not define buying and selling terms, you can negotiate with the members of the LLC and with the buying party on terms of sale. You are then fine to sell it once all of the concerned parties have agreed on the new terms. It is important to know that you would have to update the new terms to the secretary of state office in the ”statement of information”.
TRANSFER OF PERSONAL ASSETS TO AN LLC
You may want to transfer your personal assets to an LLC if you are using that asset for LLC-related activities. This is not a very complex procedure and should be completed easily without a lot of fuss if you are doing it with the help of an attorney.
The transfer of assets from personal capacity to an LLC starts with the quitclaim deed. This deed shows the transfer of ownership from you to your LLC. When executed, your quitclaim deed will transfer any interest the grantor has in the property to a grantee. In this case, you will become the grantor, and your LLC or corporation will be the grantee.
Once done, you will need to record the quitclaim deed to your local clerk’s office. It is important to do it, as otherwise, the third parties who have any claim in the assets will not be informed, and your transfer will not get a legal stature.
Other things that you need to consider while transferring your personal assets to your LLC are:
- Inform your tenant: If your property is rented and you are already in contract with your tenant, you would need to change the contract documentation. If you want to continue the rent, you can just write the name of the lender as that of your LLC instead of you.
- Open a business account: If your property has a personal bank account linked with it, you will need to open a business account for your LLC to get the property merged into it.
- Notify your lender: If your property has a mortgage, then it is very likely that your agreement stipulates a requirement of you notifying the lender when the ownership of your property changes. While this could cause a rate increase on the mortgage, but you will want to make sure that you’re compliant with your previous agreements.
FREQUENTLY ASKED QUESTIONS
Here are some of the frequently asked questions answered under the context of all kinds of transfers in an LLC:
- How to transfer an llc to another person?
The process of transferring your LLC to another person is simple. If your articles of organization and operating agreement of the LLC define the process of LLC transfer, you would just need simple paperwork.
However, if your articles of organization do not define the process of ownership transfer, you would need to negotiate with the rest of the LLC members about revisiting your articles of organization for ownership transfer.
- Can a single-member llc change ownership?
The process of changing ownership for a single-member LLC is just like the process of change of ownership for LLCs with multiple members. The only difference would be that you will not require anyone else’s permission to alter the articles of the organization or the operating agreement of your LLC for its transfer.