Q: I am now married, and my husband will have partial ownership of my LLC. Is there anything I need to do?
Thank you to a customer from California for that great question! To add a member to a California LLC, you’ll need to update your operating agreement. You may also need to inform the IRS. We’ll tell you the steps you need to take.
1. Amend your California LLC operating agreement.
Your operating agreement should include the names and addresses of all LLC members, so you will need to update this document any time you add or remove a member from your LLC. California operating agreements are internal documents, so you don’t need to file your amendment with the Secretary of State. The process for amending your operating agreement should be outlined in the operating agreement itself. (No operating agreement? California permits adding a new member with the consent of all existing members.)
Generally, amending an operating agreement involves the following steps:
- Draft a member resolution
- Hold a meeting of all LLC members
- Vote on the resolution
- Pass the resolution
- Save the member resolution with your records
Of course, if you are currently the only member of your California LLC, you don’t need to go through this formal process to change your operating agreement. You can simply change your single-member LLC operating agreement into a multi-member LLC operating agreement and add the new member’s information.
2. File Your CA Statement of Information
If you have a member-managed LLC, you’ll need to include the name and address of your new member when you file your next Statement of Information. LLCs are required to file an Initial Statement of Information with the California Secretary of State within 90 days of formation. After that, the company must file a Statement of Information form every two years, within a specific 6-month window.
Note: You can find out your LLC’s Statement of Information filing window on the CA Secretary of State website.
Do I need to amend my Articles of Organization?
No. California LLC Articles of Organization don’t ask for member information, so you won’t need to amend your articles when you add a member to your LLC.
3. Contact the IRS.
Most of the time, you will not need to contact the IRS when you add a member to your LLC. However, if your LLC is changing from a single-member LLC into a multi-member LLC, this changes the tax classification of your business, so you will need to file Form 8832 with the IRS. That’s because single-member LLCs are taxed as “disregarded entities” by default, whereas multi-member LLCs are taxed as partnerships.
Note that in community property states like California, spouses who are the sole owners of an LLC can operate as a single-member LLC for tax purposes.
Learn more about forming a SMLLC as a married couple.