Q: My LLC is registered in Maryland, so could you please let me know the specifics on what it would take to add an additional owner to the company?
Thank you to a client from Maryland for that great question! Your LLC’s operating agreement will outline the specific steps you’ll need to take within the company to add a new member. You will, however, need to update your operating agreement once the new member has been added, and you may need to contact the IRS. Let’s go through each step.
1. Vote to Add an LLC Member
With your Maryland operating agreement as your guide, you’ll follow the instructions you and the other initial members of your LLC have outlined. In most cases, a vote is required, and you need unaminous approval to add a new member. In single-member LLCs, you don’t need to hold a vote. You should create a member resolution to note the added member and vote.
Learn more about starting a Maryland LLC.
2. Amend Your Maryland LLC Operating Agreement
Even though Maryland does not require LLCs to have operating agreements, you’ll still want to have one on file and amend it during major changes in your LLC’s structure, member status, and when you add or remove members. To amend your operating agreement, include the new member’s name and ownership percentage. If other members’ interests have changed, you’ll update their membership interest as well.
Check out our free membership certificate template to note membership interest in your LLC.
What if my LLC doesn’t have an operating agreement?
If your Maryland LLC doesn’t have an operating agreement, Maryland Code § 4A-601 states members can be added without an operating agreement with the unanimous approval of all LLC members.
Do I need to file my operating agreement with the Maryland State Department of Assessments and Taxation?
No. Maryland does not require LLCs to file their operating agreements with the State Department of Assessments and Taxation. Your operating agreement is an internal document kept for your LLC’s records.
Do I need to file an LLC amendment when I add a member?
No. In Maryland, you aren’t asked to include member information on the Articles of Organization, so you don’t need to amend this document when you add a member. You can simply update your internal documents.
3. File Form 8832 with the IRS
The last step in adding a new member to your Maryland LLC is updating the IRS to any tax classification changes. If your LLC is changing from a single-member to a multi-member LLC, you will need to file Form 8832, Entity Classification Election, with the IRS. This is because single-member LLCs are taxed as disregarded entities by default, whereas multi-member LLCs are taxed as partnerships.
Learn how to change LLC membership with the IRS.