When you expand your Texas LLC to include new members, you’ll have to file paperwork with the Texas Secretary of State. Here’s what to know:
What is an LLC member?
In a limited liability company (LLC), a member is the same thing as an owner. Members typically hold a percentage of ownership interest in the company, and can thus benefit from the company’s profits accordingly.
Can I add a member to my LLC?
Yes. The procedure for adding a new member to your LLC should be outlined in your Texas LLC Operating Agreement. If for some reason you operating agreement does not including voting procedures or processes for adding new members, you’ll have to abide by TX’s default statutes (Texas Business Organizations Code § 101.353-359.)
Adding a new member will also require you to update your operating agreement, a process that should be outlined in the operating agreement itself. And, because Texas requires all member names and addresses to be included in LLC formation documents, you’ll also have to file an amendment with the Texas Secretary of State to update your TX Certificate of Formation.
How do I file an amendment for my Texas LLC?
To update any information in your TX certificate of formation, you’ll have to file a TX certificate of amendment (Form 424), and pay the associated $150 fee. Section 3 (“Other Provisions to be Added, Altered, or Deleted”) will let you add the name(s) of any new LLC members. This document must be submitted in duplicate, and can be sent by mail, in person, or via fax: (512) 463-5709 . Unfortunately, online filings of Form 424 are limited to name changes only.
Mail to:
Secretary of State
P.O. Box 13697
Austin, TX 78711-3697
Deliver in person to:
James Earl Rudder Office Building
1019 Brazos St.
Austin, Texas 78701
Can I add a member to a Texas SMLLC?
Yes. You can add a member to a single-member LLC (SMLLC). However, you should be aware that as far as taxes go, adding a new member to an SMLLC changes your business from a sole proprietorship to a partnership (i.e. multi-member LLC). This will change the way you report taxes to the IRS, and will probably require you to obtain an EIN for your company. When going from an SMLLC to a multi-member LLC, it may be a good idea to consult with a business attorney or CPA to make sure your business is set when it comes to reporting taxes.