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How can I add a new partner to my LLC? We have two partners now but wish to add a third.

Portland, OR |

I'd like to add a new partner to my business.

Attorney Answers 3


The mechanics of adding a member are fairly simple. The mechanics, however, are the very last thing you should be thinking about. Adding a member may have significant tax and legal implications. Will this new member be active in the business? Are they just an investor? What will be their duties? Is the LLC manager-managed or member-managed? Do you have a written operating agreement? Are you following the terms under that agreement and state law for adding this member? Did you provide the possible new member with the operating agreement, and have you discussed the business and respective rights and duties?

The failure to communicate and have your mutual roles and rights in writing may lead to disagreement that may ultimately destroy your LLC. Ideally, all members should discuss your expectations, roles, duties and exit plans and then have that discussion embodied in a clear operating agreement. This agreement will set the duties, voting requirements and procedures, profit and loss allocations, dispute resolution, and dissolution, among others. Without the operating agreement, you are left to possibly some vague oral agreement, state statutes, and the courts. In short, it could be an expensive and time-consuming mess if there are problems down the road.

You should ideally speak with an attorney regarding your issue. Contact people you know and trust for referrals. If you have no referrals, you should review the attorneys on this site or contact your local bar association for their referral program. I hope the information helped and I wish you the best in this matter.

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Mr. Murillo's points are very good. You should take your current partnership agreement to a local business attorney and make sure that it will work as you expect when you add your new partner. It may be worth visiting the attorney with just your current partner to discuss how you want your company to work with the new person, and then again with the new person so that everybody understands how the partnership will work after he/she is added.

Just adding a partner is easy; what you're paying the lawyer for is to look for (and warn you about, and help you work around) problems that often come up in multi-partner situations.

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Adding a new member to an existing Limited Liability Company raises numerous issues.

First, check the jurisdiction in which the LLC was initially organized, as that jurisdiction’s law will generally be the authority that outlines the default provisions governing the organization and operation of the LLC. Check with local counsel regarding the Operating Agreement, which outlines the rights and liabilities of the members of the LLC, and also might address the admission of new members.

From a tax standpoint, ascertain whether the new member will have an active or passive role in the operation of the LLC. Also, consult with qualified tax counsel to adjust all members’ capital and tax accounts accordingly.

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