How can i change the ownership of LLC, i am the sole proprietor at present. Please assist me in this:which form is to be filled

Asked over 3 years ago - Artesia, CA

Company is in loss, thus want to transfer it.Will it better to transfer the ownership or add a new member in the company to run it properly.

Attorney answers (2)

  1. Frank Wei-Hong Chen

    Contributor Level 20

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    Answered . Your question is not clear. Is the company currently a sole proprietorship or an LLC? Or are you saying that you are a single member LLC?

    You can sell the LLC or add a member to the LLC as provided in your Operating Agreement. However, if the business is operating at a loss, you might have liabilities if you sell the LLC or member shares of the LLC to a new investor.

    You might be better off selling the assets of the business to someone else. This way, the new owner/investor will know for sure that he or she did not purchase liabilities along with the assets.

  2. Bryant Keith Martin

    Contributor Level 18

    Answered . You do not need to fill out any particular paper for the State. Look at your Organization Agreement to see how new units of interest are issued. If you don’t have an OA, be sure to get one before you bring in a new member. You can either transfer some of your units or a specified percentage of the interests in the LLC, or else you can have the LLC issue new interests to the new partners. Whatever you do, just give the new member a piece of paper, signed by you both, stating clearly what he is getting and what you are retaining. The tax losses will be treated differently, depending on how you structure it. You may want to do a special allocation of the losses so that the transaction will be more attractive to the new member. Too complex to go into here. The value will factor in as well. So you should consult a business lawyer conversant in partnership taxation or a good CPA.
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    (Bryant) Keith Martin
    sbbizlaw.com
    .com

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