Q: What would it take to add a member to my Missouri LLC?
Thanks to Austin J. Johnson of Perfect Scores LLC for the great question! It’s pretty common for LLCs to change their ownership structure by adding a new member. An LLC may wish to add a new member for any number of reasons, including:
- Bringing on a business partner
- Promoting someone from within the company
- Investing more capital in the company
Before making the decision to add a new LLC member, you should consider how it might impact your company in terms of efficiency (a new voice can sometimes complicate business discussions) and profits (your ownership percentage—and potentially your profits—will decrease). That said, if you’re all set to go, here’s how to add a new member to your Missouri LLC:
1. Change your Missouri LLC Operating Agreement
Your Missouri LLC Operating Agreement is like a blueprint for your company, which means it has comprehensive information about LLC operations and structure—including a list of LLC members. If you add a new member to your LLC, you’ll have to make sure that information is reflected in your operating agreement.
How do I change my Missouri LLC Operating Agreement?
The process for changing your operating agreement should be specified in the operating agreement itself. This process may look different for different LLCs because each operating agreement can be tailored to fit its specific company. But, updating an operating agreement generally requires:
- Drafting an amendment
- Holding a meeting of all members
- Voting on that amendment
- Adopting that amendment (provided all members voted in favor)
- Updating the operating agreement
What if I don’t have an operating agreement?
If your LLC doesn’t have an operating agreement—or if your operating agreement doesn’t describe the process for adding new members—you can add a new member with the written consent of all current members, per MO Rev Stat § 347.113 (2021).
Do I have to update my Missouri Articles of Organization?
Probably not. Missouri does not require LLCs to provide member information when filing Missouri Articles of Organization, so there probably won’t be any information in your articles to update. If, for some reason, you chose to include member information in your articles, then you’ll have to file an amendment with the state.
How do I amend my Missouri Articles of Organization?
2. Contact the IRS
You’ll have to contact the IRS if your tax status changes. This is inevitable if you add a new member to a single-member LLC (SMLLC) since an SMLLC is considered a “disregarded entity” and a multi-member LLC is taxed as a “partnership” by default. (Generally, adding a new member to a multi-member LLC won’t require you to submit any new forms to the IRS.)
To inform the IRS of a change in your tax filing status, use Form 8832.