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How to Add a Member to Your South Carolina LLC

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Q: We may have a situation that will result in us adding a third member to our LLC. This means we’ll want to also update the ownership percentage to reflect the new member. How do we do this?

Thank you to a customer from South Carolina for this question! Adding a new member to your South Carolina LLC is a straightforward process that involves holding a member vote, updating your LLC’s operating agreement, and possibly contacting the IRS. Our guide will show you what you need to know about adding a member to your South Carolina LLC.

Can I add a member to an already existing LLC in South Carolina? 

Yes! As your business grows, you might find a need to bring on another LLC member. New LLC members can provide your business with an injection of cash and talent.

How do I add a member to my South Carolina LLC?

To add a member to your LLC, you will need to amend your South Carolina LLC Operating Agreement. Your operating agreement is an internal document that doesn’t need to filed with the state. Nevertheless, it is a legal document that outlines the policies and organizational structure of your LLC. Your operating agreement is legally binding and determines how your LLC will handle important processes, transferring membership interest, allocating profits and losses, voting on business issues, adding members, and even dissolving the business. Your operating agreement contains your members’ names and addresses, so when you add a new member, you’ll need to update it with the new member’s information.

How do I amend my South Carolina LLC operating agreement? 

Your LLC’s operating agreement should list the rules for amending it. Essentially you’ll need to follow your own rules for how your LLC will add a member. The process could look different depending on the policies your LLC has in place, but usually, you’ll need to do the following:

  • Draft an amendment
  • Hold a meeting of all LLC members
  • Present and vote on the amendment
  • Adopt the change if a majority of members agree on the amendment
  • Update your LLC’s operating agreement

How do I update the ownership percentage to reflect the new LLC member?

You guessed it, refer to your operating agreement, and update ownership percentages in it. Again, your operating agreement is an internal document, but legally binding, so you don’t want to play fast and loose with this step. Make sure everyone is on the same page so a disagreement of financial distributions doesn’t come back to create an unnecessary legal issue.

Will I need to amend my Articles of Organization to add a member? 

No. South Carolina doesn’t require member names to be listed when filing your LLC’s Articles of Organization. This means you won’t need to amend your articles when you add a member. Simply put, making a note of the new member in your LLC’s operating agreement is good enough.

Do I need to inform the IRS if I add an LLC member? 

That depends. If adding a new member to your LLC takes your LLC from being a single-member LLC to a multi-member LLC, you’ll need to file IRS Form 8832, Entity Classification Election. That’s because multi-member LLCs are taxed as partnerships by default. If your LLC already has more than one member, you won’t need to file anything with the IRS.

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