Hi, Lee Phillips here.
I'm an attorney. Like I always say, don't hold that against me.
What I want to talk about is how you would add
another guy, another member
stockholder
only in LLC language it's called a "member"
how you add another person
to the ownership
of an LLC
and it's pretty easy.
The individual needs to
somehow
move "consideration" as we would call it
into the LLC.
It pays
the person buys into it
they do sweat equity-- they work their way into it.
If you just give them membership in the LLC
did you notice that word, "give"?
then that is a gift to them of the value of the membership of the LLC
whatever that value is.
If there's a million dollars in the LLC and you give 25% of it
then you gave them a quarter of a million dollars worth of value.
Now I understand discounting and all that crap
but basically that's what we're doing.
So they buy into it somehow or you gift it
then you need to have a minute entry
that says that we are accepting Joe
as a new member of the LLC
I'm assuming that this is a little LLC
and we're not talking about lots of members.
You could have LLC's that have lots and lots of members
if they're taxed under Chapter C of the IRS code
but we're assuming this is a little mom-and-pop LLC
and we want to add our son.
Or
or some states now are requiring multiple members
more than one member in an LLC
in order to get the charging order protection.
So you set up an LLC
you're the only member and the state,
you learn, or the state changes its laws
and says you need multiple members of your LLC.
Well the way you get them in
is you have the minute entry
then you have to issue a membership certificate
so you should have a logbook
it's like a stock ledger
and you issue a stock certificate or a membership certificate
#2 to Joe
and he gets such-and-such a percentage of the interest
in the LLC.
So that's pretty easy so far.
Some states require
that you list the LLC members
on the state records.
And most of the time you're gonna get an annual update
you need to update the state and you have to pay your fees and all of that sort of thing
and if they require that you list the members
at least when you get the annual update
you need to put the new member on there
otherwise you can
if they require and you should do it pretty quick actually
not wait for the annual
you can file an amended document with the state
and show the additional member
so there could be a state aspect of it
there's a bookkeeping aspect of it
and there is a minute aspect of it
a meeting acceptance aspect of it.
Now you need to read your operating agreement
because the operating agreement may say
that there's a procedure for accepting a new member
or if Joe has sold his membership interest to somebody else
then other members may have a first right of refusal
so we have to follow the rules
and the rules are your operating agreement
read the operating agreement
see what it is
but basically it's accept a guy in the minutes
change the stock ledger, issue the certificate
and then, if required
update it with the state.
We now have another member of the LLC
that doesn't satisfy the question
do I have a multi-member LLC
for the state requirements
in order to get the charging order protection
charging order protection--that's another YouTube video that we've got
and the multiple member requirements to get the charging order
is another video also.
So how do you get a new member?
Follow the rules
and there's this basic structure that you're going to do.