Adding a Member to Your LLC

When the current owner or co-owners in a limited liability company have considered adding a new person, there are various factors to consider. Adding a new member is often more complicated than it first appears, and it is important that all the necessary paperwork, contracts and information are cleared before he or she becomes a member of the LLC.

The documentation of an LLC should include an operations agreement that explains various aspects of company policy, obligations, responsibilities and what to do in the event of a deadlock. This means that each member should have his or her own duties that are separate from the others. One may be the bookkeeper, another could be the person providing financial support and one may be the individual in charge of product development. When increasing these persons by another member, this person should have his or her own obligations such as marketing or advertising. This should be edited in the operations agreement including how much of an interest he or she has.

Each person that is part of the ownership of an LLC should have a portion of interest in writing. It is suggested by experts that this percentage of ownership is uneven so that votes and the direction of the company may more easily be determined. However, this could be based on a financial obligation. This means that the original owner may not have the necessary funds to run the company and needs a partner for finances to develop and market a product. He or she may become an equal owner when added to the LLC. However, the specifics should be modified in the operations agreement with an out clause if he or she needs to leave the company.

Understanding the Consequences of Adding a Member

When the owner or co-owners of an LLC are considering adding someone else into the mix, it is important to understand the benefits, disadvantages and issues that could arise. While the individual may be bringing something necessary to the company, he or she is also adding another element to the already existing relationship. This could mean chaos, or he or she could be the peacemaker. Another person also means that profits are then divided by one more. This could cut profits into halves, thirds, fourths and so on. If his or her presence causes undue tension, removing his or her membership is often complicated and fraught with difficulty.