In Florida, in 2022, there were 533,137 LLCs.
If you’re one of those LLCs, you might be interested in adding or removing an LLC member.
With a good understanding of the process and the right lawyer to guide you through it all, it can actually be very easy. Keep reading to find out all you need to know to amend your LLC.
What Are the Benefits of Using an LLC?
If you’re a business owner, you might want to form an LLC to take advantage of all the benefits. They’re easy to form in Florida.
You just need to file the LLC with the Florida Department of State. You may have to pay a filing fee, and then you’ll need to submit an annual report along with a yearly fee.
With an LLC, you’ll have liability protection. You’ll be protected from personal liability because the LLC is a separate legal entity. Your own personal assets can’t be accessed to pay the debts that arise from an LLC.
There are also different tax benefits of using an LLC. The LLC is a pass-through company. The profits of the LLC aren’t taxed at an LLC level. Instead, individuals receive profits from the LLC and pay taxes on a personal income tax return.
If this sounds like a good option, then you should learn how to add an LLC member.
How to Add an LLC Member
If you’re starting an LLC, you’ll also need to have a few LLC members as well. In Florida, it’s actually very easy to add them.
Find Your Operating Agreement
First, you should find your LLC operating agreement. You’ll need to change the operating agreement, and this can be a time-consuming process. It can be even more challenging if your Florida Department of State (DOS) copies that would be out of date.
You’ll need to review your operating agreement and see if there is an amendment in there that prohibits you from adding any new members. If you have this operating agreement, then you’ll need to revise it before you can add any new members.
When revising the operating agreement, you need to review it and ensure that it doesn’t violate any laws. You can have a lawyer help you with that process. The operating agreement shouldn’t take away the rights of any of the LLC members.
When you add new members, you’ll be changing the tax structure. You may need to file new tax forms or amendments. In some cases, you might need to file them with a registered agent.
Vote on Adding the Owner
Once you’ve found the operating agreement, the other existing members will need to add an owner to your LLC.
The amendment will add the new members, but the current members must approve it and ensure that the new members have an equal ownership share. The new members will then be owners in the new operating agreement.
Amend Articles of Organization
After the votes pass, you’ll need to amend the Articles of Organization. This changes the contract that controls how the LLC members interact with each other.
If a new member is added, they’ll need to update the article and also introduce the list of new responsibilities and rights for each member.
How to Remove an LLC Member
This is the main process for how to add an LLC member, but what happens if you add them and need to remove them later on? This will be a similar process.
Amend the Operating Agreement
In Florida, leaving an LLC is called “dissociation.”
Your Florida operating agreement will have the names and addresses of all of your LLC members. You will need to amend this operating agreement to remove one of those members off.
As with adding a member, you’ll also need to vote to remove any members. You’ll need to get a majority vote of the LLC members in order to have the policy amended.
First, you’ll want to draft a resolution to remove the member(s). Then, you can have a meeting where you want to vote on the resolution. If the majority votes in favor, you can pass the revolution.
If there are only two members in your LLC, then the member who has the largest share will be able to make the decision. The operating agreement may also have stipulations on this, so you’ll need a lawyer to review it.
In Florida, an LLC member can either decide to leave or be forced to leave.
File the Amendment
If the vote goes through, you’ll have to file the Articles of Amendment. You’ll file it with the Florida Department of State, and you’ll also have to pay the fee.
These documents can’t be submitted online. Instead, you’ll have to either submit them through the mail or in person.
Contact the IRS
You’ll need to contact the IRS if you’re going from having multiple members to only one member. A single-member LLC has different tax classifications.
A single-member LLC is taxed as a disregarded entity, but a multi-member LLC is taxed as a partnership. You’ll need to file Form 8832 to reclassify your LLC.
Learn More About How to Add or Remove an LLC Member in Florida
These are only a few things to know about how to add or remove an LLC member in Florida, but this can be a challenging process.
If you’re interested in streamlining this process, we’re here to help you out.
Contact us today to find a lawyer who can help you with this LLC process.
