Can LLCs Issue Stock? Free Guide 2024

Can LLCs Issue Stock (1)

Forming a limited liability company is a great way for LLC owners to protect their personal assets. But if you have LLC members, can LLCs issue stock and can you dilute your ownership interest? Or do you need to choose another business structure for that?

We created this guide to let you know. It covers everything you know need to know about this business structure as it compares to an S corporation, C corporation and other business entities when it comes to issuing stock. Keep reading to learn more.

What is an LLC (Limited Liability Company)?

A limited liability company (LLC) is one business structure you can use to run your company. Members of an LLC have ownership rights established in the LLC’s operating agreement. It’s one of the best business structure options for liability protection. But limited liability companies aren’t the only option for businesses with multiple owners.

In addition to forming a multi-member LLC, there are also various corporate structure options to consider, such as an S corporation and C corporations. Corporations work differently than LLCs and may involve corporate shareholders or corporate taxes that are paid at the corporate level. But more on these in a bit.

Can LLCs Issue Stock?

Unlike a corporation, LLCs can not issue stock certificates. The business entity simply doesn’t get that right, unlike an S corp. So if you’re trying to decide on a business entity and want to be able to issue stock, then this ownership structure may not be right for you since it cannot issue stock.

Can You Invest in an LLC?

The good news is that most states have a formal structure and process in place for adding a single member to an existing LLC. This can be useful when you want to raise capital, as it allows you to essentially sell LLC shares and voting units without having to change your legal structure to attract potential buyers.

So if you run an LLC that’s interested in raising capital, it’s possible to do that. But the board of directors will typically need to vote on selling membership interests in the limited liability company and reach a unanimous decision on the sale of membership units in the multi-member LLC for the deal to go through.

LLC Ownership Interests vs Corporate Stock

Can LLCs Issue Stock (2)

LLC ownership interest and preferred stock listings from a corporation are very similar. But the terminology used to describe each is a bit different.

Through codes like the Delaware LLC Act, ownership in a limited liability company is expressed through membership certificates or ownership stakes. This describes the percentage of the company that you own and often has some voting rights and responsibilities if the company fails.

Stock is essentially the same thing. When you buy stock in a business, you get shares that represent an ownership percentage of the corporation. This is sort of like LLC shares under default rules and is similar to an LLC’s ability to raise funds and seek out new capital contributions from other members. Stock also sometimes comes with voting rights.

S Corp or C Corp Stock

If you’re considering forming a corporation, then it will likely make more sense to create an initial public offering as a C Corporation, as this is considered standard. Investors who have a financial interest in your corporation will have an easier tax situation if you form a C corporation and may be more likely to invest in your company through capital contribution as a result.

S Corps have a special tax status that makes them a bit more complicated for investors. If your corporation and business idea are solid, you can still attract shareholders just like you would if you were running a single-member sole proprietorship. But it could be easier on a personal level to run a C corp as well, as your taxable income and personal tax returns may be easier to work through.

The Top 2 LLC Services

If you’re okay with not being able to issue shares, then creating a limited liability company could be a great way to get liability protection and avoid double taxation thanks to the rules of pass-through taxation for a pass-through entity.

But you don’t have to go through the process alone. You can hire a company to help you out with things like operating agreements and LLC shares. Here are two of our favorites for bringing new called members into your business.

ZenBusinessNorthwest Registered Agent
AwardBest OverallMost Affordable
Price$0 – $299 + state filing fees$0 – $225 + state filing fees
DetailRead Review Read Review

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ZenBusiness is a company formation service that can help you start a single-member LLC, corporation or multi-member-managed LLC. The company can also help you do things like set up a board of directors and assign membership certificates. It offers after-hours customer support and can be an ongoing partner as you assign ownership interests to LLC members.

Northwest Registered Agent

Northwest is another solid choice worth looking into. The company is similar to ZenBusiness in that it will also help you with your LLC membership certificate, membership interest, and operating agreement details. It’s a bit cheaper for LLC members than ZenBusiness but doesn’t quite offer as much support with membership interests and operating agreement details.

Final Thoughts

The bottom line is that an LLC can’t issue stock. But it does have membership interests. You can sell a membership interest to a new investor in a way that’s similar to selling stock if you want outside investment. You will just need to follow the rules for adding a new member to your LLC in your state in order to do so.

Frequently Asked Questions (FAQs)

Can an LLC issue stock?

No, an LLC cannot issue stock. But each LLC has membership interests that are assigned in an operating agreement that may be able to be sold to outside investors.

Do LLCs have any alternatives to issuing stock?

Yes, an LLC has membership interests that can be assigned to different people and adjusted as the needs of the LLC change. However, each state has its own rules for this and those need to be followed before any official change can be made to an LLC’s ownership structure. This process may require a formal unanimous vote.

Is a C Corp or S Corp better for stock issuance?

A C corporation typically makes it easier to attract investors because it’s easier for them to process their taxes than it is with an S Corp. But if your company and its idea are good, you should have no problem finding buyers with either structure.

Should I form an LLC, C Corp, or S Corp?

The answer to this question depends on your goals. If you want to protect yourself from personal liability, an LLC may be your best choice. But if you want to issue stock, then choosing a C Corporation or S Corporation could make more sense.

How do I add a new owner to my LLC?

If you want to sell a share in the ownership of your LLC, then you need to follow your state’s rules for the process. That often involves a vote of your existing members, but can include other steps as well.



Bizreport - Kellan Jansen
Kellan Jansen, BA
Business Writer
Kellan works with businesses of all sizes to help them achieve their growth goals and has won several awards for his work in the space. He is especially focused on the fields of business finance and the developing cryptocurrency industry, regularly writing about both for audiences across the globe.


Kristina Knight-1
Kristina Knight, Journalist , BA
Content Writer & Editor
Kristina Knight is a freelance writer with more than 15 years of experience writing on varied topics. Kristina’s focus for the past 10 years has been the small business, online marketing, and banking sectors, however, she keeps things interesting by writing about her experiences as an adoptive mom, parenting, and education issues. Kristina’s work has appeared with, NBC News,, DisasterNewsNetwork, and many more publications.

+ 6 sources

Bizreport Advisor adheres to strict editorial integrity standards avoids using tertiary references. We have strict sourcing guidelines and rely on peer-reviewed studies, academic research. To ensure the accuracy of articles in Bizreport, you can read more about the editorial process here.

  1. Personal Property Policy Overview. Accessed June 20, 2023.
  2. IRS. Business Structures | Internal Revenue Service. Published 2019. Accessed June 20, 2023.
  3. Stocks | Published 2022. Accessed June 20, 2023.
  4. Delaware Legislature. Delaware Code Online. Published 2023. Accessed June 20, 2023.
  5. IRS. S Corporations | Internal Revenue Service. Published 2018. Accessed June 20, 2023.
  6. OPERATING AGREEMENT. Accessed June 20, 2023.



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