How To Transfer LLC Ownership: Free Guide 2024

How to Transfer LLC Ownership
You can change the partnership of LLC due to circumstances. Photo: NDAB Creativity/Shutterstock

A Limited Liability Company,[1] or LLC, is a way of structuring your company to reap the best tax benefits, protect your assets, and create a clear partnership of a company or entity. Ownership of an LLC is determined according to ownership percentages, management structure, and the initial investment amount of each member. You can change partnership due to circumstances – retirement, death, or to give ownership interest to an employee of the company. 

Operating agreements protect the LLC interest of the buyer and seller of a company. This review explains how to transfer at any time with the right operating agreement. There are many reasons to create an operating agreement or buy-sell agreement for the entire LLC. 

How To Transfer LLC Ownership?

  1. Partial
  • Review Your Operating Agreement & Articles of Organization
  • Notify All Relevant Parties
  • Update the Necessary LLC Documents
  1. Sell
  • Review Your LLC Documents
  • Draft Buy-Sell Agreement With The Buyer
  • Notify Your Secretary of State
  • Tax Responsibility

How To Transfer LLC Ownership (Partial)? 

Transferring ownership for LLC members can be easy if you have set the processes in place from the initial company formation. This is sometimes called a buy-sell agreement, ownership form, or ownership letter. To transfer partial ownership follow these steps: 

Review Your Operating Agreement & Articles of Organization

When you formed your company you should have created articles of organization and an operating agreement. This agreement outlines rules for the sale of a company but also includes additional rules and regulations to account for the tax implications, ownership interest, and the ownership transfer process. The buy-sell agreement builds upon this by outlining full partnership, partial interest, or partial transfer and how ownership transfer will work. In some cases, a registered agent can be helpful for this step.

Notify All Relevant Parties

Next, you should notify parties interested in the company. This includes all banks or lenders, remaining members, brokerage services, etc., of the sale agreement. This notification should include any financial liabilities, the existing members and future business structure, profits, and any new membership interest for the company. 

Update the Necessary LLC Documents

Finally, you will update the LLC documentation. This updated legal document should include the new structure, names of the parties involved, a new operating agreement, and any membership interests. It should also include the names of all other members of the LLC group. 

How To Transfer LLC Ownership (Sell)?

How To Transfer LLC Ownership (Sell)?
In some cases, you may want to leave the company entirely. Photo: Gorodenkoff/Shutterstock

In some cases, you may want to leave the company entirely. In this case, you’ll create a buy-sell agreement that includes your initial investment, any profits to remain with you, any company liabilities and responsible parties, etc. 

Review Your LLC Documents

When transferring ownership to a new LLC member, the first step is to review your existing LLC operating agreement. An ownership transfer could be a single or multi-member agreement but should outline how the business operates, the separation of personal and company assets, the management structure of the company, identifying the new responsible party and other owners, and the difference in company and membership interests. 

Draft Buy-Sell Agreement With The Buyer

Next, you will create a draft buy-sell provision. This will outline the cost of the company, how it is paid for, monetary implications for the buyer and seller, and how the seller will be compensated for the sale. The buy-sell agreement is a legal document that is binding between company partners. Buy-sell provisions may include compensation packages and how the company works. 

Notify Your Secretary Of State

Once drafted, the document should be sent to the Secretary of State. The agreement will control the transfer of ownership, whether it is a single owner to another single owner or whether the company has multiple partner groups. The California secretary or other secretary will then file the documents. 

Tax Responsibilities

The agreement should cover tax responsibilities for the person leaving the company and for those entering or taking a larger position within the LLC. Depending on the state, the company may be taxed both for the transfer of ownership within the company and according to the income of the company. Understanding the tax implications will help you know how much you may own the new partners or how much you will gain from the sale of the entity.

Why Transfer Ownership Of A Limited Liability Company?

The partnership of an LLC can be by a single person or a group of people. There are several reasons to create a buy-sell agreement before you transfer the entire business. Even a single-member LLC can be transferred to another person or entity; in some cases, you can transfer partial interest, such as to an investor or as part of a promotion package for an employee. Reasons to transfer ownership include an illness, in cases of death, to enjoy retirement, or to add additional LLC members to the organization. 

Tips For Notify All Relevant Parties

When transferring ownership, make sure you have plenty of time to notify all parties of the sale or closure of the company. Whether you plan to sell only a portion of the company or leave the company entirely, you must inform your state’s Secretary of State, the Internal Revenue Service, banks and financial institutions, and other entities with which your company works. These notifications may take a week or could take several months, and may also require an application for a new Employer Identification Number[2]  (EIN), a file to change the responsible company party, and ownership changes for people who have access to business bank accounts.

The Top 2 Free LLC Services

The Top 2 Free LLC Services
Northwest & ZenBusiness can support you in the transfer process. Photo: fizkes/Shutterstock
Northwest Registered AgentZenbusiness
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Pricing$0 + State Fees$39 + State Fees
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Northwest’s suite of tools offers company services at a reasonable price. The main difference between Northwest and similar entities is that Northwest only offers one paid plan for services. The initial cost is $39 to file the LLC paperwork; all other charges are due as per your state’s regulations. There is a separate option, called Pay In Full. With this option, which costs $225, Northwest will file the LLC, and provide agent services for one year, however, all other charges from state fees, etc., will still apply. 

Northwest also has a strict no-data-selling policy and will provide pricing changes in advance. Northwest also offers the ability to pay by the month, with an auto-renew option. 


ZenBusiness is a one-stop shop for small business preparation. Through ZenBusiness you can search for available company names, file articles of incorporation, find out the needed documentation for your state and federal filings and registrations, obtain an EIN, and build the business’s web presence through domain names, email, and domain privacy protection. 

ZenBusiness offers three tiers. 

  • For $49 (Starter Plan), you can form your business within 3 to 4 weeks, file LLC paperwork, get an annual compliance service, search for business names, have phone/email support, and have online document access. The Starter Plan does not automatically renew each year. 
  • For $199 (Pro Plan), you get all of the Starter Plan benefits, plus extras including an operating agreement, expedited filing services, a virtual business guide, and Google Ads credit. The Pro Plan automatically renews each year. 
  • For $299 per year (Premium Plan), you get all of the Starter Plan and Pro plan benefits plus extras including a business website, a business domain name, and a business email address. The Premium Plan automatically renews each year.

Final Thoughts

There are several reasons to transfer ownership of an LLC. You may want to leave the business, may need investment capital which requires the addition of other members, or a member of the LLC may die or want to leave the business. Old and new members need legal protection. Operating agreements protect the ownership interest of the buyer and seller of a business. Having an operating agreement in place before these things happen is critical in how smoothly the transfer of ownership of an LLC goes and may reflect on the health of the business as a whole. 

Frequently Asked Questions (FAQs)

Can you transfer a business?

Yes, you can change ownership between a husband, wife, or family member, can be offered as a changed or new business partnership, or in the case of the death of an LLC member. Each must follow state laws for the departing member. An ownership change can be difficult because a transfer can be for a full or partial interest in the business; this is a written agreement. The transfer is done to protect the new owner as well as the membership interest of everyone involved with the business.

What is the ownership process?

You first need an operating agreement in place for transferring existing LLC members. The operating agreement outlines the rules for business operation, any monetary implications, and how partial LLC ownership or complete ownership will work after the transfer is completed. Without this, the business is held to the default laws of the state.

Who needs to know I am transferring LLC ownership?

Everyone who has an ownership percentage with the business and membership interests in the business should be notified of the transfer during a full or partial sale. By state law, this includes the secretary of state, any banks or financial institutions, the IRS, etc. The LLC transfer should notify all other LLC members, too.

What happens after transferring ownership of an LLC?

Transferring LLC ownership is not a simple process and having legal and tax advice will help very much. Having professionals in your corner will ensure you have no surprise bills, taxes, or other liabilities incurred that are related to the sale of the business. After you transfer ownership to a new owner, you may have fees and/or taxes from the IRS to be paid, and you may want to create a membership certificate for a new member.

What happens to the EIN?

In some cases, a transfer will mean applying for a new EIN. In these cases, the old EIN will be voided and removed and the new number put in place. The old EIN will no longer be available for use.



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.


He is an organized and creative thinking sales management professional with experience in outside and inside sales in various markets. Working as freelancer in the Greater Boston Market, he moved to St. Louis and became an Account Executive, then a Sales Manager managing and coaching 12 sales reps covering a nationwide territory. He has developed his team with a combination of consultative selling and value before price coaching mindset which has won him a President’s Cup and many other financially rewarding awards at RICOH. His most recent role as a Continuous Improvement Manager provided insight into the importance of delivering a quality product in alignment with the value and reputation of his organization. It further enhances the aspect of selling on value as opposed to price.

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  1. (2017). Limited Liability Company (LLC) | Internal Revenue Service. [online] Available at:
  2. (2017). Employer ID Numbers | Internal Revenue Service. [online] Available at:

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