Can an llc be sold?
– Sam, Illinois
A limited liability company absolutely can be sold. A member can sell his or her membership interest, or, all the members can sell their interests to a single buyer, or all the members can agree to sell all the assets of the LLC to a buyer.
Some LLCs will place clauses in the Operating Agreement preventing LLC members from selling their interests to outsides without first offering existing members the opportunity to purchase. This is a relatively common provision, but it is not mandatory, and your LLC could permit free exchange of membership interests.
A “membership interest” is similar to the concept of “shares” in a corporation. If you own 40% of the membership interest in an LLC, it’s like owning 40% of the stock in a corporation (LLCs have many similar concepts as corporations, but different terminology).
These transfers of LLC interests involve contracts and paperwork, of course.
If you have a particularly complicated transaction, you ought to have a lawyer either provide legal advice or help with selling the LLC. However, providing your lawyer with a generic buy-sell agreement will make their job easier, faster and likely result in a lower legal bill (sometimes substantially lower). The buyer and seller may also each want to engage a CPA to look at the tax consequences from the purchase.
With the sale of the LLC, there are several things needed but in particular, to the business entity, there are two to take care of. One, the new owner will need to get a new EIN as the ownership is changing. Secondly, a buy-sell agreement with the date of sale, purchase price, a list of assets included in the sale and the value of those assets is needed as there is a taxable event for both the buyer and seller to report to the IRS.