If you have an LLC in Louisiana and you wish to discontinue it, you don’t always have to dissolve it. You can transfer the ownership, and it will keep running the way it was. Transferring ownership of a Limited Liability Company (LLC) in Louisiana is a relatively simple and straightforward process involving minimal paperwork. It can be partially or fully transferred to another owner.
LLCBuddy editors shared a step-by-step guide on how to transfer ownership of an LLC in Louisiana. The steps might seem easy and doable. However, these are general steps and might need special attention for specific cities or regions in Louisiana. Hence, it is recommended to consult an attorney or legal expert before taking the steps.
How an LLC Ownership Structure Works in Louisiana
By now, you must know that a limited liability company is one of the simplest forms of business structure. The ownership and transferring it to others is even simpler. For an LLC in Louisiana or any other state in the United States, the company is considered an independent entity that is separated from its owners, which means the owners are not personally liable for the company’s debts or legal obligations.
The ownership structure of an LLC in Louisiana is determined by the percentage of ownership interests held by each member. These ownership interests can be distributed however the members see fit and are typically outlined in the Operating Agreement drafted in Louisiana.
There is no maximum limit on the number of members an LLC in Louisiana can have, and the members can be individuals, other LLCs, corporations, or even foreign entities. This flexibility allows for a wide range of business structures, from single-member LLCs in Louisiana to large, multi-member LLCs with complex ownership arrangements.
What is Louisiana LLC Buy-Sell Agreement in Ownership Transfer?
In Louisiana, the buy-sell agreement is a part of your operating agreement. It explains the instructions for buying and selling the LLC ownership. For example, who can be the member of Louisiana LLC, how will buy out and sell of the LLC be determined, whether the members of the LLC in Louisiana will buy the shares of the leaving owner, and how – these are the points you have in the buy-sell agreement.
Buy Out Louisiana LLC or Partial Transfer: In this case, the members of the LLC generally buy the shares of the owner who is leaving. As the LLC buys the owner’s interests, the shares get divided equally among the remaining Louisiana LLC members. LLC members must approve the transfer, and then the Operating Agreement (OA) will be updated to exclude the departed owner.
If your LLC operating agreement does not specify these terms beforehand, you must follow Louisiana state LLC law. In some states, ownership transfer does not simply take place. Instead, they have to dissolve the LLC to continue with the process. So, while you’re forming an Louisiana LLC, make sure to create a buy-sell agreement beforehand.
Sell a Louisiana LLC Or Fully Transfer: Selling an LLC or Fully Transferring the ownership is a bit more complicated than the buy-out process. In this condition, owners have the independent legal right to sell the interest to any third party. They do not need other members’ approval for this. The negotiation between the buyer and the seller involves complexities if there is no operating agreement in the first place. As an owner, you must find a buyer, write the change of ownership letter, set out other formalities, and voila! Your ownership transfer is done. The parties will settle the sale contract, including the LLC price, following Louisiana state laws.
How to Transfer Louisiana LLC Ownership
When an LLC member decides to step down from the owner’s position, they must transfer the ownership to someone else. It can be other existing members of the LLC or a third party. Transferring LLC ownership in Louisiana is a common yet complex deed. LLC owners who want to transfer their ownership must follow some steps to do the task. Here are the following steps-
Step 1: Review Your Louisiana LLC Operating Agreement
An operating agreement is a kind of non-mandatory document in many states. In Louisiana, it is not mandatory to draft one. If you have one at the time of LLC formation in Louisiana, then it would be easier for the owners to transfer the name. If not, then it should be filed at the time of transferring ownership. The operating agreement for the LLC in Louisiana must be reviewed for the ownership transfer conditions and other legal requirements regarding the buy-out and sale of the LLC.
Step 2: Amend the Louisiana Articles of Organization
Changing/transferring ownership might lead to structural change at the managerial level. In that case, the LLCs must comply with the Louisiana Secretary of State. To do so, one must file the Louisiana Articles of Organization amendment. Specifically in Texas, LLCs must submit a Public Information Report annually to the Texas Comptroller of Public Accounts. The managerial changes will be explained there.
As soon as the ownership transfer negotiation is done and the agreement is made with the updated change of ownership, file it with the Secretary of State. For that, you must amend the Articles of Organization and get the there is no. Make the changes to the existing Articles of Organization, get the amendment form, and submit it to the Louisiana SOS along with other documents and the filing fee. Read how to amend Louisiana Articles of Organization in a simple way.
Step 3: Spread the News
Once the legal formalities are done, and the ownership of your LLC is transferred officially in Louisiana, you must spread the word to the clients, partners, and other concerned people. Also, banks and other financial institutions should be notified about the ownership change. Business entities, vendors, and other officials you work with should also be notified.
Step 4: Obtain a New EIN (optional)
You might need to apply for a new EIN based on the LLC ownership transfer. After officially transferring ownership, you must check with the IRS whether you need a new EIN. There is a formal form to notify the IRS about the LLC ownership transfer. Get the form from their website, enter the details, and submit it. You will get notified whether you need to apply for a new EIN.
Why Transfer LLC Ownership in Louisiana
There can be several reasons why the transfer of LLC ownership in Louisiana takes place in any organization. Some of the most common reasons include the following-
- Death of the LLC owner
- Separation or Divorce of the LLC Owners
- LLC owners do not wish to continue their association with the organization
- LLC owners want to appoint a new member (owner)
- LLC owners want to sell the business off to someone else
These are some of the common reasons why an LLC ownership gets transferred in Louisiana. Transferring LLC ownership requires a comprehensive LLC operating agreement in Louisiana. This is an internal document every LLC should have at the time of formation.
The Role of Louisiana Operating Agreement in LLC Ownership Transfer
Creating an Operating Agreement in Louisiana is one of the major steps in forming a limited liability company (LLC). However, many states do not require an Operating Agreement. California, New York, Delaware, Maine, Nebraska, and Missouri are the states where an LLC operating agreement is mandatory.
Even when your state does not necessarily need you to file the operating agreement, it is recommended that you should have it to avoid any internal disagreements or issues in the future.LLCBuddy Editorial Team
An operating agreement is an internal document explaining all the procedures, including ownership transfer, dissolution, LLC operation, members, and other LLC-related processes. Operations, such as dissolution and ownership transfer, occur based on those written regulations.
If there is no Louisiana Operating Agreement or it does not have clear ownership transfer or buy-sell agreement provisions, the transfer takes place based on Louisiana state law.
What to Include in Louisiana Operating Agreement
This official document outlines the company’s structure, the members’ details, the dissolution process, and a lot more. Hence, it is always wise to have one to avoid any confusion in the future, whether your state needs it or not. The LLC operating agreement should have the following points-
- Whether LLC members are related to each other and what type of relationships they share
- Managers’ rights and responsibilities
- Operating Agreement Amendment conditions
- Members’ profit and loss shares
- Louisiana LLC Tax structures
- Transfer of ownership rules and procedure
- Dissolution of Louisiana LLC
If your operating agreement explains all the above points, you must follow it for the ownership transfer.
Reasons to Transfer Louisiana LLC Ownership
There can be many issues that lead to ownership transfer. One of the most common issues is the death of the owner. There can be other issues where transfer of ownership occurs. Here are some issues to consider,
Divorce Or End of Marriage: In some cases, according to the divorce decree, the ownership transfers to the spouse. If the LLC in Louisiana has an operating agreement and the ownership transfer condition is specified, then the LLC must follow the Louisiana operating agreement to proceed.
Death of a Member: This is the most common issue in LLCs. In Louisiana, if a member dies, the ownership, by default, transfers to the legal heirs of the deceased person. However, in this case, the legal heirs (wife/husband/kids) do not get any managerial power or authority. They continue enjoying the benefits, such as a share of the profit and others. But they won’t get any other power in the company. In such situations, other members of the Louisiana LLC often buy out the deceased’s interests.
Dissolution of Louisiana LLC: If any member/owner plans to leave the company, the LLC gets dissolved and reformed with the new policy and operating agreement. The members and managers make this sort of decision at the time of the creation of the operating agreement.
FAQs
How do I transfer ownership of a Louisiana LLC?
Ownership of a Louisiana LLC can be transferred by selling your membership interest to another person or entity.
What forms do I need to fill out to transfer ownership of my Louisiana LLC?
In Louisiana, you will need to complete and file an Amendment to Operating Agreement form with the Secretary of State to reflect the change in ownership.
Can ownership of a Louisiana LLC be transferred without the approval of all members?
Unless your operating agreement states otherwise, ownership of a Louisiana LLC generally cannot be transferred without the consent of all members.
How long does it take to transfer ownership of a Louisiana LLC?
The transfer of ownership process for a Louisiana LLC can take several weeks to complete, depending on the complexity of the transfer and the response time of the Secretary of State.
Are there any taxes or fees associated with transferring ownership of a Louisiana LLC?
In Louisiana, there may be transfer taxes or filing fees imposed by the Secretary of State when transferring ownership of an LLC.
Can a Louisiana LLC operating agreement specify the process for transferring ownership?
Yes, a Louisiana LLC operating agreement can outline the process for transferring ownership, including any approval requirements or restrictions.
What is the role of the Secretary of State in transferring ownership of a Louisiana LLC?
The Secretary of State is responsible for processing the necessary paperwork related to transferring ownership of a Louisiana LLC, such as the Amendment to Operating Agreement form.
Can I transfer ownership of my Louisiana LLC to a trust?
Yes, you can transfer ownership of a Louisiana LLC to a trust, as long as it is permitted in the operating agreement and follows the necessary legal procedures.
What happens if one of the members of my Louisiana LLC refuses to consent to the transfer of ownership?
If one of the members of your Louisiana LLC refuses to consent to the transfer of ownership, you may need to seek legal assistance to resolve the issue.
Can I transfer ownership of my Louisiana LLC to a foreign entity?
Yes, you can transfer ownership of a Louisiana LLC to a foreign entity, as long as it complies with any legal requirements and is approved by the other members.
Do I need to update my Louisiana LLC’s operating agreement when transferring ownership?
Yes, it is important to update your Louisiana LLC’s operating agreement when transferring ownership to ensure that all rights and responsibilities are clearly defined for the new member.
How do I notify the Louisiana Secretary of State when transferring ownership of my LLC?
You can notify the Louisiana Secretary of State of the transfer of ownership by filing an amendment to update the member information on your Articles of Organization.
Can I transfer ownership of my Louisiana LLC to multiple parties?
Yes, you can transfer ownership of a Louisiana LLC to multiple parties, as long as it is permitted in the operating agreement and all members consent to the transfer.
In Conclusion
As you all know, forming a limited liability company is much easier than forming a corporation, a partnership, or any other type of business. The ease of transferring ownership from one to another is one of the many reasons for entrepreneurs to start an LLC. In Louisiana, transferring LLC ownership does not need a lot of paperwork or steps. You must update the formation papers with the new ownership information, file the amendment to the formation document, tell people about it, and comply with the state.
Though it seems easy to file documents while transferring ownership, it could be more complex than just these steps. Based on the local regulations, nature of business, or some other administrative rules, transferring ownership in Louisiana might take more than what it looks like. It is recommended to consult a professional or attorney before you take such an important business decision.
