A Multi-Member LLC (MMLLC) provides liability protection and pass-through taxation for two or more owners. Here’s a detailed guide to forming one:
Step 1: Choose Your State of Formation
- Consider tax rates, annual fees, and legal environment.
- Popular choices: Wyoming (no income tax), Delaware (business-friendly courts).
Step 2: Pick a Unique Business Name
- Must include “LLC” or “Limited Liability Company.”
- Conduct a name availability search on your state’s Secretary of State website.
Step 3: Appoint a Registered Agent
- A registered agent receives legal and tax documents on behalf of your LLC.
- Must have a physical address in the formation state.
Step 4: File Articles of Organization
- Prepare and file this foundational document with the state.
- Include company name, address, registered agent details, and purpose.
Step 5: Draft an Operating Agreement
- Although often not required by law, it’s vital.
- Outline member ownership percentages, voting rights, profit distributions, and management structure.
Step 6: Obtain an EIN
- Apply online via the IRS if you or another owner has an SSN/ITIN.
- Required for bank accounts and tax filings.
Step 7: Register for State Taxes and Permits
- Sales tax, employer taxes, or specific industry licenses.
- Check local county and city requirements.
Step 8: Maintain Ongoing Compliance
- File annual reports and pay state fees.
- Keep minutes of major decisions and update your Operating Agreement if roles change.
Benefits of a Multi-Member LLC:
- Shared management and responsibilities.
- Pass-through taxation avoids double taxation.
- Enhanced credibility with banks and vendors.
Need help with business?
👉 TaxSprint