Massachusetts Sale and Assignment of a Percentage Ownership Interest in a Limited Liability Company

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A limited liability company (LLC) is a separate legal entity that can conduct business just like a corporation with many of the advantages of a partnership. It is taxed as a partnership. Its owners are called members and receive income from the LLC just as a partner would. Management of an LLC is vested in its members. An operating agreement is executed by the members and operates much the same way a partnership agreement operates. Profits and losses are shared according to the terms of the operating agreement.


A membership interest may be used to refer to the ownership interest of a member in the LLC. The word unit is often used to reflect the membership interests of a member in the LLC. Some LLC's issue membership interest certificates. To become a new member of the LLC the consent of majority of the members is necessary. A transfer of units of an existing member does not automatically include membership into the LLC.

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FAQ

To change a member's ownership percentage in your limited liability company (LLC), you'll need to consult your operating agreement. As a legal document, your operating agreement should include the names of all LLC members as well as their financial stake in your company.

Ownership equity is also known as risk capital or liable capital. In financial accounting, equity capital is the owners' interest on the assets of the enterprise after deducting all its liabilities. It appears on the balance sheet/statement of financial position, one of the four primary financial statements.

A transfer of an LLC interest where compensation is being paid is treated as a sale or exchange. The selling member will usually have a taxable gain or loss on the sale.

Business Ownership Interest refers to a designated shareholding in the ownership of a business enterprise. Such business ownership comes with privileges which depend on the size of the shareholding as may be contained in the shareholding agreement. The size of the ownership affects the valuation outcome.

In the case of corporations, an ownership interest is represented by ownership of voting stock. In the case of partnerships or limited liability companies, an ownership interest is represented by total interest in capital and profits.

After the terms of sale are negotiated, a written membership interest sales agreement can be created to record the transaction. This agreement should detail the new member's ownership percentage, the amount of the buy-in, and require that the new member agree to be bound by the existing Operating Agreement of the LLC.

In the case of corporations, an ownership interest is represented by ownership of voting stock. In the case of partnerships or limited liability companies, an ownership interest is represented by total interest in capital and profits.

James Publishing, 1995). The owners of an LLC are called ?members.? A member can be an individual, partnership, corporation, trust, and any other legal or commercial entity.

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Massachusetts Sale and Assignment of a Percentage Ownership Interest in a Limited Liability Company