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

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Description

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

In an LLC, the default assumption is that owners will not be held personally responsible for a business' liabilities. In an LLP, it's quite common for partners to assume some level of liability, at least for their own work.

LLCs generally offer more complete protection from personal liability than LLPs do. Members of an LLC are only liable for their contributions to the LLC.

While LLC members can have different ownership percentages, the ownership interests of all members in total must add up to 100%.

Neither an LLP nor an LLC is a corporation. However, in some cases, LLCs pay taxes as a corporation does, which means that they become subject to the same double taxation. LLPs, on the other hand, are always "pass through" entities that pay no tax on the company level.

Limited Liability Partnership (LLP) A limited liability partnership is similar to a limited liability company (LLC) in that all partners are granted limited liability protection. However, in some states the partners in an LLP get less liability protection than in an LLC. LLP requirements vary from state to state.

Divide ownership of the LLC by calculating total cash investment by the members. Give each member an ownership stake equal to his cash investment. Four members contributing $25,000 apiece would each receive a 25 percent stake in the company.

LLC ownership percentage is usually determined by how much equity each owner has contributed. The ownership interest given to each owner can depend on the need of the limited liability company and the rules of the state where the LLC has been formed.

An LLP insulates your personal assets from others' actions and the actions of the partnership's employees. That said, limited liability has limits. Each partner in an LLP remains personally liable for his or her own professional activities.

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