Key Takeaways

  • An LLC can have one or many owners, known as members, with no upper legal limit in most states.
  • Owners can be individuals, corporations, other LLCs, or foreign entities (with some tax-status exceptions).
  • The number of members may influence how the LLC is taxed and what documentation is required.
  • Multi-member LLCs typically offer stronger asset protection than single-member LLCs.
  • LLCs taxed as S corporations must follow strict member eligibility rules, including a 100-owner limit.
  • Management and operational complexity may grow with the number of LLC members.
  • Legal counsel can help structure the LLC properly from the beginning.

If you're wondering how many members can an LLC have, a limited liability company (LLC) can have one or more members, but most states require at least one member for an LLC to be formed. States do not, however, enforce any limitations on the number of members an LLC can have. A limited liability company that operates with only one member is called a single-member LLC, and a company with more than one member is called a multi-member LLC. Limited liability companies that are taxed as S corporations and cannot contain more than 100 shareholders carry a special status. 

Who Can Be an LLC Member?

Almost any type of organization can become an LLC member, including all C and S corporations, other LLCs, trusts, and pension plans. Although it is rare for an LLC to have thousands of members, it is legal. An LLC member is at the same time the owner of that LLC. And the only difference between a single member LLC and a multiple-member LLC is the way these two entities are subjected to taxes. Every LLC performs under specific conditions, but each state has its own requirements for all LLC members. 

Any company or person who is 18 or older is legally allowed to be part of an LLC. Holding companies can also own LLCs. In some states, LLC members must be identified, while in other states they do not.

Regardless of the state, one or multiple LLCs can own another LLC. Also, one or multiple companies in any state can own an LLC. Additionally, it does not matter to what type of company or legal business entity they belong.

Are There Any Limits on How Many Owners an LLC Can Have?

Most states place no cap on how many members (owners) an LLC can have. This allows for a highly flexible ownership structure, ranging from single entrepreneurs to large investment groups. While it's uncommon, some LLCs have dozens or even hundreds of members, especially when structured for joint ventures or real estate holdings.

However, it’s important to note that while state laws may not restrict the number of members, federal tax classifications might. For example:

  • S Corporations: If your LLC elects to be taxed as an S corporation, it is limited to 100 shareholders, all of whom must be U.S. citizens or resident individuals (no corporations or partnerships).
  • C Corporations or Partnerships: LLCs taxed this way do not face the same ownership limitations as S corps.

Having multiple owners may require more detailed operating agreements, accounting, and record-keeping. As the member count increases, so does the need for clear governance structures and consensus-building processes.

What Is an LLC Member?

A single member of an LLC is in charge of all important aspects of that LLC. This includes filing the articles of incorporation that are under particular rules of the state where the LLC is located.

Each state has its own custom form that must be filled out by the owners while they are forming an LLC. If the state requires at least two owners to form an LLC, the most convenient way to do this is to involve a partner/spouse or perhaps a reliable family member as a second owner. 

In this scenario, the second member of the LLC would not be held liable or be in charge of the state tax obligations. If you are missing an additional member to form an LLC, it might make more sense to form a corporation instead. 

Despite the fact that your state demands specific legal requirements, you can file for an LLC in states, such as Delaware or California, that require only one member/owner. Single member LLCs are usually not allowed to operate within the states that do not allow their formation.

What Happens When There Are Multiple LLC Members?

In a multi-member LLC, ownership responsibilities and profits are typically shared based on the operating agreement. This document defines:

  • Each member’s percentage of ownership
  • Voting rights
  • Capital contributions
  • Profit and loss allocations
  • Roles and responsibilities
  • Exit strategies or buyout procedures

Without an operating agreement, the default state laws will govern these matters, which may not align with your intended structure.

Additionally, multi-member LLCs are generally taxed as partnerships by default. This means each member receives a Schedule K-1 reflecting their share of the profits and losses to report on their personal tax return.

Can a Minor Be an LLC Member?

In most states, a minor can be an LLC member. However, do your due diligence first to find out if your state is one that does not allow minors to be LLC owners. This topic is still an unexplored area that requires more research, so it might be a good idea to consult with an attorney about it. 

Who Can't Be an LLC Member?

Company shareholders cannot be part of an LLC if that LLC has S corporation tax status with the IRS. The following are not permitted to be LLC members of S corps:

  • Partnerships
  • Corporations
  • Nonresident aliens
  • Certain financial institutions, insurance companies, and domestic international sales corporations

Foreign Ownership and LLC Membership

Non-U.S. residents can generally own an LLC that is taxed as a partnership or C corporation. However, foreign individuals or entities cannot be members if the LLC elects S corporation tax treatment, as S corps must have only U.S.-based, individual shareholders.

If your LLC plans to accept foreign investment or has international co-founders, it’s critical to avoid electing S corp status and ensure your operating agreement is designed to accommodate cross-border ownership, including how distributions, taxes, and legal obligations will be handled.

Number of Members and Asset Protection

The best asset protection against creditors is to form an LLC with two or more members. In many states, the law allows creditors of a single member LLC to flee a "charging order," or a lien on a member's LLC interest.

Tax Implications of Single vs. Multi-Member LLCs

The number of LLC members directly impacts how the IRS treats the business for tax purposes:

  • Single-Member LLCs are considered disregarded entities and typically report income through the owner’s personal tax return using Schedule C.
  • Multi-Member LLCs are taxed as partnerships by default, filing Form 1065 and issuing Schedule K-1s to each member.

LLCs can also elect to be taxed as S corporations or C corporations by filing IRS Form 2553 or Form 8832, respectively. These elections allow owners to potentially reduce self-employment taxes or pursue outside investment, but also add complexity and compliance obligations.

Outgrowing Your Business Structure

Over time, if the company grows and an LLC stops being a suitable business form, owners can convert that LLC into a corporation. 

If a small LLC eventually becomes so large that it no longer fits the LLC form, its owners can relocate its assets into a new corporation maintaining the same ownership rights.

Managing a Large Number of LLC Members

As the number of LLC members grows, governance and communication become more complex. Consider these best practices:

  • Create a comprehensive operating agreement that outlines member duties, dispute resolution, and voting procedures.
  • Establish regular reporting and meetings to keep members informed and involved in major decisions.
  • Use a professional management structure (such as manager-managed LLCs) to streamline day-to-day operations.
  • Utilize digital tools or legal counsel to track ownership percentages, capital contributions, and distributions accurately.

Large-member LLCs may also benefit from forming advisory boards or delegating authority to executive managers to balance control and efficiency.

Frequently Asked Questions

  1. How many owners can an LLC have in the U.S.?
    There’s no federal limit on how many owners an LLC can have. Most states allow unlimited members.
  2. Can an LLC have 100 or more owners?
    Yes, as long as it’s not taxed as an S corporation, which has a 100-shareholder limit.
  3. Can a corporation or another LLC own part of an LLC?
    Yes, corporations, LLCs, and even trusts can be members of an LLC unless the LLC elects S corp tax status.
  4. Does the number of LLC members affect taxes?
    Yes. Single-member LLCs are taxed as sole proprietorships, while multi-member LLCs are taxed as partnerships unless they elect corporate taxation.
  5. Can a non-U.S. resident be an LLC owner?
    Yes, unless the LLC is taxed as an S corporation. Foreign individuals can be members of LLCs taxed as partnerships or C corporations.

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