1. Making Amendments in Washington State
2. How to Change LLC Ownership
3. How to Add Another Member to an LLC

If you want to know how to change ownership of a business in Washington state, you'll file an amendment form with the state and pay any required fees.

Making Amendments in Washington State

If you need to make amendments to your limited liability company (LLC), you'll submit a completed Amended Certificate of Formation form by mail, in person, or via fax. The form goes to the Secretary of State. If you're unsure whether restatement or amendment is the right choice for your particular situation, you should call the Secretary of State office.

You won't be able to change the following using this form:

  • Managers
  • Members
  • Business address

You'll pay a $30 filing fee to make amendments. If you submit via fax or want expedited service, pay an additional $50. If you mail your form, send it to the Corporation Division of the Secretary of State Office.

How to Change LLC Ownership

You may need to change your LLC's ownership for a number of reasons, including the following:

  • Member's death
  • Addition of a new member
  • Sale of the company

You have to make the change official across the whole organization. Otherwise, a departing member's liabilities could cause major problems for your company.

Generally, the first place to look to for processing any changes is your operating agreement. This document usually contains terms for buy-sell provisions, which outline situations in which ownership changes.

Common reasons — in addition to ones listed above — for these changes include the following:

  • Member retirement
  • Divorce settlement
  • Legal reasons
  • Judgments

If you don't already have a buyout agreement or buy-sell provision outlined, you should create one. Without it, you may end up suffering the unwanted dissolution of your business. Although one member may want out of the business, that doesn't mean all of the members want that.

You may have an attorney draw up the provision for you, or you can use a pre-written template, where you fill in application information. The main thing is making sure you clearly state buyout terms to prevent any issues in the future.

If you don't create these provisions or agreements correctly, member liability may still exist. For instance, say one of your members doesn't want to help any longer with business operations or no longer receives profit sharing. Inactivity doesn't automatically equal no longer being a member. The member could file for bankruptcy later on, and if the courts find the member still has an ownership interest in the company, your LLC could pay that member's personal debts.

You can find templates online, and most buyout agreements have some components in common. You should clearly identify the involved parties and include everyone's contact information. You should also outline each member's unit ownership the value of it. Make it clear if the member is being bought out or relinquishing him- or herself.

Once the buyout agreement is complete, update your certificate of organization to reflect the changes. The member who releases ownership should turn in his or her member certificates. Provide any new members with a certificate with the valuation of interest.

If you're not bringing in a new member and the company holds the remaining interest, you should either split the interest between remaining members or retain the units in the LLC until they can be issued later.

How to Add Another Member to an LLC

Discuss ownership percentages with current and prospective members. When everyone comes to an agreement on how to split them, prepare an amendment to your operating agreement that adds the new member. The amendment should include the following:

  • New member's name
  • Capital contributions from the new member
  • New member's ownership percentage
  • New member's percentage of profits and losses

Members should take a formal vote on the amendment, as outlined in your operating agreement. Record the vote in your minutes. All members — current and new — should sign the amended agreement, which you should keep with other important business papers.

To make ownership changes go as smoothly as possible, you should prepare for them in advance. Having everything outlined in your business's formation documents is the best way to ensure that everyone is on the same page when it comes to the company.

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