Key Takeaways

  • An LLC membership certificate is an internal document that serves as proof of ownership in a Limited Liability Company.
  • LLCs are not legally required to issue certificates, but doing so can help formalize ownership records.
  • Information included on an LLC membership certificate generally includes the member’s name, date of issue, ownership percentage, and certificate number.
  • Filling out an LLC membership certificate involves including accurate legal and business details and obtaining authorized signatures.
  • Certificates must be backed by internal documentation like the Operating Agreement and membership ledger.
  • Notarization is generally not required but may be beneficial for added formality.
  • LLCs can issue replacement certificates if originals are lost or if ownership changes.
  • Always ensure membership certificates align with state law and your LLC’s governing documents.

An LLC member is an owner of a Limited Liability Company (LLC). This is a relatively new type of business form that offers some liability protection, similar to a corporation, and the tax benefits of a partnership. 

Important Facts About LLCs

An LLC is formed when you file Articles of Organization, or the equivalent, depending on what state you're in. LLC regulations are entirely at the state level; there is no federal involvement, including by the IRS. LLCs can have multiple classes of members. Each class may have different rights. One may have preferred rights for distributions versus those of another class. Another class may have decision-making rights while the other won't. 

Other characteristics of LLCs: 

  • Each member is an owner, but unlike a corporation, there are no shares issued.
  • The Operating Agreement sets forth the rights and responsibilities of the LLC members.
  • An LLC can either be a single-member LLC or a multiple-member LLC.
  • Both are run the same way, the designation just distinguishes how they are taxed. 

What Is an LLC Membership Certificate?

An LLC membership certificate is a formal document used to denote ownership in a Limited Liability Company. While not legally required in most states, these certificates can be a helpful way to keep track of members and their respective ownership percentages. Much like stock certificates in a corporation, LLC membership certificates can demonstrate equity ownership and help legitimize ownership structure to financial institutions, investors, or courts if necessary.

These certificates are typically issued after the Articles of Organization are filed and the Operating Agreement is executed. They are especially useful in multi-member LLCs or when documenting ownership changes.

Who Can Be an LLC Member?

States don't place too many restrictions on who can be an LLC member, but they must be at least 18 years of age or older. They are not required to be U.S. citizens. Many organizations, including corporations, S corporations, pension plans, and other LLCs, are eligible to be members of an LLC. 

For Professional LLCs (PLLCs), it's pretty standard that members and their professional licenses must be presented for approval when the business is formed. If you have not heard of PLLCs, these must have owners who are licensed professionals in their respective fields. An example would be a group of attorneys who plan to practice law. Only other attorneys who are active members of that state's bar association can be a member. 

If you have a single-member LLC, the IRS categorizes it by default as a sole proprietorship. The main difference is some liability protection with an LLC, otherwise, it's essentially the same as a sole proprietorship. Single-member LLC members cannot take a salary as the IRS treats all income as part of their personal income. 

LLCs are popular business organizations because they offer the benefits of a corporation and partnership. They are owners, more like shareholders, but responsibility and rights are more like partners. Multi-member LLCs default to partnerships in the eyes of the IRS. All profits and losses pass through to the member and they report them on their personal income tax returns. 

Passive members are akin to a limited partner. Their involvement is typically only the initial investment. They have no management rights, and they do take part when a full vote of members is required, like admitting a new member or electing a manager. 

What Information Goes on an LLC Membership Certificate?

A well-prepared LLC membership certificate should include several key elements to ensure clarity and consistency:

  • LLC Name: The full legal name of the LLC as registered with the state.
  • Member's Name: The individual or entity to whom the certificate is issued.
  • Date of Issue: When the certificate is issued to the member.
  • Ownership Interest: This could be a percentage (e.g., 25%) or a number of membership units.
  • Certificate Number: A unique identifier for tracking purposes.
  • Signatures: Authorized representatives (such as managers or managing members) should sign the certificate.
  • Seal (if applicable): Some companies may include a company seal for added formality.

Deciding On Management Structure

The LLC's Operating Agreement should detail the company's management. LLCs typically choose either member-managed or manager-managed. 

Member-managed LLCs are the default in a number of states, so you only need to set forth the details if you want a manager-managed one when drafting your Operating Agreement. If members opt to manage the LLC by themselves, they can set it up as they see fit. There is no requirement to form a board of directors, but members should meet at least once a year and keep minutes of their decisions and discussions. Member-managed LLCs are responsible for managing day-to-day activities. 

Power includes the ability to make decisions, including human resource decisions, like firing or promoting an employee. They can sign contracts, make purchases, and enter into legal contracts on behalf of the LLC. They do not appoint any non-members or third parties to make any LLC decisions. Only a member manager has the authority to sign IRS Form 1065, which is the Return of Partnership Income. This is more informational to show the IRS what annual distributions were. 

If you opt for a manager-managed LLC, you must be specific in the Operating Agreement about this person's authority and rights. LLC managers are similar to a corporation's CEO. These are employees though, not members. Any authority to manage the LLC is expressly granted by its members. 

Small businesses typically opt for member-managed LLCs, but there are certain business scenarios where a manager-managed LLC may make more sense. Examples where manager-managed LLCs are preferable include: 

  • Members who lack skill and experience or want to be passive investors.
  • If a portion of members, or all the members, don't want to play an active role in the business.
  • If there are too many owners, it can be difficult to share management with so many people. 

Do LLC Membership Certificates Need to Be Notarized?

Generally, LLC membership certificates do not need to be notarized unless explicitly required by your state law or Operating Agreement. However, some LLCs choose to notarize these documents as a way to:

  • Add credibility to ownership records
  • Facilitate trust in business transactions
  • Prevent future disputes over issuance

Although notarization isn’t mandatory, it may be a helpful safeguard for LLCs with multiple members or complex ownership structures.

Best Practices for Managing Membership Certificates

  • Maintain a Membership Ledger: Keep an internal record of all certificates issued, including certificate numbers, ownership percentages, and dates.
  • Void and Reissue When Needed: If a member leaves the LLC or transfers their interest, void the original certificate and issue a new one.
  • Align With Operating Agreement: Make sure the ownership interests and member details on the certificate match what’s stated in the Operating Agreement.
  • Digital vs. Physical Certificates: Digital certificates can be used if your LLC operates paperless, but physical certificates may be preferred for legal clarity or traditional formalities.
  • No Legal Requirement, But Valuable: Even though not legally required, membership certificates add a layer of transparency and professionalism to your LLC's governance.

If you're unsure how to issue or manage LLC membership certificates, you can find experienced attorneys on UpCounsel who specialize in LLC formation and documentation.

LLC Membership Certificate: How to Fill Out

Filling out an LLC membership certificate accurately is crucial to maintaining proper ownership records. Here’s how to do it:

  1. Start with the Template: Use a standardized LLC membership certificate template or create one that aligns with your Operating Agreement.
  2. Enter LLC Details: Include the LLC's legal name and state of formation at the top.
  3. Add Member Information:
    • Full legal name of the member
    • Address (optional but helpful for internal records)
    • Ownership percentage or units
  4. Specify Certificate Number: Assign a unique certificate number for tracking purposes.
  5. Insert Date of Issuance: Include the date the certificate is issued.
  6. Add Signatures: The certificate should be signed by an authorized member or manager.
  7. Use Company Seal (if applicable): If your LLC has a company seal, affix it for extra authenticity.
  8. Record Internally: Update your LLC’s membership ledger to reflect the issuance of the certificate.

These steps ensure that the certificate is consistent with internal records and legal documentation. Be sure to store certificates securely and provide copies to the relevant members.

Frequently Asked Questions

  1. Do I have to issue membership certificates for my LLC?
    No. Most states do not legally require them, but they can help document ownership and make transitions or disputes easier to manage.
  2. What if I lose my LLC membership certificate?
    The LLC should issue a replacement certificate and update its internal membership ledger. It's also wise to mark the original as void.
  3. Can I fill out the certificate by hand?
    Yes, as long as the information is accurate and legible. However, using a typed form is generally more professional and easier to duplicate or store digitally.
  4. Does a certificate prove legal ownership?
    It supports your claim of ownership, but the Operating Agreement and state filings carry more legal weight. The certificate serves as supplementary evidence.
  5. Where should I store LLC membership certificates?
    Keep them in a secure location with other important business documents, such as the Operating Agreement, Articles of Organization, and tax records.

If you have questions regarding being an LLC member, you can post your legal need on UpCounsel's marketplace. UpCounsel only accepts the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.