Who Can Own an LLC?: Everything You Need to Know
If you are wondering who can own an LLC, then you are probably considering starting an LLC yourself. LLCs are flexible to operate.3 min read
2. Owning an LLC as an Individual
3. Owning an LLC as a Group
4. Owning an LLC as an Entity
5. Owning an LLC as an Estate or Trust
6. LLC Ownership Restrictions
LLC Ownership Overview
If you are wondering who can own an LLC, or limited liability company, then you are probably considering starting an LLC yourself. LLCs are flexible in both who and how one can operate a business with them. The following individuals or entities can be LLC owners in all 50 states:
- US citizens
- Non-US citizens
- US residents
- Non-US residents
- US foreigners
- US immigrants
- Other LLCs
- Other corporations (both C- and S-corporations)
- Pension plans
- Individual retirement plans (IRAs)
- Other legal entities
That said, non-US citizens must possess a green card or E-1 or E-2 visa to own an LLC; an ITIN card is not enough, although it will qualify you to be an S corporation shareholder. The ITIN will be needed for non-resident LCC owners when it comes time to file taxes, however, as this will identify them to the IRS. It can be obtained by filing form W-7 with the IRS. Regular US residents use their Social Security number for this.
Owning an LLC as an Individual
When an individual owns an LLC, they are the owner of a single-member LLC. To own a single-member LLC, you do not need to be a resident of the state in which you intend to register your LLC, although your registered agent does. Also, there is no age restriction to owning a single-member LLC, although if you are under 18, you may have difficulty operating it, as minors are not usually able to be a party to a contract. Or, if they are, they may not be bound to it because a minor is not deemed to be legally competent to do so, and may be able to disavow said contract, resulting in complex legal situations.
Owning an LLC as a Group
When a group owns an LLC, the owners are part of a multi-member LLC. As a member, your responsibilities, powers, and ownership interest need not be proportional to your investment in the company; these can be divided up in any way that the ownership group sees fit. Furthermore, ownership interest is not permanent unless the operating agreement specifically makes it so; current members may sell or transfer their interest and new members may be added if so desired.
Owning an LLC as an Entity
Generally, LLCs can be owned by other entities, such as other LLCs, trusts, and corporations. When such is the case, the owned LLC is usually governed by the parent entity’s members. Also, the parent entity is usually not responsible for the subsidiary LLC’s debts, if it has any.
Owning an LLC as an Estate or Trust
Estates and trusts can be owners of LLCs, but each in their own unique way. Estates are defined as all the property and money in the ownership of an individual, including their net worth, both in owned property and in debts. So, if an individual owns an LLC, then their estate is an owner of the LLC as well.
As for trusts, these are entities that manage assets, and as part of that management, they can invest in businesses as a partner or shareholder. If such is the case with an LLC, then the ownership would strictly be as a limited partner.
LLC Ownership Restrictions
Although there are few restrictions on LLC ownership, some states do place specialized requirements on owning some LLCs. For example, to own a professional LLC, or PLLC, one must be a licensed professional (such as a lawyer, doctor, or accountant), and all other members of the PLLC must be similarly licensed, as well.
On the federal level, if an LLC should elect to be taxed as an S corporation by the IRS, the owners are required to be individuals and US citizens, not larger entities or foreign individuals. Thus, the following cannot own LLCs electing S corp status:
- Non-resident aliens
- Insurance companies
- Some financial institutions
- Domestic international sales corporations
On an individual LLC level, an LLC may stipulate membership restrictions in its operating agreement, including that only family members may be owners of the LLC.
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